BEIJING
BRUSSELS
CHICAGO
DALLAS
FRANKFURT GENEVA
HONG KONG
LONDON
LOS ANGELES
NEW YORK
SAN FRANCISCO
SHANGHAI
SINGAPORE
TOKYO
WASHINGTON, D.C.
ENTIRE MARKET VALUE,
APPORTIONMENT QUANTA AND USE
APPORTIONMENT,
DAMAGES
Edward G. Poplawski
p
Sidley Austin LLP
Global Co-Chair, Intellectual Property
And Technology Practice
Copyright
py g © 2009
ENTIRE MARKET VALUE,
APPORTIONMENT QUANTA AND USE
APPORTIONMENT,
DAMAGES
Copyright © 2009
All Rights Reserved
Mr. Poplawski is a partner in the Los Angeles office of
Sidley Austin LLP and Global Co-Chair of the Firm’s
Intellectual Property and Technology Practice. This
presentation sets forth only the author’s then present
views, which should not be attributed to the Firm or
to any of its clients.
INTRODUCTION
• BASIC DAMAGES PRECEPTS
• ENTIRE MARKET VALUE RULE AND APPORTIONMENT
– Development In Royalty Context
– Interplay Between Apportionment and EMVR
– Proof Or Disproof And Presentation Of Evidence
• Integration Of Liability And Damages
• Some Juror Considerations
• IMPACT OF QUANTA –LICENSES AND USE DAMAGES
BASIC DAMAGES PRECEPTS
(Statutory Framework – 35 U.S.C.
U S C § 284)
• “Upon finding for the claimant the court shall award the
claimant damages adequate to compensate for the
infringement,
g
, but in no event less than a reasonable
royalty for the use made of the invention by the
infringer, together with interest and costs as fixed by
tthe
e court
cou t
• The court may
y receive expert
p
testimony
y as an aid to
the determination of damages or of what royalty would
be reasonable under the circumstances.”
BASIC DAMAGES PRECEPTS
(Statutory Framework – 35 U.S.C.
U S C § 284)
• “Adequate Compensation” = Full Compensation
– Rite-Hite v. Kelley Co. Inc., 56 F. 3d 1538, 1544-45 (Fed.
Cir. 1995) (“[T]he Supreme Court has interpreted this to
mean that ‘adequate’ damages should approximate those
d
damages
that
h will
ill fully
f ll compensate the
h patentee for
f
infringement.”)(en banc) (emphasis in original), citing
General Motors Corp. v. Devex Corp., 461 U.S. 648, 654-655
(1983).
(1983)
– Purpose is to make patentee whole Paul Corp. v. Micron
Separations, Inc., 66 F. 3d 1211,1223 (Fed. Cir. 1995)
• necessarily an approximation
• attempt to assess patentee pecuniary condition after
infringement with what it would have been if no infringement
BASIC DAMAGES PRECEPTS
(Statutory Framework – 35 U.S.C.
U S C § 284)
• Methodology For Determining Damages
• → Considerable Flexibility in Choice of Method as Long as Fair
and Reasonable Kori Corp. v. Wilco Marsh Buggies & Draglines, 761 F.
2d 649, 653-654 (Fed. cir. 1985).
• Paper Converting Mach. Co. v. Magna Graphics Corp., 745 F. 2d
11 21 (1984)(“Section 284 does not instruct a court as to how to
11,21
compute damages.”).
•
•
→ Very Factual Inquiry Herbert v. Lisle Corp., 99 F. 3d 1109,1119
(Fed. Cir. 1996)(The correct measure of patent damages is case and fact
specific )
specific.).
→ Proof of Infringement Establishes Damage Lindemann
Maschinenfabrik GmbH v. Am. Hoist & Derrick Co., 895 F.2d 1403
(Fed. Cir. 1990)(“In patent law, the fact of infringement
establishes
t bli h th
the ffactt off d
damage because
b
the
th patentee's
t t ' right
i ht tto
exclude has been violated,” although patentee must still produce
evidence from which fact finder could determine reasonable
royalty.)
BASIC DAMAGES PRECEPTS
(Statutory Framework – 35 U.S.C.
