Alfonso Cioffi et al v. Google, Inc.
MEMORANDUM OPINION AND ORDER REGARDING ONGOING ROYALTY AND SUPPLEMENTAL DAMAGES re 277 SEALED PATENT MOTION filed by Morgan Rozman, Megan Rozman, Melanie Rozman, Alfonso Cioffi.. Signed by Judge Rodney Gilstrap on 9/12/2017. (nkl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
CIOFFI et al.,
Civil Action No. 2:13-cv-103
MEMORANDUM OPINION AND ORDER REGARDING ONGOING ROYALTY
AND SUPPLEMENTAL DAMAGES
Before the Court is the Motion for Ongoing Royalty (Dkt. No. 277) filed by Plaintiffs
Alfonso Cioffi, Melanie Rozman, Megan Rozman, and Morgan Rozman (collectively,
“Plaintiffs”). Plaintiffs seek imposition of an ongoing royalty for any continued infringement by
Defendant Google, Inc. (“Google”), as well as a corresponding reporting requirement. Having
considered the Motion, the Parties’ briefing, and the relevant authorities, the Court is of the opinion
that the Motion should be GRANTED AS MODIFIED. The Court hereby sets the ongoing
royalty rate at $0.002601 per Chrome user per month—the implied royalty rate determined by the
A jury trial commenced in this case on February 6, 2017. On February 10, 2017, the jury
returned a unanimous verdict (Dkt. No. 259) finding infringement and also finding the asserted
claims not invalid. The jury awarded damages of $20 million in the form of a running royalty.
(Dkt. No. 259.)
Plaintiffs concede that a permanent injunction is not appropriate in this case and instead
seek an ongoing royalty to compensate them for future infringement that may occur during the
remaining nine years of the infringed patents. (Dkt. No. 277 at 6, 17.) Although Plaintiffs initially
indicated in a footnote their intent to seek supplemental damages by a separate motion, at the
hearing on this Motion, the Parties agreed instead to apply the ongoing royalty rate determined by
the Court to any supplemental damages, thus eliminating the need for an additional motion. (Tr.
of Mot. Hr’g, July 6, 2017, Dkt. No. 30 (“Hr’g Tr.”) at 45:20–47:12.)
At the outset, Google argues that a determination of any ongoing royalty in this case should
be deferred until after the Court addresses the Parties’ pending JMOL motions. (Dkt. No. 285 at
5.) Google suggests that this Court should instead sever the issue of ongoing royalties from this
case and then stay consideration of that issue. (Dkt. No. 285 at 5.)
In this Court’s view, it is prudent in this case to address the issue of ongoing royalties now
rather than unduly delay the entry of final judgment. See Warsaw Orthopedic, Inc. v. NuVasive,
Inc., 515 F. App’x 882 (Fed. Cir. 2012) (“[T]he case is not ‘final’ because the district court has
not yet determined ongoing royalties. An ongoing royalty is not the same as an accounting for
damages [under 28 U.S.C. § 1292(c)(2)].”). In Warsaw Orthopedic, the Federal Circuit dismissed
an appeal because the district court had not yet addressed ongoing royalties. Id. Although Warsaw
Orthopedic is a non-precedential decision, it nonetheless provides some level of guidance as to
what issues should be included in a final judgment. Moreover, the Circuit’s reasoning in that case
is consistent with Supreme Court precedent regarding finality of judgments. See Catlin v. United
States, 324 U.S. 229, 233 (1945) (“A ‘final decision’ generally is one which ends the litigation on
the merits and leaves nothing for the court to do but execute the judgment.”). Other district courts
have agreed, holding that staying the ongoing royalty issue would preclude entry of final judgment,
thus preventing the parties from appealing other issues in the case. See, e.g., Apple, Inc. v. Samsung
Elecs. Co., No. 12-cv-00630-LHK, 2014 WL 6687122, at *7 (N.D. Cal. Nov. 25, 2014). The
Warsaw Orthopedic reasoning also promotes the policy underlying final judgments—that all
issues be addressed through a single appeal rather than through piecemeal appellate practice. As
such, the Court is persuaded that it is prudent under the circumstances in this case to address
ongoing royalties before entering final judgment.
As to Google’s suggestion to sever the issue of ongoing royalties, Google has not presented
any case law to suggest that this Court must sever and stay the ongoing royalty determination. The
Court sees no particular reason to sever this issue in this case.
b. Legal Standard
A court’s authority to award an ongoing royalty for continued patent infringement finds its
origin in 35 U.S.C. § 283. Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1377 (Fed.
