Manatt Technology and Intellectual Property Litigation Partner Bruce Zisser wrote an article for IP Litigator discussing the importance of applying proper apportionment to damage calculations in a patent infringement case, as seen in EcoFactor Inc. v. Google LLC.
According to the article, EcoFactor was awarded millions in damages after suing Google for infringing on their smart thermostat patents. The court had accepted the testimony of EcoFactor’s damage expert on the royalty rate based on three prior licenses the company had. Among the dissent’s arguments in a later appeal, they asserted that two of those licenses were not based on sales nor constituted a royalty and that the expert did not accurately account for different economic and technical circumstances of the licenses, consequently failing to “properly apportion the value of the one infringed patent from the additional patents covered by the prior licenses”. Subsequently, Google filed a motion for rehearing en banc which was granted by the Federal Circuit.
As observed by some, the courts’ gradual neglect of the principle of apportionment has led to patent damages awards increasing. “The Federal Circuit now seems poised to crack down on this backsliding, potentially articulating new rules that could place tighter control on damages experts and thus make it harder for patent owners to support large damages claims, likely leading to fewer large damages awards,” he concluded.
Read the full article here.