Monday, March 28, 2011

Lear Automotive v. Johnson Controls -- Live or Die by the Survey?

Although the Federal Circuit has stated repeatedly that surveys -- when done properly -- can provide valuable evidence for patent damages analysis, litigants must be careful of how they use them, lest their opponents turn the tables on them.

In Lear Automotive v. Johnson Controls, the patent involved garage door openers and the programming of such units -- the issue being whether users programmed one or two buttons (the latter infringing, while the former did not).

Johnson Controls' damages expert relied on a survey provided him by the company which polled customers as to how they used the allegedly infringing units. He opined, based on that survey, that the infringing use was not very popular with consumers and that, in the hypothetical negotiation, JCI would have only agreed to a "modest" royalty rate.

Lear, however, had a quite different problem. To show direct infringement (which would support its claim for inducement against JCI) it had to show that at least one consumer used the allegedly infringing item in an infringing manner -- programming more than one button. however, it had no direct evidence than any consumer had done so. Thus, it turned to JCI's survey, arguing that this survey, which showed that a modest percentage of users programmed more than one button, nevertheless satisfied its burden, at least circumstantially, that one user employed this feature.

JCI was put in the position of arguing that the very evident it had submitted and on which its expert relied was inadmissible hearsay and was too unreliable to support Lear's claim of infringement. The court disagreed, finding that the survey data was admissible under the "adoption by use" doctrine and allowed Lear to use the survey to prove infringement.

So, although surveys can be useful for a defendant trying to show that a patent is not valuable, that defendant needs to look over his shoulder to make sure it can't be turned against him.

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