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In a case with practical implications for all patent litigants, the Federal Circuit recently rejected the use of the 25% rule to establish a baseline royalty rate to determine patent infringement damages. Uniloc USA, Inc. v. Microsoft Corp., 2011 U.S. App. LEXIS 11 (Fed. Cir. Jan. 4, 2011). The Federal Circuit also held that the “entire market value” rule cannot be used to determine a royalty base absent a showing that the patented feature provides the basis for customer demand for the allegedly infringing product.
Background
Uniloc USA, Inc. and Uniloc Singapore Private Ltd. (“Uniloc”) sued Microsoft Corp. in the U.S. District Court for the District of Rhode Island on Sept. 26, 2003, for allegedly infringing U.S. Patent No. 5,490,216 (“the '216 patent”) directed to the use of a registration number and remote license ID system to prevent illicit installation of a software program on multiple computers.
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