Chrimar Systems, Inc. et al v. Alcatel-Lucent S.A. et al
REDACTED/UNSEALED MEMORANDUM OPINION AND ORDER denying 378 Motion for Judgment as a Matter of Law and Motion for a New Trial; denying 379 Motion for Judgment as a Matter of Law. Signed by Magistrate Judge John D. Love on 2/3/2017. (rlf)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
CHRIMAR SYSTEMS, INC., CHRIMAR
HOLDING COMPANY, LLC,
ALCATEL-LUCENT ENTERPRISE USA
CIVIL ACTION NO. 6:15-CV-00163-JDL
REDACTED MEMORANDUM OPINION AND ORDER
Before the Court is: (1) Defendant Alcatel-Lucent Enterprises USA, Inc. (“ALE”) Motion
for Judgment as a Matter of Law and Motion for A New Trial (Doc. No. 378); and (2) Plaintiffs’
Chrimar Systems, Inc. d/b/a CMS Technologies and Chrimar Holding Company LLC
(“Chrimar” or “Plaintiffs”) Motion for Judgment as a Matter of Law on ALE’s IEEE-related
Equitable Defenses and Counterclaims (Doc. No. 379). The Motions have been fully briefed.
For the reasons stated below, Defendant’s Motion for Judgment as a Matter of Law and Motion
for a New Trial (Doc. No. 378) is DENIED. Plaintiffs’ Motion for Judgment as a Matter of Law
(Doc. No. 379) is DENIED.
On March 9, 2015, Plaintiffs Chrimar Systems, Inc. d/b/a CMS Technologies and
Chrimar Holding Company LLC (“Chrimar”) filed the instant action against ALE. (Doc. No. 3.)
In this action, Chrimar alleges infringement of U.S. Patent Nos. 8,115,012 (“the ’012 Patent”),
8,902,760 (“the ’760 Patent”), 8,942,107 (“the ’107 Patent”), and 9,019,838 (“the ’838 Patent”)
(“patents-in-suit”))1. Chrimar maintains that each of the patents-in-suit are standard essential
patents (“SEP”). Specifically, Chrimar maintains that the patents-in-suit are SEPs for Power over
the Ethernet (“PoE”) standards IEEE 802.3af-2003 and IEEE 803.3at-2009. This case proceeded
through claim construction, dispositive motions and pretrial, and the trial between Chrimar and
ALE commenced on October 3, 2016. The following claims, defenses, and counterclaims were
presented to the jury: damages, invalidity based on derivation and improper inventorship, fraud,
and breach of contract. (Doc. No. 350.)
At the conclusion of Plaintiffs’ case-in-chief, ALE moved pursuant to Rule 50(a) for
judgment as a matter of law on Plaintiffs’ allegations of willfulness and damages. Trial
Transcript “Tr.” at 612:17–616:3. The Court denied ALE’s motion as to Plaintiffs’ damages
model (Tr. at 616:8–9), and granted ALE’s motion as to willfulness (Tr. at 624:4–7). At the
close of Defendant’s case-in-chief, Plaintiffs moved pursuant to Rule 50(a) on the following
issues: (1) infringement; (2) invalidity; (3) derivation; (4) antitrust; (5) implied license; (6) fraud;
(7) breach of contract; and (8) damages reduction by noninfringing alternatives. (Tr. at 964:14–
984:14.) The Court denied all of these motions, but granted as to written description and
enablement, the antitrust claim, and implied license. (Tr. at 965:17–20; 966:12–18; 969:14;
969:25–970:1; 984:14; 986:4–9.) Additionally, at the close of evidence, the Court also provided
ALE an opportunity to present additional evidence pertaining to ALE’s equitable defenses.
