On Feb. 11-12, the Federal Trade Commission conducted the latest in a series of hearing on patents and patent reform. At this hearing, there was particular emphasis on patent damage awards and the availability of injunctions after eBay. BNA (subscription service) has reported on the proceedings at the hearing.
Professor Paul Janicke of the University of Houston Law Center presented statistics collected by his organization http://www.patstats.org/. Since 2005, 2,700 patent infringement suits have been filed. Only 5% of that number were actually tried to a verdict, with another 8% resolved by summary judgment (often of non-infringement). Over 86% of the cases filed during this time-frame were settled by the parties prior to the district court rendering a verdict.
Damage Awards
For cases that made it to trial, juries were more favorable to patentees. Juries granted verdicts for them in 79% of cases, while bench trials only resulted in verdicts for patentees 44% of the time. Overall, entities that practiced the patent were victorious 58% of the time, while non-practicing patent holders only prevailed in 42% of cases. These stats demonstrate why the use of juries in patent cases has been increasing in recent years.
The median damage awards for successful patentees (not including cases where the accused infringer wins) was $5-6 million. There was a slight increase in 2007, but overall the number has remained fairly flat in constant dollars. Based on these numbers, it seems that Congress is overreacting with the damage reduction legislation that has been part of the patent reform proposals in recent years.
There was discussion as to whether damage reform was needed. Several panelists were happy with the flexibility provided by the Georgia Pacific factors used to caculate a reasonable royalty. District judges need to exercise more of a gate-keeper role to guide juries in their calculation of damages. There have been several outlier damage awards that have been significantly higher than the average award, but the courts have usually reduced or eliminated those awards, either at the district court or the Federal Circuit. The current system seems to be working.
Some high awards may result from the plaintiff trying the case on willfulness, rather than on infringement in general. Juries may include a punitive portion in the damage award to compensate for this behavior. Delaware District Judge Sue Robinson recognizes this problem and so bifurcates trials between liability and damage phases.
Injunctions
The hearing also included discussion of injunctions after the Supreme Court’s eBay v. Merc Exchange case. A survey of 49 rulings on injunctions indicated a number of factors that have been used to determine whether an injunction was appropriate. Factors that weighed very heavily included:
• When the relevant patent related to a new or developing market,• When the absence of an injunction was likely to drive down prices in the marketplace,• When the patentee had at some point explicitly refused to grant a license to the infringer,• When there was risk of harm to the patentee’s reputation,• When compliance with the injunction was easy,• When there were inexpensive alternatives to practicing the patent available to the infringer,• When the patentee would otherwise be denied a critical opportunity to develop the product or market relevant to the patent,• When the patent constituted a trivial component of the infringing article,• When the patentee had at some point explicitly offered the infringer a license, and• When the patent was critical to the patentee’s sole or critical product.
• When the injunction would have a significant impact on the adjudged infringer’s business,• When the injunction would interfere with the “core” of the infringer’s business,• When the infringer’s customers tended to be “loyal” or “sticky,” that is, reluctant to switch over in the case of an injunction,• When the patentee had licensed the patent to other parties, and• When the injunction would have a small impact on the infringer’s sales.
