Wednesday, September 5, 2018

A Couple of Interesting Damages Cases Out of Texas

1.  On the Essential Patent Blog, David Long has published a post on a patent dispute between PanOptis (assignee of certain patents that once belonged to Ericsson, Panasonic, and LG) and Huawei.  In August, a jury in the Eastern District of Texas found that Huawei willfully infringed four FRAND-committed SEPs and one non-SEP, and awarded damages of $2.8 million (total) for the four SEPs and $7.7 million for the non-SEP.  The matter now proceeds to a bench trial on whether PanOptis breached its FRAND commitment and, I would assume, on whether damages should be enhanced.  Mr. Long writes that many of the details of the case remain under seal.  One thing that strikes me as unusual is that, according to the write-up, Huawei is arguing that PanOptis breached its FRAND commitment and that, as a result, the court should hold that the SEPs in suit as unenforceable.  That would be an unusual application of . . . what, the patent misuse doctrine?  As I've noted before, in some countries implementers have succeeded in invoking the somewhat-similar "abuse of right" doctrine as a tool for avoiding injunctions in FRAND cases, but I think that courts normally still award damages--as was the case when Japan's IP High Court ruled in the Apple v. Samsung dispute a few years ago.  Anyway, the further proceedings in this case should be make for interesting reading.  Further discussion can be found on Law360 here, and here is a copy of the verdict form.

2.  Also in the Eastern District of Texas, Judge Schroeder has declined to award VirnetX enhanced damages in a dispute with Apple (the actual damages were $502.6 million, and VirnetX had asked the court to double them to $1 billion).  Here is a link to the story on Law360, and here is a link to the opinion.  (Note that this is a different case from the one Judge Schroeder decided last October, in which the actual damages were $302 million and the judge awarded a $41 million enhancement; for discussion, see here.)  From the opinion:
Having considered each Read factor, the Court concludes that enhancement is inappropriate. In favor of enhancement are the facts that Apple is a large, successful company, that Apple “copied” VirnetX’s ideas in a redesign and that an Apple engineer and corporate witness misled VirnetX in depositions about key infringement facts. The Court should not be interpreted as condoning such conduct. At the same time, however, this case was close, the misconduct brief and the remediation effort significant.
Aside from the Read factors, the Court also considers the size of the jury verdict. Enhanced damages inherently deter future, similar conduct. Affinity Labs of Texas, LLC v. BMW N. Am., LLC, 783 F. Supp. 2d 891, 899 (E.D. Tex. 2011) (“General deterrence of infringing activity is also a factor to be considered.”). The jury’s damages number is supported by the evidence in this case. But the Court is not persuaded that any enhancement of the verdict would lead to any additional deterrence of future conduct (p.45). 
The court also denies an injunction, and sets an ongoing royalty rate equal to the prejudgment rate (pp. 46-51).

Update:  Florian Mueller has some further analysis of the Huawei case on FOSS Patents, and Dennis Crouch of the VirnetX case on Patently-O.

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