Archive for the ‘Economic Damages’ Category

Hypothetical License Analysis Questioned in Oracle v. SAP

Friday, February 25th, 2011

In a massive filing this week, European business-software giant SAP AG is looking to have a new trial on damages. The liability phase was concluded last fall, and the jury’s award of $1.3 billion to Oracle Corp. plus $14 million in pre-judgment interest is the only point of contention left.

Coming on the heels of the recent high-profile reviews of IP infringement damages analyses sparked by the Uniloc v. Microsoft and the Versata v. SAP cases, this latest motion asks the Court to question the proper application of the Georgia Pacific factors, which arose in the context of Patent Law, to determine a reasonable royalty to determine the proper remedy for the Plaintiff in this copyright infringement case, and offering the alternative of the disgorgement of defendants’ profits, among other case-specific issues.

According to the motions, damages should be reduced to a level commensurate with Plaintiff’s own expert’s determination of Oracle’s Lost Profits, which are less than $300 million. In a way, part of the argument is that, in analyzing the “hypothetical license” scenario, Oracle’s expert improperly included in the royalty the reimbursement of Oracle’s overall R&D investments and disregarded evidence of the actual extent of the use made of the infringing information and the actual number of customers SAP acquired.

We shall continue to monitor the changing damages landscape, not only from the perspective of legislative reform, but also from the increasingly acute scrutiny of patent infringement damages expert reports.

Patent Damages Reforms to be Considered Next Month

Thursday, February 24th, 2011

Reuters reported that Majority Leader Harry Reid announced that the Senate aims to begin consideration next month, possibly by March 14, of a bipartisan bill to revamp the U.S. patent system and reduce the likelihood of what critics see as “excessive damage awards.”

The two areas of damages that we are watching closely are the reforms to the False Patent Marking provisions (35 USC §292) and to Patent Infringement Remedies (35 USC §284).

False Marking

Current law allows “Any person” to sue for the “$500 for every such offense” penalty (35 USC 292(b)) and this has created a veritable cottage industry of “patent marking chasers,” particularly ever since the $500 penalty has been applied to each item so marked, creating windfall profits to the filers (and the US Treasury).

The proposed reform bill seeks to strike this subsection with the following language: ”(b) Any person who has suffered a competitive injury as a result of a violation of this section may file a civil action in a district court of the United States for recovery of damages adequate to compensate for the injury.” Consequently, the reform on this issue aims at limiting recovery to compensatory damages to persons with actual damages.

Damages Determination

The proposed reform includes, for Section 284 – Damages, adding a subsection specifying the procedure for determining damages whereby: (a) The court shall identify the methodologies and factors that are relevant to the determination of damages to be considered by the court or jury; (b) The parties shall specify in a timely fashion the methodologies and factors proposed for instruction to the jury in determining damages, including the underlying legal and factual bases for their assertions; and (c) The court shall also consider whether one or more of a party’s damages contentions lacks a legally sufficient evidentiary basis.

Further reading

A full summary of the bill can be obtained on the Library of Congress’ THOMAS website.