Last Thursday, the Federal Circuit Court of Appeals issued an opinion partly affirming and partly overturning the rulings of a Central District of California judge and jury. Now, the parties will have to retry damages in the case over intellectual property rights underlying certain Broadcom Wi-Fi chips and Apple products incorporating those chips.
As previously reported, Caltech emerged the victor over both chip-producer Broadcom and device maker, Apple, who obtains chips from Broadcom pursuant to various agreements, in a February 2020 trial. The jury awarded Caltech $837 million from Apple and $270 million from Broadcom after extensive litigation, including the dismissal of the defendants’ defenses and counterclaims.
The jury’s award was based on the estimated royalties the university would have received had the intellectual property been paid for via licenses. In last week’s 39-page opinion, the Federal Circuit overturned the award after finding Caltech’s “two-tiered” damages theory unsupported, among other rulings.
The appellate panel focused on evidence Caltech’s experts presented to the jury, over the defendants’ objections, that the university would have engaged in separate patent licensing negotiations with Apple on the device-level and Broadcom on the chip-level. Apparently, the opinion said, the trial court was not concerned about a double recovery because “Broadcom and Apple were different companies and because the experts’ opinions carved out of the Broadcom hypothetical negotiation chips sold to Apple.”
The Federal Circuit faulted the district court for failing to recognize the absence of evidence showing that companies in Broadcom and Apple’s positions indeed would have engaged in separate negotiations. The mere fact that they were separate infringers does not warrant valuing chips at different royalty rates and presenting the two-tier damages theory to the jury, the panel concluded.