{"id":544,"date":"2011-12-08T15:35:22","date_gmt":"2011-12-08T23:35:22","guid":{"rendered":"http:\/\/ipmetrics.net\/blog\/?p=544"},"modified":"2011-12-08T15:35:22","modified_gmt":"2011-12-08T23:35:22","slug":"key-factors-of-infringement-damages-apportionment-in-the-java-android-case","status":"publish","type":"post","link":"http:\/\/www.ipmetrics.net\/blog\/litigation\/case-law\/key-factors-of-infringement-damages-apportionment-in-the-java-android-case\/","title":{"rendered":"Key Factors of Infringement Damages Apportionment in the Java & Android Case"},"content":{"rendered":"

In the most recent ruling in the landmark patent and copyright infringement action involving Java <\/a>and Android<\/a>,\u00a0Oracle America, Inc. v. Google Inc.<\/em>, 3-10-cv-03561 (Dec. 6, 2011), the Judge tentatively sided with the Defendants in precluding a claim-by-claim apportionment of infringement damages after the Plaintiff’s expert had testified to a patent-by-patent analysis.<\/p>\n

The Origins<\/h3>\n

This controversy began when Oracle’s first infringement damages expert witness report in this matter, by Dr. Ian Cockburn<\/a>, offered an analysis claiming the total value of the Java and Android systems. \u00a0Subsequently, that expert opinion was refined to reflect estimated damages from 2007 through 2011 for a total of, at least, $1 Billion dollars; $201.8 million for patent infringement and $823.9 million in “unjust enrichment” \u00a0copyright infringement damages \u00a0(alternative measures of lost licensing fees and lost profits were also considered). \u00a0While Android is distributed freely, the unjust enrichment claimed stems from\u00a0advertising revenue received through Android, the sales of Nexus mobile phones, and app sales in the Android Market. \u00a0The starting point for the analysis is negotiations between Sun and Google in 2006 for a $100 million license.<\/p>\n

The Analysis<\/h3>\n

The damages analysis relies on the consideration of a hypothetical license agreement that could have been reached as the result of a supposed meeting between the patentee (Sun) and the infringer (Google) at the time infringement began (The Rite-Hite<\/em> case is the landmark reference here<\/a>). \u00a0This part of the analysis is correct according to the most recent order. \u00a0Also correct is the starting point of the $100 million royalty discussed in actual negotiations in 2006 for a Java “worldwide license.” \u00a0Finally, adjusting upwards from that starting point to incorporate the so-called “convoyed sales” concept is also proper procedure, according to Judge Alsup.<\/p>\n

Dr. Cockburn\u2019s reasonable royalty calculation for both patent and copyright infringement\u00a0depended on his opinion that the patents-in-suit were worth 30% and the copyrights-in-suit\u00a0worth 15% of the $100 million starting value and upward adjustment of nearly $600 million. \u00a0These percentages were used to proportionally adjust the starting-point fee and the upward\u00a0adjustment in the hypothetical negotiation calculation. \u00a0Judge Alsup agreed with Google in that the value of the intellectual property under consideration is that of the complete Java system back in 2006 (“…all Sun owned CD JavaME technologies…”), not that of the portions used in Android since then which, Defendants would argue, is likely to be but a fraction of the whole Java system value.<\/p>\n

Furthermore, the apportionment problem remains, and is complicated by the fact that there is more than one patent involved, and each has more than one claim. Apportioning value\u00a0in litigation\u00a0is a serious and complex proposition (You can download our apportionment case study<\/a>\u00a0for an introduction), and the apportionment by patent cannot readily be converted to a claim-by-claim allocation of value. \u00a0The court has challenged the damages experts by clearly indicating that a claim-by-claim analysis in this case is preferable because of five reasons:<\/p>\n