Brief For Amici Curiae Intel

Case: 15-1066 Document: 52 Page: 1 Filed: 01/28/2015
No. 2015-1066
UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT
COMMONWEALTH SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION,

Plaintiff-Appellee,
v.
CISCO SYSTEMS, INC.,

Defendant-Appellant.
On Appeal from the United States District Court for the Eastern District of Texas
in Case No. 6:11-cv-00343, Judge Leonard Davis
BRIEF FOR AMICI CURIAE INTEL CORPORATION, DELL INC.,

AND HEWLETT-PACKARD COMPANY IN SUPPORT OF
DEFENDANT-APPELLANT AND REVERSAL
KENNETH H. MERBER WILLIAM F. LEE

WILMER CUTLER PICKERING JOSEPH J. MUELLER
HALE AND DORR LLP LAUREN B. FLETCHER
1875 Pennsylvania Avenue, NW REBECCA A. BACT
Washington, DC 20006 WILMER CUTLER PICKERING
(202) 663-6000 HALE AND DORR LLP
60 State Street
Boston, MA 02109
(617) 526-6000
Attorneys for Amici Curiae

Intel Corporation, Dell Inc., and
January 28, 2015 Hewlett-Packard Company
CERTIFICATE OF INTEREST
Counsel for amicus curiae Intel Corporation certifies the following:
1. The full name of every party or amicus represented by us is:
Intel Corporation.
2. The names of the real party in interest represented by us is:
N/A
3. All parent corporations and any publicly held companies that own 10
percent or more of the stock of the party or amicus curiae represented by me are:
None.
4. The names of all law firms and the partners or associates that
appeared for the party or amicus now represented by me in the trial court or agency
or are expected to appear in this court are:
WILMER CUTLER PICKERING HALE AND DORR LLP: William F. Lee,

Joseph J. Mueller, Lauren B. Fletcher, Kenneth H. Merber, Rebecca
A. Bact
Dated: January 28, 2015 /s/ Lauren B. Fletcher

Lauren B. Fletcher
WILMER CUTLER PICKERING
HALE AND DORR LLP
60 State Street
Boston, MA 02109
(617) 526-6000
-i-
Counsel for amicus curiae Dell Inc. certifies the following:
Dell Inc.
N/A
Dell is a privately held corporation, and its direct parent company is

Denali Intermediate Inc. There is no publicly held company owning
10% or more of Denali Intermediate Inc.’s stock.

A. Bact

Lauren B. Fletcher
HALE AND DORR LLP
60 State Street
Boston, MA 02109
(617) 526-6000
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Counsel for amicus curiae Hewlett-Packard Company certifies the

following:
Hewlett-Packard Company (“HP”)
There is no real party in interest other than HP.
There are no parent corporations or any publicly held companies that

own 10 percent or more of the stock of HP.

A. Bact

Lauren B. Fletcher
HALE AND DORR LLP
60 State Street
Boston, MA 02109
(617) 526-6000
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TABLE OF CONTENTS
Page
CERTIFICATES OF INTEREST ...............................................................................i
TABLE OF AUTHORITIES ....................................................................................vi
INTEREST OF AMICI CURIAE ............................................................................... 1
INTRODUCTION .....................................................................................................2
ARGUMENT .............................................................................................................5
I. WHERE THE PATENTED TECHNOLOGY DOES NOT DRIVE DEMAND

FOR THE ACCUSED PRODUCT, THE ROYALTY BASE MUST START
FROM THE SMALLEST SALABLE UNIT AND THEN BE APPORTIONED
FURTHER...........................................................................................................5
A. The District Court Erroneously Used Multi-Component End

Products As The Royalty Base. ............................................................. 7
B. The District Court Should Have Used The Value Of The

Wi-Fi Chips As The Starting Point For The Royalty Base. .................. 8
1. The royalty base is usually determined with reference

to a physical product or component—and
appropriately so. .......................................................................... 9
2. The Wi-Fi chip is the smallest component that

substantially embodies the patented invention. ........................12
3. The supposed depression of Wi-Fi chip prices does

not justify using end products as the royalty base. ................... 16
C. The District Court Also Failed To Apportion Between

Infringing And Non-Infringing Features In Determining The
Royalty Base........................................................................................17
II. THE VALUE OF STANDARDIZATION MUST BE CONSIDERED WHEN

