Voip-Pal.com, Inc. v. Apple, Inc.

Filing 1

COMPLAINT against Voip-Pal.com, Inc. (Filing fee $400 receipt number 0978-3994067), filed by Voip-Pal.com, Inc.. Certificate of Interested Parties due by 2/19/2016. Proof of service due by 6/8/2016. (Attachments: # 1 Index, # 2 Exhibit A, # 3 Exhibit B, # 4 Exhibit C, # 5 Exhibit D, # 6 Exhibit D-(Chart 1), # 7 Exhibit D-(Chart 2), # 8 Exhibit D-(Chart 3), # 9 Exhibit D-(Chart 4), # 10 Exhibit E, # 11 Exhibit F, # 12 Exhibit F-Addendum 1, # 13 Civil Cover Sheet, # 14 Summons) (Bonds, Kurt)

February 2016

ADDENDUM 1
RECENT PATENT INFRINGEMENT CASES
ANALYSIS DETAIL
A.

Overview

The patent infringement analysis referenced herein analyzes the outcomes of ten (10) major
patent infringement litigation examples and provides key figures on damages sought by
plaintiffs, initial court damage awards, final/adjusted damage awards or settlement amounts, and
key case notes.
The awarded damages and out-of-court settlements detailed in this analysis provide a meaningful
frame of reference in understanding the patent litigation landscape with particular respect to
technology. The weighted average royalty (or settlement) as a percentage of apportioned profits
of these ten cases is 9.88%. By contrast, the royalty rate the Voip-Pal has chosen for its Royalty
Monetization analyses is only 1.25% (87% less than the weighted average rate).
For each infringement suit analyzed, key figures detailed include (i) initial damages sought (if
applicable/if disclosed), (ii) initial court/jury damages awarded, (iii) adjusted/final damages
awarded (or settlement amount if settled out of court), and (iv) the resulting award/settlement
amount as a percentage of apportioned profits. Specific figures for each litigation example are
detailed further below.
B.

Case Analysis
1.

VirnetX v. Apple, Inc. (6:12-CV-00855 (E.D. Texas))

VirnetX filed suit against Apple in August 2010 accusing infringement on its technology by the
iPhone, iPod Touch and iPad. In November 2012, a Texas jury found that Apple infringed all
four patents awarded VirnetX $368 million in damages; VirnetX filed additional suit that day for
damages on products released since the first suit. In February 2013, U.S. District Judge Leonard
Davis rejected VirnetX’s request for a permanent injunction barring Apple from using the
infringing features in its products, and severed VirnetX's request for an ongoing royalty from
Apple into a separate cause of action. After the companies failed to reach a resolution, Judge
Davis ordered apple to pay an ongoing royalty rate of 0.98% of revenue on infringing products.
In September 2014, the Federal Circuit affirmed the jury's finding of infringement, but threw out
the $368 million damages award, and later in February 2015 vacated the ongoing royalty. In
March, Texas Judge Robert Schroeder decides to combine the trials. On February 3, 2016, the
jury found in favor of VirnetX across the board, awarding $290.7 million for the original
infringement and $334.9 million in damages for the newer complaint. Such figures were based
on a royalty of $1.41 per device (an estimated 0.48% of infringing device profits).

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2.

Wisconsin Alumni Research Facility (WARF) v. Apple (14-CV-0062 (W.D.
Wis.))

WARF filed suit against Apple in February 2014 for $398.7 million alleging infringement of its
patented technology in Apple’s 2013 and 2014 iPhone and iPad products (a royalty of $2.74 per
device). The patent, which expires in December 2016, covers a method for executing
instructions in a microprocessor out of order so that it can perform tasks faster. The patent was
issued to WARF in 1998 on behalf of Guri Sohi, a UW-Madison computer science professor,
and three graduate students.
In October 2015, the jury found Apple guilty of infringing on the WARF patent. While Apple
could have been required to pay up to $862 million in damages, the judge ultimately ruled that
infringement was not willful, and therefore Apple was ordered to pay $234.3 million (0.50% of
estimated infringing device profits).
3.

