Case 1:18-cv-00001-RGA-SRF Document 356 Filed 05/02/24 Page 1 of 5 PageID #: 39191
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`IPA TECHNOLOGIES, INC.,
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`Plaintiff,
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`V.
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`MICROSOFT CORPORATION,
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`Defendant.
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`Civil Action No. 18-1-RGA
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`MEMORANDUM ORDER
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`Before me is Defendant's motion for reconsideration (D.I. 347) of the denial of
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`Defendant's motion for summary judgment on the issue of damages and the denial of
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`Defendant's motion to exclude the testimony of Mr. Kennedy, one of Plaintiffs damages experts
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`(See D.I. 342; D.I. 341 at 37-42). I have considered the parties' briefing. (D.I. 348, D.I. 350).
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`For the reasons set forth below, this motion is DENIED.
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`I.
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`LEGAL ST AND ARD
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`Motions to reconsider are disfavored. See D. Del. LR 7.1.5(a) ("Motions for reargument
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`shall be sparingly granted."); Dentsply Int '], Inc. v. Kerr Mfg. Co. , 42 F. Supp. 2d 385, 419 (D.
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`Del. 1999). "The purpose of a motion for reconsideration .. . is to correct manifest errors of law
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`or fact or to present newly discovered evidence." Max 's Seafood Cafe v. Quinteros, 176 F.3d
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`669, 677 (3d Cir. 1999) ( citation omitted). "A proper Rule 59( e) motion . .. must rely on one of
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`three grounds: (1) an intervening change in controlling law; (2) the availability of new evidence;
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`or (3) the need to correct clear error oflaw or prevent manifest injustice." Lazaridis v. Wehmer,
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`591 F.3d 666, 669 (3d Cir. 2010). "A motion for reargument/reconsideration is not appropriate
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`1
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`to reargue issues that the court has already considered and decided." Justice v. Att '.Y Gen. of
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`Del., 2019 WL 927351, at *2 (D. Del. Feb. 26, 2019).
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`II. DISCUSSION
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`Defendant does not argue that there has been a change in controlling law, or that new
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`evidence is available. (See generally D.I. 348). I therefore only consider the final prong(cid:173)
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`whether reconsideration would correct a legal or factual error. I conclude Defendant has failed
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`to show that reconsideration is needed.
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`A. Reasonable Royalty Based on Windows 10
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`Defendant contends that I erred by declining to exclude Plaintiff's damages theory and
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`Mr. Kennedy's testimony. In particular, Defendant argues that Federal Circuit precedent
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`prohibits a patentee from seeking reasonable royalty damages based on sales of a non-infringing
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`product. (Id. at 2- 3).
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`Defendant relies on the AstraZeneca line of cases that recite the foundational principle,
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`"The royalty base for reasonable royalty damages cannot include activities that do not constitute
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`patent infringement, as patent damages are limited to those 'adequate to compensate for the
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`infringement."' AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1343 (Fed. Cir. 2015) (quoting
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`35 U.S.C. § 284); see also Brumfield v. !BG LLC, 97 F. 4th 854, 876-77 (Fed. Cir. 2024); Enplas
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`Display Device Corp. v. Seoul Semiconductor Co., 909 F.3d 398,411 (Fed. Cir. 2018). None of
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`the cited cases support Plaintiff's overbroad interpretation that this principle prohibits a damages
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`theory from including consideration of any non-infringing product. Brumfield instead supports
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`the opposite conclusion:
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`[The] principles [from AstraZeneca and related cases] point to a m1rumum
`requirement for a patentee seeking reasonable-royalty damages based on foreign
`conduct that is not independently infringing. Under the foregoing principles, the
`hypothetical negotiation must turn on the amount the hypothetical infringer would
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`2
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`Case 1:18-cv-00001-RGA-SRF Document 356 Filed 05/02/24 Page 3 of 5 PageID #: 39193
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`agree to pay to be permitted to engage in the domestic acts constituting "the
`infringement." 35 U.S .C. § 284. If the patentee seeks to increase that amount by
`pointing to foreign conduct that is not itself infringing, the patentee must, at the
`least, show why that foreign conduct increases the value of the domestic
`infringement itself- because, e.g., the domestic infringement enables and is needed
`to enable otherwise-unavailable profits from conduct abroad-while respecting the
`apportionment limit that excludes values beyond that of practicing the patent.
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`Brumfield, 97 F.4th at 877. Brumfield makes clear that no categorical bar exists prohibiting
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`consideration of non-infringing activities. The Federal Circuit instead suggests the correct
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`approach to applying AstraZeneca involves examining the relationship between the non(cid:173)
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`infringing and infringing activities. 1 It further provides an example of one sufficient relationship
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`that permits consideration of non-infringing activities: when the infringing activity "enables and
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`is needed to enable otherwise-unavailable profits" from the non-infringing activity. Id.
