Source: http://www.jdsupra.com/legalnews/strategies-and-trends-in-intellectual-pr-16892/
Timestamp: 2017-05-28 13:40:34
Document Index: 16839330

Matched Legal Cases: ['§ 504', '§ 1117', '§ 1117', '§ 553', '§ 605', '§ 305', '§ 1692', '§ 1681', '§ 227', '§ 1640', '§ 284', 'arty 2']

Strategies and Trends in Intellectual Property Law Damages | David Brezina - JDSupra
Intellectual Property Damages in some ways mirror commercial law damages principles but there are unique aspects that affect strategy and tactics. Statutory Damages are available only in certain types of cases. These depend on compliance with formalities, and very specific causes of action. When comparing patent law damages to commercial cases, on unique aspect is that in commercial cases, often much effort is expended in determining parties' intent and the benefit of the bargain. Reasonable royalty methodology deals with hypothetical bargains, yet cases permit, indeed, require evidence and analysis of real world business and economic considerations. Those causes of action that expressly permit recovery of Defendant's profits provide a powerful remedy, especially where there is burden shifting on cost deductions. Because patents typically involve individual product sales or, often, only incremental improvements in technology, compensatory damages require careful considereration of the context of the sale of real products relative to the improvements. The Entire Market Value rule and the 25% rule are, under current case law suspect.
Download PDF Copyright 2012, David C. Brezina 1 CBA Commercial Litigation Committee CLE Seminar – October 30, 2012 Strategies and Trends in Intellectual Property Law Damages David C. Brezina Ladas & Parry LLPCopyright 2012, David C. Brezina 2 Intellectual Property DamagesCopyright 2012, David C. Brezina 3 Intellectual Property Damages  Statutory Damages  Benefits of Hypothetical Bargains  Defendant's Profits  Actual/Compensatory DamagesCopyright 2012, David C. Brezina 4 Statutory Damages  IP term of art: damages awardable at discretion of the court, without proof of an amount of actual damages.  Originally a 1909 Copyright Remedy  Where “actual damages” too hard to prove, too expensive to prove, provide a flexible remedyCopyright 2012, David C. Brezina 5 How Much Money?  $750 -$30,000 per infringement, up to $150,000 willful; $250 if innocent infringement (17 USC § 504)  Traps:  Timely Registration (Before infringement or within 3 Months of Publication)  Don't Count on Windfall  Often Treble a License Fee  1909 Act Notice, Now No NoticeStatutory Damages for Other Intellectual Property or Complementary Rights  Design Patent, Only, Not Less Than $250 (35 U.S.C. 289)  Trademark law only provides Statutory Damages against  (a) counterfeit marks ($1,000 to $200,000 per counterfeit mark 15 U.S.C. § 1117 (c)) and  (b) cybersquatters ($1,000 to $100,000, 15 U.S.C. § 1117 (d)).  Cable Television Statutory Damages  (a) Unauthorized reception of cable service ($250 to $10,000, 47 USC § 553)  (b) Unauthorized publication or use of communications ($1,000 to $10,000, 47 USC § 605)  Indian Arts and Crafts Act Statutory Damages  Misrepresenting non-Native American art as Native American art  $1,000 per day of sale or display, 25 USC § 305eCopyright 2012, David C. Brezina 7 Statutory Damages for Consumer Protection, Privacy Violations Federal  Fair Debt Collection Practices: $1,000 per violation, 15 U.S.C. §§ 1692  Fair Credit Reporting Act, 15 U.S.C. § 1681n(a): $100 to $1,000  Unauthorized Faxes (and robocalling) --Telephone Consumer Protection Act 47 U.S.C. § 227: $500 per violation  Truth In Lending 15 U.S.C. § 1640: $100 to $4000, depending on particular transactions may be state equivalents  Privacy/wiretap violations Electronic Communications Privacy Act, 18 USC 2520: $100 per day, to $10000 State (1) Withheld Sales Commission: Illinois Sales