Cir. 2017) (“We have interpreted that provision [Section 283] to permit a court to award ‘an
ongoing royalty for patent infringement in lieu of an injunction’ barring the infringing conduct.”
(quoting Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1314 (Fed. Cir. 2007)). The award of
an ongoing royalty is equitable in nature. Fresenius USA, Inc. v. Baxter Int’l, Inc., 733 F.3d 1369,
1379 (Fed. Cir. 2013) (“Fresenius II”) (“While we may at times improperly use the term ‘damages’
as a shorthand term to encompass the concept of the right to some prospective monetary relief,
that cannot change the equitable character of that relief.”).
i. Whether an Ongoing Royalty is Appropriate
The Federal Circuit has recognized that “[u]nder some circumstances, awarding an ongoing
royalty for patent infringement in lieu of an injunction may be appropriate.” Paice, 504 F.3d at
1314. More recently, the Circuit has stated that “absent egregious circumstances, when injunctive
relief is inappropriate, the patentee remains entitled to an ongoing royalty.” SCA Hygiene Prod.
Aktiebolag v. First Quality Baby Prod., LLC, 807 F.3d 1311, 1332–33 (Fed. Cir. 2015), vacated
in part on other grounds, 137 S. Ct. 954 (2017). However, a court is not required to grant a
patentee’s request for an ongoing royalty, even where a permanent injunction does not issue.
Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 35–36 (Fed. Cir. 2012); Paice, 504 F.3d
at 1315. Instead, whether to grant an ongoing royalty is a matter within the district court’s
discretion, and a court may decide that a forward-looking royalty is not appropriate in a particular
case. See Whitserve, 694 F.3d at 35.
The question of whether to award an ongoing royalty is guided at least in part by the form
and scope of relief awarded by the jury. For example, in Summit 6, LLC v. Samsung Elecs. Co.,
the jury’s damages award took the form of a lump sum royalty. 802 F.3d 1283, 1301 (Fed. Cir.
2015). There, the Federal Circuit held that “the district court properly denied [the plaintiff’s]
request for an ongoing royalty because the jury award compensated [the plaintiff] for both past
and future infringement through the life of the patent.” Id. at 1300–01. See also Telcordia Techs.,
Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1379 (Fed. Cir. 2010) (“An award of an ongoing royalty is
appropriate because the record supports the district court’s finding that [the plaintiff] has not been
compensated for [the defendant’s] continuing infringement.”); Fresenius USA, Inc. v. Baxter Int’l,
Inc., 582 F.3d 1288, 1303 (Fed. Cir. 2009) (“Fresenius I”) (“A damages award for pre-verdict
sales of the infringing product does not fully compensate the patentee because it fails to account
for post-verdict sales of repair parts. . . . The district court was within its discretion to impose a
royalty on those sales of disposable products in order to fully compensate [the patentee] for the
infringement.”); Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 2:15-cv-1202-WCB,
2017 WL 3034655, at *2 (E.D. Tex. July 18, 2017) (Bryson, J.) (“UroPep”) (“[I]t would be
improper for the Court first to conclude that the damages awarded by the jury do not cover the
post-verdict period, but then to rule that [the plaintiff] is not entitled to any relief for that period.”).
Accordingly, whether the jury award compensates the patentee for future infringement is important
because without some form of prospective relief, the patent owner is effectively forced to “resort
to serial litigation” to receive compensation for future infringement. UroPep, 2017 WL 3034655,
at *2 (quoting Whitserve, 694 F.3d at 35).
Where the jury has not expressly indicated the form of its reasonable royalty award, the
form of the award may be inferred based on the arguments and evidence presented to the jury
during trial, the district court’s instructions to the jury, and the verdict form itself. See Whitserve,
694 F.3d at 35 (analyzing the evidence at trial and rejecting the argument that the jury awarded a
paid-up license). Here the jury’s verdict expressly indicates the reasonable royalty was a running
royalty as opposed to a lump sum award.
ii. Setting the Royalty Rate
If a district court finds it appropriate to award an ongoing royalty, the proper royalty rate
is “a matter committed to the sound discretion of the district court.” Amado v. Microsoft Corp.,
517 F.3d 1353, 1362 n.2 (Fed. Cir. 2008). See also Paice, 504 F.3d at 1315. Courts routinely use
the royalty rate implied by the jury’s verdict as the starting point in determining a forward-looking
royalty. UroPep, 2017 WL 3034655, at *7 (“Recognizing the importance of the jury’s verdict,
courts have uniformly held that the starting point for the Amado analysis of the ongoing royalty
rate is the royalty rate found by the jury for the pre-verdict infringement period.”). However, a
court has discretion to impose an ongoing royalty rate higher than the rate implied by the jury. See
Amado, 517 F.3d at 1361–62 (rejecting the argument that the post-verdict royalty rate should
necessarily be equivalent to the implied rate determined by the jury). The patent owner seeking a
higher rate bears the burden to show that enhancement of the jury’s rate is appropriate in a given
case. UroPep, 2017 WL 3034655 at *7.