On October 7, 2016, the trial concluded and the jury returned a verdict as follows: (1)
Claims 31, 35, 43, and 60 of the ’012 Patent were not invalid; Claims 1, 5, 72, and 103 of the
’107 Patent were not invalid; Claims 1, 59, 69, 72, and 145 of the ’760 Patent were not invalid,
and Claims 1, 7, and 26 of the ’838 Patent were not invalid; (2) the sum of money that would
Prior to trial, ALE stipulated to infringement of all of the asserted claims of the patents-in-suit. (Doc. Nos. 298,
fairly and reasonably compensate Chrimar for ALE’s infringement was $324,558.34; (3) ALE
did not prove by a preponderance of the evidence that Chrimar committed fraud against ALE;
and (4) ALE did not prove by a preponderance of the evidence that Chrimar breached a contract
with the IEEE. (Doc. No. 349.) Both Chrimar and ALE have now moved to renew their motions
for judgment as a matter of law pursuant to Rule 50(b). Specifically, ALE moves to renew its
motion on damages (Doc. No. 378); and Chrimar moves on all IEEE-related claims and
defenses, including (1) estoppel; (2) unclean hands; (3) waiver; (4) implied license; (5) patent
misuse; (6) unenforceability; (7) breach of contract; (8) fraud; (9) antitrust. (Doc. No. 379.)
Judgment as a Matter of Law
A renewed motion for judgment as a matter of law (“JMOL”) is a challenge to the legal
sufficiency of the evidence supporting the jury’s verdict. Power-One, Inc. v. Artesyn Tech., Inc.,
556 F. Supp. 2d 591, 593 (E.D. Tex. 2008) (citing Flowers v. S. Reg’l Physician Servs., 247 F.3d
229, 235 (5th Cir. 2001)). Rule 50 provides that judgment as a matter of law is appropriate if the
court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for
the party on that issue. Fed.R.Civ.P. 50(a)(1). In ruling on a renewed motion for JMOL, the
court may allow judgment on the verdict, if the jury returned a verdict; order a new trial; or
direct the entry of judgment as a matter of law. Fed.R.Civ.P. 50(b).2 A post-trial motion for
JMOL should be granted only when the facts and inferences so conclusively favor one party
“that reasonable jurors could not arrive at a contrary verdict.” TGIP, Inc. v. AT&T Corp., 527 F.
Supp. 2d 561, 569 (E.D. Tex. 2007) (citing Tol–O–Matic, Inc. v. Proma Produkt–Und Mktg.
Gesellschaft m.b.H., 945 F.2d 1546, 1549 (Fed. Cir. 1991)). “If reasonable persons in the
In order to advance a renewed motion for judgment as a matter of law under Rule 50(b), the movant must raise the
same arguments during trial, in a Rule 50(a) motion for judgment as a matter of law. Fed.R.Civ.P. 50 (a)-(b).
exercise of impartial judgment could differ in their interpretations of the evidence, then the
motion should be denied.” Id. Thus, a jury’s verdict may be overturned if, viewing the evidence
and inferences therefrom in the light most favorable to the party opposing the motion, there is no
legally sufficient evidentiary basis for a reasonable jury to find as the jury did.3 Guile v. United
States, 422 F.3d 221, 225 (5th Cir. 2005) (citing Delano-Pyle v. Victoria County, 302 F.3d 567,
572 (5th Cir. 2002)).
The court may not make credibility determinations, nor weigh the
evidence. Power-One, 556 F. Supp. 2d at 594 (citing Reeves v. Sanderson Plumbing Prods.,
Inc., 530 U.S. 133, 150 (2000)).
Under Federal Rule of Civil Procedure 59, a new trial may be granted to any party to a
jury trial on any or all issues “for any reason for which a new trial has heretofore been granted in
an action at law in federal court.” Fed.R.Civ.P. 59. “A new trial may be granted, for example, if
the district court finds the verdict is against the weight of the evidence, the damages awarded are
excessive, the trial was unfair, or prejudicial error was committed in its course.” Smith v.
Transworld Drilling Co., 773 F.2d 610, 612–13 (5th Cir. 1985). The Court is required to view
the evidence “in a light most favorable to the jury’s verdict, and  the verdict must be affirmed
unless the evidence points so strongly and overwhelmingly in favor of one party that the court
believes that reasonable persons could not arrive at a contrary conclusion.” Dawson v. Wal-Mart
Stores, Inc., 978 F.2d 205, 208 (5th Cir. 1992).
