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FELDMAN GALE

VIEWS: 12 PAGES: 13

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									            Ongoing Royalties in Patent Litigation
                        The Evolving Case Law on Damages
                          for Post-Verdict Infringement:
                                 Procedural Issues

                                 Nicole D. Galli
                                  February 15, 2011




 ELDMAN GALE
FFELDMAN GALE
INTELLECTUAL PROPERTY LAW
  INTELLECTUAL PROPERTY LAW
              Questions in the Wake of eBay
      • Source of the court’s authority to grant ongoing royalties;
      • Whether there is a Seventh Amendment right to a jury
        trial;
      • Appropriate procedural mechanism for determining the
        relief;
      • Factors to be considered in assessing such relief;
      • The complete scope of the relief (e.g., the products to
        which the royalty should be applied and/or the scope of
        the terms of the license/remedy);
      • Remedies available to address a violation of an order of an
        ongoing royalty

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                     Federal Circuit Guidance
      • Three Federal Circuit decisions since eBay have addressed
        post-judgment royalties:
         • Paice LLC v. Toyota Motor Corp., 504 F.3d 1293 (Fed. Cir.
           2007).
         • Innogenetics, N.V. v. Abbot Labs., 512 F.3d 1363 (Fed. Cir.
           2008).
         • Amado v. Microsoft Corp., 517 F.3d 1353 (Fed. Cir. 2008).
      • Each have answered some but not all of these questions, at
        least in part




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INTELLECTUAL PROPERTY LAW
                     Federal Circuit Guidance
      • Paice:
         • Award of ongoing royalties has its basis in a court’s
           power to grant equitable relief in patent cases (See 35
           U.S.C. § 283).
         • Accordingly, jury trial is not required.
      • Innogenetics:
         • Injunction not available where a jury award includes an
           ongoing royalty payment for post-verdict infringement
      • Amado:
         • Whether post-judgment rate should be higher than pre-
           judgment rate

FELDMAN GALE
INTELLECTUAL PROPERTY LAW
                     Federal Circuit Guidance
      • Key remaining issues
         • How, exactly, the royalty should be calculated, no matter
           the procedure used
         • What is the procedural mechanism for calculating
           royalties
            • Jury decides (in an advisory opinion)
            • Parties negotiate it themselves
            • Judge after briefing and/or evidentiary hearing
            • New case just on post-verdict infringement
            • Sever post-judgment royalty issue from main case


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             Evolving District Court Caselaw
      • Strongest proponent of leaving the issue to the jury is
        Judge Clark in EDTX
         • E.g., Cummins-Allison Corp. v. SBM Co., 584 F. Supp.2d
           916 (E.D. Tex. 2008); Ariba, Inc. v. Emptoris, Inc., 567 F.
           Supp.2d 914 (E.D. Tex. 2008).
      • Judge Clark has the jury advise on the appropriate rate,
        although he affirms that the parties should have a post-
        verdict opportunity to negotiate the issue and the final
        decision is the court’s
         • Thus distinguishes Innogenetics – there the plaintiff
           automatically received amount determined by the jury


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INTELLECTUAL PROPERTY LAW
             Evolving District Court Caselaw
      • At the other end of the spectrum are courts that have
        ordered the plaintiff to file a new complaint to address the
        post-verdict infringement
         • Originated by Judge Davis (EDTX) in 2006 in z4
           Technologies, Inc. v. Microsoft Corp., 434 F. Supp.2d 437
           (E.D. Tex. 2006).
         • More recently adopted by Judge Ward (EDTX) in 2008 in
           Saffran v. Boston Scientific Corp., Case No. 2:05-cv-
           00547-TJW (E.D. Tex. Feb. 14, 2008).




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INTELLECTUAL PROPERTY LAW
             Evolving District Court Caselaw
      • At least one other case has severed the post-judgment
        damages issue from the main case
         • Voda v. Cordis Corp., No. CIV-03-1512, 2006 WL
           2570614 (W.D. Okla. Sept. 5, 2006).
            • allows that part of the case to remain alive as a
              continuing action;
            • thus allowing for continued monitoring of the
              ongoing royalty payments.




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INTELLECTUAL PROPERTY LAW
             Evolving District Court Caselaw
      • Most used approach has been to order the parties to first
        negotiate the post-judgment royalty rate, and then hold an
        evidentiary hearing if the parties fail to arrive at an
        agreement on the rate.
         • See, e.g., Boston Scientific Corp. v. Johnson & Johnson,
           550 F. Supp.2d 1102 (N.D. Cal. 2008).
         • This approach is consistent with Federal Circuit’s
           observation in Paice that a process on remand that
           included conducting an evidentiary hearing would also
           have the benefit of allowing the parties an opportunity
           to set their own rate (advocated by Chief Judge Rader)


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INTELLECTUAL PROPERTY LAW
             Evolving District Court Caselaw
      • In at least two cases, however, the court appears to have
        held hearings on the appropriate rate, and it does not
        appear that the parties were explicitly given an opportunity
        to negotiate the rate first:
         • Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs.,
           Inc., No. CV-03-0597-PHX-MHM, 2009 WL 920300 (D.
           Ariz. Mar. 31, 2009).
         • Joyal Prods. Inc. v. Johnson Elec. Inc., Civ. A. No. 05-5172
           (JAP), 2009 WL 512156 (D.N.J. Feb. 27, 2009).




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             Evolving District Court Caselaw
      • Most recently, one court ordered the parties to brief the
        issue of whether they should be given an opportunity to
        negotiate the rate first or whether the court should impose
        a rate.
         • Presidio Components Inc. v. American Tech. Ceramics
           Corp., No. 08-CV-335-IEG (NLS), 2010 WL 1462757 (S.D.
           Cal. Apr. 13, 2010).




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             Evolving District Court Caselaw
      • Since the parties could not even agree on this issue, the
        court went ahead and imposed a rate without giving the
        parties an opportunity to negotiate.
         • Presidio Components Inc. v. American Tech. Ceramics
           Corp., No. 08-CV-335-IEG (NLS), 2010 WL 3070370 (S.D.
           Cal. Aug. 5, 2010).
         • Defendant wanted court to order negotiations
         • Patent owner said parties were not likely to agree so
           court should order rate
         • Court took supplemental briefing on proposed rates,
           and since so divergent, decided to order rate

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                                      Thank you!
                                Nicole D. Galli, Esquire
                                  Feldman Gale, P.A.
                            1700 Market Street, Suite 3130
                                Philadelphia, PA 19103
                                    (267) 414-1302
                               ngalli@feldmangale.com




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