Royalty Awarded After Remittitur More Appropriately Based on Percentage Than Dollar Figure Per Unit Sold to Avoid Windfall to Plaintiff

by Jeffer Mangels Butler & Mitchell LLP
Contact

In February 2013, Tomita Technologies USA, LLC ("Tomita") went to trial before a jury against Nintendo Co., Ltd. ("Nintendo"). In March 2013, the jury returned a verdict in favor of Tomita in the amount of $30.2 million, finding that the Nintendo 3DS infringed one of Tomita's patents. The jury also found that the Tomita patent was not invalid. The district court also ruled that Tomita had not proven that Nintendo willfully infringed the Tomita patent by clear and convincing evidence.

After judgment was entered in favor of Tomita, Nintendo moved to set aside the judgment or, in the alternative, for a remittitur. The district court then awarded a remittitur to Nintendo for half of the damages awarded by the jury, which Tomita accepted.

After Tomita accepted the remittitur, the district court addressed the issues of an ongoing royalty rate, the amount of supplemental damages and prejudgment interest due to Tomita. The parties agreed to the amount of supplemental damages and prejudgment interest.

Turning to the issue of the ongoing royalty rate, the district court noted that "the parties disagree about two basic issues. The first is whether the ongoing royalty rate should be paid as a dollar figure per unit sold or as a percentage of sale price. The second is what the rate should be. Nintendo favors the rate of the implied jury royalty rate halved, per the remittitur, and expressed as a percentage of sales, which would be 1.36% of the wholesale price. Tomita seeks to double the implied royalty rate of the jury award after remittitur, expressed as a dollar figure per unit sold, which would be $4.45 per unit."

The district court found that "[w]hether the ongoing royalty is expressed as a percentage of sales or on a per-unit basis would have no impact on Nintendo's payment to Tomita so long as the price of the 3DS never changes. The rapid pace of technological advancement -- and its effect on prices -- counsels the Court that it is highly likely that the price will drop with time. If, as Tomita suggests, the ongoing royalty rate were expressed as a flat dollar amount per unit sold, Tomita would capture an increasingly large proportion of each sale as the price falls, even as the technology's reliance on the infringed patent remains constant. This would result in an unearned windfall for Tomita."

As a result, the district court adopted an ongoing royalty rate expressed as a percentage of wholesale price.

The district court then addressed the appropriate percentage of the ongoing royalty rate and set that rate. "Determining what percentage that royalty rate should be is no exact science. The implied royalty rate of the jury award was approximately 2.73%, so the implied royalty rate after the acceptance of remittitur is about 1.360, the rate Nintendo urges the Court to adopt. Tomita, meanwhile, argues with some force that courts routinely increase the implied royalty rate of a verdict after a finding of infringement because the status of the parties has changed, as would the result of the hypothetical negotiation between them. See Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), mod. and aff'd, 446 F.2d 295 (2d Cir. 1971), cert. denied, 404 U.S. 870 (1971). For many of the reasons stated in the Court's Remittitur Opinion, the Court adopts an increase over the remittitur's implied royalty rate of one-third. Accordingly, the ongoing royalty rate is two-thirds of the jury's implied royalty rate of 2.73%, or 1.82%."

Tomita Technologies USA, LLC v. Nintendo Co., LTD., Case No. 11 Civ. 4256 (JSR) (S.D.N.Y. Dec. 11, 2013)

 

Written by:

Jeffer Mangels Butler & Mitchell LLP
Contact
more
less

Jeffer Mangels Butler & Mitchell LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!