808 F. Supp. 2d 584
S.D.N.Y.2011Background
- Dr. Paula Small, inventor of the '945 Patent, sues Implant Direct and Nobel for patent infringement in the SDNY.
- Neoss, Inc. and Neoss, Ltd. settled with Small and were dismissed from the case via stipulation endorsed May 2, 2011.
- Defendants seek production of the Neoss Agreement, arguing it is relevant to damages and other issues under Rule 26(b)(1).
- Small opposes production, arguing the Neoss Agreement is not relevant to the reasonable royalty or other issues.
- The court considers whether the Neoss Agreement is discoverable and, if so, whether it is relevant to a reasonable royalty under 35 U.S.C. § 284.
- The court grants the motion to compel, holding the Neoss Agreement is relevant to determining a reasonable royalty and must be produced.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Neoss Agreement discoverable under Rule 26(b)(1)? | Small argues it is not relevant to damages or royalties. | Implant Direct and Nobel contend it is relevant to damages and royalty calculations. | Yes; Neoss Agreement is discoverable and must be produced. |
| Is the Neoss Agreement relevant to a reasonable royalty under ResQNet and related authorities? | ResQNet indicates litigation-based settlements are not a basis for a royalty. | ResQNet allows considering settlement licenses as part of a broader base for a reasonable royalty. | Yes; it is relevant to determining a reasonable royalty under Rule 26(b)(1). |
| Does ResQNet foreclose the use of settlement agreements to determine a reasonable royalty? | ResQNet cautions that litigation can skew hypothetical negotiations; settlements may be of minimal probative value. | ResQNet endorses considering relevant information including settlements to establish a reasonable royalty. | ResQNet permits discovery and consideration of settlement information for a reasonable royalty, with limited probative value. |
Key Cases Cited
- ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed.Cir.2010) (settlement licenses tied to litigation can be probative but may be of limited relevance)
- Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed.Cir.2011) (hypothetical negotiation damages framework)
- Wordtech Sys., Inc. v. Integrated Networks Solutions, Inc., 609 F.3d 1319 (Fed.Cir.2010) (royalty determination can rely on the hypothetical negotiation model)
- Lucent Techs. v. Gateway, Inc., 580 F.3d 1301 (Fed.Cir.2009) (comparing licenses to the hypothetical license must show comparability)
- Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970) (factors for determining a reasonable royalty)