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

from the dumped dept

Mon, Sep 14th 2009 1:43am — Mike Masnick

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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Filed Under: awards, patents
Companies: alcatel-lucent, microsoft

21 Comments

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Pete Austin, 14 Sep 2009 @ 2:47am

This is a very good decision for FOSS
Re: "the portion of the profit that can be credited to the infringing use of the date-picker tool is exceedingly small,"

Any patent damages whatsoever would be excessive, when compared to the profit from a free product, and therefore would would be overturned.
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Anonymous Coward, 14 Sep 2009 @ 3:19am

So why do we allow juries to award damages in copyright infringement cases, and, more importantly, why aren't judges throwing out ridiculously high awards in those cases as well?
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- TheStupidOne, 14 Sep 2009 @ 10:05am
  
  Re:
  Because Congress set the limits for copyright infringement and judges can't throw it out without saying that the copyright act that set those limits was unconstitutional
  (I think, I might be wrong)
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Robert (profile), 14 Sep 2009 @ 3:40am

Amount to charge
I think the amount of money awarded should be simple maths:
X = Lines of Infringing Code / Lines of Code written
Amount awarded = Amount of money made * X

Therefore if you have a 100000 lines of code of which 50 infringe on a patent then you are only going to have to pay out $0.0005 for every $1 you make. That's $5000 for making $10,000,000.

Or Something similar.

But I don't really mind American Courts fining American companies for innovating, it means more opportunities for startups in other countries.
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- Michael, 14 Sep 2009 @ 5:01am
  
  Re: Amount to charge
  That would be an interesting equation when you apply it to a free product that a company gives away and then makes their money on some other types of services or products. Do they then have $0 of liability for anything they use?
  
  I'm not sure how the idea of a date picker is not obvious, but I don't think there is a way to use an equation for every case. It would be nice to submit cases like this to a group of people that understand technology to decide the damages (or better yet if there was infringement).
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- AC, 14 Sep 2009 @ 6:27am
  
  Re: Amount to charge
  "I think the amount of money awarded should be simple maths:
  X = Lines of Infringing Code / Lines of Code written
  Amount awarded = Amount of money made * X "
  
  Then you would end up with things like this:
  http://thedailywtf.com/Articles/The-Utlimate-State-Selector.aspx
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  - angry dude, 14 Sep 2009 @ 7:58am
    
    Re: Re: Amount to charge
    The MShit Windoze s already pretty much like this
    
    Once you dive into internals you get more and more disgusted
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    - GIMPYDWARF, 14 Sep 2009 @ 8:28am
      
      Re: Re: Re: Amount to charge
      can yo even speak in complete sentences? Your post makes no sense at all!
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  - TheStupidOne, 14 Sep 2009 @ 10:13am
    
    Re: Re: Amount to charge
    I think someone was getting paid per line of code
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- Anonymous Coward, 14 Sep 2009 @ 10:17am
  
  Re: Amount to charge
  This does not make sense it will be too easy for big corporation to code "I love you" in 1,000 000 lines of code.
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- Anonymous Coward, 14 Sep 2009 @ 10:36am
  
  Re: Amount to charge
  Whoo Whoo!
  
  Preemptive BloatWare Here We Come!
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..., 14 Sep 2009 @ 5:10am

Software is protected by copyright and should not be patentable
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itchyfish, 14 Sep 2009 @ 5:12am

Why not let them pick?
With all other idiocies of IP issues aside, I don't see anything wrong with either of these jury awards. I'll play devil's advocate for moment, with a number of assumptions (a real, working, valid patent, MS is really guilty, etc.)

The award should be punitive, not just simply "X% of profits". If we continue to allow companies, especially huge companies with basically endless legal resources, to infringe with completely minor slaps on the wrists, what's to prevent them from continuing the pratice? $358 million seems like a lot, but for MS, it's really not. But it's enough to get their attention and perhaps think twice about infringing next time. The judge will probably reduce it to something like $10 million, and MS will appeal again and get it reduced even further. Probably 99% of the time, they get away with infringement simply because they pick on little guys and out-lawyer them. But these few times where they picked on someone with enough resources to take it to trial, the fine should hurt. Eventually, through appeals and legal jockeying, they'll pay little or nothing, and simply continue on praticing infringement.

I'm not for exessive stupidity on damage awards, but until damages actually get the attention of offending parties, this kind of practice will continue.
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NullOp, 14 Sep 2009 @ 5:13am

Why?
Good question! Juries, generally, really have no idea how to value a feature. This is obvious by the ridiculous award given by the jury. Most people have pie-in-the-sky ideas and big business and money and subsequently think if the company is big, the judgment must be big.
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Y. Another, 14 Sep 2009 @ 5:41am

Yet another reason...
Yet another reason that software patents are completely and utterly idiotic and ridiculous.

There is no way you should be able to patent ANY software of ANY kind. There are 1,000,000,000 ways to do ANYTHING with software. To patent the expression of a single result is a decision made by an idiot who knew absolutely nothing about writing code.

Pure idiocy!
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Free Capitalist (profile), 14 Sep 2009 @ 6:18am

Guiding the Blind
When I once served on a jury for a civil injury lawsuit, I seem to recall receiving basic information on award calculations from both attorneys along with comments from the judge. There were also suggested 'tiers' of awards involving the potential lost income of the plaintiff, *and potential punitive awards if we found the defendant grossly negligent.

In the end it seemed more like a 'put the finger in the air and test the wind' process once we got to deliberations amongst the jurors. Try as I might, I couildnt' get anyone to really try the math (very, very limited algrebra involved with basic arithmetic), everyone wanted to simply select from one of the 'ranges' the plaintiff's lawyer suggested.

I'm curious as to whether these juries discussed in the article were given similar guidelines and in the end decided on the laziest answer?
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Vincent, 14 Sep 2009 @ 6:31am

well this is Microsoft...
Often in these cases the jury is given a choice between the damages suggested by the plaintiff and the defence with a massive gap between the two. It's easy to paint Microsoft as the Uncle Scrooge of the IT world with hundreds of millions of customers and near monopolies for MS Word and Outlook. When the plaintiff and defense both get to present a damages calculation to the jury it's easy to see why the jury often goes against Microsoft.

It would be better to have a completely independent third party offering opinions on the value of the damages and finding the middle ground.
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angry dude, 14 Sep 2009 @ 7:52am

clueless techdirt lemming-punks
You folks are stupid beyond belief
I wouldn't trust you to clean my toilets
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- Anonymous Coward, 14 Sep 2009 @ 5:38pm
  
  Re: clueless techdirt lemming-punks
  I'm suprised you use a toilet
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Anonymous Coward, 14 Sep 2009 @ 7:58am

The reduction of a jury award by a trial judge is clearly an exceptional circumstance and by no means a significant practice. In addition, a judge is constrained by significant judicial precedent outlining when he/she may and may not make such a decision.

This article to me tends to suggest this is a significant problem, when experience in such matters demonstrates that this is rarely the case.
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Anonymous Coward, 14 Sep 2009 @ 9:15am

Problem is with "reasonable royalty"
Juries do a reasonable job setting damages in other areas, why is it such a problem with patents? I think the fault lies with the "reasonable royalty" language in the statute. What about a statutory change requiring a royalty to be based on the economic value added by the patented features?
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