Lucent Technologies, Inc. v. Microsoft Corp., 2011 WL 2728317 (S.D. Calif.)(July 13, 2011)

After remand to the federal district court (S.D. Calif.), Microsoft (the successor to Gateway's interests) challenged Lucent's new damages expert under Daubert for failing to comply with the entire market value rule. On the day of the motions hearing, Jan. 4, 2011, the Federal Circuit issued its opinion in Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (2011), which abolished the 25% "rule of thumb" in patent infringement cases. The Federal Circuit also clarified the market value rule, requiring the plaintiff to either justify application of the rule on the basis of consumer demand or, "in every case," apportion its damages calculations between the patented and unpatented features of the accused product. [Read More]

Lawyers Try Hard to Argue Their Firm Has No Goodwill Value

Dixon v. Crawford, McGilliard, Peterson & Yelish, 2011 WL 4348058 (Wash. App. Div. 1)(Sept. 19, 2011)

One of the five founding partners of a well-established, 30-year-old public defense firm left in 2006, taking all of his civil defense clients with him. Two years later, a junior (non-equity) partner left the firm and sued for an accounting and purchase of his interest. At this point, the senior founding partner - concerned about potential liability - intervened in the suit. But only after the court dismissed the junior partner's claims did he assert his own for a judicial buyout.

Notably, the firm had no written partnership agreement, and the partners had always distributed 100% of the practice's profits equally among themselves. Since the late 1990s, public defense contracts had generated over half the firm's income, sufficient to pay its overhead as well as the salaries of employees who handled this work. [Read More]

Federal Court Resurrects 25% Rule of Thumb to Calculate Ongoing Royalty

Douglas Dynamics v. Buyers Products Co., 3-09-cv-00261 (W.D. Wis.)(Sept. 22, 2011)

A jury found the defendant liable for infringing two of the plaintiff's patented snowplow assemblies and awarded approximately $1.1 million in damages for past infringement. After the verdict, the federal district court denied the plaintiff's request for a permanent injunction and instead invited the parties to negotiate a reasonable royalty for any prospective infringement.

Parties were 'miles apart.' The parties agreed that an ongoing royalty rate should exceed the effective 3.3% awarded by the jury for past infringement, but they were "miles apart" as to what that rate should be, the court observed. The defendant suggested a 5% ongoing royalty based on applying wholesale prices to the snowplow assemblers. In contrast, the plaintiffs wanted a 44% royalty rate to apply to the assemblies that the defendant sold between the jury's entry of an award and the court's denial of an injunction, and a 16% royalty rate for any sales thereafter. [Read More]

Court Vacates $1.3B in Copyright Damages for Lack of 'Real World' Data

Oracle USA, Inc. v. SAP AG, 2011 WL 3862074 (N.D. Cal.)(Sept. 1, 2011)

In a high-profile infringement litigation, a jury awarded the plaintiff (Oracle USA) $1.3 billion in damages against the defendant SAP, the world's largest business application software manufacturer. Not only was the jury award the largest ever for copyright infringement, but its magnitude equaled SAP's fourth quarter 2010 net income.

On appeal SAP claimed the award was "grossly excessive" and based on "fictitious" evidence. In particular, since Oracle admitted that it never would have licensed the software in the "real world" and no comparable licenses existed, its expert simply "invented" the price of a hypothetical license, the defendant argued, relying on factors such as the amount that Oracle executives claimed they would have charged for a license (unsupported by any benchmark deals), and the value of the infringed technology as a whole, including the costs of acquisition and development.

The U.S. District Court agreed, finding the plaintiff's expert "confused the jury" by presenting "fictitious and speculative negotiating factors" that he purportedly derived from Georgia-Pacific, but which actually came from the "self-serving" testimony by Oracle executives.

Trademark Infringement Expert Assumes Liability But Not Scope: Reliable?

Pandora Jewelers 1995, Inc. v. Pandora Jewelry, Inc., 2011 WL 2295269 (S.D. Fla.)(June 8, 2011)

The plaintiff is a full-service jeweler that has maintained a single store in a strip mall in southern Florida for over 30 years. In 1999, it launched a web site, pandorajewelers.com, which accounts for 6% of its total sales and includes customers beyond south Florida. It claims to have built a reputation for its store, web site, and product packaging based on consistent advertising and various registered trademarks using the name "Pandora."

The defendant is a multinational, high-end jewelry designer and manufacturer that sells its products under the registered trademark Pandora Jewelry, among others. In 2004, the plaintiff became an authorized retailer for the defendant's products in its store and on its web site. In 2008, however, the defendant's affiliate filed suit against Google and 67 others, including the plaintiff, to enjoin them from using its registered marks as AdWords. In response, Google terminated the plaintiff's ability to use the defendant's trademarks as AdWords. [Read More]