DETERMINING A ROYALTY RATE FOR A STANDARD-ESSENTIAL
PATENT. ..........................................................................................................19
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A. The District Court Failed To Factor Out The Value Of

Standardization. ...................................................................................19
B. The District Court Misapplied The Georgia-Pacific Factors

By Neglecting To Consider The Context Of A Standard-
Essential Patent....................................................................................21
III. PATENT OWNERS SHOULD NOT BE PERMITTED TO USE THEIR OWN

LICENSING PREFERENCES TO EVADE CONTROLLING DAMAGES LAW. ........... 23
A. The District Court Erroneously Relied On CSIRO’s

Licensing Program To Avoid The Entire Market Value Rule. ........... 23
B. The Licensing Program Merely Reflected CSIRO’s

Licensing Goals, Not Accepted Royalty Rates. ..................................25
IV. REAL-WORLD IMPLICATIONS DEMONSTRATE THAT THE DISTRICT

COURT’S DAMAGES AWARD IS EXCESSIVE AND DISPROPORTIONATE. ........... 27
CONCLUSION ........................................................................................................30
CERTIFICATE OF SERVICE
CERTIFICATE OF COMPLIANCE
-v-
TABLE OF AUTHORITIES
CASES
Page(s)
American Society of Mechanical Engineers, Inc. v. Hyrdolevel Corp.,
456 U.S. 556 (1982) ............................................................................................20
Broadcom Corp. v. Qualcomm Inc.,

501 F.3d 297 (3d Cir. 2007) ...............................................................................20
Commonwealth Scientific and Industrial Research Organisation v.

Buffalo Technology Inc., 492 F. Supp. 2d 600 (E.D. Tex. 2007) .......................19
Cornell University v. Hewlett-Packard Co.,

609 F. Supp. 2d 279 (N.D.N.Y. 2009), amended, 2009 WL
1405208 (N.D.N.Y. May 15, 2009) ..............................................................11, 15
Ericsson, Inc. v. D-Link Systems, Inc.,
No. 6:10-CV-473, 2013 WL 4046225 (E.D. Tex. Aug. 6, 2013).......................24
Ericsson, Inc. v. D-Link Systems, Inc.,
773 F.3d 1201 (Fed. Cir. 2014) ...................................................................passim
Golan v. Holder,
132 S. Ct. 873 (2012) ..........................................................................................10
Golden Bridge Technology v. Apple Inc.,

No. 5:12-cv-04882-PSG, 2014 WL 2194501 (N.D. Cal. May 18,
2014) ...................................................................................................................15
GPNE Corp. v. Apple Inc.,

No. 12-CV-02885-LHK, 2014 WL 1494247 (N.D. Cal. Apr. 16,
2014) .............................................................................................................14, 15
Hanover Shoe, Inc. v. United Shoe Machinery Corp.,

392 U.S. 481 (1968) ............................................................................................17
In re Innovatio IP Ventures, LLC Patent Litigation,

No. 11 C 9308, 2013 WL 5593609 (N.D. Ill. Oct. 3, 2013)........................passim
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Keurig, Inc. v. Sturm Foods, Inc.,

732 F.3d 1370 (Fed. Cir. 2013) ....................................................................13, 14
LaserDynamics, Inc. v. Quanta Computer, Inc.,

694 F.3d 51 (Fed. Cir. 2012) .......................................................................passim
Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co.,

895 F.2d 1403 (Fed. Cir. 1990) ..........................................................................28
Lucent Technologies, Inc. v. Gateway, Inc.,

580 F.3d 1301 (Fed. Cir. 2009) ......................................................................5, 26
Lucent Technologies Inc. v. Gateway, Inc.,

509 F. Supp. 2d 912 (S.D. Cal. 2007), aff’d, 543 F.3d 710 (Fed.
Cir. 2008) ............................................................................................................26
Mayo Collaborative Services v. Prometheus Laboratories, Inc.,
132 S. Ct. 1289 (2012) ........................................................................................14
Mazer v. Stein,
347 U.S. 201 (1954) ............................................................................................10
Microsoft Corp. v. Motorola, Inc.,

No. C10-1823JLR, 2013 WL 2111217 (W.D. Wash. Apr. 25,
2013) .......................................................................................................18, 21, 27
Quanta Computer, Inc. v. LG Electronics, Inc.,

553 U.S. 617 (2008) ............................................................................................12
ResQNet.com, Inc. v. Lansa, Inc.,

