University wins billion dollar judgement against Apple and Broadcom. CALTECH v. BROADCOM

A patent is a set of exclusive rights granted to the inventor of an invention that is new, useful and not obvious. In the United States an inventor obtains a patent by filing a patent application with the United States Patent and Trademark Office. The patent application will be reviewed by an examining attorney at the USPTO and if all the statutory requirements are met, a patent will be granted. A patent gives its owner the exclusive right to make, use, sell and import the invention claimed in the patent. If someone other than the patent owner exercises one of these exclusive rights that can be considered patent infringement. A patent owner can address patent infringement by filing a complaint in United States Federal Court.

The primary motivation for combating patent infringement is to be awarded damages. Litigation is a costly and time consuming process, so if a plaintiff does not expect to be awarded damages which will exceed the cost of litigation there is little reason to file a complaint. The question then becomes, how are damages calculated in a patent infringement case? The short answer is, it depends on several factors. There is no single way to calculate patent infringement damages.

The relevant part of the patent act is 35 U.S. Code § 284 which states: the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court. This statute sets the minimum a plaintiff can hope to be awarded, but not the maximum Reasonable royalties and lost profits are the two primary methods of determining damages in a patent infringement case. A reasonable royalty is the fair market value of a license had the infringer licensed the patent. Lost profits are calculated based on the profits a patent owner would have made if not for the infringement. Both methods of calculating damages are dependent on the facts of each case and can vary greatly.

THE CALIFORNIA INSTITUTE OF TECHNOLOGY v. BROADCOM LIMITED ET AL, 2:16-cv-03714 (C.D.CA 2016) is a case which illustrates how the damages in a patent infringement case can reach astronomical values. THe plaintiff in this case, CalTech owned three patents. U.S. Patent No. 7,116,710, titled “Serial Concatenation of Interleaved Convolutional Codes Forming Turbo-Like Codes” (the “’710 patent”) issued in 2006. U.S. Patent No. 7,421,032, titled “Serial Concatenation of Interleaved Convolutional Codes Forming Turbo-Like Codes” (the “’032 patent”) issued in 2008. And U.S. Patent No. 7,916,781, titled “Serial Concatenation of Interleaved Convolutional Codes Forming Turbo-Like Codes” (the “’781 patent”) issued in 2011. The patents all relate to a novel method of correcting errors when transmitting information over radio signals. Errors in transmissions are unavoidable, and slow down the speed of radio communications. The “irregular repeat and accumulate codes” claimed in the plaintiff patents allowed transmission speeds that approach the theoretical maximum speed. The plaintiff’s patents are used in the 802.11 Wi-Fi standard which is the primary way laptops and cellphones connect to the internet.

The defendants in this case sell computer chips which are used for radio transmissions or devices that incorporate such chips. The plaintiff found that the defendant’s products used error correcting methods which were similar to methods claimed in the plaintiff’s patents. The plaintiff filed suit for patent infringement and 4 years later a jury found the defendant guilty of patent infringement. The defendant Broadcom was found liable for $270 million in damages and the defendant Apple was found liable for $838 million in damages.

Not surprisingly, the defendants both plan on appealing the jury’s award.

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