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Apple faces $600m damages claim

36 points by theklub 16y ago

DougBTX 16y ago
I'll never understand how these damages are calculated. Does anyone actually believe that the patent owners would have made > $600m had Apple never written the supposedly infringing software?
- parenthesis 16y ago
  IANAL, but there is a distinction between compensatory damages (which is what you are talking about) and punitive damages. I don't think the article mentions which, or what combination, of these is being awarded here.
  - jessriedel 16y ago
    Incidentally, what is the theory behind awarding the punitive damages to the plaintiff? I could understand giving the plaintiff a fraction of the punitive damages in order to provide an incentive to the plaintiff (and their counsel) to pursue, but isn't it crazy to give them all of it? Should the state keep it (like a ticket) or, better, use it where possible to compensate the unknown victims that punitive damages are supposed to help protect?
- tseabrooks 16y ago
  To add to the other commenter's reply. These damages have little to do with compensating the damaged party and far more to do with punishing the infringer as a way to provide a dis-incentive for them to do something similar in the future. An example is in some average lawsuit where someone is hurt by something and unable to work.. let's say they can never work again... Now if we assume the company, or person, responsible would only have to pay for their hospital bills (200k maybe?) and their lifetime salary (50 years of working at the US avg of 50k a year) we only get to about 2.7 mil... In these cases the courts generally find that the compensatory damages aren't large enough to provide the dis-incentive necessary... Or so I understand it.
- ori_b 16y ago
  What about the more interesting case - what if apple had made the software, licensed the patent, and paid them a royalty for every copy of itunes downloaded, every copy of time machine shipped, and so on? You know, the way patents are usually handled.
- dctoedt 16y ago
  In general, here's how patent damages work (in the U.S.): 1. If the patent owner can establish that it would have made the sales that the infringer did, then the patent owner is entitled to the profits it would have made from those sales. (That's often hard for a patent owner to prove, especially if it is a "non-practicing entity.") Not surprisingly, this is referred to as lost-profits damages. 2. Otherwise, the patent owner is entitled to a "reasonable" royalty on the sales the infringer made that are covered by one or more valid patent claims. The royalty is supposed to be determined by assessing -- in hindsight -- what a reasonable licensor and reasonable licensee would have agreed to before the infringement began. (There are variations on, and complications in, the analysis that I won't go into here.) 3. Usually what happens at trial is that each side puts an expert witness on the stand to walk the jury through his or her analysis of what a reasonable royalty would have been. Opposing experts' analyses can vary wildly. 4. All of these determinations are made by a preponderance of the evidence. That is, jurors are instructed by the judge that they are to determine whether the patent owner has submitted evidence sufficient to make the patent owner's damages claim "more likely than not." [EDIT: As a practical matter, jurors often can be influenced by which expert witness they found more believable and/or likable, and by their perception of who is the good guy and who the bad guy.] 5. See http://www.virginiaiplaw.com/2010/03/articles/patent-litigation/federal-circuit-requiring-more-rigorous-proof-of-patent-damages/ http://www.virginiaiplaw.com/2010/03/articles/patent-litigat... for a summary of some recent contentious issues in the patent-damages area. 6. If the jury finds that patent owner has proved, by clear and convincing evidence (not just a preponderance of the evidence), that the infringement was "willful," then the judge (not the jury) has the authority: a) to increase the damage award up to treble damages; and/or b) to find that the case was "exceptional" and award the patent owner its reasonable attorneys' fees and expenses of litigation. 7. As a practical matter, any prospective juror who knows anything about the subject matter is likely to be excluded. [EDIT: That's because patent-owner lawyers don't want jurors to have pre-conceived notions about what is or isn't patentable in that field.] FOOTNOTE: It's not well-known that lawyers don't pick a jury, they unpick it. Usually, prospective jurors are randomly assigned sequential numbers from 1 to N. Jurors can be excluded "for cause" (e.g., because they know one of the parties, etc.), or by the lawyers' using their limited number of peremptory strikes. The first 12 people remaining (or six people in some cases) become the jury. 8. EDIT: The discussion above presupposes (i) that the patent owner has proved that at least one claim in the patent has been infringed, and (ii) that the accused infringer has not proved, by clear and convincing evidence, that all infringed claims are invalid.
jcromartie 16y ago
It's unbelievable that a company that doesn't even have a website can win a suit like this. For Apple to have caused "Mirror Worlds" any harm, they would have to be competing with each other. For Mirror Worlds to compete with ANYBODY, a good start would be appearing to be a real business in any way shape or form. Maybe I don't really understand patent law, but David Gelernter just sounds like a total scumbag here. I've read some of his stuff before, and he seems like a smart guy. What gives? Edit: apparently this is Mirror Worlds' product website: http://www.scopeware.com/ http://www.scopeware.com/ Nothing. Vaporware.
- jws 16y ago
