Federal Circuit Gets Tougher on Patent Damages:VirnetX v. Cisco Systems

The topic of damages in patent infringment actions reemerged recently, as the U.S. Court of Appeals for the Federal Circuit continued to restrict acceptable reasonable royalty analyses. This time, in VirnetX, Inc. v. Cisco Systems, Inc., No. 2013-1489 (Fed. Cir. Sept. 16, 2014) [Opinion], the court held that apportionment is required in virtually every case in which the patentee cannot establish that the patented invention is the basis for demand of the accused product. Apportionment, which has its root is 19th century patent caselaw, requires the patentee to apportion value between patented and unpatented features in an accused product. This may well be one of the most important patent cases of the last few years, and will have an immediate impact on how litigants prove damages, particularly in cases involving technologies embodied in components used in complex products. I have just co-authored a more detailed look at the case and its likely impact, "The Federal Circuit’s VirnetX Ruling Continues Its Focus On Requirements For Proving Patent Damages," which you can download HERE.