Federal judge awards $456,000 for enhanced damages in patent case

By Kate Jacobson | Nov 25, 2016

MARSHALL, Texas (Legal Newsline) -- A federal judge in Texas has awarded $456,000 for enhanced damages in a patent case against LG Electronics Inc., bringing the total reward for the case to about $2.3 million.

On Nov. 1, U.S. District Judge Rodney Gilstrap of the Marshall Division of the Eastern District of Texas found LG willfully infringed upon two patents owned by Core Wireless Licensing designed to improve battery life and for voice quality in smartphones. The enhanced damages are on top of the $2.26 million award a jury gave to Core Wireless in September.

Michael Smith, a partner at Siebman, Burg, Phillips & Smith, said judges can give enhanced damages up to three times that of the original award if there’s proof of willful infringement in patent cases. He likened the award to punitive damages given in civil proceedings.

“The court awards claim damages adequate to compensate for the infringement,” Smith said. “Here the jury found that it was willful and that means the court has a basis to determine whether enhanced damages are appropriate, and [Gilstrap] felt they were.”

The case began in 2014, after Core Wireless sued LG for infringing on two of its patents. LG denied the claims and the matter went to court. Representatives of LG said in court that the patents were invalid but in a deposition by an LG employee, it became apparent that the company had reviewed the patents before it met for licensing negotiations.

Gilstrap said in a statement that LG had knowledge of the patents-in-suit before filing its own lawsuit, and that it did not act in good faith negotiations.

Judges have always been allowed to issue enhanced damages in patent cases but a U.S. Supreme Court ruling in June makes it easier to do so. Smith said previously judges had to follow rigid tests to determine whether damages and attorney fees could be incurred by the defendant. The court’s ruling allows judges to determine for themselves whether the award is necessary if a jury determines the infringement was willful.

“It’s completely up to the judge,” Smith said. “They’ve said, ‘Judge, you tried the case, you have a willful finding and it’s up to you to decide if there’s an enhancement and for how much.’”

Smith said in this case, the judge determined there was reason to issue enhancements, but based on the small amount, Gilstrap decided it was only had slight cause.

Gilstrap could have issued upward of $4 million in enhancement damages on top of the $2.2 million award. By going for a lower amount – about 20 percent of the issued award – the judge is sending a message.

“The thing the judge seemed to really center on was the negotiation,” Smith said. “Basically, they were jerks about negotiations and he felt that that deserved some sort of enhancement.”

Smith said he thinks this will be a trend seen in other patent cases where enhanced damages are deemed appropriate. He said only a small percent of patent cases go to trial, and an even smaller percentage are entitled to enhanced damaged. But with the new U.S. Supreme Court ruling, he predicts judges faced with issuing an enhancement will be more in line with Gilstrap’s award formula.

“I don’t know that I’ve ever seen a judge give a full enhancement award,” he said. “This is a good indication – this is a data point where a judge is saying, ‘Here are the facts that I’ve got and I think it’s about 20 percent.'"

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