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Fed. Circuit Shows That Summary Judgment/Adjudication On Damages Is Much More Difficult For Patent Infringement Defendants Than Posner Thought

The case of Apple Inc., et. al. v. Motorola, Inc. et. al., 757 F.3d 1286 (Fed. Cir. 2014) is chock full of interesting and instructive patent litigation issues.  One could easily write about a number of issues analyzed in the case.  As an interesting aside, the trial Judge was none other than Seventh Circuit Court of Appeals jurist Richard Posner, sitting by designation.  It must be an interesting experience being reversed when one is usually in the position of doing the reversing.  In any event, for purposes of this blog entry, I will only address the issue of damages for patent infringement on a summary judgment.

After the evidence of Apple’s damages expert was excluded, Motorola moved for summary judgment, arguing that even if Motorola infringed one of the patents-in suit, Apple had not demonstrated it was entitled to any damages.  Specifically, Motorola argued that Apple had not tendered any admissible evidence to establish or measure any amount of damages.  Judge Posner agreed and granted summary judgment of no damages for that particular patent-in-suit.

The Federal Circuit disagreed and reversed the trial court on the issue of damages.  The Federal Circuit began its analysis by citing 35 U.S.C.S. § 284, which requires a court to award damages for infringement that are no less than a reasonable royalty.  In other words, a reasonable royalty will always be at least a floor for a patentee’s damages model.  And, although a finding no evidence of lost profits will justify summary judgment as to lost profits, once a party raises an issue of material fact as to infringement, they are at least allowed to invoke the default to a reasonable royalty.

The Federal Circuit continued by stating that, even on summary judgment when a royalty estimate suffers from factual flaws, that does not, by itself, support a legal conclusion that zero is the proper amount of a reasonable royalty.  Essentially, regardless of whether damages expert testimony is even offered or admissible, the fact finder is still required to scour the record to determine a reasonable royalty based on remaining evidence in the record.  If the evidence is weak, the determined royalty may be a nominal amount, but unless the record reflects a zero royalty award, a damages award must be assessed.  Resultantly, on summary judgment, the court may only award zero damages for infringement if there is no genuine issue of material fact that zero is the reasonable royalty.  Obviously, that presupposes the product or method is basically worthless – which would beg the question why there would be litigation in the first place.  Thus, if a patentee raises a factual issue regarding whether it is entitled to a nonzero royalty, summary judgment must be denied.

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