On January 29, 2020, Caltech prevailed in its Central District of California jury trial against Apple and Broadcom, where the jury found both Broadcom (who supplied WiFi chips) and Apple (who sold products with the Broadcom WiFi chips) infringed all five asserted claims of Caltech’s U.S. Patent Nos. 7,116,710, 7,7421,032, and 7,916,781, and awarded over $1.1 billion in total damages. The case marks what appears to be the largest verdict awarded on standard essential patents (SEPs) that were not subject to any standard-setting commitment (i.e., no RAND commitment).
The Jury Verdict shows that the jury found neither Broadcom nor Apple had willfully infringed any of the asserted claims and awarded Caltech running royalties in the amount of $837,801,178 for Apple’s infringement and $270,241,171 for Broadcom’s. The jury was not asked to make any findings on issues related to validity or any affirmative defenses or counterclaims, focusing solely on infringement and damages.
The parties currently are filing post-trial motions in which Apple/Broadcom are asking the trial court to enter judgment in their favor and overturn the jury verdict. The post-trial filings also include Caltech’s request for a permanent injunction. The trial court may decide those motions in the next couple months.
Caltech filed suit against Broadcom, Avago Technologies Limited, and Apple on May 26, 2016. Caltech’s Amended Complaint alleges Defendants’ Wi-Fi enabled devices infringed four related U.S. patents directed to error correction codes, called “irregular repeat and accumulate codes” (“IRA codes”), used in improving transmission rates and performance. Caltech alleged that its patented IRA code technologies were widely recognized by experts in the communications industry and eventually adopted into 802.11 Wi-Fi standards. Specifically, Caltech alleged that one of the key improvements introduced by 802.11n and later incorporated into 802.11ac involved a high throughput (HT) mode implemented by a specific type of low-density parity check (LDPC), which implements Caltech’s patented technology. Caltech had previously asserted the patents against DISH Network, EchoStar, and Hughes Communications Inc. in two lawsuits — the first in 2013 and a second in 2015 — that were resolved in May 2016 following a licensing agreement between the parties.
Interestingly, the patents seems to have been asserted as essential to the 802.11n and 802.11ac standards, but not subject to RAND commitments, presumably due to Caltech’s development of this technology for other wireless purposes and Caltech not being involved in the IEEE’s standard setting process. While docket entries show that defendants sought discovery on Caltech’s knowledge related to the development of 802.11 standards and compatible products, it does not appear any defenses related to standard-setting activity or RAND obligations were raised, outside of a motion in limine by Caltech to exclude any mention of standard essential patents or RAND issues from trial.
After a 12-day jury trial in January 2020, the jury returned its verdict that both Apple and Broadcom infringed all five claims across the three patents asserted at trial, awarding damages based on a running royalty calculation. With respect to the patents reading on technology in IEEE standards, the Jury Instructions mention only that the products accused of infringing the patents-in-suit include Apple devices and Broadcom chips that “support Wi-Fi”. The instructions make no explicit reference to the 802.11 standards or any standard-setting activity.
With respect to damages, the jury was instructed to calculate a royalty in the manner most appropriate based on the evidence presented and considering a number of factors, including the value the claimed invention contributes to the accused product, the amount a prudent licensee would have been willing to pay as a royalty and a prudent patentee would have accepted, and comparable licenses. The jury instructions made no reference to RAND obligations nor any impact standardization might have on calculating damages. The jury instructions listed common Georgia-Pacific factors that caution the jury to separate value of the invention from other value in the accused products, and the instructions appear to have purposely avoided listing factors that might be unduly influenced by standardization, which factors the Federal Circuit has said requires extra attention in SEP cases to ensure that it is not unduly influenced by standardization (e.g., ensure that commercial success or widespread adoption of the technology was due to the patented technology and not standardization of that technology), stating:
Some of the factors you may consider in making your determination are:
(1) The value that the claimed invention contributes to the accused product.
(2) The value that factors other than the claimed invention contribute to the accused product.
(3) The amount that a licensor (such as the patentee) and a licensee (such as the infringer) would have agreed upon (at the time the infringement began) if both had been reasonably and voluntarily trying to reach an agreement; that is, the amount which a prudent licensee — who desired, as a business proposition, to obtain a license to manufacture and sell a particular article embodying the patented invention — would have been willing to pay as a royalty and yet be able to make a reasonable profit and which amount would have been acceptable by a prudent patentee who was willing to grant a license.
(4) Comparable license agreements, such as those covering the use of the claimed invention or similar technology.
The jury instructions did note that it was only a component in the products that caused the infringement (presumably the Broadcom WiFi chip), and cautioned the jury to award damages based only on the value provided by that infringing component “to the product as a whole” and to separate out value provided by other features of the end product, stating:
In this case, the asserted patents are alleged to cover only one component of the product that Broadcom or Apple imports, uses, or sells. It is Caltech’s burden to demonstrate what value that component has added to the product as a whole and to separate the value of the patented contribution from the value of other parts of the product that are not attributable to the patented invention. The ultimate combination of royalty base and royalty rate must reflect the value attributable to the allegedly infringing feature of the product, and no more.