U S C § 284)
• Burden of Proof → Ultimately on Patentee
– Reasonable Probability Kori at 653-654 (The patentee need
only prove its damages with reasonable probability.).
– Consequences of Imprecision or Uncertainty Caused By
Infringer
• infringer bears the adverse consequences of any
imprecision or uncertainty in damages proof that is due to
its inaccurate record keeping practices or unavailability of
complete information from the infringer. TWM Mfg. Co.,
Inc. v. Dura Corp., 789 F. 2d 895, 900 (Fed. Cir. 1986).
BASIC DAMAGES PRECEPTS
(Statutory Framework – 35 U.S.C.
U S C § 284)
• Types of damages
– lost
l t profits
fit and
d royalty
lt Minco, Inc. v. Combustion
Engineering, Inc., 95 F. 3d 1109,1119 (Fed. Cir. 1996)(“The
Patent Act permits damages awards to encompass both lost
profits and a reasonable royalty on that portion of an
infringer’s sales not included in the lost profits calculation.”).
– other types Minco (damages for patentee’s overpayment
for infringer’s business are potentially recoverable)
– categories of royalty damages
• established
• reasonable – lump sum vs. running royalty
– reasonable royalty is “floor below which damages
may not fall.” Del-Mar Avionics v. Quinton Instrument Co.,
(
Cir. 1987).
)
836 f. 2d 1320,, 1329 (Fed.
BASIC DAMAGES PRECEPTS
(Statutory Framework – 35 U.S.C.
U S C § 284)
• Types of damages – cont’d
• reasonable royalty is “floor below which damages
may not fall.” Del-Mar Avionics v. Quinton Instrument
Co., 836 f. 2d 1320, 1329 (Fed. Cir. 1987).
– fact finder may award an amount of damages greater
than a reasonable royalty so that the award is
"adequate
adequate to compensate for the infringement. Hebert
v. Lisle Corp., 99 F. 3d 1109, 1119 (Fed. Cir. 1996);
Maxwell v. Baker, 86 F. 3d 1098, 1109 (Fed. Cir. 1996)
• royalties are paid for the actual use made of the
invention Fromson v. Western Litho Plate & Supply
Co., 853 F. 2d 1568, 1578 (Fed. Cir. 1988)
–
BASIC DAMAGES PRECEPTS
(Statutory Framework – 35 U.S.C.
U S C § 284)
• Reasonably Royalty Damages Framework – two
principal approaches Lucent
L
t v. Gateway,
G t
Inc.
I
ett all (2009)
– Analytical Method – infringer’s profit projections
• TWM Mfg.
g Co. v. Dura Corp,
p, 789 F. 2d. 895,, 899 (Fed.
(
Cir.
1986); Fromson, 853 F. 2d at 1578 (Fed. Cir. 1988)
– Hypothetical Negotiation: (Willing Licensor - Licensee)
• Georgia – Pacific Factors Used Lucent.
Lucent See also,
also Parental
Guide of Texas, Inc. v. Thomson, Inc. 446 F. 3d 1265 (Fed. Cir.
2006)(reasonable royalty is calculated with reference to the long
list of factors outlined in” the Georgia-Pacific decision)
• “necessarily involves an element of approximation and
uncertainty.” Unisplay, S.A. v. Am. Elec. Sign Co., 69 F. 3d
512, 517 (Fed. Cir. 1995)
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
• Patented Invention
– may be
b a part off an entire
i accused
d product
d
or process
– may be a product that is sold along with a convoyed or
collateral non-patented product(s)
– How is “adequate compensation” for the value of use of
the invention then determined?
• Two fundamental interrelated precepts may apply to assess
extent to which
h h “value”
“ l ” off invention both
b h extends
d to
patented and non-patented features
– (1) entire market value rule (EMVR)
– (2) apportionment
– these precepts apply to both lost profits and reasonable royalty
• current controversy → application of EMVR to royalty damages
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• assessment of reasonable royalty
– amount = royalty rate x royalty base
• lump sum vs. running royalty
– royalty rate and royalty base are interrelated
• one or both can be adjusted to yield appropriate value of use of the invention
– EMVR → royalty base
• recognizes that value the patented invention adds to an infringing product or
process may extend beyond the patented feature alone
– EMVR “recognizes that the economic value of a patent may be greater than the
sales of the patented part alone.” King Instruments Corp. v. Perego, 65 F. 3d 941,
951 n
n.4
4 (Fed
(Fed. Cir
Cir. 1995).