594 F.3d 860 (Fed. Cir. 2010) .............................................................................. 4
Ricoh Co. v. Quanta Computer Inc.,

550 F.3d 1325 (Fed. Cir. 2008) ..........................................................................13
Uniloc USA, Inc. v. Microsoft Corp.,
632 F.3d 1292 (Fed. Cir. 2011) ............................................................................ 5
VirnetX, Inc. v. Cisco Systems, Inc.,

767 F.3d 1308 (Fed. Cir. 2014) ...................................................................passim
- vii -
STATUTES
17 U.S.C.
§ 102(a) ...............................................................................................................10
§ 102(b) ...............................................................................................................10
35 U.S.C.
§ 271(c) ...............................................................................................................13
§ 284......................................................................................................................4
OTHER AUTHORITIES
Brief of Wi-Fi Chip Companies Broadcom Corporation, Marvell
Semiconductor, Inc., and MediaTek as Amici Curiae Supporting
Appellants, Ericsson, Inc. v. D-Link Sys., Inc., Nos. 2013-1625, -1631,
-1632, -1633, 2013 WL 7173257 (Fed. Cir. Dec. 23, 2013) ..............................27
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INTEREST OF AMICI CURIAE
Intel Corporation is the world’s leading semiconductor manufacturer. Intel
develops, manufactures, and sells microprocessors, chipsets, motherboards,
wireless and wired connectivity products, platforms incorporating those
components, and software products, among many other offerings. Intel invests
billions of dollars in research and development each year, and holds thousands of
its own patents.
Dell Inc. is a leading global information technology company. The Client
Solutions Group provides notebooks, desktop PCs, tablets, and third-party
software; the Enterprise Solutions Group provides servers, networking, storage,
and converged infrastructure offerings; Dell Services provides IT and business
services; and the Dell Software Group provides systems management, security, and
information management. Dell invests more than one billion dollars in research,
development, and engineering annually and holds thousands of its own patents.
Hewlett-Packard Company is a leading, global provider of innovative
information-technology products, software, and solutions to consumers,
businesses, and governments. HP sells printers, personal computers, and tablets to
enable businesses and consumers to create and inspire. It also provides businesses
with IT and data-center solutions, including servers, storage, networking, cloud,
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security, and big data. HP invests more than three billion dollars in research and
development annually, and holds thousands of its own patents.
Although Intel, Dell, and HP were previously engaged in litigation with
CSIRO involving alleged infringement by 802.11-compliant products, that
litigation was settled and dismissed. Amici have no interest in the particular
outcome of this case. Instead, as suppliers of complex multi-featured chips that
comply with industry standards and the multi-component end products into which
such chips are incorporated, amici have a strong interest in the development and
consistent application of patent damages law. Amici seek to ensure that the rules
governing the calculation of reasonable royalties, particularly as they relate to
apportionment and standard-essential patents (“SEPs”), are appropriately balanced
so that damages awards reflect only the value of the patented invention. 1
INTRODUCTION
CSIRO asserted a single patent, held by the district court to be essential to
the 802.11 industry standard for wireless communications, or “Wi-Fi.” The
hundreds of features described in the 802.11 standard—including the single feature
claimed by CSIRO’s patent—are implemented in a Wi-Fi chip, which is
incorporated into multi-component end products. The parties in this case did not
1
All parties to this appeal have consented to the filing of this brief. No
counsel for any party authored this brief in whole or in part, and no person or entity
other than amici and their counsel made a monetary contribution intended to fund
the preparation or submission of this brief.
-2-
dispute infringement and validity, leaving the district court to determine reasonable
royalty damages. The court’s methodology, however, was deeply flawed in
several respects.
In determining the royalty base, the district court violated this Court’s
apportionment requirements several times over. The court began its royalty base
analysis with multi-component end products (e.g., wireless network interface
cards, routers, and access points) rather than the smallest salable unit (Wi-Fi
chips), even though the patented technology did not drive demand for those end
products and the “inventive aspect” of CSIRO’s patent “[wa]s carried out in … the
wireless chip.” A23. To make matters worse, the court did not engage in the
further apportionment necessary to determine the value of the one patented feature
apart from the value attributable to the hundreds of non-infringing features
contained in the Wi-Fi chips, let alone the end products.
In determining the applicable royalty rates, the district court failed to
consider the role of standardization. The court made no effort to distinguish
between the intrinsic value of CSIRO’s patented technology and the value
attributable to its adoption as part of an industry standard. The court also
misapplied several Georgia-Pacific factors by failing to make the adjustments that
this Court has held are necessary for standard-essential patents.
-3-
The district court then sought to justify its royalty base and rates by relying
on a licensing offer that rested on the full value of multi-component end products
rather than the relevant Wi-Fi chip, and that was never accepted by any licensee.
By doing so, the court impermissibly allowed the patentee’s own licensing
preferences to trump this Court’s binding precedent.
The end result was a royalty award that is excessive and disproportionate by
any measure—it far exceeds the entire profit margin on Wi-Fi chips that
implement the accused functionality, it implies that the royalty stack on a Wi-Fi
chip (which sells for just a few dollars) would be thousands of dollars, and it
would make the ’069 patent worth billions of dollars if applied throughout the
Wi-Fi industry.
The district court’s decision, if affirmed, would do considerable harm to this
Court’s recent efforts to clarify the law on damages, particularly with respect to the
rules governing apportionment and standard-essential patents. The district court’s
methodology not only contradicts this Court’s precedent but also endorses an
entirely different approach to valuing patents—an approach that would allow
patentees to collect damages on products and features they did not invent,
improperly “punish[ing] beyond the reach of” 35 U.S.C. § 284. ResQNet.com,
Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010).
-4-
ARGUMENT
I. WHERE THE PATENTED TECHNOLOGY DOES NOT DRIVE DEMAND FOR

