WD escapes half a billion in patent damages as judge trims award to $1

SPEX Technologies still gets the win, but failed to 'adequately tie a dollar amount' to infringing acts, says order

Western Digital has succeeded in having the sum it owed from a patent infringement case reduced from $553 million down to just $1 in post-trial motions, when the judge found the plaintiff's claims had shifted during the course of the litigation.

The storage biz was held by a California jury to have infringed on data encryption patents owned by SPEX Technologies Inc in October, relating to several of its self-encrypting hard drive products.

WD was initially told to pay $316 million in damages, but District Judge James Selna ruled the company owed a further $237 million in interest charges earlier this year, bringing the total to more than half a billion dollars. In February, WD was given a week to file a bond or stump up the entire damages payment.

The verdict that WD storage devices, including some of its Ultrastar and My Book products, infringed on SPEX Patent No. 6,088,802 (the '802 patent) was upheld, despite the drive maker's applications for a new trial and for a ruling to overturn the findings.

These came in the shape of a Rule 50(b) Motion for Judgment as a Matter of Law, which is basically an appeal for a judgment notwithstanding the verdict, and a Rule 59 Motion for Relief from Judgment and a New Trial.

Judge Selna's decree is that WD's Rule 50(b) Motion be denied when it comes to the company's liability, but granted as to the level of damages awarded.

"Throughout this litigation, SPEX's damages theory changed as certain evidence and theories became unavailable. At this stage, and for the reasons discussed, there is insufficient evidence from which the Court could determine a reasonable royalty," the judge wrote in the order.

He cited [PDF] precedents where an award of damages was deemed unnecessary if the plaintiff could not "adequately tie a dollar amount" to the infringing acts.

"Accordingly, the Court enters nominal damages in the amount of $1," he stated.

For this reason, the portion of WD's Rule 59 Motion regarding damages was declared moot, while the request for a new trial was denied.

Despite the judge denying almost all of the storage firm's post-trial motions, its legal representatives Gibson Dunn claimed the reduction of damages "a significant win."

"Prior to trial, Western Digital made a successful motion to exclude SPEX's damages expert. SPEX then tried the case and attempted to put on a damages case without a damages expert. Based on damages theories that were never disclosed, and legally improper, the jury awarded SPEX over $250 million in damages," Gibson Dunn claimed in a statement sent to The Register.

The court order gave SPEX seven days from the filing of the document, dated June 16, in which to respond. We asked the company for its reaction, via its attorneys, and will update if we get an answer.

According to the document, the court excluded SPEX's damages expert at the post-remand summary judgment stage, and WD then filed a motion to preclude SPEX from presenting a reasonable royalty rate based on insufficient evidence and disclosure issues, but this was denied.

SPEX presented a damages theory based on licensing efforts and supported by lay witness testimony at trial. The court granted WD's Rule 50(a) motion to eliminate this comparable license theory, but allowed SPEX to present a revised damages theory relying on evidence already presented at trial.

The '802 patent at the heart of this case is entitled "Peripheral Device With Integrated Security Functionality," and defines a peripheral device, such as a portable hard drive, designed to perform "security operations" on data transmitted to a host computing device, or vice versa. ®