Using the jury’s implied royalty rate as a starting point, courts conduct a renewed analysis
of a reasonable royalty based on a post-verdict hypothetical negotiation. UroPep, 2017 WL
3034655 at *8; Apple, Inc. v. Samsung Elecs. Co., No. 12-cv-00630-LHK, 2014 WL 6687122, at
*13 (N.D. Cal. Nov. 25, 2014). In this analysis, “courts have often used the so-called GeorgiaPacific factors in assessing how the changed circumstances would produce a royalty rate in a
hypothetical post-verdict licensing negotiation that was different from the royalty rate the jury
selected based on a hypothetical licensing negotiation at the outset of infringement.” Bianco v.
Globus Med., Inc., 53 F. Supp. 3d 929, 933 (E.D. Tex. 2014) (Bryson, J.). See Fresenius I, 582
F.3d at 1303 (reversing the district court’s JMOL ruling and, in light of such reversal, remanding
for an analysis of the ongoing royalty rate that would result from a hypothetical negotiation—an
analysis that is “influenced by the Georgia Pacific factors”). See generally Georgia-Pacific Corp.
v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970) (outlining the relevant factors). In this
post-verdict analysis, courts “focus on any new evidence that was not before the jury and
additionally any changed circumstances (other than willfulness) between a hypothetical
negotiation that occurred [at the time infringement began] (which the jury determined) and a
hypothetical negotiation that would occur  after the judgment (which this Court is determining).”
Mondis Tech. Ltd. v. Chimei InnoLux Corp., 822 F. Supp. 2d 639, 647 (E.D. Tex. 2011), aff’d sub
nom. Mondis Tech. Ltd. v. Innolux Corp., 530 F. App’x 959 (Fed. Cir. 2013).
A jury’s calculation of a reasonable royalty based on the hypothetical negotiation model
involves “ascertain[ing] the royalty upon which the parties would have agreed had they
successfully negotiated an agreement just before infringement began.” Lucent Techs., Inc. v.
Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009). This approach analyzes the rate a willing
licensor and willing licensee would have agreed to before infringement began, with both parties
assuming that the patents were valid and infringed. Lucent Techs., 580 F.3d at 1325 (“The
hypothetical negotiation also assumes that the asserted patent claims are valid and infringed.”).
Where it is clear that the jury’s award was based upon an assumption that the patent was
infringed and valid, there is a “strong reason for following the jury’s lead” in determining the
appropriate ongoing royalty rate. UroPep, 2017 WL 3034655 at *7. Said another way, the fact that
the jury has determined that the patents are actually valid and infringed does not necessarily change
the analysis. Although the new hypothetical negotiation occurs on the date of the jury verdict, this
underlying assumption—that the patents are valid and infringed—has not changed since the date
of the hypothetical negotiation considered by the jury. As Judge Byson aptly explained in UroPep:
“To the extent that the jury can be discerned to have made a decision based on the assumption that
the patent was infringed and valid, and to the extent that other considerations do not compel a
departure from the jury’s assessment of the proper royalty rate, the Court should defer to the jury’s
decision as the finder of fact . . . .” UroPep, 2017 WL 3034655 at *7.