  Patent law is to protect the inventor, not necessarily a manufacturer. In this case the jury has decided that Mr. Gelernter invented something, properly acquired a patent (thus documenting his invention's workings for the whole world to read), and that Apple used his invention without compensating him.
- lkjuhygthyujk 16y ago
  I don't think you understand the difference between a patent troll and an IP company. The company I work for designs antennae for cell phones, wifi, GPS receivers etc. We barely have a website, just a couple of PhDs and a lawyer. We rely on licencing our designs and file a lot of patents. It's judgements like this that stop cell phone makers deciding that it's cheaper to just copy our inventions than pay us a licence fee. The fine is supposed to be a dtterent - to say that it should be limited to what the company was bought for is like saying the fine for murdering a child should be limited to the hospital maternity bill.
  - hugh3 16y ago
    Hold on, so what is the difference between your company and a patent troll? Not that I'm accusing you guys, I'm just not sure how I can readily draw the line between the two.
    - lkjuhygthyujk 16y ago
tnorthcutt 16y ago
It added that the patents had been sold and any damages awarded should reflect that market value. The patent package is believed to have been sold for $5m. If the patent package was recently sold, doesn't that do a pretty good job of establishing the value of the patents, and thus, the appropriate judgment against Apple?
- lkjuhygthyujk 16y ago
  No it represents what a market maker thought the value of the patent was multiplied by the chance of collecting on it. What would the idea of the iPod have been worth in the 90s? The then value of Apple's consumer electronics sales (ie 0) or the current and future value of Apple?
  - gruseom 16y ago
    What would the idea of the iPod have been worth in the 90s? Very little indeed.
deleted 16y ago
[deleted]
photon_off 16y ago
I cannot fathom putting the decision of a patent dispute in the hands of my "peers" -- 12 people that are chosen, likely with the prerequisite of not knowing much at all about technology, whose opinions on the matter are going to be molded by how well somebody pitches their argument, and not the contents thereof.
- statictype 16y ago
  So you're basically against the jury system in general - not just for patent disputes, right?
gruseom 16y ago
I find it hard to believe that Gelernter's work played any role in the creation of Apple's products. I've read some of his stuff (admittedly unrelated) and the thing that leapt out at me was how hard it would be to do anything with it. (Edit: frankly, I don't think it's all that hard to sit around "inventing" things if all you have to do is write about them and never back them up with real products. Research prototypes don't count, either.) These judgments are really hard to stomach. Perhaps, though, if enough powerful companies get hit with them, they'll lobby to stop the insanity. That's how the legislative process works, isn't it?
- jcl 16y ago
  Be careful of what you wish for, though. Powerful companies would most likely lobby for changes to patent law that benefit powerful companies. For example, they might lobby to require the invention be a "real product", defined as N x 100,000 units or $N million dollars revenue. While that would eliminate patent trolls, it would also destroy small companies and individual inventors.
  - marknutter 16y ago
    Why exactly would that destroy small companies or individual inventors?
    - borism 16y ago
      because achieving 100k units or 1M in revenue in short period of time is beyond their abilities, duh?
MrMatt 16y ago
OK, so I get that a patent allows an inventor to protect their invention from exploitation, but I don't understand why a patent is transferrable - surely the idea is to allow an inventor to license the patent so that even if they couldn't realise a commercial product with their idea, they could allow others to do so, and still get something in return. I could sympathise if Mirror Worlds were the originators of the patent, but as they bought it, then I get the impression that the whole thing stinks.
deleted 16y ago
[deleted]
_emice 16y ago
The article on Arstechnica noted at similarities between the infringement and the functionality of HyperCard, which shipped on all Macs in 1987. Hypercard used stacks of cards that had some shared some aspects with a group, but individual cards could also have unique elements. These included text fields, GUI elements and background images. I haven't looked at the patent, but owning the ability to - display records/documents in a virtual pile, possibly in chronological order, with the ability to scroll through them - sounds absurd to me. http://arstechnica.com/apple/news/2010/10/apple-loses-patent-infringement-suit-over-cover-flow-display.ars http://arstechnica.com/apple/news/2010/10/apple-loses-patent...
davidcann 16y ago
Aren't the real issues obviousness and prior art? The interfaces for Cover Flow and Time Machine are fun, but they hardly seem patent-worthy. How could a jury of 12 non-technical people possibly be qualified to judge if a patent is valid? I would not feel qualified to judge if an automotive patent is valid, so how can a non-developer judge a software patent? The system is broken.
russell 16y ago
Note that the suit was brought in east Texas which is a favorite haunt for patent trolls. As far as I know the trolls always win and the awards have become increasingly huge, way out of proportion to the actual value of the work. Gelernter himself is not a troll. If all this is based On Linda (I havent dug deep enough), it would be based on work he did at least as far back as 1983. Google "Gelernter Linda", He published a book "Mirror Worlds". which I read decades ago. He tried to commercialize it, but had only modest, if any, success. OTOH he sold his patents to a patent troll.

