WARF Bid to Enhance Apple Damages Denied; SCOTUS to Review Willfulness
Oct. 20, 2015 (Mimesis Law) — Litigating whether or not an accused infringer acted “willfully” used to be very big business. Because the stakes were high. A finding of willfulness could lead to enhanced, up to treble, damages owed by the adjudged infringer. As a result, clients would demand “opinions of counsel” from patent practitioners, at a significant cost (and much profit for the firms tasked with preparing them). An expensive enhanced damages insurance policy if you will. Compounding the cost was that producing the opinion in litigation would result in a waiver of the attorney-client privilege, and lead to an expensive (if usually ineffectual) round of willfulness discovery.
The Federal Circuit did a lot to lower the importance of willfulness in patent cases, and opinion practice generally, in a series of decisions (Seagate is considered a seminal case in this area) designed to make proving enhanced damages a much more difficult task for patent owners. Standards such as “objectively reckless” behavior were put in place, setting a bar that could only be reached in only the most egregious of cases. The decline in willfulness findings has played its part in reducing the value of patents generally, and has been yet another example of a more difficult climate for patent owners seeking licenses and litigation wins.
In fact, just last week we wrote about WARF’s mega-case against Apple. Ultimately, the jury in the damages phase of the case decided that WARF was entitled to huge damages in a patent case — in the range of $250mm. But that favorable news for WARF was tempered by the District Court’s decision that Apple’s defenses — though unsuccessful — were reasonable. So no willful infringement, and no enhancement of the jury’s award to the pantheon of patent verdicts. A fairly typical result, but one that may prove a relic over time, because the Supreme Court has decided to hear two appeals (by Stryker and Halo) of Federal Circuit denials.
The Supreme Court’s willingness to redirect the Federal Circuit on patent law issues has been demonstrated time and again over the past few years. We will not know for a while whether the Supreme Court decides to reinvigorate the ability of patentees to recover enhanced damages. In the meantime, patent owners and investors will be watching closely, especially because the Federal Circuit may use the intervening period to further move toward a more moderate approach on the issue of willfulness. It may be too late for WARF, but this news may portend a brighter future for patent owners looking to police infringement of their key assets.
Disclosures and Disclaimers:
Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material. Questions or comments can be directed to me at firstname.lastname@example.org. All suggestions are welcome.