There’s a lot at stake in Apple Inc.’s landmark patent infringement trial against Samsung Electronics Co. that started Tuesday. Apple is seeking a whopping $2.5 billion from Samsung for allegedly stealing features of the iPad and iPhone. (Our affiliate, The Recorder, has a summary of Tuesday’s court proceedings here.)
But even if the jury awards Apple that much money, the company would likely face an uphill battle making the award stick. As recent high-profile patent trials have shown, big awards often evaporate or shrink drastically in post-trial motions and appeals.
“Most of the big verdicts don’t stand. Something alway happens to them,” said Paul Janicke, an intellectual property professor at the University of Houston Law Center who is faculty coordinator of patstats.org, which monitors patent infringement damage awards. He noted that despite some outsized awards recently, the average jury verdict damage award has hovered around $7 million for the past five years. He added that statistics on the amount of money that ultimately changes hands after these trials is hard to track because so many of these cases settle confidentially. (You can view patstats.org’s data here. )
For example:
- In 2009 a federal jury in Tyler, Tex., handed Johnson & Johnson’s Centocor unit a record-setting $1.67 billion patent infringement verdict against Abbott Laboratories. The U.S. Court of Appeals for the Federal Circuit in February 2011 found that the Centocor patent in question was invalid, overturning the $1.67 billion verdict.
– In April 2009, Uniloc USA, Inc., won a $388 million jury verdict in its six-year patent infringement case against Microsoft Corporation. But a Rhode Island federal judge tossed the verdict five months later, concluding that the jury didn’t grasp the issues and reached a finding without a legally sufficient basis. The Federal Circuit reversed that decision, but deemed the $388 million damages award “fundamentally tainted by the use of a legally inadequate methodology,” and ordered a new trial on damages. The two sides settled for an undisclosed sum in March 2012.
– At two trials, one in 2009 and another in 2011, Alcatel-Lucent succeeded with claims that a component of Microsoft’s Outlook program infringed one of its patents, and juries in each trial awarded damages of $358 million and $70 million, respectively. The Federal Circuit threw out the first award, and a San Diego federal judge reduced the second to $26.3 million. The parties settled confidentially .
– In Tyler, Tex., a federal jury in October 2010 determined that Apple infringed three patents belonging to software company Mirror Worlds Technologies, Inc., and awarded damages of $208.5 million for each patent. On post-trial motions, the judge ruled in April 2011 that as a matter of law, Apple did not infringe and found that the verdict wasn’t supported by the trial record.
– In May 2008, a jury in Syracuse federal court found that Hewlett-Packard Company infringed a patent held by Cornell University and awarded damages of $184 million. In March 2009, the trial judge slashed that sum to $53 million after finding that the company had not made as much money from the computers as the university had claimed and the jury had incorrectly calculated the damages. They settled on confidential terms in June 2010.
But not all big patent verdicts are lost. One of the larger damage awards to survive the test of post-trial motions and appeals was the $290 million verdict entered in i4i Ltd. Partnership’s favor in its patent infringement suit against Microsoft in the Eastern District of Texas. Microsoft appealed the verdict and its accompanying permanent injunction to the Federal Circuit, which affirmed the trial court’s ruling. Microsoft then appealed to the Supreme Court, which ruled 8-0 in favor of i4i .
Janicke said that juries have a tendency to over-inflate damage awards because their calculations are based on the so-called Georgia Pacific standard, a 15-factor method for determining reasonable royalties. “It’s a hodgepodge, a total grab bag of factors, and there’s no law about how much weight each of these factors receives,” he said. He added that there were proposals to alter the standard as Congress debated reforming patent laws. One suggestion would have required juries to consider only the factors that were raised by evidence at trial, as determined by the district judge, but judges objected to the proposal. When Congress passed patent law reforms in September 2011, they included no changes to the Georgia Pacific standards. “So when juries look at the factors and then a judge does the same, they often make different conclusions,” Janicke said.
Brian Love, a Stanford Law School lecturer who heads the school’s Law, Science, and Technology LLM program, said judges often find fault with the way that damages evidence is presented at trial. “Evidence presented to a jury can be misleading and not moored in rational economic thought,” Love said. “Judges seem to be keyed into this and often reduce the awards to something they feel is more reasonable.” He added: “[The evidence] is not always based on science. It’s constructed post-hoc to make it seem like a patent is responsible for something like 3 to 5 percent of a device’s sales.”
And when damage awards hit the high digits, they receive added scrutiny. “It’s like going to the emergency room, if you have a sprained ankle, they’ll take a glance at you eventually, but if you go in with a heart attack, you’re going to get immediate attention,” Janicke said. The same goes for damage awards. “They get more attention when they’re more serious.” And with $2.5 billion on the line, a possible Apple-Samsung verdict will be about as serious as it gets.
