Plaintiffs counsel Douglas Cawley, left, predicts continued difficulty for patent claims. Danny Kraft Jr. won last year’s largest products liability verdict, worth $190 million to five plaintiffs. ()
For the first time in years, intellectual property cases contributed no billion-dollar jury verdicts in 2013. In fact, IP recoveries decreased significantly both in number and in dollar amount when compared with 2012.
Nine IP verdicts collectively totaling just below $808.5 million made The National Law Journal affiliate VerdictSearch’s Top 100 Verdicts of 2013. That represented an 81.6 percent drop in value from 2012, when 16 verdicts totaled nearly $4.4 billion. Last year ended a three-year stretch in which at least one IP verdict each year exceeded $1 billion.
“These reduced verdicts are a reflection that it has gotten harder to prove damages — and judges are insisting on a greater degree of rigor,” said Douglas Cawley, a principal at McKool Smith in Dallas, whose firm obtained a $172.7 million IP verdict that ranked No. 11 on the list.
The results were based on Verdict­Search’s survey of court records nationally, consultations with practitioners and a review of news reports by other ALM Media LLC publications. The key was what the jury awarded; the survey did not account for subsequent judicial reductions, offsets or appeals.
The highest IP verdict, at No. 6, was for $290.5 million. It came in the damages retrial between Apple Inc. and Samsung Electronics Co. over smartphone and tablet patents. The first trial ended in a $1.05 billion jury award to Apple — ranked No. 2 in highest verdicts in 2012. But U.S. District Judge Lucy Koh slashed $410 million from the award after agreeing with Samsung that the jury’s damages were improper as to half the products in the case. She turned to jurors last year to recalculate the vacated amount.
Koh issued final judgment on March 6 of almost $929.8 million; a third patent trial between the two companies is set to begin March 31. The decrease in IP verdicts could reflect judges’ interpretation of recent rulings by the U.S. Court of Appeals for the Federal Circuit that make it harder to prove damages, Cawley said.
“They have insisted on much more rigorous proof about what the invention has actually contributed economically to the infringing product,” he said. “How much have sales gone up? How much of consumer demand is actually attributable to the invention? How much has the market grown as a result of the invention?”
He predicted continued difficulty for patent claims. “That’s not to say you won’t have an occasional huge verdict — billion-dollar or otherwise. But for most patent cases, it will continue to be challenging to prove damages.”
THE BILLION-DOLLAR AWARDS
The top verdict in the country came in antitrust law: A $1.2 billion award against The Dow Chemical Co. in a case involving price-fixing of urethane. That outcome pushed antitrust awards to the No. 1 category, last year topping out at nearly $1.5 billion.
The next highest categories — nursing home abuse and defamation — involved cases in which the defendants didn’t appear at trial. Both occurred in Florida, which outranked previous leader California as producing the most verdicts on VerdictSearch’s list. Florida had 16 verdicts during 2013, although Los Angeles County Superior Court remained the most prolific single venue in the nation, contributing six of California’s 15 top listed verdicts.
The No. 2 award of $1.1 billion went to plaintiffs lawyer Bennie Lazzara Jr. of Tampa’s Wilkes & McHugh, in another verdict against a nursing home owner. At No. 3, homebuilder Lennar Corp. obtained a $1 billion verdict against real estate developer Nicolas Marsch III and his company, Briarwood Capital LLC, accused of hiring convicted felon Barry Minkow to publish false reports likening the Miami real estate firm to a Ponzi scheme.
Toxic torts ranked No. 4, due to a $816.8 million verdict obtained by the state of New Hampshire in a rare trial over drinking water contamination by the banned gasoline additive MTBE. All but one of the defendants, Exxon Mobil Corp., settled with the state for a total of more than $130 million. Given its 29 percent market share at that time, however, Exxon is expected to pay $236 million in cleanup costs. At nearly $768.8 million, products liability verdicts, although far from reaching the dollar values of past years, reversed a decline that began in 2011. The resurgence came most noticeably in cases brought by workers diagnosed with a deadly form of cancer called mesothelioma, which often is traced to asbestos exposure, which contributed more than one-third of the 17 verdicts last year.
Danny Kraft Jr., an associate at New York’s Weitz & Luxenberg who obtained the largest products liability verdict last year — a record $190 million award to five plaintiffs, two of whom were still alive — said juries are deciding more cases now that Resolute Management Inc., a subsidiary of Berkshire Hathaway Inc. and a leading insurance firm for several of the defendant companies, has become more reluctant to settle. “This particular insurer doesn’t want to negotiate, is trying to change the playing field, and is forcing us to go to trial more often,” he said.Although not a significant category, employment cases totaled $310.6 million due to two successful verdicts obtained by the U.S. Equal Employment Opportunity Commission. The largest verdict, for $240 million, was the largest in the agency’s history, although it was reduced to $3.4 million in a final judgment in June. It involved 32 workers with mental disabilities who were subjected to abuse at a turkey processing plant in Iowa. “The fact that the jury rendered the largest verdict ever obtained by the EEOC says volumes about the severity of the violation,” EEOC general counsel David Lopez said.
Contact Amanda Bronstad@alm.com.