Microsoft Corp. v. i4i Ltd. P'ship, 131 S. Ct. 2238, 180 L. Ed. 2d 131 (2011)

i4i filed suit against Microsoft in May 2007, claiming Microsoft was infringing on its XML
software with various versions of its Word software, and seeking $200 million in damages. i4i
argued that it was entitled to a 25.0% royalty on approximately 2.0% of some 100 million
Microsoft Word licenses ($98.00 royalty per license).
After the Jury ruled in i4i’s favor in May 2009, US District Judge Leonard David upheld the
decision against Microsoft and decided that the infringement was willful and ordered additional
compensation to i4i for damages – $37.1 million in post-trial interest & $40 million in punitive
damages for a total of $290.6 million (0.73% of ~$40 billion of estimated profits). He further
ordered Microsoft to halt all sales and support for any new copies of Word 2003 and Word 2007
in the U.S. for approximately 60 days. Microsoft appealed to the U.S. Supreme Court, but the
decision was upheld in June 2011.
4.

VirnetX v. Microsoft (6:07-cv-00080 (E.D. Texas))

VirnetX filed suit against Microsoft in 2007, claiming Microsoft was using its virtual private
networking (VPN) patents without paying for their use. VirnetX cited Windows Server 2003,
XP, Vista, Live Communications Server, Windows Messenger, Office Communicator and
various versions of Office as infringing on two of its patents, and sought $242 million in
damages.
After a contentious trial, in March 2010 a jury recommended Microsoft pay VirnetX $105.75
million for willfully infringing on two VirnetX networking patents. Microsoft officials said at
that time they were appealing that ruling. However, VirnetX then filed an additional suit,
claiming Microsoft's Windows 7 and Windows Server 2008 R2 also infringed on its networking
patents.

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In May 2010, the companies announced they had settled out of court for $200 million
(approximately 2.24% of $8.9 billion in Microsoft profits from potentially infringing software).

5.

Wisconsin Alumni Research Facility (WARF) v. Intel (08-C-78-C (W.D.
Wis.))

WARF filed suit against Intel for an undisclosed amount in February 2008 alleging infringement
of an invention that significantly improved the efficiency and speed of computer processing,
utilized in some of Intel’s processors (including Core & Core 2). The technology, patented in
1998, was developed by four researchers at UW-Madison, including former computer science
department chair Professor Gurindar Sohi.
In October 2009, both sides notified the court that they had reached a settlement just days before
trial was scheduled to begin. Terms were confidential, but the settlement amount paid to WARF
was later revealed to be $110 million (approximately 3.61% of an estimated $3+ billion in Intel
Core profits; terms were discovered in documents in WARF’s litigation against Apple which was
filed in February 2014).
6.

Apple Inc. v. Samsung Electronics Ltd., Inc. (12-CV-00630-LHK (N.D. Cal))

Apple filed a second lawsuit against Samsung in February 2012 for nearly $2.2 billion in
damages, alleging infringement by at least 21 Samsung smartphones, media players, and tablets
released beginning August 2011 through August 2012. Samsung once again filed counterclaims
against Apple, accusing the company of infringement on some of its own patents and arguing
that Apple was trying to hurt competition by targeting it for litigation.
In May 2014, the jury ultimately found largely in favor of Apple in the amount of $119.6 million
(1.84% of estimated infringed device revenue). The jury also found that Apple had infringed
one of Samsung two patents (although Apple was ordered to pay Samsung a mere $158,400).
7.

Apple Inc. v. Samsung Electronics Ltd., Inc. (11-CV-01846-LHK (N.D. Cal))

Apple filed a lawsuit against Samsung in April 2011 for over $2.5 billion in damages, accusing
the company of infringing four of its design patents (iPhone, iPad and iOS) and three utility
patents. Samsung counter-sued, arguing that Apple infringed on five of its patents, two of which
are standard essential patents that have to do with 3G technology, which the company licenses
out. Samsung demanded Apple pay a royalty rate of 2.4% on the “entire selling price” of its iOS
devices for use of its patents. The jury ultimately found in favor of Apple, awarding $1.05
billion in damages, which was reduced to just under $930 million in a partial retrial.
On appeal of the $930 million verdict, the Federal Circuit affirmed the infringement by
Samsung, but ultimately reduced the $930 million verdict by $382 million, stating that Apple's
trade dress did not meet the “nonfunctional” requirement for protection under the Lanham Act.
In the end, Samsung paid Apple ~$548 million, or 6.71% of the $8.61 billion in infringing device
revenue.
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8.

Carnegie Mellon University v. Marvell Technology Group, Ltd. (09-CV00290-NBF (W.D. Pa.))

