Judge Posner (of the U.S. Court of Appeals for the Seventh Circuit), sitting by designation, derailed Apple’s and Motorola’s expected patent liability trial when he found that both parties provided insufficient evidence to support either damages or injunctive relief. Apple, Inc. v. Motorola, Inc., Case No. 1:11-cv-08540 (N.D. Ill., June 22, 2012) (Posner. J.).
Apple had sued Motorola, alleging infringement of several of its patents related to touch screens and user interfaces for smartphones. Motorola counterclaimed with its own patents directed to cell phone communications. In a Daubert hearing, Judge Posner found inadmissible a majority of both parties’ proposed expert testimony on damages. In the aftermath, considering the parties’ follow-up briefs and oral arguments, Judge Posner addressed the evidentiary deficiencies for each of damages, injunctive and declaratory relief.
For damages, Judge Posner found that Apple had conceded that the excluded expert testimony precluded it from recovery of damages for two of its four remaining asserted patents. For one of its patents, Apple attempted to substitute its technical report for its damages report, but Judge Posner countered that the technical report merely “invite[d] guesswork because it failed to properly estimate the percent value added by a particular computer chip that performed the patent functionality. Similarly, for its remaining patent, Judge Posner found that Apple’s damages calculation was incorrectly based on a stand-alone iPhone application that was not necessarily correlated to patent’s claims, e.g., extracting dates from text to create calendar entries. He also found that Apple could not remedy this deficiency by relying on “nominal damages”: “[y]ou can’t go into federal court and say you had a contract with X and [that] X broke it and you’re really annoyed even though you sustained no injury of any sort … so please give me a judgment for $1 that I can pin on my wall.” Federal courts require Article III “cases” and “controversies” for subject-matter jurisdiction. Finally, Judge Posner found that even § 284 provided no relief where Apple did not show admissible evidence sufficient to substantiate a “reasonable royalty.”
Motorola fared no better. Its one remaining patent in the case belonged to a portfolio that Judge Posner found Motorola had committed to license to anyone on a fair, reasonable and non-discriminatory (FRAND) basis (in return for the portfolio being dubbed by various standards organizations as “standard essential”). Judge Posner found that Motorola did not provide evidence sufficient for calculating a reasonable royalty consistent with its FRAND requirement and, similarly, did not provide a reason why Motorola’s remaining patent represented “up to” (or, later contradicting itself, “at least”) 40 to 50 percent of the entirety of the portfolio’s value.
Judge Posner also ruled that neither party proved entitlement to an injunctive relief. He stated that Motorola’s request for an injunction was nonsensical given its FRAND requirement to provide its patented technology to anyone—including Apple. And Apple’s request for an injunction “flunked” the eBay standards of irreparable injury, balance of hardships and public interest—Apple could not receive an injunction based merely on the speculative grounds of loss of consumer good will and market share, especially where the patent claims were directed to technology “worth very little” to consumers and were easy to invent around.
Judge Posner went on to find that the case exemplified “a simple failure of proof” on both sides. Injunctive relief is no substitute if money damages would have been an adequate remedy but where parties incurred “self-inflicted wound[s]” for lack of evidence on the same.
Thus he stated that declaratory relief would serve no purpose: “when the court has determined that neither party could obtain monetary or injunctive relief against the other, as in this case, a declaratory judgment in favor of either party would confer no tangible benefit on the victor and so there would be no federal subject-matter jurisdiction”—“the issuance of such a judgment would have no practical effect” —in short, no damages, no injunction, no trial.
Perhaps anticipating an almost certain appeal, Judge Posner ended by dismissing the case with prejudice, noting that “[i]t would be ridiculous to dismiss a suit for failure to prove damages and allow the plaintiff to refile the suit so that he could have a second chance to prove damages.” Judge Posner concluded that “[the parties] can’t obtain any benefit from further proceedings in this case but they can appeal its dismissal.”