Although the underlying assumptions of validity and infringement have not changed preverdict versus post-verdict, the Federal Circuit has nonetheless stated that “[t]here is a fundamental
difference  between a reasonable royalty for pre-verdict infringement and damages for postverdict infringement.” Amado, 517 F.3d at 1361 (quoting Paice, 504 F.3d at 1317 (“[P]re-suit and
post-judgment acts of infringement are distinct, and may warrant different royalty rates given the
change in the parties’ legal relationship and other factors.” (Rader, J., concurring))). As the Amado
Court explained: “[p]rior to judgment, liability for infringement, as well as the validity of the
patent, is uncertain, and damages are determined in the context of that uncertainty. Once a
judgment of validity and infringement has been entered, however, the calculus is markedly
different because different economic factors are involved.” Amado, 517 F.3d at 1362. The posture
in Amado, however, was unique. See ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694
F.3d 1312, 1343 (Fed. Cir. 2012) (referring to Amado as a “sunset royalty analysis”). There, the
district court granted a permanent injunction, then stayed implementation of that injunction until
seven days after the resolution of any appeal. Amado, 517 F.3d at 1356. After the appeal concluded,
the district court dissolved the injunction1 and awarded the plaintiff a per-unit royalty rate for
infringing sales made during the sunset royalty period (the period that the stay of the injunction
had been in effect). Id. As other courts have reasoned, the analysis in Amado may not apply to
every case. UroPep, 2017 WL 3034655 at *5; EMC Corp. v. Zerto, Inc., No. CV 12-956 (GMS),
2017 WL 3434212, at *3 (D. Del. Aug. 10, 2017). Instead, Amado may be limited to cases where
a permanent injunction was found to be appropriate. UroPep, 2017 WL 3034655 at *5; EMC
The district court in Amado dissolved the permanent injunction in light of eBay Inc. v. MercExchange, L.L.C., 547
U.S. 388 (2006). However, this aspect of Amado is not relevant to the ongoing royalty analysis.
Corp., 2017 WL 3434212, at *3 (distinguishing Amado based on Amado’s unique posture
involving a stay of a permanent injunction).
i. Whether an Ongoing Royalty is Appropriate
At the outset, a court should first determine whether imposition of an ongoing royalty is
appropriate in a particular case. As Google correctly notes, ongoing royalties are a form of
equitable relief, and a court may “exercise its discretion to conclude that no forward-looking relief
is appropriate in the circumstances.” WhitServe, 694 F.3d at 35. In this case, the verdict form
indicates that the jury’s damages award was intended to compensate Plaintiffs only for past
infringement. (See Dkt. No. 259 at 4 (showing the jury’s indication that its award took the form of
a running royalty rather than a lump sum).) Moreover, neither party has pointed to evidence or
arguments presented at trial that would support an argument that the jury award included future
infringement. From this, the Court finds it fitting to award an ongoing royalty in this case, as the
jury’s award fails to compensate Plaintiffs for future infringement. See Summit 6, LLC v. Samsung
Elecs. Co., 802 F.3d 1283, 1301 (Fed. Cir. 2015) (affirming denial of ongoing royalty because “the
jury award compensated [the plaintiff] for both past and future infringement through the life of the
patent”); Telcordia Techs., Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1379 (Fed. Cir. 2010) (“An
award of an ongoing royalty is appropriate because the record supports the district court’s finding
that [the plaintiff] has not been compensated for [the defendant’s] continuing infringement.”);
UroPep, 2017 WL 3034655 at *2 (“[I]t would be improper for the Court first to conclude that the
damages awarded by the jury do not cover the post-verdict period, but then to rule that [the
plaintiff] is not entitled to any relief for that period.”).
Having determined that the circumstances of this case warrant an ongoing royalty, the
Court next turns to the issue of what royalty rate is appropriate.
ii. Implied Royalty Rate
In this case, the Parties agree that the royalty rate implied by the jury’s verdict is $0.002601
per Chrome user per month. (Hr’g Tr. at 23:18–22, 24:11–16.) This rate is supported by the
evidence presented at trial. During trial, Plaintiffs’ damages expert, Dr. Bratic, opined that a
reasonable royalty for past infringement would be $26,275,887, which was calculated based on a
running royalty rate of $0.0034 per Chrome user per month, multiplied by about 7.7 billion
monthly users.2 (Bratic Decl. ¶ 5; Dkt. No. 277 at 4–5, 9 & n.1; Trial Tr. Feb. 7, 2017 p.m., Dkt.
No. 266 at 74:21–75:13, 94:16–95:24; Sealed Trial Tr. Feb. 7, 2017, Dkt. No. 265 at 38:18–40:2.)
The user base included users from December 2012 to January 2017. (Bratic Decl. ¶ 5; Dkt. No.
277 at 4–5; Dkt. No. 285 at 14; Trial Tr., Feb. 7, 2017 p.m., Dkt. No. 266 at 75:1–4.)
Although the jury did not expressly provide a royalty rate, the implied royalty rate may be
calculated based on the total damages award and the user base. Plaintiffs calculate this implied rate
by noting that the total damages award ($20 million) is about 76.12% of the total damages award
they suggested to the jury ($26,275,887), which was based on a suggested rate of $0.0034. (Bratic
Decl. ¶¶ 5–6; Dkt. No. 277 at 5.) Multiplying the rate Plaintiffs suggested to the jury ($0.0034) by
this same percentage (76.12%) results in an implied rate of $0.002601 per Chrome user device per
month. (Bratic Decl. ¶ 6.) The Court finds this undisputed calculation to be reasonable based on
the evidence. Thus, the Court adopts $0.002601 as the implied royalty rate.
