Posted by Robert Lorsch
In August of this year, two separate billion dollar verdicts for patent infringement were handed down. Apple was awarded $1.05 billion in a patent infringement suit against Samsung related to the iPhone and Monsanto was awarded $1 billion in a patent infringement lawsuit against DuPont related to genetically engineered agricultural seed.
One of the questions being debated in the legal community and the media is whether a patent portfolio can have a billion dollar value. Most experts believe the answer is yes based on the way patent damages are calculated.
Patent damages are compensatory and meant to remedy the loss due to infringement. There are two ways that patent infringement damages may be calculated monetarily. The first by awarding a hypothetical reasonable royalty and the second through the calculation of lost profits. Under either of these approaches the idea is to compensate the patent holder by placing them in the position they would have been in if an infringement had never occurred.
Over the past year, MMRGlobal’s subsidiary, MyMedicalRecords, Inc., has been awarded five patents by the United States Patent and Trademark Office, U.S. Patent Nos. 8,121,855; 8,117,646; 8,117,045; 8,301,466 and 8,321,240, with similar patents issued and/or pending in twelve other countries. In addition, MMR has hundreds of pending claims involving Personal Health Records and features included in Electronic Medical Records systems in the U.S.
Although reasonable royalty calculations look to industry standard rates for the technology, in most cases there is no industry standard. As a result, courts often turn to a “hypothetical negotiation” to determine an amount a patent owner would have received if it had licensed the patent to the infringer in an arm’s length licensing relationship. With health IT projected to be a hundred billion dollar industry fueled by tens of billions in incentives that “hypothetical negotiation” could result in a big number.
The lost profit damage calculation is not so hypothetical. Instead, it is an approximation of the profits that the patent owner lost due to the presence of the infringer’s product(s) in the marketplace. This is essentially based on lost sales that the patent holder would have had if no infringing products were on the market. The lost profits calculation can include what is called the “entire market value rule.” This rule permits the patent owner to include as lost revenue separate non-patented components that are typically sold along with the patented product. If that were applied to MMR’s patents, that could be a really big number based on a really big market.
In order to make a belief into a reality, we need to keep thinking out of the “BOX” while placing one foot in front of the other regardless of the obstacles that appear in the way. Then one day we find ourselves ringing the bell on the New York Stock Exchange and the answer to how to do it appears in front of us. When I started MMR in 2005 I believed it could be the most successful venture of my life. At that time, I did not know how I would get there because there is never certainty in something that has not happened yet. Through the inner voice of natural knowing I simply knew I could. So I started thinking out of the “BOXES” which became the four corners of many pieces of paper called patent applications. Now it appears the resultant patents (and pending applications) should help get us through to the most successful venture of my life.
Robert H. “Bob” Lorsch, CEO, MMRGlobal
4401 Wilshire Blvd., 2nd Floor, Los Angeles, CA 90010
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Edited from an article by Jonathan L. Kennedy of McKee, Voorhees & Sease
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