Court Denies Summary Judgment of Patent Infringement Because of "Battle of the Experts"

In a May 28, 2015 ruling, Judge Jed S. Rakoff denied summary judgment of patent infringement because the parties’ experts had conflicting views on the issue. Judge Rakoff wrote that the plaintiff “has proffered expert testimony that” the accused product contains a particular claim limitation and the defendant “has proffered expert testimony that it does not. Upon careful review, it is clear that the resulting 'battle of experts' involves genuine disputes of material fact precluding judgment as a matter of law. Accordingly, the Court hereby denies both parties' motions for summary judgment.”

Court Sets Post-Judgment Patent Royalty Rate

In a December 11, 2013 ruling, Judge Jed S. Rakoff set the post-judgment patent royalty rate in Tomita Technologies USA, LLC's patent infringement action against Nintendo Co., Ltd.  The Court rejected Tomita's request for a flat dollar amount for each unit, finding that the "rapid pace of technological advancement -- and its effect on prices -- counsels the Court that it is highly likely that the price will drop with time.  If, as Tomita suggests, the ongoing royalty rate were expressed as a flat dollar amount per unit sold, Tomita would capture an increasingly large proportion of each sale as the price falls, even as the technology's reliance on the infringed patent remains constant."  Judge Rakoff also rejected Nintendo's argument to set the royalty rate as the same implied rate found by the jury as was subsequently halved by a remittitur, noting that "Tomita . . . argues with some force that courts routinely increase the implied royalty rate of a verdict after a finding of infringement because the status of the parties has changed, as would the result of the hypothetical negotiation between them."  The Court then set the royalty rate at two thirds the implied royalty rate found by the jury.

Court Orders Remittitur of the Jury's Award for Patent Infringement

In an August 14, 2013 ruling, Judge Jed S. Rakoff ordered a remittitur of the $30 million judgement obtained by Tomita Technologies USA, LLC in its patent infringement action against Nintendo co., Ltd. over its Nintendo 3DS gaming console. Nintendo argued that the damages award was excessive because it used the "entire market value" of the 3DS consoles as the royalty base rather than the "'smallest salable patent-practicing unit.'"  Nintendo based its argument on "the rule that, in calculating damages for multi-component products accused of infringement, royalties must 'be based not on the entire product, but instead on the "smallest salable patent-practicing unit."'"  The Court reasoned that "[w]hether the entire market value rule is implicated thus turns on the question of whether the 3DS constitutes the 'smallest salable patent-practicing unit.'" 

Judge Rakoff adhered to his ruling, made in response to Nintendo's in limine motion, that Tomita's expert "properly looked to the 3DS itself as the 'smallest salable patent-practicing unit,'" and did not rely on the entire market value rule.  The Court thus declined to order a remittitur on that ground. 

Judge Rakoff nevertheless did find that "the jury's $30.2 million damages award is 'intrinsically excessive' and unsupported by the evidence presented at trial."  In particular, the Court found that although the reasonable royalty rate of 3% found by the jury is less than a comparable license to which Tomita is a party, "there are special circumstances relating to the 3DS that strongly suggest that such a royalty rate is excessive in this context."  Those factors, according to Judge Rakoff, are that the 3DS consoles are not profitable for Nintendo, and that the infringed patent-in-suit was used in only two functions of the consoles that were "in some sense ancillary to the core functionality of the 3DS as a gaming system."  Judge Rakoff thus gave Tomita a choice of accepting one-half of the damages awarded or facing a new trial.