DNJ grants SJ of no damages and no injunction due to failure of proof

On April 19, 2013, the DNJ issued an opinion in Unicom Monitoring, LLC v. Cencom, Inc.-c1495cb07dc1, Civil Action No. 06-1166 (MLC) (Doc. No. 134). The court addressed defendant's motion for summary judgment of no damages due to plaintiff's failure of proof and for no injunction due to lack of damages. The court granted the motion.

In the pretrial order, plaintiff Unicom contended it would prove entitlement to reasonable royalty damages at a rate of 30% of the total revenue of Cencom's sales of accused products. In the pretrial order, Unicom indicated it would call two fact witnesses who would testify on matters related to damages, but the pretrial order contained virtually no detail on their proposed testimony. Unicom did not identify a damages expert or submit a damages report, and it did not produce any licenses for the patent-in-suit or for comparable technology.

The court first reasoned that, even though proof of infringement establishes the fact of damages, this is not a basis to award a reasonable royalty where there is no evidence to support the award. Slip op. at 13 (quoting Devex Corp. v. General Motors Corp., 667 F.2d 347, 363 (3d Cir. 1981)). The court also observed: "In another case where the patent was held valid and infringed, the Court of Appeals for the Federal Circuit upheld a district court's award of no damages but a permanent injunction. Gustafson, Inc. v. Intersystems Indus. Prods., Inc., 897 F.2d 508, 509 (Fed.Cir. 1990) (finding "no reversible error in the district court's . . . awarding no damages to [plaintiff] because none were proven.")." Slip op. at 13; see also id. at 13-18 (discussing holding in Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302 (Fed. Cir. 2002); and addressing Judge Posner's decision in Apple v. Motorola in which summary judgment of no damages was granted due to absence of evidence on damages).

The court concluded that competent evidence of reasonable royalty damages does not require expert testimony, but also found a "dearth of evidence in the record on which Unicom intends to present its reasonable royalty theory of damages to the factfinder." Slip op. at 19; see also AVM Techs., LLC v. Intel Corp., No. 10-610 (Doc No. 294) (D. Del. March 29, 2013) (granting summary judgment for defendant when plaintiff had no evidence with which to prove reasonable royalty). The court noted that the case had been pending for 7 years, and Unicom never established a reasonable royalty calculation or stated the amount it demanded until the pretrial conference. Moreover, Unicom did not offer an expert witness and only intended to provide two fact witnesses, neither of which could testify to the facts of a hypothetical negotiation because their testimony would not have involved facts at the time infringement commenced. Also, Unicom could not provide evidence of a licensing practice to establish a rate and no rationale to support its reasonable royalty calculation.

The court summarized its holding as follows:

Although there are many Georgia-Pacific factors which the Court can consider, the failure to present competent evidence regarding how the factfinder should perform the reasonable royalty calculation is fatal to Unicom's claim for reasonable royalty damages. A factfinder cannot be asked to speculate from numbers unsupported by law and divorced from expert guidance, but rather the factfinder needs either clear guidance from an expert about how to apply complex calculations or simple factual proofs about what this patentee has previously accepted in factually analogous licensing situations. See Lindemann, 895 F.2d at 1407; see also Devex, 667 F.2d at 361 (holding that, although plaintiff failed to adduce proof to support its proposed reasonable royalty rate, the facts demonstrated that the plaintiff had previously made an industry-wide offer of license for a fixed amount of .75% and that offer was sufficient evidence to support a royalty rate for .75%).

The court then addressed injunctive relief, again granting Cencom's motion for summary judgment. First, the court discussed Judge Posner's decision in Apple v. Motorola, noting that there the court found that plaintiff could not satisfy the second eBay prong that remedies available at law, such as monetary damages, are inadequate to compensate for that injury because of "one party's failure to present proof establishing the amount of damages to be awarded." Slip op. at 24. On the facts in Unicom, the court concluded there the first eBay prong that plaintiff has suffered an irreparable injury because the facts of record did not support this conclusion. Cencom had previously ceased using the accused product, and there was no risk that Unicom would not be paid the monetary damages assessed because the court determined Unicom was not entitled to damages. Accordingly, the court denied injunctive relief.