In a ruling whose implications are still unclear for patent litigation in general, Judge Posner of the Seventh Circuit Court of Appeals, sitting by designation on a very high-profile patent case involving Apple and Motorola in Chicago, completely dismissed the claims of each party with prejudice.
In effect, the Judge found that Apple, as the party filing the case and with the burden of proving damages or a right to injunctive relief, had irrevocably failed in that effort. And because there was no remedy available to Apple, the Judge threw the entire case out and dismissed the action in total.
This decision, coupled with the increased rigor being applied by both District Courts and the Federal Circuit with respect to analyzing patentee damages claims, promises to impact both current and future patent litigations involving Cleantech companies.
While it is unclear at this point how much of an impact Judge Posner’s reasoning will have on other judges, or even whether the Federal Circuit will sign off on it after the likely appeal, it is not too early to start thinking about how current and prospective Cleantech patent litigants should react and proceed.
On the patentee side, this decision, if accepted by the Federal Circuit and other judges – together with the recent spate of other Federal Circuit decisions calling for patent damages to be based on sound economic principles and evidence – simply makes it harder to meet the burden of proof on damages.
Judge Posner’s earlier orders, whereby he threw out the expert opinions on damages and canceled the trial just days before it was about to begin, contain almost-unprecedented hurdles for patentees to jump through in order to substantiate their damages claims. Accordingly, patentees will need to both budget more money to pay damages experts and be more realistic about going after damages that are provable.
For Cleantech companies currently involved in patent litigation as patentees, there should be an immediate expectation that the defense will undertake serious challenges to the asserted damages model. On that front, patentees may need to be flexible regarding their valuation of the case, and be willing to invest additional resources to buttress their damages claims.
Future Cleantech patentee litigants will need to invest in a pre-suit damages analysis, and be prepared to face early challenges to the asserted damages model. While not ideal, from an expense and risk standpoint, more Cleantech patentees will also need to consider moving for preliminary injunctions, particularly in competitor cases.
The defense perspective takes the above considerations and flips them. Cleantech companies currently defending themselves against allegations of patent infringement should immediately focus on the plaintiff’s damages model, and blast away at any infirmities with renewed vigor.
For example, if the plaintiff is acting wishy-washy in terms of even disclosing what its model is for damages, the court should immediately be made aware of this decision, together with a request for immediate disclosure of the damages theory being asserted.
Likewise, defense counsel should consider pushing early in the case, particularly where no preliminary injunction is being sought, for a patentee disclosure of its preliminary damages contentions.
Needless to say, the usual attacks on the damages opinions of the experts employed by the plaintiff should be pursued, via Daubert motion, summary judgment, or motion in limine as appropriate.
Meanwhile, potential defendants, including those engaged in license discussions with patentees, should highlight the difficulties and expense that patentees will encounter in proving their damages during litigation, and use that prospective litigation expense as a means of reducing the license cost if possible.
In sum, Judge Posner’s order serves as a good reminder of the centrality of damages to patent litigation.
Cleantech companies, whether they be patent owners or just likely targets for infringement claims, need to be aware of the current legal landscape regarding patent damages. Armed with this knowledge, they can be more effective litigants, and even if not in litigation, be better prepared to evaluate the potential value of their patent portfolio, or their infringement exposure vis-a-vis other patentees.