36 points by theklub 16y ago

I'll never understand how these damages are calculated. Does anyone actually believe that the patent owners would have made > $600m had Apple never written the supposedly infringing software?

parenthesis 16y ago
IANAL, but there is a distinction between compensatory damages (which is what you are talking about) and punitive damages. I don't think the article mentions which, or what combination, of these is being awarded here.
- jessriedel 16y ago
  Incidentally, what is the theory behind awarding the punitive damages to the plaintiff? I could understand giving the plaintiff a fraction of the punitive damages in order to provide an incentive to the plaintiff (and their counsel) to pursue, but isn't it crazy to give them all of it? Should the state keep it (like a ticket) or, better, use it where possible to compensate the unknown victims that punitive damages are supposed to help protect?
tseabrooks 16y ago
To add to the other commenter's reply. These damages have little to do with compensating the damaged party and far more to do with punishing the infringer as a way to provide a dis-incentive for them to do something similar in the future. An example is in some average lawsuit where someone is hurt by something and unable to work.. let's say they can never work again... Now if we assume the company, or person, responsible would only have to pay for their hospital bills (200k maybe?) and their lifetime salary (50 years of working at the US avg of 50k a year) we only get to about 2.7 mil... In these cases the courts generally find that the compensatory damages aren't large enough to provide the dis-incentive necessary... Or so I understand it.
ori_b 16y ago
What about the more interesting case - what if apple had made the software, licensed the patent, and paid them a royalty for every copy of itunes downloaded, every copy of time machine shipped, and so on? You know, the way patents are usually handled.
dctoedt 16y ago
In general, here's how patent damages work (in the U.S.): 1. If the patent owner can establish that it would have made the sales that the infringer did, then the patent owner is entitled to the profits it would have made from those sales. (That's often hard for a patent owner to prove, especially if it is a "non-practicing entity.") Not surprisingly, this is referred to as lost-profits damages. 2. Otherwise, the patent owner is entitled to a "reasonable" royalty on the sales the infringer made that are covered by one or more valid patent claims. The royalty is supposed to be determined by assessing -- in hindsight -- what a reasonable licensor and reasonable licensee would have agreed to before the infringement began. (There are variations on, and complications in, the analysis that I won't go into here.) 3. Usually what happens at trial is that each side puts an expert witness on the stand to walk the jury through his or her analysis of what a reasonable royalty would have been. Opposing experts' analyses can vary wildly. 4. All of these determinations are made by a preponderance of the evidence. That is, jurors are instructed by the judge that they are to determine whether the patent owner has submitted evidence sufficient to make the patent owner's damages claim "more likely than not." [EDIT: As a practical matter, jurors often can be influenced by which expert witness they found more believable and/or likable, and by their perception of who is the good guy and who the bad guy.] 5. See http://www.virginiaiplaw.com/2010/03/articles/patent-litigation/federal-circuit-requiring-more-rigorous-proof-of-patent-damages/ http://www.virginiaiplaw.com/2010/03/articles/patent-litigat... for a summary of some recent contentious issues in the patent-damages area. 6. If the jury finds that patent owner has proved, by clear and convincing evidence (not just a preponderance of the evidence), that the infringement was "willful," then the judge (not the jury) has the authority: a) to increase the damage award up to treble damages; and/or b) to find that the case was "exceptional" and award the patent owner its reasonable attorneys' fees and expenses of litigation. 