Court tosses out record $358 million reasonable royalty award

BVWireIssue #84-2
September 16, 2009

After more than six years in litigation, last April software developer Uniloc won a record $358 million against Microsoft for patent infringement. It was the second-largest verdict this year and the fifth-largest patent jury award in U.S. history, according to Bloomberg. Microsoft vowed to appeal—and just last week the U.S. Court of Appeals for the Federal Circuit overturned the verdict in Lucent Technologies, Inc. v. Gateway, Inc., 2008-1485, -1487, -1495 (Sept. 11, 2009) The same sources are now saying the decision could “alter how damages are calculated.”

Most important factor: evidence of comparable licensing agreements. During the original trial, the plaintiff’s “licensing expert” based his calculations solely on a running royalty rate, requesting $561 million in damages. Microsoft argued solely for a lump-sum no greater than $6.5 million. The jury awarded the $358 million as a lump-sum, but on review, the appellate court found three critical problems: 1) the jury heard no evidence how consumers would use the patented software; 2) it heard little explanation how a reasonable royalty agreement could help prove a lump-sum; and 3) the comparables offered by plaintiff’s expert were “far different” than the licensing agreements the parties might have negotiated. In fact, the damages evidence “was neither very powerful, nor presented very well by either party,” the court said, in remanding the case for yet another trial on damages.

This time around, the experts might look at KtMine. ktMINE™ is the only interactive IP database that provides damages experts direct access to royalty rates, source licensing agreements, and detailed agreement summaries. ktMINE finds and analyzes market comparables from over 13,000 public royalty rate, licensing, and lump sum agreements.

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