Case Cite

Internet Machines LLC v. Alienware Corp., No. 6:1—cv-00023-MHS, slip op. (E.D. Tex. June 19, 2013).

IPDQ Commentary

The court in Internet Machines agreed with Plaintiff that using smallest patent-practicing salable unit methodology rendered the EMVR inapplicable and, therefore, required no further apportionment. The court also found the licenses Plaintiff’s damages expert applied were reliable because they were sufficiently comparable to the patented technology.

Case Summary

Plaintiff sued alleging infringement. After a trial, the jury found the patent valid and infringed, awarding more than $1M in damages. Id. slip op. at 2. Defendants moved for (1) JMOL on Damages, (2) Remittitur or a New Trial, (3) Post Verdict Royalties, and (4) Pre- and Post-Judgment Interest.

After considering the four motions, the court ruled:

JMOL – Damages – Defendants argued Plaintiff’s expert, Walter Bratic, (1) improperly applied the EMVR, and (2) relied on non-comparable licenses to calculate reasonable royalty damages. Id. slip op. at 24-25. The court denied the motion:

  • EMVR – Smallest Salable Unit –Bratic used the smallest patent-practicing salable unit, thus rendering further apportionment unnecessary and making the EMVR inapplicable, especially since the determination of a damage award is an inexact science. Id. slip op. at 25-26. Any attempt to apportion value within the product would be speculative and arbitrary. Id.
  • Comparable Licenses –Bratic properly relied on the disputed license agreements. The licenses covered the same general field of technology as the patent-in-suit. Although they did not cover the patented technology, they were comparable to the technology at issue and provided relevant information about the value of the patented technology. Id. slip op. at 26-27. The fact the comparable licenses conferred greater rights than a mere license was unimportant since Bratic used the licenses as just one data point in his Georgia-Pacific analysis. Id. slip op. at 27.

Motion for Remittitur/New Trial – The court denied the motion because it found: (1) Plaintiff’s damages model was acceptable; (2) the model was based on the smallest salable patent-practicing unit; (3) the royalty rate and base were tied to the patented technology; and (4) the verdict was supported by substantial evidence. Id. slip op. at 28.

Motion for Post-Verdict Royalties – At trial, the jury awarded damages consistent with Bratic’s testimony that a 6% rate would be appropriate. Id. slip op. at 34. Plaintiff sought a post-verdict rate of 10% while Defendant argued the 6% rate was more accurate. Id. Ultimately, the court concluded the appropriate rate for post-verdict damages was 9%. Id. slip op. at 40.

The court began its analysis by distinguishing between post-verdict and post-judgment damages. Id. slip op. at 35. Because it vacated the jury’s willful infringement verdict, the court found no basis to increase the royalty rate for post-verdict damages. Id.

The court then turned to post-verdict damages. After noting the parties had reached an impasse in their attempt to negotiate a post-verdict royalty rate, the court adopted the procedure outlined in Mondis Tech. Ltd. v. Chimei InnoLux Corp., 822 F.Supp. 2d 639, 646 (E.D. Tex. 2011) for determining the ongoing royalty. Id. slip op. at 36.

The court began with the jury’s 6% rate as the baseline. Id. slip op. at 37. The court then addressed the changed parties’ circumstances in light of the Georgia-Pacific factors and found no basis to depart from the jury’s 6% award. Id. slip op. at 37-38.

After completing an analysis of the nine factors set out in Read v. Portec, the court concluded Defendant’s post-judgment infringement of the patents was willful, thus enhancing the jury award by 50% to 9%. Id. slip op. at 38-40.

Motion for Pre and Most-Judgment Interest – The court granted Plaintiff’s motion for pre-judgment interest from the date of first infringement through judgment, concluding the prime interest rate better approximated Plaintiff’s foregone investment opportunity. Id. slip op. at 40-42. The court also awarded post-judgment interest at the lawful federal rate pursuant to 28 U.S.C. § 1961. Id. slip op. at 42.