Meta, the parent company of Facebook and Instagram, has been ordered to pay almost $175 million having been found to have infringed patents belonging to Voxer.
The ruling follows a two-year legal battle between the companies with echoes of David and Goliath relating to communications technologies patented by Voxer used in Meta’s Facebook Live and Instagram Live features. Voxer owns the Walkie-Talkie app.
Voxer shared patents and proprietary information with Facebook (as it was then known before a 2021 rebrand) following an offer to collaborate in 2012. That collaboration did not materialise and Facebook Live was launched in 2015 followed by Instagram Live the next year. Voxer alleged both products incorporated its patents, and the Texas jury ruled in their favour and imposed determined the value of damages to be $174,530,785, paid via running royalty. Meta intends to appeal.
US patent valuation for damages reflects lost profits and/or lost royalties. In this case, Voxer and Meta do not compete in the same market and so it is unlikely lost profits played a substantial role in the damage calculation. US Courts often consider at least some of the fifteen factors established in Georgia-Pacific Corp. -v- US Plywood Corp. 1970. The final factor asks that an estimate of the royalty a willing licensors and willing licensee would have agreed to just prior to the infringement be established. This is the “hypothetical bargain” or “willing licensor-willing licensee” framework.
In constructing the hypothetical bargain, juries can take into account considerations, such as comparable licensing transactions, patent value to the defendant, and apportionment. Georgia-Pacific factor 2 accounts for the rates paid by the licensee of the use of similar patents. Factors 8 – 11 concern the patent’s value to the defendant covering such factors as its commercial success and current popularity, its utility over others, the nature of the patented invention including its benefits to users, and the extent to which the patent was used by the infringer. The thirteenth factor concerns the apportionment of realised profits that can be credited as arising out of the infringed patent against realised profits from other elements of the infringing product, such as the manufacturing process or improvements made by the infringer.
Court documents relating to the patent valuation are not available, but we might also safely assume these considerations were incorporated into the jury’s consideration. The case and its outcome (so far, this story evidently has further to run) reiterates the importance of effective valuation. Whilst the financial implications for Meta are perhaps not substantial, the company reported $100 billion in revenue in 2021, for Voxer they will be much more so. This determination has ratified the validity of their US patents and opened a new revenue stream of substantial value.
Expert testimony is required to perform and effectively communicate patent valuations and damage estimations. These conclusions must be well-founded and withstand intense scrutiny throughout the course of litigative proceedings. OxFirst is well accustomed to performing patent valuations for litigation with well over ten years of experience.
Infringed patents: US10142270 and US10511557.
Jury verdict form: https://aboutblaw.com/40j.
Georgia-Pacific Factors: https://www.ipglossary.com/glossary/georgia-pacific-factors/#.YzqgmbTMK3A