by Dennis Crouch
Apple v. Motorola (N.D.Ill. 11–cv-8540) (Order by Judge Posner, June 2012)
Compensating for Harm: In most tort cases, the harm is easy to identify (if not prove). A negligent driving accident results in property damage. Tortious battery leads to medical bills. However, the non-rivalrous nature of intellectual property often makes the harm more difficult to ascertain. No one is directly injured per se when a third party begins to use an inventor's idea without authorization. Rather, the idea is still available and a third party's separate use of the invention does not prevent the inventor from continuing use the invention as well. Competitive injury sometimes comes into play. Of course, in most situations we don't think of competitive injury as an actionable harm, but rather classify it as beneficial competition – survival of the fittest. And, in most US patent lawsuits, the patented invention does not relate to any ongoing market competition between the parties. The legal harm does exist, but it comes from the statutory exclusive right that guarantees an exclusive entitlement to the patentee along the potential for injunctive relief and a reasonable royalty. Patentees expect to collect rents if others use their patented inventions. Litigation damages are those rents.
Judge Richard Posner is sitting by designation as a trial court judge in a pending infringement lawsuit between Apple and Motorola. (N.D.Ill. 11–cv-8540). Judge Posner's opinions are always interesting to read and this case is no exception. In a recent order, Judge Posner canceled the jury trial scheduled for this week and instead opined that the case is moot because there are no damages and therefore, “neither party can establish a right of relief.” In the order, Judge Posner indicated that a full opinion would be forthcoming, likely within the week.
The crux of the order is that, even if Apple's asserted patents are valid and infringed, Apple cannot prove any damages stemming from the infringement nor can it prove that the harm of ongoing infringement is sufficient to demand injunctive relief.
Damages not an Element: For some causes of action, harm is considered an element of the offense that must be proven before liability is found. Ordinary defamation requires harm. Likewise, murder requires a death. However, many other causes of action (including patent infringement) do not require a showing of harm for the substantive case. Rather, the the usual approach in patent cases is to first determine whether infringement has occurred (without regard to the damage caused) and then determine the appropriate damages. This approach is derived by the patent statute that defines infringement in 35 U.S.C. 271 without regard to damages. A separate provision (discussed below) then suggests a damage calculation method.
Patent Infringement but No Damages?: Section 284 of the Patent Act briefly defines the scope of damages available for infringement. The statute indicates that damages should be “adequate to compensate for the infringement but in no event no less than a reasonable royalty for the use made.” Many see the statute as offering a minimum statutory damage award of at least a reasonable royalty. In my view, one implication of the statute is that damages will never be properly calculated as zero. Rather, even a nominal infringement should result in at least a few pennies as the reasonable royalty.
Proving Damages: It is easy to reconcile my notion that infringement damages are always posigive with Judge Posner's conclusion that no damages exist in this case. The missing linkage is the procedural reality that it is the patentee's burden to prove damages. A planitiff that cannot prove damages should not expect a court to speculate on the proper award. Rather, without that proof, the proper award is zero (or perhaps a nominal award of $1). Here, because Apple's damages experts have either been rejected by the court or else have provided unbelievable reports, Apple's award will be zero.