Page 86 - Intellectual Property Disputes

manifest commercial success. fn 91 The relative contribution of a patented invention "varies greatly
within each field and for each patent, the weight accorded this factor varies with the circumstances of
the individual case." fn 92

In Lucent Technologies, fn 93 the court addressed, among other topics, Microsoft’s theory that damages
for infringement of a method patent should be limited to the "proven number of instances of actual
infringing use," which Microsoft defined as use by the ultimate consumer. Microsoft argued that the
frequency with which customers used the accused date-picker function was irrelevant because this
information was not available at the time of the hypothetical negotiation. The Federal Circuit held that
"neither precedent nor economic logic requires us to ignore information about how often a patented
invention has been used by infringers," and "[c]onsideration of evidence of usage after infringement
started can, under appropriate circumstances, be helpful to the jury and the court in assessing whether a
royalty is reasonable." However, "[o]n the other hand, [the Court has] (". . . ") never laid down any rigid
requirement that damages in all circumstances be limited to specific instances of infringement proven
with direct evidence. Such a strict requirement could create a hypothetical negotiation far-removed from
what parties regularly do during real-world licensing negotiations." The court concluded that "[t]he
damages award ought to be correlated, in some respect, to the extent the infringing method is used by
consumers" because that would be considered in the hypothetical negotiation. fn 94

Another consideration is the technological development of the patented technology. All else equal, a
more mature and established technology will command a higher royalty because such a technology will
involve fewer commercial risks and will require less time and capital to commercialize.

The remaining term of the patent at the time of infringement is another factor to be considered in the
hypothetical negotiation. "Generally, it is believed that a buyer would have been more likely to agree to
a higher royalty the longer the remaining term of the patent. A defendant, however, may argue that the
longer the remaining patent term, the lower the royalty." fn 95 The rationale for a lower royalty is that an
extended period provides greater incentive to look for non-infringing alternatives to the patent. fn 96

The courts have taken into consideration "whether the defendant had any non-infringing alternatives that
were equal in terms of cost and performance." fn 97 All else equal, an infringer "would have been in a

fn 91 See, for example, Rite-Hite, 56 F.3d at 1538

fn 92 Thomas, Segal, and Lyon, 3-58.
fn 93 Lucent Techs., Inc. v. Gateway Inc., 580 F.3d 1301 (Fed. Cir. 2009). The patent at issue, known as the "Day patent" or "date
picker functionality," relates to a method that allows the user to enter data into fields on a computer screen without using a keyboard.
This case was first filed by Lucent in 2002 against Gateway and subsequently Microsoft intervened. Three actions were filed in the
Eastern District of Virginia, Southern District of California, and Delaware that were subsequently consolidated in the Southern
District of California. The court severed the Day patent from four other patents that were consolidated in the action. The jury found
that the Microsoft products that feature a date selection pop-up tool, including Money, Outlook, and Mobile, infringed the patent at
issue.

fn 94 Lucent Techs., 580 F.3d at 1301.

fn 95 Thomas, Segal, and Lyon, 3-58.

fn 96 Id.

fn 97 Id.

82 © 2020, Association of International Certified Professional Accountants