Google produced its financial data using “monthly active user totals.” (Bratic Decl. ¶ 5; Dkt. No. 277 at 5 n.1.)
iii. Proper Royalty Rate
In this case, the Parties attempted to negotiate a rate amenable to both parties. However,
such negotiations have failed. (Hr’g Tr. at 5:15–7:13; Dkt. No. 289 at 2; Decl. of Eric W. Benisek
in Support of Plaintiffs’ Motion for Ongoing Royalty, Dkt. No. 277-1 ¶ 2.) In fact, the Parties
could not even agree as to whether their discussion of ongoing royalties was premature. (Dkt. No.
285 at 8; Dkt. No. 290 at 3.) At the hearing, the Parties indicated that further negotiations would
result in an impasse. (Hr’g Tr. 6:18–21.) Having given the Parties an opportunity to negotiate an
appropriate rate, and finding that it would be futile to order additional negotiation efforts, this
Court now exercises its discretion to impose an ongoing royalty rate for post-verdict infringement.
As discussed in further detail below, Plaintiffs request a royalty rate that falls between
$0.0052 and $0.0078 per Chrome user per month, which amounts to 2–3 times the implied jury
rate. (Dkt. No. 277 at 17.) Defendant argues for a rate equal to the jury’s implied rate.3 For the
reasons discussed below, the Court agrees with Google.
1. Post-Verdict Hypothetical Negotiation
Plaintiffs first argue that a higher royalty rate is warranted due to changes in the Parties’
bargaining power. (Dkt. No. 277 at 9.) Specifically, Plaintiffs argue that they would not willingly
accept the implied royalty rate for post-verdict infringement, given the Parties’ changed legal
status, with Google now being an adjudicated infringer with weakened bargaining power. (Dkt.
Although Defendant initially argued in its briefing that certain Georgia-Pacific factors actually favor a rate lower
than the implied jury rate, during the ongoing royalty hearing, Defendant’s counsel argued in favor of simply using
the implied jury rate. (Hr’g Tr. at 29:11–15.) Moreover, as Plaintiffs note, when the jury set its royalty rate, it had
already considered the evidence cited by Defendant in support of its arguments for a lower rate. (Dkt. No. 289 at 5.)
For example, the jury heard evidence that Plaintiffs have never licensed the asserted patents. (Dkt. No. 289 at 5.) As
such, without an explanation as to how such evidence should alter the post-verdict rate as compared to the pre-verdict
rate, the Court need not reconsider the same evidence that has already been incorporated into the jury’s verdict.
No. 277 at 10–11.) However, the Court is not persuaded, as the circumstances that would give
Plaintiffs strengthened bargaining power (that the patents are infringed and not invalid) were
already assumed and in place when the jury set its implied royalty rate.
It is clear that the jury assumed that the patents were valid and infringed when it analyzed
the hypothetical negotiation that would have occurred just before infringement began. (Trial Tr.
Feb. 7, 2017 p.m., Dkt. No. 266 at 78:25–79:4 (testimony of Plaintiff’s damages expert); Feb. 9,
2017 a.m., Dkt. No. 270 at 49:4–9 (testimony of Defendant’s damages expert); Feb. 10, 2017 a.m.,
Dkt. No. 272 at 49:13–16 (jury instructions, instructing the jury to assume validity and
infringement).) Thus, the jury’s implied royalty rate already encompasses the result that has now
been formally reached through a verdict—that the patents are valid and infringed—and the Court
need not alter the post-verdict hypothetical negotiation in light of these now confirmed
assumptions. See UroPep, 2017 WL 3034655 at *6–7; EMC Corp., 2017 WL 3434212, at *3
(“When the court considers a hypothetical negotiation that occurs post-trial, that approximation
and uncertainty are absent. The question is really whether removing such uncertainty materially
affects the royalty rate calculation. The court does not believe it does.”).
Plaintiffs next contend that the ongoing royalty rate should be enhanced because the
patented invention covers the “flagship feature” of the Chrome web browser: a per-process
sandbox that has been “fundamental” to the Chrome brand since 2008. (Dkt. No. 277 at 11 (citing
Trial Tr. Feb. 8, 2017 a.m., Dkt. No. 267 at 71:23–73:20; 40:25–42:12; PTX-039; PTX-017).)