Representative Act Treble damages and attorneys fees 820 ILCS 120 (2) Vexatious and unreasonable delay paying insurance claims $25,000 (Illinois Insurance Code 215 ILCS 5/155(1)) (3) Assignment of wages --improper notice Illinois Wage Assignment Act 740 ILCS 170: $500 (4) Motor Vehicle Lemon Laws a) Illinois 815 ILCS 505/2L: Percentage of Repairs; Replacement Vehicle; Refund b) Indiana IC 24-5-13.5-13: Treble Damages, Attorneys Fees (5) Consumer Fraud Act: "actual economic damages or any other relief which the court deems proper" 815 ILCS 505/10a (6) Tenant/landlord, including security deposits; Fees and costs (710 ILCS 765) see also Chicago Municipal Code 5-12-080(f))Copyright 2012, David C. Brezina 8 Damages Under Statute – Liability First: IP Damages, In Addition To “Statutory Damages” Formulations  Patents (35 U.S.C. 1 – 376, damages 35 U.S.C. § 284)  Technology & Useful Items  Infringement of Claims  Strict Liability --Independent Development Not a Defense  Trademark (15 U.S.C. 1051 – 1127, damages 15 U.S.C. 1117)  Brand Identity (Misleading Advertising)  Infringement By Likely Confusion  Strict Liability --Independent Development Not a Defense  Copyright (17 U.S.C. 101 -1332, damages 17 U.S.C. 504)  Art, Literature, Particular Forms of Expression  Infringement by Copying – but Copying May Be inferred  Independent Creation a Defense, If It Beats InferenceCopyright 2012, David C. Brezina 9 Damages Under Statute --Defendant’s Profits = Statutory Unjust Enrichment 1) Copyright a) Burden shifting b) Plaintiff Only Has To Prove Total Sales Attributable To Infringement c) Defendant To Prove Costs, Deducted From Sales, To Give Profits 2) Trademark, False Designation of Origin a) Burden Shifting i. Plaintiff Only Has To Prove Total Sales ii. Defendant To Prove Alternative Causes Of Revenue, Costs, Deducted From Sales, To Give Profits b) Subject To Equity, Exemplary But Not Punitive, Adjust c) Defendants Profits Up Or Down (Only Adjust Lost Profits Up) d) Some Case Law Requiring Wilfulness 3) Design Patent, Only (35 U.S.C. 289)  Defendant’s Total ProfitsCopyright 2012, David C. Brezina 10 Remedies for Patent Infringement 35 U.S.C. 284 1) Compensatory damages a) Typically Lost Profits b) Reasonable Royalty as a floor 2) Increased damages --can treble actual damages where there is willful infringement 3) Attorneys fees in exceptional cases only 4) Injunction meeting eBay requirements 5) Design Patent Only 35 U.S.C. 289Copyright 2012, David C. Brezina 11 Reasonable Royalty Damages – a Patent Damages Floor  A “hypothetical negotiation, occurring between the parties at the time that infringement began”  Posner closes Daubert gate Apple v Motorola: So again imagine this imaginary conversation between Napper and Motorola, which I’ll pretend hired Napper to advise on how at lowest cost to duplicate the patent’s functionality without infringement: Motorola: “What will it cost us to invent around, for that will place a ceiling on the royalty we’ll pay Apple?” Napper: “Brace yourself: $35 million greenbacks.” Motorola: “That sounds high; where did you get the figure?” Napper: “I asked an engineer who works for Apple.” Motorola: “Dummkopf! You’re fired.”  Rates vary from fractions of percents, to high percentages  Basic science licensed from 1 or 2% up to about 6 or 7%Copyright 2012, David C. Brezina 12 Reasonable Royalty Damages --Major Factors  Other royalties actually received in licenses for the patent in suit  Other royalties actually received for comparable licenses  Portion of profit customarily allowed in the particular business for the use of the invention or similar inventions  Effect of patented feature on customer demand for productCopyright 2012, David C. Brezina 13 Reasonable Royalty Damages – More Factors  How Exclusive (or Nonexclusive) the License?  Does Licensor have any established policy to not license – to profit based on sales?  