Source: https://patentlyo.com/tag/damages/page/2
Timestamp: 2019-04-25 23:45:41+00:00

Document:
The challenge in Samsung v. Apple is whether to calculate the award based upon Samsung’s profits for its smartphone devices as a whole or instead whether profits could be narrowed to profits associated with individual components (such as the screen or phone body shape) even though those components are not sold directly to the consumers.
Siding with the infringer Samsung, the court held that the statute allows for damages to be applied at the component level since components are also “articles of manufacture.” The court also indicated that the product as a whole is also an article of manufacture.
Thus, it will be up to courts to figure out which to level applies in particular cases.
No Test: Here, the court refused to offer any opinion as as to (1) how a judge or jury might go about deciding whether the profits apply to the product as a whole or instead to an individual component or (2) whether – in this case – the profits should be applied to the entire Samsung Galaxy smartphones or only to the individual components. The problem, according to the Court, was inadequate briefing. “We decline to lay out a test for the first step of the §289 damages inquiry in the absence of adequate briefing by the parties.” On remand, the Federal Circuit may grapple with these issues — what is the best test?
Defining Article of Manufacture: In the decision, the court offered what it termed a “broad” meaning of “article of manufacture” as “a thing made by hand or machine.” Although broad, the definition appears to exclude digital and virtual designs. I query here whether Apple’s patented “graphical user interface for a display screen” at issue in this case fits this definition. Sale of an Article of Manufacture: One problem with the decision is how it intermingles Section 171 with Section 289. Section 171 can be thought of as the 101-of-design-patents and allows for the patenting of “any new, original and ornamental design for an article of manufacture.” Once issued, the design patent may be asserted either under the general patent statutes Section 271/284 (infringement/damages) or else under the alternative design patent alternative codified in Section 289. The statute expressly allows for either option, but forbids double-collection of damages. The distinction: Although Section 171 may well allow for patenting of a component or portion of a device (see below), it does not necessarily follow that an infringement action would lie in Section 289 for such a component – since that section requires a sale of the patented article of manufacture. Perhaps all of this will be baked into the Federal Circuit test.
Component-Based Design Patents: Of some interest, the Court accepts as a given that design patents may properly cover a component of a multi-component invention. In the process, it affirmatively cites Judge Rich’s 1980 Zahn decision that allows for design patents covering partial components even when non-discrete or incomplete. Application of Zahn, 617 F. 2d 261 (CCPA 1980) (“Section 171 authorizes patents on ornamental designs for articles of manufacture. While the design must be embodied in some articles, the statute is not limited to designs for complete articles, or ‘discrete’ articles, and certainly not to articles separately sold . . . ”). This goes beyond the also-cited old case of Ex parte Adams, 84 Off. Gaz. Pat. Office 311 (1898) (design patents allowed on movable/separable components).
Read the short decision: SamsungAppleDecision.
Dennis wrote about this case involving Jenner & Block and Parallel Networks on the main page, and I was an expert in the underlying case for the client. Boiled down, Jenner agreed to represent Parallel Networks on a contingent fee. The firm got upset when the client fell behind on expenses, and the client paid up. Then the firm lost on summary judgment, and dumped the client.
The law in Texas is pretty clear that there’s a big distinction between whether you can quit a case — withdrawal — and whether you can quit a case and be paid. The former is pretty narrowly circumscribed but the latter is severely so: without “just cause” you lose any right to any money. Makes sense, otherwise a contingent fee is illusory: I get in a case, and it’s a loser, I withdraw but still get paid. Undermines the entire notion of contingent fees.
Although Jenner gave up on its client’s case, the client didn’t. But the client had to pay another firm hourly fees to handle the appeal and get the case out of the ditch into which Jenner had put it, and left it.
Then that firm (my old firm, Baker Botts), turned the case around on appeal, resulting in settlement money.
The Texas courts have, so far, refused to even examine the merits of the award because, supposedly, the Federal Arbitration Act precludes review unless the award was fraudulent, etc.
As you can imagine, the prevailing notion in Texas that we’ve outsourced ethics to arbitrators (aka, lawyers), and as a result insulated their decisions from review by the judiciary — supposedly independent and constitutionally charged in many states with enforcing ethics — has caused some people to wonder about what is wrong in Texas courts. If anything, the Texas Supreme Court should say, clearly: “if there’s an arbitration clause it will be enforced even if the conduct is unethical because that’s what the FAA requires,” so the Supreme Court can take corrective action.
The latest amicus brief is here. Dennis’ post which links to my earlier one, is here.