Plaintiffs point to evidence presented at trial which, according to Plaintiffs, indicates that Google
would rather pay a higher figure in this revised hypothetical negotiation than lose this “flagship
feature” of Chrome. (Dkt. No. 277 at 11 (citing Trial Tr. Feb. 8, 2017 a.m., Dkt. No. 267 at 71:23–
73:20; 40:25–42:12; PTX-039; PTX-017).) Google responds, however, that Chrome has many
features and that even with respect to the various security features of Chrome, the “auto-update”
feature was the most important. (Dkt. No. 285 at 13 (citing Trial. Tr. Feb. 8, 2017 a.m., Dkt. No.
267 at 44:1–45:22).) Google also points to evidence that speed is the most important overall feature
to users. (Dkt. No. 285 at 13 (citing Trial Tr. Feb. 8, 2017 a.m., Dkt. No. 267 at 13:6–17).) Based
on this evidence, Google argues that the sandboxing feature is simply not as important as Plaintiffs
make it out to be and that Plaintiffs’ request for ongoing royalties at a rate 2–3 times the implied
jury rate is therefore disproportionate to the relative value of the infringing feature. (Dkt. No. 285
The relative importance of the patented technology, both from Google’s perspective and
from its users’ perspective, has already been considered by the jury and has been incorporated into
the jury’s implied rate. As such, without evidence that post-verdict circumstances will alter the
importance of the patented feature, the Court finds no reason to reconsider this evidence. See
Internet Machines LLC v. Alienware Corp., No. 6:10-cv-23, 2013 WL 4056282, at *19 (E.D. Tex.
June 19, 2013), aff’d sub nom. Internet Machines LLC v. Cyclone Microsystems, Inc., 575 F.
App’x 895 (Fed. Cir. 2014) (“[Plaintiff] points to numerous documents and testimony from trial
in arguing that a number of the factors strongly suggest an increase is warranted in the royalty rate.
But all of the evidence [the plaintiff] points out was previously before the jury and considered at
the time the jury addressed damages. This evidence provides no insight into the parties’ subsequent
Turning to the Parties’ specific arguments under the Georgia-Pacific factors, Plaintiffs
indicate that factors 1–7 have not changed. (Dkt. No. 277 at 11.) However, Plaintiffs argue that
factors 8–10, pertaining to profitability, commercial success, and benefits of the infringing
product, favor a higher royalty. (Dkt. No. 277 at 11.) Plaintiffs first point to evidence that the
number of regular users of Chrome increased 20% between 2015 and 2016. (Dkt. No. 277 at 11;
Bratic Decl. ¶ 8 (citing Bratic Decl., Ex. A).) Google responds by noting that Plaintiffs did not
provide any evidence to suggest that the 20% increase in Chrome users was caused by or
attributable to the patented technology. (Bakewell Decl. ¶ 5.) In further support of this point,
Google notes that the number of users for the non-accused version of Chrome increased by about
24.1% during the same period of time—a higher percentage increase than was experienced by the
infringing version of Chrome. (Bakewell Decl. ¶ 6.) According to Google, this demonstrates that
the increase in Chrome users was caused by something other than the patented technology.
(Bakewell Decl. ¶ 6.) To some extent, the Court agrees. Although increased commercial success
between the two hypothetical negotiation dates could theoretically favor a higher ongoing royalty
rate, the evidence of causation is insufficient to warrant a higher royalty rate.
Plaintiffs also contend that Google’s refusal to switch to what Google believes to be a
suitable non-infringing alternative “in the face of significant legal exposure demonstrates the
continued utility and advantage of the patented technology over old security methods.” (Dkt. No.
277 at 11 (citing Trial Tr. Feb. 9, 2017 a.m., Dkt. No. 270 at 55:2–18; 78:12–79:24).) However, at
least one district court has found that the ability for a defendant to switch to a non-infringing
alternative actually weighs against a higher royalty rate because a defendant, post-verdict, is able
to use an alternative rather than continue its infringing conduct. See ActiveVideo Networks, Inc. v.
Verizon Commc’ns, Inc., 827 F. Supp. 2d 641, 658 (E.D. Va. 2011), aff’d in part, rev’d in part on
other grounds, 694 F.3d 1312 (Fed. Cir. 2012) (noting that the defendant’s ability to create a non14
infringing alternative lessens any increase in a plaintiff’s bargaining power). Thus, the Court is not
persuaded by Plaintiffs’ argument on this point.