THE ACCUSED PRODUCT, THE ROYALTY BASE MUST START FROM THE
SMALLEST SALABLE UNIT AND THEN BE APPORTIONED FURTHER.
This Court has repeatedly explained that a patentee seeking reasonable
royalty damages must “apportion the royalty down to a reasonable estimate of the
value of its claimed technology, or else establish that its patented technology drove
demand for the entire product.” VirnetX v. Cisco Sys., Inc., 767 F.3d 1308, 1329
(Fed. Cir. 2014); see LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51,
67 (Fed. Cir. 2012); Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318
(Fed. Cir. 2011); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1337 (Fed.
Cir. 2009). The basis for the requirement is fundamental: a patentee seeking
reasonable royalty damages is entitled only to damages that “reflect the value
attributable to the infringing features of the product, and no more.” Ericsson, Inc.
v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014).
To “ensure that a reasonable royalty ‘does not overreach and encompass
components not covered by the patent,’” the apportionment process may not begin
with the entire value of an end product unless the patented feature “creates the
basis for customer demand or substantially creates the value of the component
parts.” VirnetX, 767 F.3d at 1326 (citations omitted). Instead, the reasonable
royalty calculation should begin by identifying a starting point for the royalty base
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that is, at most, “the smallest salable infringing unit with close relation to the
claimed invention.” Id. at 1327 (internal quotation marks omitted); see
LaserDynamics, 694 F.3d at 67 (“[I]t is generally required that royalties be based
not on the entire product, but instead on the ‘smallest salable patent-practicing
unit.’”). 2
That royalty base may need to be further apportioned: “the requirement that
a patentee identify damages associated with the smallest salable patent-practicing
unit is simply a step toward meeting the requirement of apportionment.” VirnetX,
767 F.3d at 1327. Where the smallest salable unit is itself a multi-component
product that contains several non-infringing features, “the patentee must do more
to estimate what portion of the value of that product is attributable to the patented
technology.” Id. (“[T]he [jury] instruction mistakenly suggests that when the
smallest salable unit is used as the royalty base, there is necessarily no further
constraint on the selection of the base. That is wrong.”). Determining a royalty
base in this way enables the patentee to be compensated for the incremental value
2
In Ericsson, this Court suggested that “an appropriately apportioned royalty
award” could possibly “be fashioned by starting with the entire market value of a
multi-component product.” 773 F.3d at 1227. The Court explained, however, that
“[t]he essential requirement” is still “that the ultimate reasonable royalty award
must be based on the incremental value that the patented invention adds to the end
product.” Id. Thus, “where the entire value of a machine as a marketable article is
[not] ‘properly and legally attributable to the patented feature,’” a “more realistic
starting point for the royalty calculations” is “the smallest salable unit and, at
times, even less.” Id. (citing VirnetX, 767 F.3d at 1327-1328).
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its patent contributes to the end product—that value is included in the price of the
smallest salable unit—but ensures that the patentee does not obtain additional
compensation to which it is not entitled.
A. The District Court Erroneously Used Multi-Component End