ALE’S MOTION FOR JUDGMENT AS A MATTER OF LAW AND MOTION FOR
NEW TRIAL ON DAMAGES
Because a motion for judgment as a matter of law is a procedural matter not unique to patent law, the law of the
regional circuit governs under Rule 50(b). See SynQor, Inc. v. Artesyn Techs., 709 F.3d 1365, 1373 (Fed. Cir. 2013)
(“This court reviews the grant or denial of a motion for JMOL under the law of the regional circuit . . . .”).
ALE moves for JMOL, a vacatur of the damages verdict, or in the alternative, a new trial,
on grounds that Chrimar failed to prove damages. Specifically, ALE claims that: (1) Chrimar’s
damages expert, Mr. Mills, improperly based his opinions on the Entire Market Value Rule
(“EMVR”); (2) Mr. Mills failed to properly apportion; (3) the Court erred in its instruction on
smallest saleable unit; (4) the Court erred in allowing Chrimar to present evidence of and rely on
settlement agreements; and (5) the Court erred in allowing Chrimar to present evidence on
Georgia-Pacific Factors 8, 9, and 10. (Doc. No. 378).
a. Applicable Law
The damages statute, 35 U.S.C. § 284, sets the floor for “damages adequate to
compensate for [patent] infringement” at “a reasonable royalty for the use made of the invention
by the infringer.” The burden of proving damages falls on the patentee. Dow Chem. Co. v. Mee
Indus., Inc., 341 F.3d 1370, 1381 (Fed. Cir. 2003). Calculation of a reasonable royalty requires
determination of two separate and distinct amounts: (1) the royalty base, or the revenue pool
implicated by the infringement; and (2) the royalty rate, or the percentage of that pool “adequate
to compensate” the plaintiff for the infringement. See Cornell Univ. v. Hewlett-Packard Co.,
609 F. Supp. 2d 279, 286 (N.D.N.Y. 2009). A reasonable royalty is based on a hypothetical
negotiation that takes place between the patentee and the infringer on the date infringement
began. Unisplay, S.A. v. American Electronic Sign Co., Inc., 69 F.3d 512, 517 (Fed. Cir. 1995).
“Although this analysis necessarily involves an element of approximation and uncertainty, a trier
of fact must have some factual basis for a determination of a reasonable royalty.” Id. The trial
court has discretion to discern the reliability of methods used to arrive at a reasonable royalty.
See SmithKline Diagnostics, Inc. v. Helena Labs. Corp., 926 F.2d 1161, 1164 (Fed. Cir. 1991)
(“[D]ecisions underlying a damage theory are discretionary with the court, such as, the choice of
an accounting method for determining profit margin, or the methodology for arriving at a
reasonable royalty.”) (internal citations omitted)).
1. Entire Market Value Rule
ALE argues that Mr. Mills improperly calculated his royalties by “applying percentage
rates from Chrimar’s past licenses to ALE’s net sales of the accused products,” “which is
equivalent to the entire market value of such products.” (Doc. No. 378, at 5.) Chrimar points out
that ALE never objected to Mr. Mills’s testimony as violating the EMVR, and argues that Mr.
Mills properly “apportioned the value of the patented technology and arrived at a royalty rate
tied to the number of PoE ports per device, regardless of the price or revenue generated by the
product,” and that “he does not use the entire accused device as the royalty base.” (Doc. No. 393,
In determining a reasonable royalty for a multi-component product, it is generally
required that “royalties be based not on the entire product, but instead on the ‘smallest salable
patent-practicing unit.’” LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 67 (Fed.
Cir. 2012). The entire market value rule is an exception to this rule, and “allows a patentee to
assess damages based on the entire market value of the accused product only where the patented
feature creates the ‘basis for customer demand’ or ‘substantially create[s] the value of the
component parts.’” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011)
(quoting Lucent Techs. V. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009); Rite–Hite Corp.
v. Kelley Co., 56 F.3d 1538, 1549–50 (Fed. Cir. 1995)).