1995)
– apportionment → royalty rate and/or royalty base
• May contract royalty base and/or adjust royalty rate
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• assessment of reasonable royalty
– apportionment → Georgia Pacific framework → factors 8 – 13
• Factor 9: “the utility and advantages of the patent property over the
old modes or devices, if any that have been used for working out
similar results.”
• Factor 10: “the nature of the patented invention; the character of the
commercial embodiment of it as owned and produced by the
li
licensor;
and
d th
the b
benefits
fit tto th
those who
h h
have used
d th
the iinvention.”
ti ”
• Factor 11: “the extent to which the infringer has made use of the
invention and any evidence probative of the value of that use.”
• Factor 13: “the portion of the realizable profit that should be credited
to the invention as distinguished from the non-patented elements,
the manufacturing process, business risks, or significant features or
improvements added by the infringer
infringer.”
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• assessment of reasonable royalty → EMVR
– Lucent Technologies, Inc. v. Gateway, Inc. et al (2009)
• “In one sense, our law on the entire market value rule is
quite clear. For the entire market value rule to apply, the
patentee must prove that ‘the patent-related feature is the
basis for customer demand.’” quoting Rite-Hite Corp. v.
Kelley Co., Inc. 56 F. 3d 1538, 1549 (Fed. Cir. 1995)
– Other
Oth EMVR Cases
C
L
Lucent
t cites
it ffor this
thi precept:
t
• Bose Corp. v. JBL, Inc., 274 F. 3d 1354, 1361 (Fed. Cir.
2001)(reasonable royalty)
• State Industries,
Industries Inc
Inc. v.
v Mor-Flo Industries,
Industries Inc.,
Inc 883 F.
F 2d
1573, 1580 (Fed. Cir. 1989)(combination of (1) lost profits
under market share approach and (2) reasonable royalty)
• TWM Mfg. Co. v. Dura Corp, 789 F. 2d. 895, 899 (Fed. Cir.
1986)(royalty and lost profits in collateral goods context)
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• EMVR Test: Customer Demand
– Bose, 274 F. 3d at 1361 (Fed. Cir. 2001)
• Patent: loudspeaker enclosure having at least one port
• Infringing product – loudspeakers that included the
patented invention
• Single functional unit: The invention “worked with other
components
p
of loudspeakers
p
as a single
g functioning
g unit to
provide the desired audible performance.”
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• EMVR Test: Customer Demand
– Bose, 274 F. 3d at 1361 (Fed. Cir. 2001) cont’d
• Customer demand: test met
– Invention improved performance of infringing loudspeakers
• Improved bass tones and eliminated port noise
– Invention “contributed substantially to the increased demand
for products in which it was incorporated.”
• Defendant’s marketing executive acknowledged that
“improved bass performance was a prerequisite for
[defendant’s] decision to go forward with manufacturing and
selling certain loudspeakers.
loudspeakers ”
– Efforts made to market the benefits of the defendant’s
loudspeakers using the invention
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• EMVR Test: Customer Demand
– F
Fonar Corp.