Products As The Royalty Base.
The district court began its analysis by setting the royalty base to include
multi-component end products, such as wireless network interface cards, routers,
and access points. A11; A23; A25. Despite its use of the value of end products,
the court never mentioned the entire market value rule and never found that the
patented feature drove demand for the end products or created the value of the
other non-infringing components.3
In fact, it found the opposite: that the patented technology “was not the only
factor contributing to the growth of 802.11g products” (A28), 4 that “the accused
products contain many features and functions that are in no way attributable to the
’069 [p]atent” (A29), and that customers purchased Wi-Fi products implementing
3
Although the royalty set by the court was a flat fee per unit, it was calculated
with reference to the value of the entire multi-component end products, in violation
of the entire market value rule. A23; A25. As this Court has explained, “[n]o
matter what the form of the royalty, a patentee must take care to seek only those
damages attributable to the infringing features.” VirnetX, 767 F.3d at 1326.
4
The court noted that the ’069 patent was an “important” factor in this growth
(A28), but to apply the entire market value rule “[i]t is not enough to merely show
that the [patented feature] is viewed as valuable, important, or even essential to the
use of the [overall product].” LaserDynamics, 694 F.3d at 68.
-7-
“the unaccused 802.11b standard” (A12). These facts demonstrate that the
patented technology was simply one feature among many that added value to the
end products and was not the reason consumers purchased the end products.
The entire market value rule is a “narrow exception,” which applies only if
“the presence of [the infringing] functionality is what motivates consumers to buy
[the end product] in the first place.” LaserDynamics, 694 F.3d at 67-68. That
standard clearly was not met here, and it was inappropriate for the district court to
calculate a royalty based on the “sales volume of end products.” A25. The court’s
approach, if accepted, would undermine the entire market value rule’s fundamental
purpose, which is to “ensure that the royalty rate applied [to the royalty base] does
not overreach and encompass components not covered by the patent.”
LaserDynamics, 694 F.3d at 70; see In re Innovatio IP Ventures, LLC Patent Litig.,
2013 WL 5593609, at *14 (N.D. Ill. Oct. 3, 2013) (“Using those end-products as a
royalty base would include value far beyond the patented features of the 802.11
standard that Innovatio’s patents do protect.”).
B. The District Court Should Have Used The Value Of The Wi-Fi
Chips As The Starting Point For The Royalty Base.
Because the entire market value rule was not satisfied, the district court
should have begun its royalty base analysis with the smallest salable unit—the
Wi-Fi chip. As the court found, the “inventive aspect” of the ’069 patent “is
-8-
carried out in the PHY layer of the wireless chip” (A23), which establishes that the
Wi-Fi chip is the appropriate starting point. 5
Instead, the district court proceeded in the opposite direction and concluded
that “the primary problem with Cisco’s damages model” was “that it bases
royalties on chip prices.” A23. The court’s reasons for refusing to use the Wi-Fi
chip as the starting point for the royalty base are without merit.
1. The royalty base is usually determined with reference to a