The accused devices in this case were Powered Device (“PD”) and Power Sourcing
Equipment (“PSE”) products compliant with the relevant IEEE PoE standards. Sealed Tr. at
17:9–18:12; Doc. No. 206, at 4. Specifically, Chrimar accused ALE’s PD products such as
wireless access points, VOIP phones, and WLAN controllers that comply with the PoE standard.
Id. As an initial matter, Mr. Mills did not base his reasonable royalty off of the entire accused
device. 4 Instead, Mr. Mills testified that he used PoE ports as a royalty base. Sealed Tr. at 8:7 –9.
In fact, the parties agreed to the number of PoE ports as a royalty base on which the jury was
instructed. See Final Jury Instructions (Doc. No. 350, at 19) (“[i]n this case, the parties have
stipulated that there are 268,971 ports sold by ALE that create the royalty base.”) ALE did not
then, nor does it now, object to this instruction.
When ALE filed its initial Daubert motion challenging Mr. Mills’s opinions, ALE did
not accuse Mr. Mills’s opinions of violating the EMVR. (Doc. No. 205.) It was not until ALE’s
reply brief that ALE first challenged Mr. Mills’s opinions based on the EMVR.5 (Doc. No. 228.)
In its reply, the only basis ALE identified as violating the EMVR was Mr. Mills’s comparison of
PoE premiums that were based on the sale of an end product. (Doc. No. 228, at 3.) As to that
specific challenge, the Court found that “Mr. Mills’s consideration of the price difference
between Defendants’ products that include PoE functionality and those that do not include PoE
functionality, does not violate the entire market value rule” because “Mr. Mills is not using the
revenue numbers of the final products to establish a royalty base or to assess damages based on
the entire market value of the accused products, but instead has isolated the premium in an
attempt to apportion and value the patented features.” (Doc. No. 253, at 7.)
ALE disputes this because they contend the ports are not distinct components. (Doc. No. 378, at 5.) Regardless, it
is undisputed that Mr. Mills did not use the entire revenue of the accused devices to begin his analysis, but instead
started his analysis with an average revenue per PoE port. Id.; Sealed Tr. at 53:4–12.
See Jones v. Cain, 600 F.3d 527, 541 (5th Cir. 2010) (“Arguments raised for the first time in a reply brief are
generally waived.”) Although this argument was waived during briefing, the Court nonetheless considered the
argument in ruling on ALE’s Daubert motion.
Despite the fact that Mr. Mills’s damages opinions have not changed, not once did ALE
affirmatively raise an issue with respect to his opinions and the EMVR, let alone the plethora of
issues it now outlines for the Court in its JMOL. Indeed, ALE filed a second motion to strike Mr.
Mills’s opinions and again did not raise any argument that his opinions violated the EMVR.
(Doc. No. 284.) Similarly, ALE did not challenge these opinions at the pretrial conference. (Doc.
No. 268.) Most importantly, not once during the entirety of Mr. Mills’s testimony, did ALE
object. Sealed Tr. at 5:5–34:6. Thus, ALE waived its contention it now brings that Mr. Mills
violated the EMVR. Rather than objecting to Mr. Mills’s testimony on this basis, at trial, ALE
instead attempted to insert the EMVR in cross examining Mr. Mills. For example, ALE’s Motion
begins by citing a portion of Mr. Mills’s testimony that was solicited on cross-examination.
(Doc. No. 378, at 4.)
