June 6, 2011
LES Insights
By John C. Paul; D. Brian Kacedon; Susan Y. Tull
Authored by D. Brian Kacedon, John C. Paul, and Susan Y. Tull
Recently, the Court of Appeals for the Federal Circuit as well as the U.S. District Courts have been more closely scrutinizing the testimony of experts charged with determining damages for patent infringement. The result has been that certain tools that experts have historically relied on to determine damages have become either more difficult to use (for example, comparable licenses or the entire market value rule) or outright forbidden (for example, the 25% rule). Because of these changes, experts have begun looking for different tools to determine an appropriate damages measure. One "new" tool that has sparked much interest is the use of survey evidence to measure the value of a patented invention. Surveys have frequently been used in other types of litigation, such as antitrust or trademark litigation, but are less common in patent litigation.
Because such survey evidence has frequently not been used in patent litigation, there has been less guidance from the courts as to what is required for such surveys to be admissible. In Fractus, S.A. v. Samsung Electronics Co., Ltd.,1 Civ. No. 6:09-cv-203-LED-JDL (E.D. Tex. Apr. 29, 2011), the Eastern District of Texas excluded survey evidence from a patent damages calculation. The court found the survey evidence was not sufficiently tied to the patent-at-issue or the patented technology, but rather addressed the market as a whole. Because the surveys risked confusing the jury and resulting in an excessive damages award, the court excluded that evidence.
In Fractus, the dispute centered on the plaintiff's reliance on survey expert witnesses to determine damages for infringement of its patent relating to internal cell phone antennas. Fractus had commissioned two expert witnesses to perform two surveys assessing the value of internal antennas used in cell phones. The first expert's survey was intended to determine the value to consumers of incorporating internal, as opposed to external, antennas in cell phones. The second expert's survey was intended to determine the relative importance of internal antennas in cell phones to consumers. Even though the asserted patent covered only one type of internal cell phone antenna and did not purport to cover all internal cell phone antennas, neither survey focused on the specific type of internal antenna in the patent.
Samsung moved to exclude evidence relating to testimony by the survey experts. The court granted the motion, reasoning that the surveys failed to assess how consumers valued the purported advantages of the technology in the asserted patent, instead only estimating the perceived value to consumers of cell phones with any internal antennas.
Citing the Federal Circuit's decision in ResQNet.com, Inc. v. Lansa, 594 F.3d 860, 869 (Fed. Cir. 2010), the court noted that admitting the survey evidence "risk[ed] compensation for infringement that punishes beyond the reach of the statute" and failed to "tie proof of damages to the claimed invention's footprint in the market place." Rather than focus on the value of the specific type of internal antenna claimed by the asserted patent, the surveys assessed the valuation of a far broader market. The district court found the surveys only confused the issues before the jury, and excluded them accordingly.
1 Fractus, S.A. v. Samsung Electronics Co., Ltd., Civ. No. 6:09-cv-203-LED-JDL (E.D. Tex. Apr. 29, 2011).
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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