physical product or component—and appropriately so.
The district court incorrectly suggested that physical goods cannot serve as a
reference point in calculating a royalty base. It stated that the royalties here should
not be based on Wi-Fi chip prices because “[t]he benefit of the patent lies in the
idea, not the small amount of silicon that happens to be where the idea is
physically implemented.” A23. But if there is an infringing device, then the
patented invention must have been implemented in some physical embodiment.
The smallest salable unit approach, which this Court has endorsed, starts by
identifying a component “with a sufficiently close relation to the claimed
functionality” precisely because doing so provides a reasonable way to measure the
claimed invention’s value in the marketplace. VirnetX, 767 F.3d at 1329.
5
Indeed, this finding suggests that only a portion of the chip’s value is
attributable to the patent. Further apportionment was thus required. See infra pp.
17-19.
-9-
The district court also compared “[b]asing a royalty solely on chip price” to
“valuing a copyrighted book based only on the costs of the binding, paper, and ink
needed to actually produce the physical product” and stated that “the cost of the
physical product … provides no indication of its actual value.” A23. This is a
false analogy. A copyright covers “the expression of [an] idea—not the idea
itself.” Mazer v. Stein, 347 U.S. 201, 217 (1954) (emphasis added). Copyright
protection “gives no exclusive right to the art disclosed,” id., and does not extend
to any “procedure, process, system, [or] method of operation … described,
explained, illustrated, or embodied in [the copyrighted] work.” 17 U.S.C.
§ 102(b); see Golan v. Holder, 132 S. Ct. 873, 890 (2012). And the particular
medium used to express the idea is irrelevant. See 17 U.S.C. § 102(a) (copyright
subsists in original works recorded in any tangible medium of expression). By
contrast, a utility patent recognizes the utility of an idea as implemented in a
device, system, or process. The value of a patented invention is thus closely
related to how the physical materials are assembled in order to implement the
invention. In a circuit patent, for example, the particular combination of physical
materials (transistors, capacitors, silicon, etc.) is what provides the inventive
functionality and is the invention. It therefore makes sense that determining
reasonable royalties for patent infringement should start from the value of the
physical product or component that provides the infringing functionality.
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Moreover, the district court’s book analogy erroneously compared basing
patent damages on Wi-Fi chip prices to the cost of the materials used to produce a
copyrighted book. The Wi-Fi chip is not merely the “binding, paper, and ink”
(A23); it is the finished product that embodies the protected intellectual property.
Thus, even if the cost of materials used to manufacture a Wi-Fi chip is not a
reasonable starting point for the royalty base, the price at which the assembled
chip is sold certainly is—it reflects the amount that the market is willing to pay for
a device that provides the patented technology (plus many other features). The
Wi-Fi chip is therefore the appropriate starting point for the royalty base because it
encompasses “the incremental value that the patented invention adds to the end
product.” Ericsson, 773 F.3d at 1226.
The district court’s rationale has no logical end point: if a patented
invention cannot be valued by reference to the physical components and materials
that implement the invention, then no physical product (whether a component or an
end product) could serve as a royalty base. That is contrary to the law, industry
practice, and the evidence in this case. See, e.g., LaserDynamics, 694 F.3d at 68
(optical disk drive); Innovatio, 2013 WL 5593609, at *14 (Wi-Fi chips); Cornell
Univ. v. Hewlett-Packard Co., 609 F. Supp. 2d 279, 283 (N.D.N.Y. 2009),
amended, 2009 WL 1405208 (N.D.N.Y. May 15, 2009) (computer processor).
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2. The Wi-Fi chip is the smallest component that substantially

