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Source link: http://archive.mises.org/7221/patent-damages/

Patent Damages

September 27, 2007 by

Is that a verb or a noun?

Some recent examples:

  • Qualcomm has been enjoined from importing chips that help conserve power in cellphones (discussion; latest developments);

  • 802.11n Wi-Fi standard (which promises to significantly increase Wi-Fi speed and range) in jeopardy due to patent threats. See Bill Ray, Next generation Wi-Fi mired in patent fears, The Register (9/21/2007);
  • VoIP phone service Vonage may be put out of business by Sprint’s patent victory; Sprint plans “to ask the court to permanently ban Vonage from using its patented technology,” and the damage aware could be tripled. Kim Hart, Sprint Wins Patent Case Against Vonage: Reston Firm Awarded $69.5 Million in Second Blow to Internet Phone Company, Washington Post (September 26, 2007);
  • Revolutionary Television Design Killed by Patents;
  • BlackBerry’s manufacturer, RIM, was forced to cough up $612.5 million after NTP used patent law to threaten to shut RIM down;
  • Microsoft was on the receiving end of a $1.5 billion dollar jury verdict for infringing an MP3 patent held by Alcatel-Lucent (which was recently overturnedAfter Kodak sought more than $1 billion in damages from Sun Microsystems for patent infringement, Kodak finally settled for $92M (and according to one colleague, the verdict resulted “in the immediate shut-down of Kodak’s entire instant photography division, with the immediate loss of 800 jobs. And, some say, the eventual failure of Polaroid due to lack of any real competition to keep them on their toes!”);
  • In another recent case, Freedom Wireless obtained a $150M damages award against Boston Communications Group, Inc., which at the time had revenues of only about $100M. In this case, the judge also refused to stay the injunction issues against BCGI (and by extension, its customers) pending appeal;
  • Smith International was forced to pay Hughes Tool Company $205.4 million for infringement upon Hughes’s patent for an “O-ring seal” rock bit, which led to Smith filing for Chapter 11 bankruptcy protection (this was in 1986, when $200M was considered a large patent verdict).

As of March 2003, the top 5 patent infringement damage awards ranged from $873 million (Polaroid v. Kodak, 1991) to $204.8 million (Hughes Tool v. Smith International, 1986). The top 5 patent settlements ranged from $1 billion to $300 million. Damage Awards and Settlements, IP Today (March 2003); see also Gregory Aharonian, Patent/copyright infringement lawsuits/licensing awards. Sadly, a $200 million verdict seems normal nowadays. The recent $156 million patent infringement verdict against AT&T, for example—which could possibly be trebled by the judge—now looks like small potatoes.


Marc Pickett September 27, 2007 at 9:26 am

I have been in patent litigation practice since 1993. And it does appear that many patent damage paradigms propounded during trial are not in-line with business reality, nor the law.

Paul Hartyanszky September 27, 2007 at 8:35 pm

It seems that one of the odd things about patent and copywright protection is that the principal users of it, namely information technology heavy weights, are the very ones that are accused of ‘anticompetitive’.

Antitrust mesures are always called for yet the issue of the patent system creating a legal monopoly is never addressed.

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