C
v. General
G
l El
Electric
i C
Co., 107 F.3d
F 3d 1543
1543,
1552-53 (Fed. Cir. 1997)
• Patent: an imaging technique (“MAO”) used in an MRI
machine to get multiple image slices in one body scan
• Infringing product: GE’s MRI machine with MAO feature
• Single functional unit: not addressed
• Customer demand: test met
– GE claimed that royalty should be based only on “the value of
the improvement covered by the claimed invention” and that
there was no evidence that MAO was basis for demand for
entire MRI machine
– But GE’s “technical literature” and brochures emphasized MAO
feature and and/or its benefits in “patient efficiency and
throughput”
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• State Industries
– some context here is “demand” element of lost profits,
but still instructive
• patent
p
claim: method of insulating
g a water heater tank with
polyurethane foam
• Product: infringing water heaters made using the method
– Product used to assess both lost p
profits and royalty
y y
• market need for adequate foam insulated water heaters
• no acceptable non-infringing substitute on the market
– absence
b
off economically
i ll and
d ttechnically
h i ll viable
i bl substitute
b tit t
– Infringer asserted, but failed to show, that non-patented
components were key to demand
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• State Industries – demand evidence
– Extent to which there is a need to solve the problem or
for the invention
bse ce of
o economically
eco o ca y and
a d technically
ec
ca y viable
ab e
– Absence
substitutes on the market
• “Mor-Flo now argues that foam insulation was not the basis
for customer demand and several unidentified nonpatented
p
components were key. But, it did not identify or present
evidence of the value of these nonpatented components. Id
at 1580
– interplay with apportionment and infringer’s burden to
come forward with evidence
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• EMVR Test: Customer Demand – Tracing Origin
– Rite Hite cites State Industries and TWM
• “We have held that the entire market value rule permits
recovery of damages based on the value of a patentee’s
entire apparatus containing several features when the
patent-related feature is the ‘basis for customer demand.’”
(citing, State Industries at 1580 and TWM at 900-901)
• State
St t Industries
I d t i cites
it TWM
– “[T]he entire market value rule, which permits recovery of
damages based on the value of the entire apparatus containing
several features, where the patented feature is the basis for
customer demand.” (TWM at 901)
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• EMVR Test: Customer Demand – Tracing Origin
– Rite Hite cites State Industries and TWM
• TWM sets forth a “customer demand” underpinning for the
EMVR in connection with looking to financial and marketing
evidence.
– “[T]he entire market value rule permits recovery of damages
based on the value of a patentee’s entire apparatus containing
several features when the patent-related feature is the ‘basis
basis
for customer demand.’” (Id. at 901)
– “[I]t is the ‘financial and marketing dependence on the
patented item under standard marketing procedures’ which
d
determines
whether
h h the
h non-patented
d ffeatures off a machine
h
should be included in calculating compensation for
infringement.” (Id. at 901)(citations omitted)
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• EMVR Test: Is functional relationship also required?
– Lucent does not mention it
– Rite-Hite was convoyed goods case
• Patented good (truck restraint) sold with non-patented
good (dock lever)
• Court also applied functional relationship test along with
customer demand test.
test
• Court noted that EMVR was “typically applied” to include
both patented and non-patented components in the
“compensation
p
base when the components
p
were “physically
p y
y
part of the same machine.” (Id. At 1549-1550)
– However, for convoyed good, the components also needed to
be “components of a single assembly or parts of a complete
machine,
hi
or they
th
together
t
th constituted
tit t d a functional
f
ti
l unit.”
it ” (Id.)
(Id )
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• Is EMVR necessarily required in order to assess
royalty damages in which the royalty base includes
patented and non-patented features?
– Lucent: “Simply put, the base used in a running royalty
calculation can always be the value of the entire
commercial embodiment, as long as the magnitude of
the rate is within an acceptable range (as determined
b th
by
the evidence).
id
)
• Citing Kerns v. Chrysler Corp. 32 F. 2d. 1541,1544 (Fed.
Cir. 1994)(awarding a reasonable royalty of 90 cents per
vehicle
hi l th
thatt had
h d the
th infringing
i f i i
intermittent
i t
itt t windshield
i d hi ld
wipers, when the average car price was approximately
$4000 to $6000).
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(royalty context)
• EMVR Test: Is functional relationship also required?
– Cornell University et al v. Hewlett Packard Co., 609 F.
Supp 2d 279 (N.D.N.Y. 2009)
sju c e test?
es (is
( s either
e e customer
cus o e demand
de a d or
o functional
u c o a
Disjunctive
relationship enough)
• Cf., Juicy Whip, Inc. v. Orange Bang, Inc., 382 f. 3d
1367,1372-1373
,
((Fed. Cir. 2004)(in
)( vacating
g jjury
y award of
royalties and lost profits, only applying functional
relationship test to patented dispenser and non-patented
syrup)
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(Proof and Disproof)
• Issues:
– To what extent must the customer demand be
attributable to the patented feature(s)?
