Professor Mark Lemley, Stanford Law School (Jason Doiy / The Recorder)
PALO ALTO — In the patent world, the rich are getting richer while the poor settle for middling amounts.
Data presented Tuesday by analytics firm Lex Machina show that some $15 billion in patent damages have been awarded in U.S. courts over the last 14 years. The 10 largest awards, including three for $1 billion or more, account for nearly half that amount. But the median compensatory award was around $400,000, far less than the typical cost of litigating a patent case to verdict.
“The damage awards are often not enough to pay the litigation fees,” said Stanford law professor and Lex Machina cofounder Mark Lemley, who previewed the data Tuesday along with four other lawyers. “The profit is not going to trial. It’s in settling the case before trial.”
Wilson Sonsini Goodrich & Rosati partner James Yoon agreed, saying the data help explain why many patent holders settle in a range of $50,000-$70,000. “The plaintiff firms that are repeat players are rational actors,” he said. “The difficulty is the irrational player. The individual who thinks they’ve got the lottery ticket, they’re going to retire on a tropical island—they’re the ones who are difficult to settle with.”
The three big winners were Johnson & Johnson, which obtained a $1.67 billion verdict against Abbott Laboratories over the arthritis drug Humira; Carnegie Mellon University, which won $1.1 billion against Marvell Technology Group; and Monsanto Co., which was awarded $1 billion against DuPont Co.
None of those verdicts has withstood appeal, though. Johnson & Johnson’s win was thrown out, Monsanto and Dupont settled, and Marvell’s appeal is pending before the U.S. Court of Appeals for the Federal Circuit. Apple Inc.’s $930 million verdict against Samsung Electronics Co. was not considered in the report because the judgment included both patent and trade dress infringement.
With $2 billion in 23 cases, McKool Smith topped the list of law firms with the most compensatory damages won, according to Lex Machina’s preliminary data. Sayles Werbner; Woodcock Washburn; Beck Redden; and Akin Gump Strauss Hauer & Feld rounded out the top five. (Woodcock Washburn merged with Baker & Hostetler in January.)
The Eastern District of Texas accounted for $5 billion, or about one-third, of all the compensatory damages awarded since 2000. But that was largely because so many cases are filed there. The median award in that district was actually less than in the Eastern District of Virginia and the District of Kansas.
Enhanced damages and attorney fee awards were not a big factor in most cases. Enhanced damages topped $50 million only five times and fee awards exceeded $6 million in only eight cases. Marta Beckwith, vice president-legal at Aruba Networks, said that squares with her impression that judges reserve enhanced damages for the most extreme circumstances. “If your facts are so bad that you think there may be enhanced damages, you’d better get out of that case right now,” she said.
Lemley said it was somewhat surprising to see the median awards trending upward over the last several years, given recent efforts by the Federal Circuit to rein in patent damages. The Federal Circuit recently loosened the reins somewhat in May with Apple v. Motorola, Lemley noted.
Lex Machina’s Owen Byrd led Tuesday’s discussion, which was held at the Westin Hotel in Palo Alto.
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