In the entirety of that testimony, Mr. Mills actually explained that
Next, ALE argues that Mr. Mills violated the EMVR by using net sales of the accused
products in his analysis of past licenses. (Doc. No. 378, at 5.) As Mr. Mills testified, where he
looked at past licenses and considered net sales, he did so in order to do a direct comparison
because those past licenses were running royalty agreements based on a percentage of net
revenue. Sealed Tr. at 6:12–16; 8:16–21. Because the royalty bearing licenses were negotiated
based on the invention or comparable inventions—not the value of the accused products—the
starting point for such an analysis cannot be said to be off of the total revenue of the accused
product. Thus, multiplying a running royalty from a past license that was based on a percentage
of net sales to ALE’s net sales of the accused products does not violate the EMVR. Instead, it
provides a direct comparison to apportion the value of the technology (as previously licensed)
and ascertain a reasonable royalty as to ALE.
In sum, Mr. Mills is not using the revenue numbers of the final products to establish a
royalty base or to assess damages based on the entire market value of the accused products.
Accordingly, ALE’s motion is DENIED as to its challenges based on EMVR.
ALE argues that Mr. Mills failed to apportion for the features of the accused products that
are unrelated to PoE, that he failed to apportion for the patented versus unpatented features of the
PoE standard, and that he failed to apportion for the value of standardization. (Doc. No. 378, at
During direct examination, Mr. Mills identified for the jury these three issues with
respect to apportionment in this case:
Q. Now, do we have any particular apportionment issues in this case that we need
to talk about?
A. Yes. There are three issues in this case. One is the value of PoE functionality.
The products at issue here have other functionality besides just PoE
functionality; so, we need to focus, when we're talking about profit, on the profit
associated with PoE functionality.
The second is within PoE functionality there are technologies that are
covered by the patents-in-suit and technologies that are not. And, so, we need to
focus the analysis on the aspects of PoE that are covered by the patents-in-suit.
And, finally, we need to consider the value of standardization to determine
whether the act of standardization itself provided any kind of artificial value or
enhanced value to the patents-in-suit.
(Sealed Tr. at 21:7–23.)
Mr. Mills then went on to testify as to how he accounted for apportionment in each of
these manners. Sealed Tr. at 22:5–26:22. With respect to apportionment of the value of the
patented PoE technology, Mr. Mills testified that he was able to look at PoE price and profit
premiums to compare the prices (and profits) of the exact same products with and without the
PoE functionality. Sealed. Tr. at 22:5–25:12.
Sealed Tr. at
24:10–13. The use of price and profit premiums from the sale of non-PoE products as compared
to the same products with PoE functionality is a measurable and appropriate way to isolate the
value of the PoE functionality. This analysis alone allowed Mr. Mills to begin to apportion the
value of the patented technology.
With respect to the value of the patented features contained in the standard, Mr. Mills
testified that he relied on Dr. Madisetti’s opinions that “the patents-in-suit relate to the majority
and the most critical aspects of the standard,” and that therefore the patents “should be credited
with a significant portion of this profit premium”—
discussed above. Sealed Tr. at
25:13–26:11. Mr. Mills then testified that this information indicated his $2.50 per port rate was
inherently reasonable. Id. And ultimately, Mr. Mills testified that $2.50 was reasonable for just
the contributions of the patents and setting aside artificial value due to standardization. Sealed
Tr. at 26:12–22.
The jury heard evidence that the profit premium on ALE’s accused products that include
the PoE functionality is
As discussed above, because this premium is the difference
between the same products that have and do not have the PoE functionality, it is a reliable
indicator of the value of the PoE functionality. The jury was thus then able to consider Mr.
Mills’s $2.50 royalty rate as a fraction of that value that he opined was reasonable based on Dr.
Madisetti’s opinions regarding the importance of the patented technology to the standard and
irrespective of any value from standardization itself.6 Moreover, the jury heard evidence as to
how Mr. Mills’s analysis of Chrimar’s past license agreements led him to believe $2.50 was a
Sealed Tr. at 5:5–6:16; 28:3–29:7. The jury also heard Mr. Mills testify
that Mr. Mills testified
showed what ALE was willing to pay for comparable technology. Sealed Tr. at 9:5–10:23.
Sealed Tr. at 10:8–11.
