“In view of Brumfield and WesternGeco…events can count on plaintiffs to hunt damages calculations primarily based on overseas revenues, which, at a minimal, will result in extra frequent discovery requests and disputes….”
In patent litigation, damages points are typically handled as an afterthought when in comparison with the problems of infringement and invalidity. Nevertheless, attaining a consumer’s objectives requires an lawyer to put damages on the heart of the litigation technique from the very starting. Damages, fairly merely, could make or break a case. And it’s a shortly evolving discipline, rife with inconsistent judicial choices, obscure requirements, and new methods for measuring damages. Beneath are a few of the present sizzling matters in patent litigation—and ideas for practitioners on either side of the “v” on learn how to deal with them.
Extraterritorial Patent Damages Might Be Up for Grabs
Claims of patent infringement of U.S. patents are, in fact, restricted to infringing actions in the US, so for a very long time it was standard knowledge that damages might solely be recovered for gross sales that occurred inside the territorial United States. However a number of current appellate court docket choices make clear that there are circumstances wherein a profitable plaintiff might acquire damages primarily based on overseas misplaced earnings.
In 2018, the Supreme Courtroom determined WesternGeco LLC v. ION Geophysical Corp., 585 U.S. 407 (2018), which held that damages could possibly be awarded for infringement below Part 271(f), primarily based on supplying part elements of a patented invention that had been mixed exterior the US. Nevertheless, there remained an open query of whether or not this similar rationale could possibly be utilized to acquire damages for overseas gross sales for instances of infringement below Part 271(a) (e.g., making, utilizing, promoting, or providing to promote the patented invention). Lately, in Harris Brumfield v. IBG LLC, the U.S. Courtroom of Appeals for the Federal Circuit thought of this query and held that it did. Because of this, the legislation is now clear {that a} profitable patent holder might get better damages primarily based on completely overseas gross sales if a home act of infringement below Part 271(a) is the “proximate trigger” of the misplaced overseas earnings.
The Brumfield determination is unlikely to be the top of this line of jurisprudence, because it raises a number of questions, together with, most notably, what “causal relationships” and reality patterns will fulfill the proximate causation requirement.
In view of Brumfield and WesternGeco, practitioners must be ready for extra litigation points arising regarding extraterritorial points. Events can count on plaintiffs to hunt damages calculations primarily based on overseas revenues, which, at a minimal, will result in extra frequent discovery requests and disputes relating as to whether discovery into overseas gross sales is suitable and whether or not the causal connection has been proven. It might additionally result in larger disputes up entrance in instances the place plaintiffs selected to plead allegations concerning overseas gross sales. And there could possibly be points regarding patent exhaustion and double restoration if patentees usually are not cautious and simultaneous asserting associated overseas patents. Practitioners must be acquainted with the requirements and ready to determine and handle these points.
Watch out for Apportionment Points
Most practitioners know {that a} plaintiff has the burden to determine and outline the incremental good thing about the patented invention, and customarily can’t calculate damages primarily based on the worth of the accused product’s non-patented parts. Nevertheless, in a world the place inter partes assessment happens in parallel with district court docket litigation, and dispositive motions might invalidate sure claims earlier than trial, the claims being tried could also be very totally different from people who had been initially set forth in a damages knowledgeable report months earlier than.
What this implies is that practitioners have to be very cautious to make sure their damages knowledgeable opinions present acceptable apportionment for every patent and even amongst impartial and dependent claims. In any other case, if a patentee is left with out an opinion tailor-made to the incremental worth of a selected declare, its damages opinion could also be excluded.
For instance, in Prolitec Inc. v. ScentAir Techs., LLC, No. CV 20-984-WCB, 2023 WL 8697973, at *17 (D. Del. Dec. 13, 2023), the District of Delaware excluded a damages knowledgeable opinion the place all impartial claims had been invalidated, and the knowledgeable had not apportioned the worth of the options within the remaining dependent claims. The penalties for failure to apportion are actual and might be case dispositive. Plaintiffs and defendants ought to each pay shut consideration to this difficulty.
Defendants Have Burdens, Too
It’s sensible for defendants to be proactive, and—typically—it’s required. Whereas a lot of the burdens and first steps in litigation fall to plaintiffs, that isn’t all the time the case. If defendants neglect sure key areas the place they’ve obligations, they could discover themselves lacking out on sure defenses at trial.
As an example, whereas defendants usually discover themselves responding to knowledgeable studies, they need to take into account whether or not to submit a gap knowledgeable report on noninfringing alternate options. In some circumstances, the failure to handle non-infringing alternate options till a rebuttal report could also be grounds to exclude these arguments at trial. For instance, in Correct Transmission, LLC v. Nokia of America Corp., 2:22-cv-00343, the Jap District of Texas not too long ago excluded an knowledgeable report on non-infringing alternate options that was not disclosed till rebuttal studies. Equally, some courts take into account the defendant to have the burden of proof of demonstrating the existence of a FRAND obligation that limits their damages if they’re discovered to infringe. See In re Innovatio IP Ventures, LLC Pat. Litig., 956 F. Supp. 2nd 925, 936 (N.D. In poor health. 2013).
Thus, defendants shouldn’t merely reply to plaintiff’s case. They need to be proactive and determine areas the place they could need or must current affirmative theories and proof.
Keep On High Of Damages Professional Requirements
In 2023, the Advisory Committee on the Federal Guidelines of Proof made adjustments to FRE 702 concerning the admissibility of knowledgeable testimony. The adjustments set up a requirement that it’s “extra possible than not” that the knowledgeable’s opinion meets the necessities of the rule. The adjustments to this rule had been supposed to curb what the Advisory Committee described because the “incorrect utility” of Rule 702 by courts in holding the sufficiency of an knowledgeable’s foundation for the knowledgeable’s opinion, and the knowledgeable’s utility of the methodology, to be questions of weight, and never admissibility. The Advisory Committee emphasised the essentiality of “judicial gatekeeping” on knowledgeable opinions.
After this rule change, courts could also be extra prepared to step into the “gatekeeper” position and exclude opinions that may have beforehand been permitted to go to the jury. Because of this, practitioners must be ready for elevated challenges to their specialists’ opinions. Within the damages context, which means specialists ought to rely on confirmed damages methodologies—now just isn’t the time to exit on a limb with a novel principle or to make use of an unproven supply. Likewise, practitioners ought to use this chance to intently scrutinize their adversary’s knowledgeable opinions and shouldn’t hesitate to problem an opinion that fails to fulfill the usual.
Don’t Neglect Your Damages Case
In sum, the panorama continues to evolve for damages in patent litigation instances. Practitioners ought to keep on prime of those tendencies, whether or not a plaintiff or defendant, to make sure they’re advocating as greatest as doable for his or her shoppers.
. Please be a part of us on Might 14, 2024, on the IP Watchdog Patent Litigation Masters program, the place the creator, together with David Duski of Charles River Associates and Sanjay Murthy of McAndrews, Held, & Malloy, Ltd., shall be talking on these points.
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