A recent non-published case from the District Court of New Jersey serves as a reminder that navigating the damages phase of patent infringement is just as important as proving liability.
In Unicom Monitoring, LLC v. Cencom, Inc., Judge Cooper court denied the patent owner damages despite the fact that it succeeded in proving infringement. The patent at issue covered a device for rerouting alarm reports through a telephone line. Defendant Cencom was found to infringe claim 1 of the patent. Before the trial on Unicom’s damages, Cencom moved for summary judgment to dismiss Unicom’s damages claim because it failed to present expert evidence. Cencom also moved for summary judgment on injunctive relief because Unicom failed to establish its burden under the factors articulated by the Supreme Court in eBay Inc. v. MercExchange, LLC. Cencom argued that the only proof Unicom provided supporting Unicom’s reasonable royalty position was attorney argument, Cencom’s sales records, and statements from Unicom’s owners. The Court held that while expert testimony is not required to prove reasonable royalties, it agreed with Cencom that Unicom failed to establish competent proof to support its claim.
A factfinder cannot be asked to speculate from numbers unsupported by law and divorced from expert guidance but rather the factfinder needs either clear guidance from an expert about how to apply complex calculations or simple factual proofs about what this patentee has previously accepted in factually analogous licensing situations.
Unicom Monitoring, LLC v. Cencom, No. 06-01166, slip op. at 21 (D.N.J. April 19, 2013) (MLC). The Court also denied Unicom injunctive relief holding that it is not an automatic grant or even a presumptive result of finding liability. Instead, the prevailing patent holder must establish the four-part test as articulated in eBay. The second prong of the eBay test inquires into whether remedies available at law, such as monetary damages, are inadequate to compensate for that injury. The Court, guided by Judge Posner’s decision in Apple, Inc. v. Motorola, Inc. held that Unicom is not entitled to permanent injunction because it failed to show that monetary damages were inadequate to compensate for its injury. Here, as in Apple, Unicom failed simply to set forth its prima facie case of how much monetary damages it is entitled to. Further, the Court also considered that both parties are no longer producing or marketing the product as another factor denying injunctive relief.
Lisa H. Wang is a Director in the Gibbons Intellectual Property Department.