Patent Law

Prove It

By Gary Odom and Jordan Kuhn

In its battle to pry open Microsoft's wallet, Alcatel-Lucent has two parallel patent cases. Yesterday it filed an identical motion in both cases, seeking full production of all Microsoft's patent license agreements with third parties. Such agreements are almost always confidential, as a condition of settlement. Alcatel doubts whether Microsoft has been truthful with regard to its settlements.

At another trial, according to the motion, "Microsoft told the jury that it has never paid more than $100 million in a license. Alcatel believes that statement to be untrue and is entitled to test it."

Microsoft faced a multi-hundred million dollar damage claim in a recent patent infringement trial among similar parties - Alcatel, Microsoft, and Lucent - in the Southern District of California. In an attack on that claim, Microsoft's damages expert testified that Microsoft had never paid more than $100 million for a patent license. He told the jury that Microsoft's three largest licenses were for $80 million (Hewlett Packard), $93 million (Apple), and $100 million (Emprize). The expert further testified that these licenses "are the three largest license agreements Microsoft has entered into."

Alcatel is particularly curious about the settlements in the famous Stac and Eolas cases. Eolas had garnered a $520 million damage award, which Microsoft fought tooth-and-nail before settling. Microsoft had produced the Stac license in a previous litigation, but balked in the Alcatel matter.

In its motion, Alcatel stated: "It is well established that a party's prior license agreements are directly relevant to the determination of a reasonable royalty."

Microsoft invoked Federal Rule of Evidence 408 to justify its discretion. Alcatel asserts that:

Rule 408 addresses the admissibility of settlement negotiations but does not shield the discovery of these documents... Federal Rule of Evidence 703 allows experts to rely on evidence that is "of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need not be admissible in evidence in order for the opinion or inference to be admitted."

Full post as published by The Patent Prospector on July 22, 2008 (boomark / email).