Why Do We Let Juries Set Patent Award Damages? Appeals Court Throws Out Another Jury Award

from the dumped dept

There is a mythology in the US about the value and importance of patents -- and because of that, it's not surprising that patent trials involving juries quite often end with the patent holder being declared victor, and a huge amount being awarded by the jury. Microsoft and Alcatel-Lucent have been involved in a whole series of patent battles recently. Two years ago, a jury found for Alcatel-Lucent on a patent related to MP3 technology, and it awarded Alcatel-Lucent a stunning $1.5 billion. It didn't take long for a judge to toss out that award. More recently, in another patent dispute involving the same parties (but a totally different patent), a jury awarded Alcatel-Lucent $358 million because Microsoft included a "date-picker" calendar tool in Microsoft Outlook. Yet, once again, an appeals court has now tossed out the jury's award amount, noting how ridiculous it is that such a tiny, minor feature should get such a huge dollar value:

The portion of the profit that can be credited to the infringing use of the date-picker tool is exceedingly small.... In short, Outlook is an enormously complex software program comprising hundreds, if not thousands or even more, features. We find it inconceivable to conclude, based on the present record, that the use of one small feature, the date-picker, constitutes a substantial portion of the value of Outlook.

So why do we (as a matter of policy, not law) allow juries to make such decisions when they seem to have trouble picking reasonable amounts, given the nature of the patents and the lawsuits?

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The Meaningless WiMax Patent Pool

from the somebody's-missing.... dept

There are some folks who believe that the solution to patent problems is to just have everyone who claims to have a patent on a certain technology throw it into a "patent pool" and then those who use the technology pay up a fee that gets divided up among pool members. It sounds nice, but in practice, it almost never works. Setting up a patent pool actually encourages the wrong behavior: it encourages plenty of other patent holders to claim they deserve to be a part of the pool, and if they're not included, they start suing like crazy. Also, it encourages companies to try to get any kind of patent that might get them included in a pool, leading to all sorts of crazy claims. It's the exact opposite of the type of behavior that should be encouraged.

So, don't read too much into the fact that a bunch of companies in the WiMax space have agreed to put together a patent pool under the amusingly inaccurately named "Open Patent Alliance." The companies involved, Cisco, Intel, Samsung, Sprint, Alcatel-Lucent, and Clearwire are all betting big on WiMax deployments, so they know it's in their best interest to get the licensing out of the way. But you'll notice that there are a lot of companies missing -- including Wi-LAN who has been claiming that it owns all the key patents over WiMax technology for years. The patent pool sounds nice, but it's certainly not going to diminish the number of patent lawsuits that arise over WiMax technology. If anything, it's just going to make all those other companies even angrier.

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Fallout From Alcatel-Lucent's Patent Nuclear War With Microsoft Continues

from the be-careful-who-you-launch-against dept

Part of the conventional wisdom in having tech companies apply for lots of patents is that they're helpful as a "defensive" mechanism against other companies filing patent lawsuits against you. It's the nuclear stockpiling argument that suggests (without much proof) that the more patents everyone holds, the less likely actual patent litigation will result. That doesn't seem to be happening, though, as we see more and more patent "nuclear wars" happening. For example, Alcatel-Lucent went after Microsoft on a questionable patent concerning MP3 technology. While Alcatel-Lucent initially won that battle to the tune of $1.5 billion, everything's gone down hill since then. First, Microsoft hit back at Alcatel-Lucent, dredging up a bunch of patents it claimed the company was violating. Then, a judge overturned the $1.5 billion ruling. Now, Microsoft's patent attack on Alcatel-Lucent has succeeded, as a judge at the US International Trade Commission (yes, Microsoft is also using the popular loophole in patent law here) has determined that Alcatel-Lucent has infringed, suggesting that its products be barred from the US. While this seems like a silly ruling, it does show how if you're going to play the game of accusing companies of patent infringement, you might get burned yourself.

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Judge Says Jury Screwed Up In Awarding Alcatel-Lucent $1.5 Billion From Microsoft For MP3 Patents

from the so-sorry-about-that dept

Back in February, a jury told Microsoft to pay Alcatel-Lucent $1.5 billion for supposedly violating some patents Alcatel-Lucent held on MP3 technology. The case helped highlight the patent thicket around MP3 technologies, as Microsoft had licensed the technology from the creator of the MP3 technology, Fraunhofer. Back in May, as the judge was considering what to do about the jury's award, Alcatel-Lucent actually claimed that $1.5 billion wasn't enough. It appears the judge not only didn't buy that story, but didn't buy the jury's reasoning either. Today he threw out the jury's ruling, noting that Microsoft doesn't even infringe on one of the patents in question, and the other one is jointly owned by Fraunhofer, and therefore Microsoft has a legitimate license to it already. As the judge said, "The jury's verdict was against the clear weight of the evidence." As you might imagine, Alcatel-Lucent is not happy about this, calling the ruling "shocking and disturbing." So, there is likely going to be a long appeals process. However, this is the second time in recent weeks that we're seeing courts take a more reasonable approach on patents. Hopefully, it's the start of a trend.

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