Damages Expert May Consider Litigation Outcome Statistics

The court denied defendant's motion to exclude the opinion of plaintiff's damages expert to the extent it was based on patent litigation outcome statistics. "The expert's] opinions concerning patent litigation outcomes are admissible. . . . [Defendant] contends that [the expert] 'discloses these statements so that [plaintiff] can wave them around at trial in an attempt to persuade the jury to find comfort in determining liability and awarding a large damages number.' [Plaintiff] responds that the studies support [the expert's] opinion that a hypothetical negotiation, which assumes that the patent is valid and infringed, supports a higher royalty than negotiations before such a finding. The data concerning litigation outcomes is sufficiently tied to the issue of how real-world licenses should be understood in the hypothetical negotiation context. [Defendant] has not shown that the opinion is unreliable, or that the potential for prejudice outweighs its probative value."

NetAirus Technologies, LLC v. Apple Inc., 2-10-cv-03257 (CACD October 23, 2013, Order) (Kronstadt, J.).

Giving App Away for Free May Constitute Infringing Sale

The court denied without prejudice defendants' motion for summary judgment of no contributory infringement of plaintiff's mobile device application patents. "[Defendant] moved for entry of judgment as a matter of law . . . on the ground that it 'provides its mobile applications as well as access to its mobile website free of charge' making it impossible for [it] to violate 35 U.S.C. § 271(c). . . . Because there are currently material facts in dispute on this key question of whether or not [defendant] receives consideration from its customers in exchange for the Apps and website, the motion must be denied. . . . [Plaintiff] cites to various exhibits that purportedly demonstrate that [defendant] provides the Apps to its customers in exchange for consideration, such as fees and access to deposited funds, and requirements that customers have accounts and enter into contracts. . . . [T]he fact that [defendant] might, in some situations, give the Apps away for free does not mean that [it] cannot, in other situations, be selling the Apps within the meaning of § 271(c). These are all legal issues that require the benefit of full discovery and thorough briefing based on a universe of known facts."

Maxim Integrated Products, Inc., Patent Litigation, 2-12-mc-00244 (PAWD October 25, 2013, Order) (Conti, J.)

Pressing Tactical Advantage Instead of Workable Solution a “Mistake”

The court denied defendant's motion to strike two expert reports that were served after the deadline. "These two reports were due with the opening round of reports. . . . Plaintiff made a mistake. There is no evidence of bad faith. When the matter was brought to Plaintiff’s attention (which Defendant did not seem to be in any hurry to do . . . ) Plaintiff . . . appeared to respond appropriately to Defendant's complaint in seeking to understand what was necessary to alleviate any prejudice to Defendant. . . . Defendant appears, however, to have understood that it had gained a tactical advantage, and, instead of working with Plaintiff to come up with a workable plan, decided to press home its advantage with the instant motion. In my opinion, that approach was a mistake. I am not going to strike the experts' reports, and I do not intend to continue the trial."

Warner Chilcott Company LLC v. Zydus Pharmaceuticals (USA) Inc. et. al., 1-11-cv-01105 (DED October 24, 2013, Order) (Andrews, J.)

Survey of Customer Usage of Accused Products Excluded as Unreliable

The court granted defendant's motion to exclude the testimony of plaintiff's expert as to a survey "regarding consumer use of the accused . . . products." "[The expert's] survey was not constructed in a reliable manner. . . . There was no effort made in connection with [this] survey to shield participants from study goals. The survey did not take measures to adjust for response rates to balance the gender of respondents. . . . It is fundamentally flawed methodology to have asked prospective purchasers many of the questions posed that required present use of the [accused product]. . . . A survey that generates answers from respondents who have no basis to provide them is not one conducted according to accepted principles. Further, those questions, and others, e.g., 'If you had to pay extra for Wi-Fi access to your [accused phone product] to connect to Wi-Fi networks would you pay the extra amount?,' seek to value features that go beyond those circumscribed by the asserted claims."

