April 11, 2017
LES Insights
By John C. Paul; D. Brian Kacedon; Anita Bhushan
Authored by Anita Bhushan, D. Brian Kacedon, and John C. Paul
Litigation settlement agreements can be submitted as evidence to establish the amount of reasonable royalty damages and are more likely to be admitted into evidence when they occur at a later stage of the litigation, if the use of the patented technology by the party that settled is similar to the use made by the accused infringer, and if there are no enhanced damages at issue in the settled litigation.
Patent owners can recover reasonable royalty damages for patent infringement based on factors including royalty terms in other licenses involving the patented technology. In some instances, courts permit agreements that settled other litigations to be used to establish reasonable-royalty damages.
Prism sued AT&T for patent infringement and settled on the last day of trial. Prism separately sued Sprint for infringing the same patents, and Sprint asked the district court to exclude the AT&T settlement agreement from evidence, arguing that the AT&T agreement was not comparable to the hypothetical negotiation in its case and would be prejudicial to consider as evidence of a reasonable royalty. The district court disagreed and admitted the agreement into evidence. The jury found that Sprint infringed Prism’s patents and awarded Prism reasonable royalty damages of $30 million. Sprint appealed the district court’s decision to admit the AT&T settlement agreement into evidence.
The Federal Circuit held that the district court did not abuse its discretion by admitting the AT&T settlement agreement into evidence and concluding that the danger of undue prejudice from admitting the litigation settlement agreement into evidence substantially outweighed the value of the agreement in determining the proper amount of damages. The Court noted that there is no explicit rule against excluding litigation settlement agreements from evidence and then enumerated the factors a court should consider in determining to allow a settlement agreement to be admitted into evidence: (1) whether the same patented technology was at issue in the settled litigation, (2) how far along the settled litigation was, (3) whether the agreement covers non-comparable technologies or additional technologies to the patented technology, (4) whether the settled litigation included the risk of enhanced damages, and (5) whether the litigation costs at the time of settlement were high. Applying these factors, the Federal Circuit held that the district court properly admitted the AT&T settlement agreement into evidence finding that (1) although the agreement between Prism and AT&T covered the patents at issue against Sprint as well as other patents, Prism satisfactorily explained how the unasserted patents related to AT&T’s business, and presented sufficient evidence to establish the comparability of the AT&T settlement agreement; (2) Prism’s agreement with AT&T was more reliable since it occurred at such a late stage of the litigation—after the trial; and (3) no enhanced damages were at issue in the AT&T case.
Litigation settlement agreements can be submitted as evidence to establish the amount of reasonable royalty damages and are more likely to be admitted into evidence when they occur at a later stage of the litigation, if the use of the patented technology by the party that settled is similar to the use made by the accused infringer, and if there are no enhanced damages at issue in the settled litigation.
The Prism Technologies opinion can be found here.
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.
Lecture
Patent Protection for Software-Related Inventions in Europe and the USA Training Course
June 5, 2024
Hybrid
Workshop
Life Sciences Workshop: Updates and Key Trends in Pharmaceutical and Biotechnology IP Law
May 2, 2024
Cambridge
INCONTESTABLE® Blog
The Federal Circuit’s Heartfelt Affirmation of Everybody’s Right to Use “Everybody vs. Racism”
March 22, 2024
Due to international data regulations, we’ve updated our privacy policy. Click here to read our privacy policy in full.
We use cookies on this website to provide you with the best user experience. By accepting cookies, you agree to our use of cookies. Please note that if you opt not to accept or if you disable cookies, the “Your Finnegan” feature on this website will be disabled as well. For more information on how we use cookies, please see our Privacy Policy.
Finnegan is thrilled to announce the launch of our new blog, Ad Law Buzz, devoted solely to breaking news, developments, trends, and analysis in advertising law.