It took jurors two whole weeks to return a $283 million verdict for ViaSat Inc. earlier this year in its lawsuit alleging a betrayal by fellow satellite technology company Space Systems/Loral. The lengthy deliberation didn’t do much good, though, according to a decision issued on Friday that pokes all sorts of holes in the jury’s damages calculation.
In a 21-page ruling, U.S. District Judge Marilyn Huff in San Diego granted SSL’s lawyers at Susman Godfrey a new trial on damages, ruling that a do-over “is necessary to prevent a miscarriage of justice.” The judge didn’t vacate the jury’s underlying verdict that SSL is liable for breaching a contract with ViaSat and infringing its patents, however.
In a separate order, Huff scheduled the damages retrial for Nov. 12.
Carlsbad, Calif.-based ViaSat designs satellites for commercial and military uses, including one called ViaSat-1 that the company says is a major advancement in broadband Internet satellite technology. One of ViaSat’s main competitors is Hughes Communications Inc., an Echostar Corporation subsidiary, which makes a similar broadband satellite called Jupiter 1.
Neither ViaSat nor Hughes actually manufactured their much-touted satellite designs. Both companies outsourced manufacturing work to SSL, a wholly owned manufacturing subsidiary of MacDonald Dettwiler and Associates.
ViaSat alleged in a 2012 complaint that it trusted SSL to keep the design of ViaSat-1 confidential, only to have SSL share the proprietary information with Hughes. “Jupiter’s design is almost identical to ViaSat-1,” ViaSat’s lawyers at Quinn Emanuel Urquhart & Sullivan wrote. “As a result of having its own technology used against it, ViaSat now stands to lose market advantage, including hundreds of thousands of customers.”
Huff held a jury trial in the case in March 2014. William Carmody and Jacob Buchdahl of Susman Godfrey’s New York office defended SSL, squaring off against a Quinn Emanuel team led by Charles Verhoeven, Sean Pak and Amy Candido.
The trial was a huge success for ViaSat and its lawyers at Quinn Emanuel. Jurors awarded ViaSat $181 million in damages for patent infringement and another $102 million in breach of contract damages, despite ViaSat’s own expert testifying that awarding both types of damages would lead to an improper double recovery. The jury’s patent infringement damages award was particularly remarkable, since $181 million is roughly eight times more than SSL earned in profits from the Jupiter satellite.
ViaSat’s lawyers at Quinn Emanuel fought hard to preserve the verdict in posttrial motions. They argued that it made sense for the jury to provide both patent and contract damages, because not all the allegedly pilfered ideas were patent-protected. They also maintained that expected profits are not a hard limitation on reasonable royalty damages, and that SSL would have paid a premium to license ViaSat’s patents in order to ensure that it could deliver a top-notch satellite to Hughes.
Huff rejected both arguments in Friday’s ruling. ViaSat presented theories to explain the verdict, Huff wrote, but it never presented evidence to support those theories at trial.
Susman Godfrey’s Carmody praised the decision in an interview. “This sort of ruling is very unusual in our world,” he said.
Quinn Emanuel’s Verhoeven didn’t immediately return a call seeking comment.
Correction: An earlier version of this story repeatedly transposed the names of the parties. The story has been corrected. We regret the error.