The jury heard all of this testimony and evidence on apportionment and ultimately did not
fully accept Mr. Mills’s rate, but determined a rate of $1.2067 per port was reasonable:
The jury heard Dr. Madisetti’s testimony on the importance of the “detection” and “classification” aspects of the
patented inventions as it relates to the IEEE standard. See, e.g., Tr. at 316:23–319:10. The jury was allowed to weigh
the credibility of this testimony based on the evidence presented.
(Doc. No. 349, at 2.)
In light of the testimony that was provided at trial, the Court finds that substantial
evidence supported the jury’s damages determination. Accordingly, the Court DENIES ALE’s
request for judgment as a matter of law that Chrimar failed to prove damages.
3. The Court’s Instructions
Finally, ALE argues that the Court erred in three ways: (1) its instructions on the smallest
saleable unit; (2) by allowing Chrimar to present evidence of settlement agreements to support its
royalty rate; and (3) by allowing Chrimar to present evidence on Georgia-Pacific Factors 8, 9,
and 10. (Doc. No. 378, at 11–16.)
i. Smallest Saleable Unit
As to the instructions on the smallest saleable unit, ALE objects to the following
instruction by the Court:
(Doc. No. 350, at 19.)
As discussed above, while the Court did not intend to provide this instruction based on
the testimony presented in this case, because ALE interjected this issue during the crossexamination of Mr. Mills, the Court felt it necessary to clarify the issue for the jury. Not
surprisingly, it was ALE who proposed and argued for such an instruction in the first place.
(Doc. No. 317, at 64.) ALE now objects to the change from “the ‘smallest salable unit’ that
practices the patent and has close relation to the claimed invention” to “the ‘smallest salable
unit’ that infringes the patent and has close relation to the claimed invention.” (Doc. No. 378, at
As an initial matter, ALE did not clearly object on the bases it now raises. At the charge
conference, counsel for ALE stated “I don’t think any change needs to be made” and that a
change would be “to basically just skew the argument in favor of the Madisetti testimony.” Tr. at
1099:23–1100:14. Thus, the arguments now raised are extraneous to what was raised on the
record and have been waived. However, even if not waived, the focus of ALE’s current argument
is on the need to include the idea that the “smallest saleable unit” have “close relation to the
claimed invention.” The Court instructed the jury that the smallest saleable unit must have “close
relation to the claimed invention.” (Doc. No. 350, at 19.) Thus, the only real objection can be
some imputed difference between the words “practice” and “infringe.” ALE has not explained
the significance of that difference such that a new trial would be warranted. Moreover, even if an
error was made in stating the word “infringes” instead of “practices” in the instructions, that
error was harmless because, as discussed above, the royalty base was agreed and the jury was
instructed on the exact per port base at issue in this case. See Final Jury Instructions (Doc. No.
350, at 19) (“[i]n this case, the parties have stipulated that there are 268,971 ports sold by ALE
that create the royalty base.”) For these reasons, the Court DENIES ALE’s request for judgment
and a new trial based on this instruction.
ii. Settlement Licenses
As to the settlement licenses, ALE did not challenge these licenses as unreliable in its
Daubert motions or during the pretrial proceedings. See Doc. Nos. 205, 284, 268.7 ALE also did
not object to this evidence and testimony regarding the licenses at trial. In fact, each of the
licenses were admitted into evidence without objection. Tr. at 602:1–16. Accordingly, this
argument was waived. ALE’s failure to timely raise objections on the issues it now presents to
the Court is a consistent theme throughout its JMOL. While the Court functions as a gatekeeper,
it is the litigant’s responsibility to raise issues they believe warrant gatekeeping in a timely
manner at an appropriate stage in the case. Here, the Court held an early damages hearing on
April 19, 2016, where early damages expert reports were exchanged by the parties on March 31,
2016. As early as that point in time, ALE knew Mr. Mills was relying on these license
agreements and yet never challenged those opinions or testimony during pretrial or trial.
ALE’s only objection to the licenses in its Daubert motion was that the licenses were entered after industry
adoption of the standard and that therefore Mr. Mills did not properly account for the value of the standard. (Doc.