What is the commercial relationship between the licensor and licensee?  Would sales of the patented product promote sales of other products?  What is the duration of the patent and the term of the license?  How profitable is the product made under the patent in terms of commercial success and current popularity?  What are the utility and advantages of the patent over the old modes or devices?  How does the patent relate to the actual commercial embodiment sold, including benefits to users?  Whether and how much the infringer has used the invention and the value of that use  Apply an analysis to the hypothetical negotiation  What if Licensor and Infringer had reasonably and voluntarily tried to reach an agreement?  How much would a prudent licensee have been willing to pay as a royalty and still make a reasonable profit?  What would a prudent patentee, willing to grant a license, accept?Copyright 2012, David C. Brezina 14 Damages as Patent Owner’s Lost Profits on Lost Sales 1) Demand for patented invention 2) Absence of acceptable non-infringing alternatives 3) Manufacturing and marketing capacity to exploit demand 4) Ability to quantify the amount of lost profits 5) “But for” the infringement, the patent owner would have made those profitsCopyright 2012, David C. Brezina 15 Damages as Patent Owner’s Lost Profits – Other Causes, Proofs 1) Potential sales lost 2) Convoyed sales – one stop shopping 3) Price erosion – made sale, lower price 4) New, higher price hindered 5) Company growth limited 6) Entire market value rule – invention drives demand for whole product 7) Market share decrease 8) Defendant’s profits as a yardstick for Plaintiff’sCopyright 2012, David C. Brezina 16 Patent Damages Trends  “Patent trolls" (Nonpracticing entitities)  demanding license fees based on a percentage of total sales  Suing end users, customers  Monsanto v DuPont: $1 Billion or so; Apple v. Samsung, about the same  Entire Market Value  25% rule: “25% to 33 1/3% of the saving of a new process, or of the profits of a new product should go to the licensor” should no longer be used in Court  Current case law requires proof that the improvement taught by the patent be directly connected to the amount of royalty  Small percentage does not save misapplication of entire market valueCopyright 2012, David C. Brezina 17 Other Statutorily Provided Money Remedies 1) Fee Shifting a) Copyright: to Plaintiff, if Timely Registered, to Defendant, discretionary, consistent with purpose of Copyright Act b) Trademark & Patent: in ”Exceptional cases” to prevailing party 2) Increased Damages a) Copyright: if Willful, to $150,000, if Timely Registered b) Patent: Treble Damages for Willfulness or Litigation Misconduct c) Trademark: Treble Damages ”according to the circumstances of the case”Copyright 2012, David C. Brezina 18 IP Damages --Anomalies 1) Design Patent – only Defendant Profits remedy under Patent 2) Copyright plaintiff proves attribution, Trademark, defendant, to show all deductions 3) Lanham Act treble damages are not punitive 4) Copyright fee shifting to defense under case law --level playing field or tilted 5) Copyright Attorneys Fees = Costs, Remember in your Bill of Costs! 6) Computer Fraud and Abuse Act 18 USC 1030 “damage” means impaired computer functionality, while “loss” is the economic injuryCopyright 2012, David C. Brezina 19 Intellectual Property Damages  Statutory Damages in Certain Cases Only, Formalities, Cause of Action Material  Hypothetical Bargains Permit and Require Analysis of Real World Business  Defendant's Profits Can Be a Powerful Remedy, Especially Where Burden Shifting  Actual/Compensatory Damages: Consider the Context of the Sale of Real Products Copyright 2012, David C. Brezina 20 Any questions? Dave Brezina Ladas & Parry LLP (312) 427-1300 dbrezina@ladas.net
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