Innogenetics, N.V. v. Abbott Laboratories - WilmerHale

At the damages phase of trial, the jury was instructed to calculate a reasonableroyalty for Abbott’s infringement of the ’704 patent starting from “just before theinfringement began (in June 2003).” Docket No. 359 (Jury Instructions 3). Nowhere didthe jury instructions state the reasonable royalty would be limited to a period from thestart of infringement to the date of judgment. In fact, the jury was told that a reasonableroyalty could “include both an up-front payment and an ongoing royalty payment.”Docket No. 359 (Jury Instructions 1) (emphasis added).Innogenetics conceded at oral argument that the final amount of damagesawarded by the jury included both a market entry fee of $5.8 million and an ongoingroyalty payment amount of $1.2 million. The jury’s damage award exactly trackeddamages proposed by Innogenetics’ expert, John Jarosz, at trial—$7 million, whichincluded an upfront payment that equated to approximately $5.8 million and a runningroyalty of 5 to 10 Euros per test on the 190,000 tests Abbott had sold up to that point.Docket No. 340 (Trial Tr. vol. 2, 9:15-10:8, Sept. 5, 2006). Contrary to Innogenetics’contentions, the jury verdict of $7 million was not a royalty for Abbott’s past infringementonly. 7The record is replete with references to the market entry fee as an amount paidin anticipation of Abbott’s long-term license to sell its products. For example, Mr.Jarosz, testified that the hypothetical negotiation upon which he was basing hisproposed amount of damages was not capped by the date of the jury award, but would7It is hard to believe that a hypothetical negotiation between Innogeneticsand Abbott would result in a royalty of $7 million that included a market entry fee of $5.8million to sell licensed products for a three year period only, Abbott’s total revenueduring the period of infringement was just $13 million. State Contr. & Eng'g Corp. v.Condotte Am., Inc., 346 F.3d 1057, 1072 (Fed. Cir. 2003) ("[A]n actual infringer's profitmargin can be relevant to the determination of a royalty rate in a hypotheticalnegotiation.") (citing Interactive Pictures Corp. v. Infinite Pictures, Inc., 274 F.3d 1371,1385 (Fed. Cir. 2001)).2007-1145, -1161 25