Posner (once again) takes aim at ‘pie in the sky’ patent damages

In his continuing quest to “fix” the broken patent system in this country—particularly its manifestation in long, costly, and invention-stifling litigation—Judge Richard Posner (7th Circuit) wants federal courts to use the two most ready tools at their disposal: the appointment of neutral damages experts and the application of a more precise calculus of damages.

“Among the things a judge can do is assign a neutral expert to assess the claims of damages from both sides,” Judge Posner said in a recent article by a New York Times op-ed columnist. Such court-appointed neutrals are sure to “have a deep understanding of the issues,” the judge says, and can explain them “to a jury in a jargon-free manner.” (That may be so, but neither Posner nor the Times mentions the high-profile Oracle v. Google case, in which the federal court struck portions of the report by its appointed expert for ignoring the strict exception to applying the entire market value of an infringing product.)

Far more important, the Times piece continues, is for judges to continue their scrutiny of patent damages. “Instead of allowing companies and their experts to come up with pie-in-the-sky estimates of what they are owed by the infringer,” Posner wants them to calculate precisely how much the infringing component is driving demand for the product. “If they can meet that challenge, then fine,” he says. “But it’s difficult.”

Thus, in the equally high-profile Apple v. Motorola litigation, Posner dismissed both experts—and the entire case—after concluding that neither side came close to meeting the current, rigorous standards for precision and objectivity (which might be summed up as what amounts would an expert calculate in a nonlitigation role). The case is currently on appeal, and the NYT piece posits that if Posner’s standards hold up, “there is a decent likelihood that his new formulation will become the standard in the federal judiciary—and the costly patent wars, which take money from shareholders and consumers alike, will finally come to an end.”