Carnegie Mellon University (CMU) sued Marvell in March 2009 for infringing two patents
related to hard-disk drives. A jury found in favor of CMU on infringement and validity,
awarding damages of approximately $1.17 billion in reasonable royalties (based on a $0.50 per
product royalty rate). The district court applied the $0.50 per product rate to all sales as of the
date of judgment, and further awarded a 23% enhancement for willful infringement. Marvell
appealed.
In August 2015, the Federal Circuit affirmed the judgment of infringement and validity, and
affirmed the $0.50 royalty rate (22.56% of Marvell profit of $2.22 per chip) as a reasonable
result based on a hypothetical negotiation. However, it vacated the original damages award
(reducing damages to U.S. sales only) and ordered a partial new trial to determine whether chips
that never entered the U.S. could be considered sales that occurred in the United States for
damages purposes. This remains to be determined.
9.

Summit 6, LLC v. Samsung Elecs. Co., 802 F.3d 1283 (Fed. Cir. 2015)

Summit 6 sued Samsung (as well as Research in Motion, Facebook and other defendants) in
February 2011 asserting infringement of its “intelligent processing” web-based media
submission tool, specifically regarding processing of digital content such as photos.
Summit’s expert witness attributed 6.2% (based on costs) of Samsung’s revenue from selling
each phone ($14.15) to the camera’s functionality. He further concluded that 20.8% of the
$14.15 in revenue for including the camera component in each phone ($2.93) was due to
infringing features. Based upon annual reports and other estimated figures, the Summit 6 expert
concluded that because neither party had a stronger negotiating position, the parties would have
in theory split the $0.56 evenly, thus deriving a reasonable royalty of $0.28 per device, or
approximately $29 million based upon relevant device sales.
In April 2013, a jury ruled in Summit 6’s favor, finding its five asserted claims not invalid and
infringed, and awarded Summit $15 million in damages (~25.9% of an estimated $58 million of
infringing profits) as a lump sum for past and future infringement. On appeal, the verdict against
Samsung in both amount and form was upheld.
10.

ActiveVideo Networks v. Verizon Communications (10-CV-0248 (E.D. Va.))

ActiveVideo sued Verizon in May 2010 alleging that Verizon’s FiOS-TV video-on-demand
service infringed five of its patents. In August 2011, a jury found Verizon liable for infringing
four patents, and awarded in favor of ActiveVideo for $115 million in damages; the jury also
found ActiveVideo infringed two Verizon patents, but pegged Verizon's damages at just
$16,000. After trial, U.S. District Judge Raymond Jackson added $25 million in supplemental
damages and interest, and further issued a rare injunction forcing Verizon to cease infringing the
four patents. Although the injunction was stayed for eight months to give Verizon time to design
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around the patents, during that time Verizon accrued $2.74 per month per FiOS-TV subscriber (a
staggering 40% of Verizon's profits from Fios-TV) in “sunset royalties” owed to ActiveVideo,
which brought Verizon's total liability to approximately $260 million.
On appeal, The Federal Circuit reversed the finding of infringement as to one patent, but
affirmed as to the other three; it left the jury's verdict intact and ruled that the royalty payments
were not in error. Verizon settled the case for the ~$260 million owed plus an unspecified
additional cash amount (over 40% of relevant FiOS TV profits).
C.

Conclusion

The cases, as detailed above, cover a broad spectrum of technology patent litigation, ranging
from software to hardware, from processing to operating systems and even simple device
appearance.
As illustrated below, the weighted average damage award as a percentage of court award
or settlement amount the ten (10) cases analyzed is 9.88%. Comparatively, Voip-Pal has
utilized a modest royalty rate of just 1.25% in its Royalty Monetization analyses, which
represents an 87.3% discount to this weighted average figure.
Case #
6:12-CV-00855
14-CV-62
07CV113
607CV80 (LED)
08-C-78-C
12-CV-00630-LHK
11-CV-01846-LHK
09-CV-00290-NBF
11-CV-0367
10-CV-0248

Plaintiff

Defendant

VirnetX
WARF
i4i
VirnetX
WARF
Apple Inc.
Apple Inc.
Carnegie Mellon University
Summit 6, LLC
ActiveVideo Networks

Apple
Apple
Microsoft
Microsoft
Intel
Samsung Electronics Ltd. Inc.
Samsung Electronics Ltd. Inc.
Marvell Technology Group, Ltd.
Samsung Electronics Ltd. Inc.
Verizon Communications

Award / Settlement
Adj. Settlement /
% of Relevant Profit
Court Award ($)
$625,633,841
0.48%
234,300,000
0.50%
290,640,316
0.73%
200,000,000
2.24%
110,000,000
3.61%
119,625,000
14.27%
547,860,041
19.18%
278,406,046
22.57%
15,000,000
25.86%
115,000,000
40.77%
WEIGHTED AVERAGE

9.88%

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