7. As a practical matter, any prospective juror who knows anything about the subject matter is likely to be excluded. [EDIT: That's because patent-owner lawyers don't want jurors to have pre-conceived notions about what is or isn't patentable in that field.] FOOTNOTE: It's not well-known that lawyers don't pick a jury, they unpick it. Usually, prospective jurors are randomly assigned sequential numbers from 1 to N. Jurors can be excluded "for cause" (e.g., because they know one of the parties, etc.), or by the lawyers' using their limited number of peremptory strikes. The first 12 people remaining (or six people in some cases) become the jury. 8. EDIT: The discussion above presupposes (i) that the patent owner has proved that at least one claim in the patent has been infringed, and (ii) that the accused infringer has not proved, by clear and convincing evidence, that all infringed claims are invalid.

jcromartie 16y ago

It's unbelievable that a company that doesn't even have a website can win a suit like this. For Apple to have caused "Mirror Worlds" any harm, they would have to be competing with each other. For Mirror Worlds to compete with ANYBODY, a good start would be appearing to be a real business in any way shape or form. Maybe I don't really understand patent law, but David Gelernter just sounds like a total scumbag here. I've read some of his stuff before, and he seems like a smart guy. What gives? Edit: apparently this is Mirror Worlds' product website: http://www.scopeware.com/ http://www.scopeware.com/ Nothing. Vaporware.

jws 16y ago
Patent law is to protect the inventor, not necessarily a manufacturer. In this case the jury has decided that Mr. Gelernter invented something, properly acquired a patent (thus documenting his invention's workings for the whole world to read), and that Apple used his invention without compensating him.
lkjuhygthyujk 16y ago
I don't think you understand the difference between a patent troll and an IP company. The company I work for designs antennae for cell phones, wifi, GPS receivers etc. We barely have a website, just a couple of PhDs and a lawyer. We rely on licencing our designs and file a lot of patents. It's judgements like this that stop cell phone makers deciding that it's cheaper to just copy our inventions than pay us a licence fee. The fine is supposed to be a dtterent - to say that it should be limited to what the company was bought for is like saying the fine for murdering a child should be limited to the hospital maternity bill.
- hugh3 16y ago
  Hold on, so what is the difference between your company and a patent troll? Not that I'm accusing you guys, I'm just not sure how I can readily draw the line between the two.
  - lkjuhygthyujk 16y ago

tnorthcutt 16y ago

It added that the patents had been sold and any damages awarded should reflect that market value. The patent package is believed to have been sold for $5m. If the patent package was recently sold, doesn't that do a pretty good job of establishing the value of the patents, and thus, the appropriate judgment against Apple?

