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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

by 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.

by 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.