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`Following the Federal Circuit's guidance, I disagree with Defendant's contention that
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`uses of Windows 10 client devices, at least with regard to uses of the embedded Cortana
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`interface, "are activities that do not constitute patent infringement and cannot serve as the base
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`for reasonable royalty damages as a matter oflaw." (D.1. 348 at 3 (emphasis omitted)).
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`Defendant's assertion ignores the nature of the accused technology. It is undisputed that the only
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`way users can access Cortana, and thereby trigger the accused server code to run, is through
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`Windows 10. (D.1. 341 at 3, 39). As Plaintiff explained, "Cortana servers are . .. a fully
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`1 The concept that non-infringing products can be relevant, when they are sufficiently related to
`an infringing product, is also present in other aspects of patent damages law. See, e.g., Warsaw
`Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1375 (Fed. Cir. 2015) ("A convoyed sale is a
`sale of a product that is not patented, but is sufficiently related to the patented product such that
`the patentee may recover lost profits for lost sales."), cert. granted,judgment vacated sub nom.
`Medtronic Sofamor Danek USA, Inc. v. NuVasive, Inc., 577 U.S . 1099 (2016), and opinion
`reinstated in part, 824 F .3d 1344 (Fed. Cir. 2016); IMX, Inc. v. Lendingtree, LLC, 2005 WL
`3465555, at *4 (D. Del. Dec. 14, 2005) (requiring marking of a website deemed to be intrinsic to
`the patented system, based on the nature of the website' s relationship to the system it provides
`access, even though the website itself did not infringe the claims).
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`3
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`embedded feature of Windows 10, as Cortana servers can only be accessed by Windows 10 and
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`can only serve Windows 10." (D.I. 350 at 3). Furthermore, Defendant benefits from the
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`infringing server code by providing an interface for Cortana access in Windows 10 to boost sales
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`of the operating system. (D.I. 341 at 39). The relationship between Windows 10 and the servers
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`running the infringing code presents the type of situation contemplated by the example provided
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`in Brumfield.2
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`The close relationship between Windows 10 client devices and Defendant's Cortana
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`servers can be contrasted with the relationships in Enplas and in AstraZeneca. In Enplas, the
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`Plaintiffs proposed freedom to operate payment covered all lenses manufactured by Defendant,
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`including both infringing and non-accused lenses. 909 F.3d at 409-10. In AstraZeneca, the
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`Plaintiffs damages theory included product sales from after the patent had expired. 782 F.3d at
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`1344. Both cases present functionally unrelated, non-overlapping products; the sale of the
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`infringing product does not "enable[] and is [not] needed to enable otherwise-unavailable
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`profits" resulting from the non-infringing product. Brumfield, 97 F.4th at 877.
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`Defendant has not convinced me that Plaintiffs proposed reasonable royalty rate, based
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`on Windows 10 sales, captures more than the "' value of what was taken'-
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`the value of the use of
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`the patented technology." AstraZeneca, 782 F.3d at 1344 (quoting Aqua Shield v. Inter Pool
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`Cover Team, 774 F.3d 766, 770 (Fed. Cir. 2014)). I decline to reconsider my decision to deny
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`summary judgment of Plaintiffs damages theory and exclusion of Mr. Kennedy's testimony.
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`2 I note that, while it appears the Federal Circuit has not addressed the particular question at issue
`in this motion, Plaintiff is not the first to base its damages theory on sales of a non-infringing
`consumer product that triggers infringing server code. In Virnetx, Inc. v. Cisco Sys., Inc. , the
`Plaintiff accused the Apple servers that run its "Face Time" feature on iOS devices and Mac
`computers of infringement. 767 F.3d 1308, 1314 (Fed. Cir. 2014). Despite the standalone iOS
`devices remaining unaccused in relation to the "Facetime" feature, Plaintiff relied on iOS device
`sales in formulating its damages theory. Id. at 13 31.
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`4
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`B. Apportionment
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`Defendant argues that my conclusion that Plaintiffs damages theory properly
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`apportioned patented features from unpatented features was in error. (D.I. 348 at 4-5). In
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`support of its contention, Defendant reiterates its argument that Windows 10 cannot serve as the
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`basis of Plaintiffs damages theory because the operating system, by itself, does not infringe the
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`asserted claims. (See id.) . Pursuant to my rationale above, I decline to reconsider this issue.
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`III. CONCLUSION
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`For the foregoing reasons, Defendant's motion for reconsideration (D.I. 347) is denied.
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`IT IS SO ORDERED.
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`J_
`Entered this ~ day of May, 2024
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`5
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