## Facts

- Uniloc owned U.S. Patent No. 5,490,216, directed to a software registration/activation system aimed at reducing unauthorized copying.
- Uniloc accused Microsoft of infringing the patent through “Product Activation” functionality used in Windows and Office products.
- After an earlier appeal and remand, a jury found infringement, found willfulness, and awarded Uniloc $388 million in damages.
- Post-trial, the district court entered JMOL of non-infringement and JMOL of no willfulness; alternatively, it ordered new trials on infringement, willfulness, and damages.
- The district court denied Microsoft’s JMOL motion that the patent was invalid.
- Uniloc appealed the JMOL rulings and new-trial orders; Microsoft cross-appealed the denial of JMOL on invalidity.

## Issues

1. Whether substantial evidence supported the jury’s infringement verdict such that JMOL of non-infringement was improper.
2. Whether substantial evidence supported the jury’s willfulness verdict under the objective-recklessness standard.
3. Whether ordering a new trial on infringement was an abuse of discretion.
4. Whether the reasonable-royalty damages case was legally reliable, including the use of the “25 percent rule of thumb” and references to overall product revenues.
5. Whether the district court erred in denying JMOL that the patent was invalid.

## Decision

- Reversed the JMOL of non-infringement and reinstated the jury’s infringement verdict.
- Reversed the alternative order granting a new trial on infringement.
- Affirmed the JMOL of no willful infringement, holding the willfulness verdict lacked substantial evidence under the governing standard.
- Affirmed the order granting a new trial on damages because the verdict was tainted by legally improper damages methodology.
- Affirmed the denial of Microsoft’s JMOL on invalidity, leaving the no-invalidity verdict intact.

## Legal Principles

- JMOL may be granted only when, viewing the evidence in the verdict winner’s favor, only one reasonable conclusion is permitted; a trial court may not reweigh evidence and substitute its technical view for the jury’s where substantial evidence supports the verdict.
- Willfulness (under the then-governing standard) requires at least objective recklessness; absent substantial evidence of objective recklessness, a willfulness finding cannot stand.
- A reasonable-royalty methodology must be grounded in case-specific facts and be reliable under the evidentiary standards for expert testimony; a generalized “25 percent rule of thumb” is inadmissible and cannot supply a baseline royalty rate.
- Use of the entire product’s revenues as a royalty base is permissible only under the narrow entire market value rule, requiring proof that the patented feature drives customer demand for the accused product; otherwise, broad revenue evidence risks prejudicing the damages determination.

## Conclusion

The Federal Circuit reinstated the infringement verdict and upheld the patent’s validity, but eliminated willfulness and required a new damages trial, holding that reasonable-royalty proof must be tied to the facts of the case and rejecting both the 25 percent rule and unsupported reliance on total product revenues.


Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011)