Last year, Alcatel-Lucent convinced a San Diego jury that it deserved $1.5 billion (yes, with a ‘b’) from Microsoft for infringing on a couple of little patents. It was the biggest patent damage award in history.
Although the patents only covered MP3 audio technology used in Microsoft Windows media player, the huge verdict was calculated by taking a percentage of each computer sold with the software on it. That made many IP lawyers question the wisdom of the so-called “entire-market value rule,” which basically means that a victim of patent infringement should get a royalty based on sales of the whole product, even if the patent only covers a tiny part.
The verdict was set aside by U.S. District Judge Rudi Brewster of San Diego, but IP litigators everywhere were hoping that an appeal to the federal circuit by Lucent would clarify the entire-market-value rule. Maybe the Federal Circuit U.S. Court of Appeals would put an end to even the possibility of billion dollar verdicts?
“People looking to rein in demands thought this was the best case,” said Sean DeBruine, an IP litigator with Alston & Bird in Palo Alto. “It seemed like the poster child.”
Alas, the federal circuit handed down its opinion (.pdf) today without addressing the issue, although it did agree that Judge Brewster was right to throw out the $1.5 billion jury verdict because the patents weren’t actually being infringed on.
“It’s a good decision, in that it resolved the case,” DeBruine said. “On the other hand, at some point this needs to be addressed, whether by a court or by Congress.”
While IP lawyers were a tad disappointed with the decision, Alcatel-Lucent, of course, is a little more disappointed about losing $1.5 billion they once had in their hands.
— Zusha Elinson
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