embodies the patented invention.
CSIRO also argued below that the entire multi-component end product
should serve as the royalty base where a smaller component does not literally
infringe. A11 (noting CSIRO’s argument that the end product was the smallest
salable unit including all elements required to practice the claims); A25 (noting
that “CSIRO did not believe that components, such as chips, directly infringed”).
But “the smallest salable unit approach was intended to produce a royalty base
much more closely tied to the claimed invention than the entire market value of the
accused products.” VirnetX, 767 F.3d at 1327. Here, because the Wi-Fi chip
carries out “the inventive aspect” of the patent (A23), other conventional
components such as an antenna—even if technically required to satisfy a limitation
in the asserted claims—are not part of “the incremental value that the patented
invention adds to the end product.” Ericsson, 773 F.3d at 1226.
Patent law frequently recognizes that the core elements of an invention may
be sold in a physical embodiment that does not literally infringe. In the patent
exhaustion context, for example, a patentee’s rights are exhausted by the sale of a
product that “substantially embodies” the invention, even if the product does not
infringe until combined with other products or elements. Quanta Computer, Inc. v.
LG Elecs., Inc., 553 U.S. 617, 621 (2008). The exhaustion of a patentee’s rights
following the authorized sale of a product substantially embodying the patent
- 12 -
reflects that “the patentee has bargained for and received full value” for its
invention. Keurig, Inc. v. Sturm Foods, Inc., 732 F.3d 1370, 1373 (Fed. Cir.
2013). That is, the royalties it collected on the sale of the component provide the
full measure of compensation under the patent laws, notwithstanding that
additional elements may be required to make the component work.
Similarly, contributory infringement is premised on products that contain the
inventive aspects of the patent but do not literally infringe. Liability for
contributory infringement can be established by the sale of products constituting a
“material part” of the invention. 35 U.S.C. § 271(c); cf. Ricoh Co. v. Quanta
Computer Inc., 550 F.3d 1325, 1337 (Fed. Cir. 2008) (contributory infringement
hinged on a “component … that had no use other than practicing the [patented]
methods,” regardless of whether that component was embedded in a larger
product).
Yet under CSIRO’s reasoning, a product whose sale would either exhaust
the patent (if authorized) or create liability for contributory infringement (if not) is
not an appropriate starting point for the royalty base when calculating damages.
That cannot be correct. Such a component is closely tied to the patented invention,
and its value provides the most accurate starting point for an apportionment
analysis. See VirnetX, 767 F.3d at 1327 (the proper starting point for the royalty
base is “‘the smallest salable infringing unit with close relation to the claimed
- 13 -
invention’” (citation omitted)). Moreover, in the patent exhaustion context, the
royalty collected on the sale of a component that substantially embodies a patented
invention reflects the “full value” of the patent rights for which a patentee need be
compensated (Keurig, 732 F.3d at 1373); there is no reason that the royalty
charged on that product should not also provide sufficient compensation for
infringement.
Further, patentees should not be permitted to rely on a claim’s reference to
non-inventive elements of larger products to expand the royalty base. Doing so
would have undesirable consequences: it would encourage patent applicants to
include claim limitations wholly unrelated to their actual inventions simply to
pursue larger royalty bases, and it would unfairly allow patentees to receive
compensation for value extending well beyond their inventions. See, e.g., GPNE
Corp. v. Apple Inc., 2014 WL 1494247, at *13 (N.D. Cal. Apr. 16, 2014)
(“Adopting [the patentee’s] reasoning would allow patent drafters to effectively
abolish the smallest salable patent-practicing unit doctrine by simply drafting
patent claims to cover end products rather than the individual components that
actually embody the invention.”); cf. Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 132 S. Ct. 1289, 1294 (2012) (patent eligibility should not “depend
simply on the draftsman’s art” (internal quotation marks omitted)).
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Consistent with these principles, several courts have properly recognized
that Wi-Fi chips are the appropriate starting point for the royalty base when
determining damages for patents covering standardized wireless technology—even
when using that wireless functionality requires operating larger end products. In
Innovatio, for example, the patentee sought to include end products such as laptops
and access points in the royalty base because “it [was] not possible to provide
Wi-Fi functionality or to practice [the] claim only with a Wi-Fi chip,” and “many
of its patent claims read on systems and methods involving apparatuses beyond the
Wi-Fi chip.” 2013 WL 5593609, at *13. The court, however, correctly
determined that the Wi-Fi chip was the appropriate starting point for the royalty
base because the instructions for the patented method were contained within the
chip. Id. at *13-14; see also GPNE, 2014 WL 1494247, at *13 (where the
invention’s “contribution to the art” occurred in the baseband processor, the iPhone
could not be the royalty base, despite broadly worded claims purporting to cover
the entire product); Golden Bridge Tech. v. Apple Inc., 2014 WL 2194501, at *5
(N.D. Cal. May 18, 2014) (rejecting iPad and iPhone as the royalty base because
“the entire infringing functionality lies in the baseband processor, not the accused
product as a whole”); Cornell, 609 F. Supp. 2d at 283 (the processor where the
patented method took place was the smallest salable unit and the starting point for
apportionment, as opposed to the larger computer server).
- 15 -
3. The supposed depression of Wi-Fi chip prices does not

justify using end products as the royalty base.
The district court also rejected the Wi-Fi chip price as an appropriate starting
point due to “the depression of chip prices in the damages period resulting from
rampant infringement which occurred in the wireless industry.” A23. The court’s
apparent premise was that chip prices are undervalued because the suppliers of the
accused chips have not accounted for patent royalties in their chip prices. That
reasoning is flawed for several reasons.
First, chip suppliers would only account for patent royalties in their chip
prices if they had paid such royalties under a license—in which case those chips
could not be (and here were not) accused of infringement. A3. To use a chip price
that included a patent royalty to set another royalty for the same patent would be
“double dipping.” That is why it is proper to use the price of unlicensed—and
allegedly infringing—components to set a patent royalty.
Second, by suggesting that manufacturers could raise their “depressed” chip
prices, the district court wrongly assumed that manufacturers have been pricing
their chips below what the market would pay. Under that logic, chip suppliers
have not been seeking to maximize their profits, but rather systematically
underpricing chips. That runs counter to basic economic principles, and the court
did not cite any evidence to support this incorrect assumption.
- 16 -
Third, it is not clear that the royalty base could be adjusted to account for the
“depression” described by the district court without impermissible speculation.
Any attempt to do so would require determining what prices would have been if
royalties had been paid, a process the Supreme Court has called “virtually
unascertainable” in other contexts. E.g., Hanover Shoe, Inc. v. United Shoe Mach.
Corp., 392 U.S. 481, 493 (1968) (antitrust); see id. at 492-493 (“A wide range of
factors influence a company’s pricing policies. Normally the impact of a single
change … cannot be measured after the fact[.]”).
Even if third-party infringement were somehow relevant, it does nothing to
distinguish between Wi-Fi chips and end products as the appropriate starting point
for the royalty base. If neither chip nor end product was licensed, then both chip
prices and end-product prices would be “depressed” under the court’s logic. The
supposed depression of chip prices therefore provides no justification for the
court’s use of end products instead of Wi-Fi chips.
C. The District Court Also Failed To Apportion Between Infringing

