The Court of Appeals for the Federal Circuit (CAFC) welcomed the new year with a decision that will have damages experts for patent owners and alleged infringers alike rethinking how they calculate reasonable royalties in patent infringement cases. The decision, Uniloc USA, Inc. v. Microsoft Corp., 2010-1035, -1055 (Fed. Cir. 2011), stemmed from an appeal of a $388 million jury award against Microsoft. The CAFC upheld the finding of infringement and of no invalidity, but affirmed the grant of a new trial on damages based on the fact that “the jury’s damages award was fundamentally tainted by the use of a legally inadequate methodology.” In particular, the CAFC found the “25 percent rule of thumb” approach to reasonable royalty calculations to be per se inadmissible, and “Entire Market Value Rule” evidence to be inadmissible under the circumstances.
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