Published: 12/4/14
In this decision, the Court of Appeals for the Federal Circuit reviewed a trial court’s decision upholding a jury award of $0.15 for three Wi-Fi SEPs. The Court of Appeals held that the trial court had not instructed the jury properly and reversed the damages award. In particular, it faulted the trial court for failing to instruct the jury to apportion the royalty to the value of the patented inventions. The court held that:
When dealing with SEPs, there are two special apportionment issues that arise. First, the patented feature must be apportioned from all of the unpatented features reflected in the standard. Second, the patentee’s royalty must be premised on the value of the patented feature, not any value added by the standard’s adoption of the patented technology. These steps are necessary to ensure that the royalty award is based on the incremental value that the patented invention adds to the product, not any value added by the standardization of that technology.
The court emphasized that because electronic products implement multiple technologies and “patents often claim only small portions of multicomponent products,” it is essential that royalties be awarded based on the contributions of the patents to the relevant standards and the applicable standards’ contributions to the overall product. Unless the entire value of the product is attributable to the particular patented feature, the starting point for the royalty calculation is “the smallest salable unit [that implements the patented feature] and, at times, even less.” The court also held where evidence of hold-up or royalty stacking is introduced, the trial court must instruct the jury to take them into account.