Patent damages have become wildly excessive. Or not.
The issue has roiled the courts and produced bruising battles in Congress. It has pitted the pharmaceutical and biotech industries against the IT and software industries.
"Since 2005, Congress has been debating every year about whether to reform the way patent damages are calculated," says John Desmarais, a Kirkland & Ellis partner who represented Lucent in the Federal Circuit. "This never gets anywhere because there are people on both sides."
Indeed, powerful groups have opposed changing damages law. The pharmaceutical and biotech industries in particular have fought fiercely on Capitol Hill to retain the status quo.
The ruling will make it harder for patentees to prove damages by using comparable licenses, according to many experts. "Lucent opens the door wider ... to exclude 'actual' licenses as irrelevant when they involve significantly different technologies," Albert says. "Even in cases where there is a viable connection between actual licenses and the disputed technology, Lucent seems to indicate that ... plaintiffs will henceforth need to explain to the jury exactly why the actual licenses are relevant."
More generally, the decision pushes district courts to review evidence of damages with a more critical eye. "The decision is an important signal to district courts that they have a responsibility to ... ensure that damages verdicts are appropriate and based on substantial evidence," says Jonathan Tropp, a partner at Day Pitney.