Federal Circuit rules for SSL Services on patent damages

SSL Services, LLC initially brought suit in 2008 against Citrix Systems, Inc. and Citrix Online, LLC for infringement of U.S. Patent No. 6,061,796 and 6,158,011. The patents relate to technology allowing for secure connections over the internet to enable users to remotely access another computer or network, or enhance secure collaboration between computer users. 
In 2012 Competition Economics Director Brett Reed testified in the historic courthouse in Marshall, Texas regarding the reasonable royalties due from Citrix for patent infringement. Mr. Reed assessed Georgia-Pacific factors, including information relating to a prior product license agreement between relevant parties referencing the ’011 patent, and explained to the jury how this supported an underlying reasonable royalty rate and contributed to a lump sum reasonable royalty of $10 million for the patent. The jury concluded that the ‘796 patent was not infringed, while it found that Citrix infringed the ’011 patent and agreed with Mr. Reed’s damages analysis, awarding $10 million in reasonable royalties. Subsequently, the district court entered judgment and awarded an additional $5 million in enhanced damages and nearly $5 million in interest.
Upon appeal, the Federal Circuit upheld Mr. Reed’s approach, including the use of non-patent agreements to construct a damages methodology, noting that “SSL’s expert expressly addressed the difference between the license negotiations and any hypothetical negotiations, thereby clarifying for the jury where such differences might exist and the limited value of such evidence.”  The Federal Circuit also agreed with the district court’s ruling which allowed Mr. Reed to rely on the product license agreement and that “any issues regarding their fit to the precise facts presented should be addressed by way of cross-examination.” 
The Federal Circuit also affirmed the district court’s award of prejudgment interest, which was based on Mr. Reed’s approach of accruing interest on the hypothetical lump sum royalty payment from the time of first infringement in 2004.

For more information, see the District Court ruling and the Federal Circuit ruling.

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