Irrespective of the Georgia-Pacific factors, Plaintiffs argue that the implied royalty rate
should be enhanced because any continued infringement is inherently willful. Plaintiffs
particularly point to testimony indicating that Google could switch to a non-infringing version of
Chrome in a short amount of time and at little cost. (Dkt. No. 277 at 12 (citing Trial Tr., Feb. 9,
2017 a.m., Dkt. No. 270 at 55:2–18, 78:12–79:24).) This, Plaintiffs argue, shows that any
continued infringement is necessarily willful. In response, Google argues that willfulness
enhancement is per se improper, as willfulness is a means for enhancing damages, and damages
“by definition cover only past harm.” (Dkt. No. 285 at 8 (quoting WhitServe, 694 F.3d at 35
(stating this principle in the context of evaluating whether the jury awarded a paid-up license))).
Plaintiffs did not assert willful infringement at trial and instead dropped all allegations of
willful infringement up through the jury verdict. (Dkt. No. 200 at 7.) In doing so, Plaintiffs stated
that they were “retain[ing] the right to seek willful infringement in any post-trial proceedings such
as seeking an ongoing royalty under Paice LLC v. Toyota Motor Corp.” (Dkt. No. 200 at 7.) As
this Court noted during trial, willful infringement is essentially a claim for non-compensatory
punitive damages. (Trial Tr. Feb. 6, 2017 p.m., Dkt. No. 263 at 78:10–79:21.) See Halo Elecs.,
Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1932 (2016) (noting that “[a]wards of enhanced damages
under the Patent Act over the past 180 years establish that they are not to be meted out in a typical
infringement case, but are instead designed as a ‘punitive’ or ‘vindictive’ sanction for egregious
infringement behavior”). Meanwhile, the purpose of an ongoing royalty, an equitable form of
relief, is to help fully compensate the patent owner for infringement of its patent rights. As such,
it is unclear whether enhancing an ongoing royalty based on future willfulness is appropriate.
Regardless, considering the totality of the circumstances developed throughout the trial, the Court
is not persuaded that an enhancement based on willfulness would be appropriate in this case.
Both Parties spend much of their briefing analyzing the various Read factors, which are
used by courts, even after Halo, when determining whether to enhance damages after a jury finding
of willful infringement. See Dominion Res. Inc. v. Alstom Grid, Inc., No. CV 15-224, 2016 WL
5674713, at *21 (E.D. Pa. Oct. 3, 2016) (collecting cases where courts have used the Read factors
to guide the discretionary analysis post-Halo). The Read factors include: “(1) whether the infringer
deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the
other’s patent protection, investigated the scope of the patent and formed a good-faith belief that
it was invalid or that it was not infringed; (3) the infringer’s behavior as a party to the litigation;
(4) the defendant’s size and financial condition; (5) the closeness of the case; (6) the duration of
defendant’s misconduct; (7) any remedial action by the defendant; (8) the defendant’s motivation
for harm; and (9) whether the defendant attempted to conceal its misconduct.” Affinity Labs of
Texas, LLC v. BMW N. Am., LLC, 783 F. Supp. 2d 891, 902 (E.D. Tex. 2011) (citing Read, 970
F.2d at 827).
The Court does not find application of the Read factors necessary in this case. Although
the Court does not necessarily agree with Google’s argument that enhancing the ongoing royalty
rate based on willfulness is per se improper, the Court recognizes that the Federal Circuit has
discounted the relevance of willfulness in at least some circumstances. See Amado, 517 F.3d at
As previously mentioned, in Amado, the district court issued a permanent injunction to
prevent future infringement of the patents, but then stayed implementation of that injunction until
seven days after the resolution of any appeal. Amado, 517 F.3d at 1356. As a condition of the stay
of the injunction, the district court also required the defendant to make escrow deposits of a certain
amount for each infringing product sold during the stay period. Id. After the first appeal on the
merits concluded, the Circuit remanded the case for the district court to determine the proper
royalty rate for sales that occurred during the period of time that the permanent injunction was
stayed. Amado, 517 F.3d at 1356. The district court determined that the plaintiff was entitled to a
royalty rate that was three times the reasonable royalty rate implied by the jury verdict, trebling
the rate using willful infringement as a guideline. Id. at 1361–62.4 On appeal of the royalty rate
set by the district court, the Federal Circuit stated that “willfulness, as such, is not the inquiry when
the infringement is permitted by a court-ordered stay.” Amado, 517 F.3d at 1362.
