The recent jury verdict and $234 million award in favor of the Wisconsin Alumni Research Foundation over tech juggernaut Apple Inc. is the latest victory for university licensors over well-heeled corporate giants, and it offer some lessons for TTOs — particularly those protecting IP that makes up one small part of a bigger piece of equipment.
WARF sued Apple over U.S. patent number 5,781,752, “Table-Based Data Speculation Circuit for Parallel Processing Computer,” which essentially improves the efficiency and performance of computer processors. The patent has been in litigation before — WARF asserted it against Intel in 2008, and on the eve of trial got a $110 million settlement.
The complaint was very simple, reports B. Scott Eidson, a partner at Stinson Leonard Street LLP in St. Louis: one patent, one set of accused products. They all used the A7 processor, including the iPhone 5S, the iPad Air and the iPad Mini with retina display. Apple filed an Inter Partes Review request, which the Patent Trial and Appeal Board denied.
That denial left Apple “stuck in litigation in the Western District of Wisconsin,” Eidson points out. “WARF had two cases filed there, the first on January 31, 2014. Apple updates its product once a year, and each update brings in a new processor. So in this case they sued in January in 2014 after the September launch and Apple, during the course of the litigation, released new products with a new, updated processor. When you sue for patent infringement, you identify the accused products-in-suit and you’re allowed to have discovery on them, but Apple essentially released a lot more mid-litigation.”
WARF was forced to file a second lawsuit on September 25, when the second wave of products launched, to take those into account. “If another wave of products is launched next year, WARF may be forced to file yet another lawsuit.”
The WARF case was an odd situation, he points out, because of what the magistrate judge would and wouldn’t let WARF do. In general, you want to keep an application on file, especially if you have new IP that will cover a successful product, so if people move their technology around your patent, you’ve got the continuation on file so you can put claims on top of the product. But in WARF, he explains, “the patent was just sitting out there. In that situation, you’re basically stuck doing what WARF did: Ask the court to combine the products, and if it won’t, you’ve got to file another lawsuit.”
The second lawsuit is still pending, he says, and is in the very early stages of discovery. It is, he points out, “nearly identical to the first, but for adding the updated chip and the new products.”
Damages pose another problem in such cases. WARF had asked for $400 million, based on a royalty of $2.74 for each device sold. Not surprisingly, Apple had set the same royalty calculation at just $0.7 cents a device. “The main problem is how you assess damages for something that is but a component of the overall product sold,” Eidson comments. A detailed analysis of the case appears in the January issue of Technology Transfer Tactics. To subscribe and access the full article, plus the publication’s rich archive of success strategies and case studies for TTOs, CLICK HERE.