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Top Verdicts of 2005 A 2003 U.S. Supreme Court ruling that capped punitive damages has put a big dent in California’s biggest jury verdicts. The top 10 jury verdicts in California last year totaled $1.01 billion — only half of 2003′s $2.03 billion. Indeed, punitive damages were a non-factor, or at most a minor one, in 2004′s biggest verdicts. Whereas the 2003 list was dominated by torts — insurance bad faith, medical malpractice, product liability, fraud — the latest list features three patent cases, a straightforward (though expensive) contract dispute and an eminent domain case, of all things. The trend toward IP cases doesn’t surprise patent litigator Morgan Chu, who helped bring in the fourth-largest verdict of the year. “The value of patents has been recognized in recent years, and their value has increased,” said the Irell & Manella partner, whose trial team won an $82 million verdict for client Immersion Corp. There were still a handful of tort cases on the list, but the dollar value was smaller than in recent years. In State Farm Mutual Auto Insurance Co. v. Campbell, 123 S.Ct. 1513 (2003), the Supreme Court essentially limited punitive damages to 10 times compensatory damages. The California Supreme Court is reviewing how that rule should apply in California, but the state appeal courts have enforced it in most cases. For example, the top verdict in 2003 was Beckman Coulter v. Dovatron International, in which actual damages were $3 million and punitives were $930 million (the case later settled for $23 million). In 2002, the top verdict included a $28 billion punitive award against a tobacco company. By contrast, last year’s top verdict was for “only” $369 million. In Buell-Wilson v. Ford Motor Co.,the plaintiff contended that the faulty design of the Ford Explorer contributed to a rollover that rendered her paraplegic. A San Diego jury awarded $123 million in compensatory damages and $246 million in punitives. The Buell-Wilsonverdict ended a string of more than 10 consecutive defense wins in Explorer rollover cases. Even worse for Ford, defense attorney Anthony Sonnett’s closing argument appeared to concede that Ford “knowingly put a defective product out on the market.” His comments were said to be encouraging plaintiff lawyers to file more vehicle rollover suits against the auto maker. Sonnett has said he was only acknowledging the jury’s earlier finding that the Ford Explorer had safety issues and that Ford had failed to fix them. Two other product liability cases were among the top 10 verdicts. In Griggs v. West-Pac Industries, a tractor operator who was burned over 75 percent of his body by hydraulic fluid won a $58 million verdict from the distributor and importer of the defective O-ring that caused the spill. No punitive damages were awarded. And in Sun v. Parker-Hannifin, nine relatives of passengers killed in a SilkAir plane crash in Indonesia recovered $43 million in economic and noneconomic damages from the manufacturer of a faulty rudder control system. More litigation over the crash is on tap: Families of some 30 other crash victims are scheduled to go to trial in June before the same judge, according to plaintiff attorney Walter Lack of Los Angeles. Meanwhile, San Francisco plaintiff attorneys James Sturdevant and Thomas Brandi won a $75 million judgment against Bank of America — but the case is already worth a lot more and may eventually top $1 billion, the attorneys say. In Miller v. Bank of America, the bank was found to have violated California’s Consumer Legal Remedies Act by seizing customers’ Social Security benefits to pay overdrafts or other debts in their checking and savings accounts. In October, Superior Court Judge Anne Bouliane expanded the jury’s damages to include $284 million in overdraft fees charged over a 10-year period, plus additional damages. For good measure, she awarded attorneys fees as well. But the most obvious trend was the three big patent verdicts. Knobbe, Martens, Olson & Bear partner Joseph Re notched two of them on behalf of Southern California biotech companies ( see sidebar page TK) . In Masimo Corp. v. Nellcor Puritan Bennett Inc.,a Hayward company was ordered to pay $134 million over an infringing technology in its pulse oximeter product, which measures the oxygen level in blood. In Applied Medical Resources v. U.S. Surgical Corp.,the latter company was found to have infringed Applied Medical’s patents for trocar seal technology. A trocar is a tube inserted into patients during laparoscopic surgery. “I only heard about the Applied Medical case through Masimo,” Re said, although he noted that Knobbe already counted Applied Medical as a client. Re pooh-poohed the idea that trying multimillion-dollar cases back to back must have been a challenge. “The final verdict in the Masimo case came in the last week of March. The Applied Medical case didn’t start till July, so it wasn’t that hard,” he said. Chu identified three reasons for the increasing presence of patent cases on the top verdicts list: the increasing value of patents, the difficulty in valuing them, and the unsettled law surrounding claims construction. Each patent is unique, and unlike a commodity like oil, there’s no open market to value them. That results in sincere differences of opinions regarding their value, Chu said, and increases the likelihood of cases proceeding through trial. And the Federal Circuit U.S. Court of Appeals frequently reverses decisions on claims construction, Chu said. That further increases the incentive “to see it through to the end.” Chu’s case was a battle of superstar patent trial lawyers. Chu was pitted against Weil, Gotshal & Manges’ Matthew Powers in Immersion Corp. v. Sony Computer Entertainment America Inc.A federal jury in Oakland found that Sony, in its Play Station video game system, had infringed on Immersion’s technology for vibrotactile sensations. The jury awarded $82 million and the trial judge, according to Chu, further ordered a compulsory license for sales after the damage period of $7 million. Asked what made the difference in the case, Chu said it was credibility. “Both our fact and expert witnesses called them as they saw them,” Chu said. “We didn’t want any of our experts to stretch or bend their opinions. We wanted to be sure they were comfortable with their analysis.”

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