I don’t mean to be flippant but, the way things stand, suppose you hire a hit man and, being the good lawyer you are, you include an arbitration clause in your written agreement. He then decides it’s not right to murder someone. So you bring an arbitration proceeding for damages. Hooray for you. That arbitrator is free to ignore public policy saying that contract is no good, and make then hitman pay, and a Texas court will enforce the award. Yes, a silly example and obviously extreme, but that’s where Texas now is. It’s obviously wrong, seriously misguided, and needs to be corrected by that court or the one above it.
An interesting False Claims Act case has recently been unsealed. USA ex rel. Lower Drug Prices for Consumers (LDPFC) v. Allergan and Forest Labs., Case No. 16-cv-09 (E.D.Tex. 2016) (SEALED USA Complaint).
The False Claims Act provides special incentives for whistleblowers to uncover fraud against the U.S. Government. The Act authorizes the whistleblower to file a qui tam lawsuit on behalf of the Government and then receive a cut of any recovered damages. See 31 U.S.C. §§ 3729–3733. The whistleblower here LDPFC appears to be a branch of the hedge fund Foxhill Capital.
Although the legal theory makes sense, the facts may get in the way: Is the patent invalid (PTAB says its close, but no) and, if it is invalid – did the patentee have knowledge of the invalidity?
Following Halo v. Pulse, the Supreme Court vacated and remanded WesternGeco’s case for further consideration. Now on remand, the Federal Circuit now vacates the district court judgment denying willfulness.
The district court, on remand, should consider whether ION’s infringement constituted an “egregious case of misconduct beyond typical infringement” meriting enhanced damages under § 284 and, if so, the appropriate extent of the enhancement.
Slip Opinion. On remand, we vacate the district court’s judgment with respect to enhanced damages for willful infringement under 35 U.S.C. § 284 and reinstate our earlier opinion and judgment in all other respects.
In 2005, Liberty provided the Army with a set of 50 prototype rounds for testing (subject to a NDA). The Army decided not to take a license or purchase those rounds from Liberty, but did begin using substantially similar rounds. In the subsequent CFC infringement case, the court sided with Liberty – finding the asserted claims infringed and enforceable. The court then awarded $15 million in damages to Liberty with an ongoing royalty of 1.4¢ per round.
Claim Construction a Loser: On appeal, the Federal Circuit reversed – finding that the lower court had erred in its interpretation of the claim term “reduced area of contact.” The debate over the unstated reference point – reduced from what? The CFC used the reference of “traditional jacketed lead bullet of calibers .17 through .50 BMG” based upon the specification statement that the invention is designed for “all calibers generally ranging from .17 through .50.” On appeal, however, the Federal Circuit found that the reference for the accused 5.56 mm should – in particular – be traditional M855 rounds – since that is “the specification’s only mention of a specific conventional projectile” and was the standard-issue round for the Army at the time. This modification to the construction is important because the traditional M855 projectiles already had a rather small area of contact and the accused projectiles have an increased contact area — thus no infringement.
Almost Indefinite: “Reduced area of contact” is a problematic claim term because it is a term of degree that calls for comparison against some unstated baseline. Reflecting that sentiment, the court here writes that “Terms of degree are problematic if their baseline is unclear to those of ordinary skill in the art.” Although not ‘inherently indefinite’, terms of degree will be found indefinite if they fail to provide some ‘objective boundaries.’ In talking through this, the Federal Circuit wrote that the lower court’s construction would have left the claim as indefinite because there would be multiple ‘traditional’ bullets that could be used as the baseline.
Claim 1 would not be definite had the trial court’s construction been correct because there would not be a sufficient objective boundary around the term of degree “reduced area of contact.” It is true that the trial court did objectively limit the claim language by including the “.17 through .50 BMG caliber” guidepost in its construction. This standard is objective in the sense that it defines a set range of calibers from which the baseline projectile may be drawn. Yet, even after limiting the field of baseline projectiles according to the trial court’s construction, a multitude of candidates for the conventional baseline projectile would remain for each caliber within that range, making the claim indefinite under Interval.
NDA Not Enforceable against the Army: Although the patent portion of the case is most relevant for Patently-O readers, the most important business element may be the court’s disregard of the non disclosure agreement signed by Lt. Col. Glenn Dean. When the inventor of the ‘325 patent approached the army, he was directed to the Chief of Small Arms for the army’s Infantry Combat Directorate (DCD), Lt. Col. Dean. Prior to discussing the ammunition, Dean signed a non disclosure agreement (NDA).
The courts, however refused to enforce the agreement – finding that Lt. Col. Dean “did not have the requisite authority to enter the NDA on the Government’s behalf.” In traditional contract law, an agent’s “apparent authority” can be sufficient to bind a principal. However, several cases have held that the U.S. Government “is immune to actions of its agents who merely possess apparent authority.” See CACI, Inc. v. Stone, 990 F.2d 1233, 1236 (Fed. Cir. 1993).

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