NetAirus Technologies, LLC v. Apple Inc., 2-10-cv-03257 (CACD October 23, 2013, Order) (Kronstadt, J.)

Denial of Motion to Amend Infringement Contentions Precludes Later Suit Addressing Additional Products

The court granted defendant's motion to dismiss plaintiff's second infringement action as a collateral attack on the court's earlier denial of a motion to amend plaintiff's infringement contentions. "[This action] represents a collateral attack on the Court’s order in [the prior action] notwithstanding the order’s silence on the question of whether [plaintiff] would be permitted to accuse the models at issue in a subsequent action. If [this action] were allowed to proceed, the Court would have to consolidate [these actions] in the interest of judicial economy, as both actions involve the same patents and the same accused conduct. If consolidation occurred, then the Court’s order excluding the products at issue from [the prior action] would be negated, and essentially reversed. . . . [Plaintiff's] prejudice arguments are unpersuasive, because [its] current inability to enforce its property rights with respect to the models at issue is the direct result of its own lack of diligence . . . Permitting [plaintiff] to get a second bite at the apple by allowing this action to proceed would contravene the preclusion principles discussed above and would undermine the spirit and purpose of the Patent Local Rules."

Icon-IP Pty Ltd. v. Specialized Bicycle Components, Inc., 3-13-cv-03677 (CAND October 22, 2013, Order) (Tigar, J.)

Eleventh Hour Covenant Not To Sue Does Not Avoid Adverse Determinations or Fee Award

The court denied plaintiffs' motion to dismiss all patent claims and counterclaims following a jury trial, bench trial, the Federal Circuit's affirmance of a reexamination which invalidated the patent-in-suit, and plaintiffs' proposed covenants not to sue. "Plaintiffs acknowledge, as they must, that the reexamination is 'not technically "final’' until the USPTO issues the reexamination certificate. . . . [T]here has been no relevant change to the legal status of the [patent-in-suit]. Therefore, the status of the reexamination does not provide a basis to dismiss any portion of this case. . . . Plaintiffs’ covenants not to sue, issued after adverse rulings of invalidity and noninfringement, and after a bench trial determined that the [patent] is unenforceable for inequitable conduct, come far too late to avoid entry of judgment on those issues. . . . [C]ovenants not to sue do not allow parties to escape the consequences of their litigation choices, and specifically, do not provide a means of voiding adverse findings and precluding attorney fee awards. . . . Even if the reexamination were final, and even if Plaintiffs’ covenant not to sue had come prior to the Court’s determinations regarding infringement and invalidity, the Court would still have jurisdiction under 35 U.S.C. § 285 to determine inequitable conduct and make a fee award."

Kim Laube & Company, Inc., et. al. v. Wahl Clipper Corporation, et. al., 2-09-cv-00914 (CACD October 17, 2013, Order) (Kronstadt, J.)

25% Enhancement For Ongoing Royalty

Following a jury verdict of $7,500 per device, the court granted in part plaintiff's motion for an ongoing royalty of $9,375 per device. "Although [defendant] argues that it is far along in the process to design around [plaintiff's] patent, and that [defendant] will retrofit any infringing units sold after [the date of the clerk's judgment] with such noninfringing technology, [defendant] acknowledges that its design around work did not commence until after the jury returned its verdict of validity and infringement and [it] is still speculating as to when such design around will be complete as well as whether it will be acceptable to [its] customers. . . . In contrast . . . [plaintiff] offers a compelling argument that after the jury's verdict, any post-infringing sales to third parties were/are made with a substantially diminished belief that such sales are permissible non-infringing sales. . . . [H]aving considered both parties' arguments as to changed circumstances . . . the Court finds that an ongoing royalty 25% higher than that found by the jury is appropriate in this case."

Morpho Detection, Inc. v. Smiths Detection, Inc., 2-11-cv-00498 (VAED October 17, 2013, Order) (Davis, J.)