Patent licensing, monetization, and damages are full of potential pitfalls for IP holders, prospective licensees, and even companies that have never seen the inside of a courtroom. The U.S. Court of Appeals for the Federal Circuit’s new precedential opinion in Rex Medical v. Intuitive Surgical underscores the risks IP holders face when relying on patent portfolio licenses in litigation. For technology and life sciences companies, the case is a reminder to be strategic in documenting and valuing IP assets within a larger portfolio.
Case Background: Rex Medical v. Intuitive Surgical
Rex Medical sued its competitor, Intuitive Surgical, for infringement of multiple patents. Rex narrowed its case to one patent before trial and relied on a damages expert to argue that Intuitive should pay $20 million for a lump-sum license to that single patent. Rex and its expert reached this conclusion based on a Rex patent portfolio license stemming from another litigation years earlier, where a different competitor had paid $10 million to resolve claims involving a different patent. The Delaware district court excluded the expert’s reliance on this earlier license, holding that the expert had not apportioned for the value of the specific patent now being asserted. The parties went to trial without presenting any damages expert testimony and the jury awarded $10 million to Rex. But the court reduced that award to $1 after trial, again because Rex had failed to explain how the portfolio license related to the single patent presented at the trial.
What did the Federal Circuit decide?
The court affirmed. It emphasized that the patent holder “bears the burden of proof” and that the statute “does not require an award of damages” if the patent holder fails to prove them. Here, the parties offered no expert testimony and did not show the jury how to apportion the earlier portfolio license (including U.S. and foreign patent rights) to the patent in suit, leaving the jury to guess. The Federal Circuit also denied Rex’s request for a new damages trial.
Key Takeaways
- Portfolio deals vs. single-patent damages: Courts require clear apportionment of value to the specific patent(s) asserted in litigation, even if prior licenses covered broad portfolios.
- Burden of proof matters: Companies relying on prior licenses—plaintiffs or defendants—must have evidence linking the prior license to the asserted patent, rather than leaving juries to speculate.
- No guarantee of damages: For patent holders, a winning trial strategy requires more than a solid liability case. Winning on liability finding does not mean the patent owner gets damages if the value-related evidence falls short.
Practical Implications for Technology and Life Sciences Companies
For portfolio owners and licensors: Even outside litigation, consider developing a strategy for identifying and valuing high value patents included in broader portfolio agreements. If you plan to enforce or monetize a subset of your rights, evidence (not speculation) drives successful damages awards.
For licensees and defendants: When considering IP licenses, consider whether the licensor can link its demand to the specific patents at issue. In negotiations, this can affect pricing and leverage. In litigation, it can win the day even after a liability finding.
Why This Decision Matters
Portfolio deals are common, but litigation damages are about the incremental value of specific patent assets. The Federal Circuit’s opinion is the latest in a series of decisions tightening the burden on patent holders to prove the value of their technology. Technology and life sciences companies should view this ruling as a reminder to proactively align licensing, valuation, and enforcement strategies with litigation realities. Building a clear strategy today can help safeguard tomorrow’s monetization or defense efforts.