lkjuhygthyujk 16y ago
No it represents what a market maker thought the value of the patent was multiplied by the chance of collecting on it. What would the idea of the iPod have been worth in the 90s? The then value of Apple's consumer electronics sales (ie 0) or the current and future value of Apple?
- gruseom 16y ago
  What would the idea of the iPod have been worth in the 90s? Very little indeed.

deleted 16y ago

[deleted]

photon_off 16y ago

I cannot fathom putting the decision of a patent dispute in the hands of my "peers" -- 12 people that are chosen, likely with the prerequisite of not knowing much at all about technology, whose opinions on the matter are going to be molded by how well somebody pitches their argument, and not the contents thereof.

statictype 16y ago
So you're basically against the jury system in general - not just for patent disputes, right?

gruseom 16y ago

I find it hard to believe that Gelernter's work played any role in the creation of Apple's products. I've read some of his stuff (admittedly unrelated) and the thing that leapt out at me was how hard it would be to do anything with it. (Edit: frankly, I don't think it's all that hard to sit around "inventing" things if all you have to do is write about them and never back them up with real products. Research prototypes don't count, either.) These judgments are really hard to stomach. Perhaps, though, if enough powerful companies get hit with them, they'll lobby to stop the insanity. That's how the legislative process works, isn't it?

jcl 16y ago
Be careful of what you wish for, though. Powerful companies would most likely lobby for changes to patent law that benefit powerful companies. For example, they might lobby to require the invention be a "real product", defined as N x 100,000 units or $N million dollars revenue. While that would eliminate patent trolls, it would also destroy small companies and individual inventors.
- marknutter 16y ago
  Why exactly would that destroy small companies or individual inventors?
  - borism 16y ago
    because achieving 100k units or 1M in revenue in short period of time is beyond their abilities, duh?

MrMatt 16y ago

OK, so I get that a patent allows an inventor to protect their invention from exploitation, but I don't understand why a patent is transferrable - surely the idea is to allow an inventor to license the patent so that even if they couldn't realise a commercial product with their idea, they could allow others to do so, and still get something in return. I could sympathise if Mirror Worlds were the originators of the patent, but as they bought it, then I get the impression that the whole thing stinks.

deleted 16y ago

[deleted]

_emice 16y ago

The article on Arstechnica noted at similarities between the infringement and the functionality of HyperCard, which shipped on all Macs in 1987. Hypercard used stacks of cards that had some shared some aspects with a group, but individual cards could also have unique elements. These included text fields, GUI elements and background images. I haven't looked at the patent, but owning the ability to - display records/documents in a virtual pile, possibly in chronological order, with the ability to scroll through them - sounds absurd to me. http://arstechnica.com/apple/news/2010/10/apple-loses-patent-infringement-suit-over-cover-flow-display.ars http://arstechnica.com/apple/news/2010/10/apple-loses-patent...

davidcann 16y ago

Aren't the real issues obviousness and prior art? The interfaces for Cover Flow and Time Machine are fun, but they hardly seem patent-worthy. How could a jury of 12 non-technical people possibly be qualified to judge if a patent is valid? I would not feel qualified to judge if an automotive patent is valid, so how can a non-developer judge a software patent? The system is broken.

russell 16y ago

Note that the suit was brought in east Texas which is a favorite haunt for patent trolls. As far as I know the trolls always win and the awards have become increasingly huge, way out of proportion to the actual value of the work. Gelernter himself is not a troll. If all this is based On Linda (I havent dug deep enough), it would be based on work he did at least as far back as 1983. Google "Gelernter Linda", He published a book "Mirror Worlds". which I read decades ago. He tried to commercialize it, but had only modest, if any, success. OTOH he sold his patents to a patent troll.