The posture of this case is far different from the unique scenario in Amado. However, it is
difficult to see how the underlying logic of Amado does not apply here. In Amado, the Court held
that willfulness was not the relevant inquiry when setting the royalty rate for post-verdict sales,
even where the defendant knew that a permanent injunction of those sales would become effective
in the future. In short, although the defendant in Amado was authorized to make infringing sales
during the stay of the injunction, the defendant knew it would ultimately have to cease its
infringing activity. Here, all Parties are aware that no permanent injunction will issue in this case
because Plaintiffs have elected not to seek a permanent injunction. Thus, future infringement will
On remand, the district court in Amado also determined that the permanent injunction should be dissolved
prospectively, given the Supreme Court’s intervening decision in eBay. However, this aspect of Amado does not
impact the analysis in this case.
be authorized, even though Google will be required to pay a royalty for any such infringement.
When comparing these two post-verdict scenarios, it appears to this Court that willfulness would
be more relevant to the situation in Amado than it would be to the situation here, where any future
infringement is authorized indefinitely. However, since the Circuit has rejected consideration of
willfulness in the Amado context, this Court finds it appropriate to reject consideration of
willfulness in this case as well.5 See EMC Corp., 2017 WL 3434212, at *5 (“If willfulness was
not the proper inquiry in Amado where the district court awarded an injunction—despite staying it
pending appeal—it seems equally improper here where the court already decided that the equities
did not weigh in favor of granting [the plaintiff] an injunction.”). Moreover, as other courts have
noted, Plaintiffs receive a benefit from Google’s continued infringement—an ongoing royalty for
future infringing uses. Id.; UroPep, 2017 WL 3034655, at *9. Accordingly, this Court declines to
enhance the ongoing royalty rate in this case based on a theory of willfulness.
Having considered the Parties’ arguments, the Court agrees with Google that Plaintiffs
have not presented sufficient evidence of changed circumstances such as to warrant enhancement
of the implied jury rate in this case. In sum, Plaintiffs bear the burden of demonstrating that a
heightened royalty is appropriate in this case. The Court is not persuaded that economic and
commercial circumstances have changed materially since the date of the hypothetical negotiation
considered by the jury. Accordingly, having considered anew the Georgia Pacific factors, and
having rejected any enhancement based on willfulness, the Court finds no reason to depart from
the jury’s implied royalty rate in this case.
In this Court’s view, Plaintiffs’ arguments regarding reducing Google’s marginal profit from its infringing activity
as a means of deterring patent infringement remain inextricably intertwined with a willfulness analysis. Accordingly,
the Court does not consider such arguments here.
d. Reporting Requirement
For purposes of administering the ongoing royalty going forward, the Court finds it
appropriate to establish a reporting requirement. Plaintiffs suggest a reporting requirement which
mirrors Google’s method of reporting during discovery. Specifically, Plaintiffs suggest that by the
5th of each month, Google should produce a report of 7-day active users of all infringing versions
of Chrome, as of the 1st day of that month. (Dkt. No. 277 at 18.) Plaintiffs further suggest that
Google should be required to pay the ongoing royalty no later than the 15th of each month. (Dkt.
No. 277 at 18.) Google has not disputed this suggestion, nor has it provided a competing proposal.
Accordingly, the Court finds Plaintiffs’ approach to be reasonable and adopts it for this case.
“District courts have discretion to award damages for periods of infringement not
considered by the jury.” Whitserve, 694 F.3d at 38 (citing Fresenius I, 582 F.3d at 1303). Here the
jury, during trial, was presented with user data through January 31, 2017. (Dkt. No. 285 at 4–5.)
As such, the patentee has not yet been compensated for infringing uses from February 1, 2017,
through the entry of judgment. As discussed above, however, the Parties have agreed to apply the
ongoing royalty rate determined by the Court to this supplemental damages period, thus
eliminating the need for an additional motion. (Hr’g Tr. at 45:20–47:12.)
Having determined that the ongoing royalty rate should be consistent with the jury’s
implied royalty rate in this case, the Court finds that Plaintiffs’ Motion for Ongoing Royalty (Dkt.
No. 277) should be GRANTED AS MODIFIED. The Court hereby sets the ongoing royalty rate
for the accused technology at $0.002601 per Chrome user per month. The Court further holds that
such rate shall apply beginning February 1, 2017, being the day after the last date for which the
jury considered damages. The Court will incorporate the above determined ongoing royalty rate
into the Final Judgment it will subsequently enter in this case.
SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 12th day of September, 2017.
UNITED STATES DISTRICT JUDGE
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