In February of this year, Smartflash LLC was awarded over $530 million in a judgment against Apple for willful patent infringement. The judge voided the award in July based on confusion surrounding his jury instructions which may have led to the jury miscalculate royalties. But this raises a bigger issue: in a world where new technology is developed every minute, how can we expect juries to calculate a developer’s damages realistically? Or perhaps more importantly, should we expect juries to calculate these damages at all?

The Smartflash judgment was thrown out because the jury instructions, while legally correct, “may have created a skewed damages horizon for the jury.” Apple argued that “jurors might have improperly considered the entire market value of the products, rather than distinguishing between patented and unpatented features.” When these judgments are frequently in the hundreds of millions of dollars, the concern that damages are being miscalculated is very real. The largest damages awards are frequently patent infringement cases. While, like the Smartflash/Apple case, the judgments may eventually be voided, the cases often take an exorbitant amount of time on the judicial docket, regardless of the final outcome. In addition to the financial problems large damage awards have on companies, curbing innovation in a technology age may become a huge policy concern. This brings us to another related issue: patent trolls.

Patent trolls often accuse businesses of infringing upon a product or technology, in addition to attempting to protect an invention. Should Congress focus on legislation that could quell some less-than-legitimate patent infringement cases?  The Innovation Act, a House Bill that has been introduced, stopped, and reintroduced, would take aim at patent infringement suits, including a requirement that plaintiffs be much more specific about the alleged violation. Still, others are concerned that the Innovation Act would discourage legitimate suits, as well as the illegitimate ones. One thing is for sure, a system that allows patent trolls, multi-million-dollar damage awards, and a misunderstanding of the problem by juries is likely to promote more illegitimate suits and large settlements than legitimate suits that support innovation.

Danielle Dudding

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