USA Ranking of damages awards

This week the ranking has been modified, Centocor Ortho Biotech (J&J) v Abbott $ 1,848 MM has disappeared from no. 1.

On February 23, the US Court of Appeals for the Federal Circuit in Washington concluded that four claims of plaintiff’s patent “are invalid for lack of written description” and reversed the judgment. Copy of the decision here.

Much was written about this case. Most of the times reference was made to the amount of damages (here, or here) but also to the lawyers “show” during the trial, as Jeremy reported here.

2007 Lucent v. Microsoft $ 1,538 MM returns to lead the ranking published by PWC in September 2010. Full report here.

The end of the American (damages) dream?

Most of the times a patent case is ruled in the US I’m surprised with the amount of damages award. I usually have the impression that more than damage repair, US Courts apply punitive damages.

The situation may change with the decision of the US Court of Appeals of the Federal Circuit in Uniloc v. Microsoft, rejecting a very popular damages calculation rule (the 25% rule of thumb). We read uin the ruling:

“Section 284 of Title 35 of the United States Code provides that on finding infringement of a valid patent, damages shall “in no event [be] less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.” In litigation, a reasonable royalty is often determined on the basis of a hypothetical negotiation, occurring between the parties at the time that infringement began.
…
The 25 percent rule of thumb is a tool that has been used to approximate the reasonable royalty rate that the manufacturer of a patented product would be willing to offer to pay to the patentee during a hypothetical negotiation.
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there must be a basis in fact to associate the royalty rates used in prior licenses to the particular hypothetical negotiation at issue in the case. The 25 percent rule of thumb as an abstract and largely theoretical construct fails to satisfy this fundamental requirement. The rule does not say any-thing about a particular hypothetical negotiation or reasonable royalty involving any particular technology, industry, or party. Relying on the 25 percent rule of thumb in a reasonable royalty calculation is far more unreliable and irrelevant than reliance on parties’ unrelated licenses, which we rejected in ResQNet and Lucent Technologies.
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evidence purporting to apply to these, and any other factors, must be tied to the relevant facts and circumstances of the particular case at issue and the hypothetical negotiations that would have taken place in light of those facts and circumstances at the relevant time”.

It seems to me that from now on it will be difficult to reach figures we have seen in the past.

"I think he should've shown a little more emotion"

Writing for Law.com today, Zusha Elinson ("Anatomy of a $1.67 Billion IP Verdict") discusses the massive US $1.67 billion patent infringement damages award in favour of Johnson & Johnson against Abbott Laboratories. The dispute related to Abbott's Humira arthritis drug which, J&J alleged, infringed its own Remicade product.

This account is more anecdotal than legal in its analysis, contrasting WilmerHale's William Lee ("one of the biggest names in intellectual property litigation", even though "Lee" is but three letters long) on Abbott's side with Woodcock Washburn's Dianne Elderkin for J&J. This gave a certain flavour to the Texas Federal Court drama, in which each out-of-towner was assisted by a local lawyer:

"The out-of-town lawyers -- Lee is from Boston, and Elderkin is from Philadelphia -- took about half an hour each, with the Texas lawyers finishing the last 15 minutes on folksy notes".

Precisely what were those "folksy notes"? And were they the subject of case management? We are not told, but presumably both parties thought it prudent to ensure those notes were struck, given that US patent infringement trials are heard before a lay jury. A neutral lawyer, not instructed in the proceedings but merely watching from the gallery, said that Lee's body language didn't help him connect with the jurors:

"He was very knowledgeable, but for about five or 10 minutes he stood there with his arms crossed while he was talking to the jury. I think he should've shown a little more emotion".

Aphorisms were much in evidence. Lee apparently alluded throughout the trial to the Chinese proverb, "Give a man a fish; you have fed him for a day. Teach a man to fish; and you have fed him for a lifetime", to persuade the court of his client's truly original role in developing the arthritis treatment. J&J retailiated with a quotation from the prophet Isaiah, asking the jury, "Come now, let us reason together", as they discussed the quantum of damages.

A side issue in this patent pageant was the quantum of damages. J&J sought massive damages on the ground that Abbott's sales of Humira came to some US$4.5 billion in 2008. J&J initially pressed for $2.2 billion, while Abbott's expert (of whom it was not recorded whether and, if so, how he swung his arms) put the damages at just US$200 million even if there had been infringement. The article continues:

"After five hours of deliberations, the jury went with the Johnson & Johnson lawyers, finding willful infringement and awarding $1.17 billion in lost profits and $504 million in royalties",

following which lawyers on each side gave "generic statements" to the press. Then, presumably, they all lived happily ever after ...