The United States District Court for the Northern District of Illinois – Eastern Division released a decision on Friday in Apple, Inc. et al v. Motorola, Inc. et al, dismissing the case with prejudice, effectively ending what has been a highly charged and contested conflict.
The two cases were consolidated for judicial economy, with each party claiming damages. Apple’s claims focuses on patents 6,493,002, 6,343,263, 7,479,949, and 5,946,647, and Motorola’s claim centers around US patent 6,359,898. The dispute began in 2011, with Apple initially claiming 16 patent violations, and Motorola claiming 6. From the outset, Posner J referred to Motorola’s claim as “ridiculous.” In an order dated April 26, 2012, he stated,
I deny the second half of Apple’s motion (seeking prohibition of the deposition) as frivolous and the first half (seeking substitution) as untimely. I’ve had my fill of frivolous filings by Apple. The next such motion, and I shall forbid it to file any motions without first moving for leave to file.
Justice Posner had previously ruled at a Daubert hearing on May 22, 2012 that the expert evidence proffered by both parties over damages were inadmissible. He expressed significant concern over the discrepancies of the damages estimates proffered by each side’s experts, $100,000 by Motorola, and $14 million by Apple,
Apple’s damages expert . . . estimates that a reasonable royalty (covering the period up until the trial) would be a lump sum of $14 million. In other words, he differs with [defendants’ damages expert] by a factor of 140. The size of the disparity is a warning sign. Either one of the experts is way off base, or the estimation of a reasonable royalty is guesswork remote from the application of expert knowledge to a manageable issue within the scope of that knowledge.
I am mindful that a degree of speculation is permitted in calculating damages . . . But if an expert witness fails to conduct a responsible inquiry that would have been feasible to conduct, his failure cannot be excused by reference to the principle that speculation is permitted in the calculation of damages
Motorola’s estimate was based on costs related to redesigning around the patent, but Posner J indicated this failed to consider design-around costs already priced through research and development. Apple’s estimate was based on customer surveys by Motorola inquiring over reasons they purchased the phone, but this approach failed to attribute incremental value for each feature based on the allegedly infringed patent. Posner J indicated that the cost of eliminating uncertainty through a commissioned survey is only warranted when the benefit exceeds it.
The Daubert ruling led to summary judgment motions by both sides. A ruling on June 7, 2012 tentatively concluded that the Apple’s inadmissibility of damages evidence tentatively failed to create a genuine issue of material fact.
At a hearing on June 20 for clarifications on the parties’ briefs, Posner J suggested that Apple should consider ongoing royalties instead of an injunction. A complete ban of sales over features which were unlikely to affect consumer goodwill appeared to be a severe punishment. Apple indicated that these options were the patent holder’s choice, and said they could submit a new suit if Motorola doesn’t modify their products following the expiration of an injunction. Posner J responded to this saying,
Great, that’s all we need, new suits. There aren’t enough lawsuits worldwide between Apple and all the Android manufacturers.
In this week’s ruling Justice Posner intended his disposition to be final, and expressed concern of the case being reopened,
It might seem that the case has become moot, because the parties cannot obtain any benefit from further proceedings. But that is not correct. They can’t obtain any benefit from further proceedings in this case but they can appeal its dismissal. And even if no appeal were planned, the case would not be moot, because a failure of proof, whether with respect to liability or to remedy, while it ends a case does not make the case moot. A dismissal for mootness ordinarily (though with exceptions, for example because of voluntary cessation by the defendant of his alleged misconduct, or because the case is capable of repetition but evades review) is without prejudice… And when a suit is dismissed without prejudice, so that the dismissal is not res judicata, the loser can (again with exceptions) refile it… It would be ridiculous to dismiss a suit for failure to prove damages and allow the plaintiff to refile the suit so that he could have a second chance to prove damages. This case is therefore dismissed with prejudice; a separate order to that effect is being entered today.
The case has led to some speculation that judges may require more stringent evidence regarding damages in patent litigation, and curiosity over whether other courts will adopt a similar approach on design-around costs.