• substantial basis for demand vs. sole basis for demand
• Demand for benefit vs. demand for patented feature
• connection or link between invention and product demand
- Wh
Whatt evidence
id
determines
d t
i
customer
t
demand
d
d and
d
apportionment?
- How to approach apportionment
- Role of patent claim in context of actual infringing use
- Interplay between royalty rate and royalty rate
- Interplay
I
l
between
b
liability
li bili and
dd
damages evidence
id
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(Proof and Disproof)
• quantum of demand – substantial basis vs. sole basis
– Bose → substantial contribution to demand was enough
– Trans-World Mfg. Co. v. Dura Corp., 750 F. 2d 1552, 1558 (Fed. Cir.
1984)(trial court directed on remand to examine whether the patented
di l case “played
display
“ l
d an iimportant
t t part”
t” in
i th
the sales
l off non-patented
t t d
eyewear in assessing whether the royalty should include the eyewear.).
– Lucent → lack of evidence that invention was “the basis – or even a
substantial basis – of the consumer demand for Outlook
Outlook.”
•
customer demand – patented feature vs. its benefit or result
– need not necessarily show customers demand the patented feature
itself; rather demand for its benefit may be enough
– Bose → evidence showed demand for benefits
– State Indus.→ evidence showed demand for result invention provided
p
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(Proof and Disproof)
• demand → adequate connection or link between invention
(or its benefit/result) and demand for product
• customer demand → potential evidence (or absence thereof)?
– financial and marketing dependence
– technical
h i l and
d marketing
k i liliterature that
h emphasizes
h i
the
h iimportance off
the patented feature and/or the benefits or results flowing from it
– internal financial, technical and marketing documents of the infringer
that indicate that the patented feature and/or its benefits are a
competitive requirement and/or necessary to satisfy a consumer need
• Key: royalty assessment is made as of time infringement began,
although “Book of Wisdom” evidence may apply
– customers chose products of the infringer that contained the patented
feature rather than products lacking the patented feature or replaced
their prior products with the infringing product
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(Proof and Disproof)
• customer demand → potential evidence (or absence thereof)?
– customers pay more for products that have the patented
feature because of its benefits
– lack of acceptable non-infringing substitutes
– extent to which infringer
infringer’s
s patents or other proprietary
technology drives the demand
– tie demand to aspects of liability case
• liability case is fundamental to showing value of invention
• use “secondary considerations” as an additional checklist
– look to certain Georgia Pacific factors go to royalty base
and/rate
/
– use of experts (technical, marketing, licensing, economic) and
employees of patentee and/or infringer (marketing, technical,
financial)
ENTIRE MARKET VALUE RULE AND
APPORTIONMENT
(Proof and Disproof)
• customer demand → potential evidence (or absence thereof)?
– demand curves/customer surveys?
– use of experts (technical, marketing, licensing, economic) and
employees of patentee and/or infringer (marketing, technical,
financial))
– industry practice as to base/rate in license agreements
– existence of well established market value for the patented
feature in p
products sold on open
p
market
• apportionment
– overlap with demand evidence
– apportionment in base and/or royalty rate
– whose burden?
– infringer’s use of patents and proprietary technology
Lucent v. Gateway et. al.
• Lucent v. Gateway1
Accused Product
30
(Sept. 11, 2009)
Accused Feature
Lucent v. Gateway et. al.
• Patent: method of entering information into fields on
a form displayed on a computer screen without using
a keyboard
• Infringing product: Microsoft Outlook which has “date
picker” feature
• Royalty damages: $357.7 million
– royalty
oya ty base – Out
Outlook
oo
– royalty rate – 8 percent
– reversed and remanded for new trial since lack of
substantial evidence to support either lump sum royalty
award or royalty based on EMVR
• verdict also against great weight of evidence
Lucent v. Gateway et. al.
– reversed and remanded for new trial since lack of
substantial evidence to support either lump sum royalty
award or royalty based on EMVR –cont’d
• lack of substantial evidence as to Georgia Pacific factors 2,
10-11 and 13
– GP factor: “the rates paid by the licensee for the use of other
patents comparable to the patent-in-suit
– interplay between GP factors and EMVR
• EMVR - lack
l k off substantial
b
i l evidence
id
– “first flaw:” “lack of evidence demonstrating that the patented
method of the day patent as the basis-or even substantial
basis-of the consumer demand for Outlook
– “second flaw:” “the approach adopted by Lucent’s licensing
expert” which looked to other licenses to determine royalty
base and rate did not ultimately support his opinion
Lucent v. Gateway et. al.
