CPF Ups the Ante on Patent Reform, Spells Out Damage Apportionment

On March 5, the Coalition for Patent Fairness (CPF) issued a letter to Senators Leahy, Specter and Hatch proclaiming that, not only is damage apportionment necessary, apportionment considerations need to be codified to provide a template for judges to instruct juries:

A serious and continuing problem in the calculation of a reasonable royalty is the lack of adequate jury instruction. Juries are not given enough guidance and are too often left to sift through facts and factors without clear guidance on which of the many factors presented are relevant. As a result, judges have been compelled to either take the difficult step of vacating the jury’s award, with the resulting disruptions and inefficiencies, or let the unfair verdict stand. To address these concerns, and based on the work conducted through consultations hosted by Senator Specter, we suggest adding a substantially clarified role for judges.

Much discussion in Senator Specter’s process has focused on whether the judge is compelled to direct the jury to apply a single method to calculating a reasonable royalty. We understand this concern, and our suggestion provides the judge the clear discretion to put before the jury a single method, or more than one method, in the interest of justice.

Much discussion has also focused on whether the changes made by the bill should be limited to just a clarified role for judges as gatekeepers. We believe that a clarified “gatekeeping” role for judges is a necessary but not sufficient element of the bill. We believe it is indispensable for the bill also to provide judges with the legal guidance on how a reasonable royalty is to be calculated. Without this guidance judges would be left with a mandate to apply the law and instruct juries, but without the guidance on the legal principles needed to fulfill that mandate. Such a situation would be akin to requiring persons to take a road test to obtain a driver’s license, while leaving the DMV examiner without guidance on the skills the applicant must demonstrate, or requiring a referee at a basketball game to officiate without a rulebook.

Specifically, CPF proposes a statutory analysis "to ensure that a reasonable royalty is determined on the basis of the portion of the economic value of the infringing product … that is properly attributable to the infringer’s use of the elements of the invention that were novel and nonobvious … and shall permit the jury to hear only evidence relating to that economic value.”

The CPF has also provided a mark-up of the proposed statutory language in the attached document. As Hal Wegner noted this weekend, "[t]he Business Software Alliance (BSA) has now thrown what must be considered the ultimate bomb to blow up any realistic chance of compromise [for the Patent Reform Act]."

Read/download the letter, along with supporting documents here (link)