No. 205, at 12–13.) ALE raised no objection to reliance on these licenses because they were the result of a litigation
settlement—the challenge it now raises.
Finally, even if the settlement licenses here had not been presented to the jury, the jury’s
verdict is still supported by the additional evidence discussed above including the PoE
premiums. Accordingly, there is no basis for a judgment of no damages or a new trial based on
this evidence and the Court DENIES ALE’s requests.
iii. Georgia-Pacific Factors 8, 9, and 10
As to Georgia-Pacific Factors 8, 9, and 10, it was the Court that first raised a concern on
these issues with the parties. Again, ALE has filed a motion for judgement as a matter of law on
an issue that ALE did not raise with respect to Mr. Mills’s opinions before or during trial. When
Mr. Mills testified as to these factors during the trial, ALE did not object to this testimony.
Sealed Tr. at 5:5–34:6. The Court, recognizing the precedent on this issue and having concerns
with Mr. Mills’s testimony, had to call the parties into chambers to discuss if and how the Court
could proceed in light of Mr. Mills’s testimony. The Court and the parties were in agreement that
any harm could be cured with specific jury instructions. Therefore, the Court carefully crafted its
final instructions to the jury to address this issue. Specifically, the Court removed factors 8, 9,
and 10 from its list of factors to be considered and instead instructed the jury as follows:
You may also consider the established profitability of the product made under the
patents, its commercial success, and its current popularity; the utility and
advantages of the patented property over the old modes or devices, if any, that had
been used for working out similar results; and the nature of the patented
invention, the character of the commercial embodiment of it as owned and
produced by the licensor, and the benefits to those who have used the invention.
However, if you consider these factors you must also consider the standard’s role
(as opposed to the patents’ role) in causing commercial success, as well as the
standard’s role in the profitability of the accused products and the accused
products’ popularity. In addition, you must consider the benefits of the standard
over old modes as well as the benefits to those who use the standard to which the
patents-in-suit are alleged to be essential. You must take this into consideration
because the patentee’s royalty must be premised only on the value of the patented
feature, not any value added by the standard’s adoption of the patented
technology. These steps are necessary to ensure that the royalty award is based on
the incremental value that the patented invention adds to the product, not any
value added by the standardization of that technology. In other words, the patent
holder should only be compensated for the approximate incremental benefit
derived from his invention.¶ This is particularly true for standard essential
patents. When a technology is incorporated into a standard, it is typically chosen
from among different options. Once incorporated and widely adopted, that
technology is not always used because it is the best or the only option; it is used
because its use is necessary to comply with the standard. In other words,
widespread adoption of a standard essential technology is not entirely indicative
of the added usefulness of an innovation over the prior art.
(Doc. No. 350, at 18–19.)
The Court finds these instructions were sufficient to cure any harm that may have come
from Mr. Mills’s testimony on these factors. Indeed, the Federal Circuit has never stated that
these factors should be all together removed in a case involving standard essential patents, but
instead that they should be modified. For example, in Ericsson, the Federal Circuit stated as
Several other Georgia–Pacific factors would at least need to be adjusted for
RAND-encumbered patents—indeed, for SEP patents generally. For example,
factor 8 accounts for an invention’s “current popularity,” which is likely inflated
because a standard requires the use of the technology. Factor 9—“utility and
advantages of the patented invention over the old modes or devices,”—is also
skewed for SEPs because the technology is used because it is essential, not
necessarily because it is an improvement over the prior art. Factor 10, moreover,
considers the commercial embodiment of the licensor, which is also irrelevant as
the standard requires the use of the technology. Other factors may also need to be
adapted on a case-by-case basis depending on the technology at issue.
Consequently, the trial court must carefully consider the evidence presented in the
case when crafting an appropriate jury instruction. In this case, the district court
erred by instructing the jury on multiple Georgia–Pacific factors that are not
relevant, or are misleading, on the record before it, including, at least, factors 4, 5,
8, 9, and 10 of the Georgia–Pacific factors.
See Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1231 (Fed. Cir. 2014) (emphasis added).
Given this precedent, the Court’s instructions on these issues were proper and Mr. Mills’s
testimony cited by ALE was not so harmful that the bell could not be “unrung” as ALE claims. It
is again important emphasize that litigants carefully consider the testimony and evidence
presented to the jury and timely raise objections where appropriate. While the Court will always
proactively scrutinize evidence that comes in during a trial to ensure the jury is not
impermissibly tainted by any testimony and/or evidence, the Court must also rely on litigants to
raise meritorious objections when warranted. In this case, not a single objection was raised by
counsel and the parties submitted proposed agreed jury instructions with a parroted list of
Georgia-Pacific factors. (Doc. No. 317, at 59–63.) This issue should have been teed up by the
parties long before trial when the Court had to initiate the conversation with the parties and
conduct a chambers conference, delaying the trial and making the jury wait in recess. Given the
circumstances, however, in this instance the harm could be cured with proper instructions from
the Court, as was done here. Therefore, the Court DENIES ALE’s request for a new trial on this
CHRIMAR’S MOTION FOR JUDGMENT AS A MATTER OF LAW AS TO IEEERELATED CLAIMES AND DEFENSES
Chrimar moves for judgment as a matter of law on all IEEE related equitable defenses
and counterclaims. (Doc. No. 379.) As a preliminary matter, Chrimar moves on the basis that all
of the equitable defenses require a duty of disclosure for which Chrimar seeks a judgment that it
owed no such duty. (Doc. No. 379, at 1–2.) This Court has already issued an order finding that
on the evidence presented “Chrimar did not owe a duty of affirmative disclosure to the IEEE.”
(Doc. No. 413, at 6.) A judgment will be entered in accordance with that finding. Accordingly,
Chrimar’s JMOL is DENIED as moot as to that point. Specifically, the Court has issued findings
that ALE did not carry its burden on claims of equitable estoppel, unclean hands, and waiver.
(Doc. No. 413.) Accordingly, as to those defenses, Chrimar’s JMOL is DENIED as moot.
As to the implied license defense, the Court granted Chrimar’s JMOL on implied license
pursuant to Rule 50(a) during trial. Tr. at 986:4–9. Accordingly, Chrimar’s request to enter
renewed judgment on that defense pursuant to Rule 50(b) is DENIED as moot.
As to the claims of breach of contract and fraud, the jury found that ALE did not prove
those claims by a preponderance of the evidence. (Doc. No. 349.) Chrimar’s renewed motion for
JMOL merely seeks to confirm its favorable outcome on those issues. Accordingly, because
Chrimar prevailed on those claims at trial, Chrimar’s renewed motion for JMOL as to those
claims is DENIED as moot.
Finally, Chrimar moves on the remainder of IEEE defenses and claims that were not
presented by ALE at trial, including claims pursuant to monopolization under § 2 of the Sherman
Act and patent misuse. While the antitrust claim was specifically raised by Chrimar in a 50(a)
motion at the close of evidence, and subsequently granted by the Court (Tr. at 969:15–970:1), to
clarify the record, the Court’s intention in granting that motion was to confirm that that issue was
not going to be presented to the jury as the parties were in agreement that evidence on that claim
had not been presented and the claim was no longer being pursued. As to these claims
specifically, and all claims and defenses that were not presented at trial, the Court DENIES
Chrimar’s request to enter judgment as a matter of law. The Court will not enter judgment on
claims that were dropped and not presented at trial.
ALE’s Motion for Judgment as a Matter of Law and New Trial (Doc. No. 378) is
DENIED. Chrimar’s Motion for Judgment as a Matter of Law (Doc. No. 379) is DENIED as
set forth herein. Final judgment will issue as a separate order.
Within 7 days of the issuance of this Order, the parties shall jointly submit a proposed
redacted version of this Order so that a public version can be made available.
So ORDERED and SIGNED this 3rd day of February, 2017.
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