• EMVR may properly have important role
– “Th
“The evidence
id
off record
d in
i the
h present dispute
di
illustrates
ill
the importance the entire market value may have in
reasonable royalty cases”
• “The license agreements admitted into evidence (without
objection from Microsoft, we note) highlight how
sophisticated parties routinely enter into license
agreements that base the value of the patented inventions
as a percentage of the commercial products’ sales price.”
price ”
• “There is nothing inherently wrong with using the market
value of the entire product, especially when there is no
established market value for the infringing
g g component
p
or
feature, so long as the multiplier accounts for the
proportion of the base represented by the infringing
component or feature.”
Cornell University
y et al v. Hewlett Packard
Server
34
CPU Brick
CPU
Instruction Reorder
Buffer
Cornell University et al v. Hewlett Packard
• Cornell Preclusion Order Against HP Issued During
Fact Discovery Stage
• “(1) Defendant shall be precluded from maintaining, either
on motion or at trial, that any evidence introduced by
plaintiffs concerning customer demand/customer
preference is deficient or defective because of lack of
testimony or other information from customers.
• (2) It is established that,
that at least as early as of 1996,
1996 HP
HP’s
s
customers for servers and workstations received HP’s press
releases of …. Those press releases were intended to
convey to HP’s customers that the ‘Intelligent Execution’
feature in them was at least one of the reasons why they
should buy HP servers and work stations containing PA8000 family processors.”
Extension Of The Patent Exhaustion Doctrine
IMPACT OF QUANTA –LICENSES AND USE
DAMAGES
36
Patent Exhaustion Doctrine
• The first authorized sale of a patented item exhausts
all future patent rights to that item
• E.g.,
g,
– patentee sells patented products to customers with no
restriction
• customer can resell,
resell modify,
modify or use product without being
found to infringed
– manufacture receives license to make and sell patented
products with no restriction
• manufacture’s authorized sale to customer exhausts patent
rights
37
Quanta Computer v. LG Electronics* –
Extension of the Patent Exhaustion Doctrine
• Patent exhaustion applies to method claims
• License to upstream supplier without restriction
– exhaust patent rights against unlicensed downstream
buyers
38
* 128 S. Ct. 2109 (2008)
Quanta Computer v. LG Electronics
Factual Background
• LGE licensed method patents to Intel
• License does not extend to combination of Intel
products with non-Intel products
• Intel requires to give notice to its customer (e.g.
(e g
Quanta) of license restriction
• Quanta buys Intel products and combined with nonIntel products
• Held:
H ld LGE patent
t t rights
i ht against
i tQ
Quanta
t exhausted
h
t d
39
IMPACT OF QUANTA –LICENSES AND
USE DAMAGES
• It may now be difficult to obtain licenses from all
entities in a supply chain.
chain
• It may be possible to contractually limit the right of
products incorporating
p
g the p
patented
licensees to sell p
technologies unless the buyer also has a license.
• Covenants not to sue now trigger the patent
exhaustion doctrine.
doctrine 1
40
1.
TransCore LP v. Elec. Transaction Consultants Corp., No. 2008-1430, slip op. at *13 (Fed. Cir.
Apr. 8, 2009).
IMPACT OF QUANTA –LICENSES AND
USE DAMAGES
• May Affect Patentee’s Choice Of Whom To Sue
– Hypothetical Product: manufacturer – seller chain
• component mfgr → component assembly integrator → end
product mfgr → end product retailer
• which company yields best damages potential?
• patent exhaustion vs. full recovery rule (does suit against one
company
p y in the chain exhaust ability
y to sue others?))
• vertically integrated companies may be most attractive targets
– i.e., company is its own integrator, end product manufacture rand has its
own distribution network for p
product ((including
g over Internet).
)
CONCLUSION
• More developments will come
– jurisprudence
– legislation