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Cornell Damage Apportionment Making Way Through Courts

By Peter Zura

The other week in Cornell University v. Hewlett-Packard, Judge Randall, sitting by designation in the Northern District of New York, chopped Cornell's damage award from $184M to $54M, stating that "Cornell simply stepped one rung down the Hewlett- Packard revenue ladder from servers and workstations to the next most expensive processor incorporating product without offering any evidence to show a connection between consumer demand for that product and the patented invention"(see more here).

In the high-profile case of Star Scientific v. R.J. Reynolds, (MJG 01-CV-1504, D. Md.) defendant counsel pounced on this ruling and filed a motion in limine to prevent Star from expanding their damages theory before the jury:

In Cornell University v. Hewlett-Packard Company, No. 01-CV-1974 (N.D.N.Y. Mar. 30, 2009) (Ex. 1), the Honorable Randall R. Radar, sitting by designation from the United States Court of Appeals for the Federal Circuit, issued a significant ruling limiting the scope of the royalty base for damages in patent infringement cases, and made clear that Star?s pie-in-the-sky damages theory in this case should be stricken.

[T]he decision in Cornell bears directly on three of the fatal flaws in Star?s damages theory, as addressed in RJR?s pending motions in limine on damages (see Dkt. Nos. 603 and 749): (1) Star seeks a royalty base derived from cigarette sales, even though the output of the patented proces sends with tobacco, not with the cigarettes that only result many steps later; (2) there is no nexus between the farmers? alleged use of the patented process and cigarette sales sufficient to invoke application of the entire market value rule; and (3) Star improperly aggregates license agreements under an A + B + C + D formula, even though only A ? a license agreement setting forth a royalty base tied to pounds of tobacco ? is related to Star?s patents. If Star is permitted to mislead the jury with its seriously flawed damages theory, the decision in Cornell demonstrates why the resulting award could not withstand review.

See also, "With Tobacco-Patent Suit, Star Scientific Presses for Clout" (link)

Full post as published by Two-Seventy-One Patent Blog on April 15, 2009 (boomark / email).