And Non-Infringing Features In Determining The Royalty Base.
After improperly starting its analysis from end products, the court
compounded that error by failing to apportion the royalty base between the single
feature covered by the ’069 patent and the numerous other features in the accused
products—a step that is necessary to ensure that the patentee is compensated for
only the patented invention. See VirnetX, 767 F.3d at 1327.
- 17 -
The 802.11 standard includes hundreds of features that allow devices to
communicate with each other wirelessly. See Cisco Br. 48; Ericsson, 773 F.3d at
1232. The technical specification for the 802.11 standard is nearly 3,000 pages
long, and there are potentially more than 3,000 patents that are necessarily
infringed by products implementing the standard. See Cisco Br. 51; Microsoft
Corp. v. Motorola, Inc., 2013 WL 2111217, at *92 (¶576) (W.D. Wash. Apr. 25,
2013); Innovatio, 2013 WL 5593609, at *42 (citing research report finding 3,106
patents potentially essential to 802.11). Thus, to appropriately value the ’069
patent, “the patented feature must be apportioned from all of the unpatented
features reflected in the standard.” Ericsson, 773 F.3d at 1232.
Although the district court criticized CSIRO’s expert for failing “to quantify
and fully consider” features in the various versions of the 802.11 standard that are
not attributable to the ’069 patent—including features relating to backwards
compatibility, operating frequency, security, encryption, the MAC layer, and radio
functionality (A16)—the court made precisely that error in its own analysis. The
court treated the fact that “the accused products contain many features and
functions that are in no way attributable to the ’069 [p]atent” as a “neutral” factor
(A29), and made no adjustment to the royalty base to account for the vast number
of features covered by the 802.11 standard but not claimed in the ’069 patent.
Consequently, the royalty award improperly compensated CSIRO for
- 18 -
non-infringing technology in the accused Wi-Fi chips and end products—
technology that was invented, developed, and commercialized by companies
including Intel and many others. See Ericsson, 773 F.3d at 1232.
II. THE VALUE OF STANDARDIZATION MUST BE CONSIDERED WHEN

DETERMINING A ROYALTY RATE FOR A STANDARD-ESSENTIAL PATENT.
The accused products were deemed to infringe the ’069 patent solely by
virtue of their compliance with the 802.11 standard. See A3; A8; A29;
Commonwealth Scientific & Indus. Research Org. v. Buffalo Tech., Inc., 492 F.
Supp. 2d 600, 602 (E.D. Tex. 2007). Yet in determining the applicable royalty
rates, the district court failed to account for the value attributable to the patent’s
inclusion in the standard. Thus, the royalty award impermissibly compensated
CSIRO for not only “the incremental value that the patented invention adds to the
product” but also the “value added by the standardization of that technology.”
Ericsson, 773 F.3d at 1232.
A. The District Court Failed To Factor Out The Value Of

Standardization.
The standardization process, whereby certain technologies are selected over
available alternatives, can artificially increase the market power of parties holding
patents on technologies that have been chosen for use in the standard. Before
standardization, patented technologies compete with other technologies on the
merits; after standardization, manufacturers wanting to implement a standard have
- 19 -
only a single choice—the technology in the standard—even if alternative
technologies would provide equally good or even better performance. After a
standard becomes widely adopted, companies cannot compete effectively without
offering products that support the standard. See American Soc’y of Mech. Eng’rs,
Inc. v. Hydrolevel Corp., 456 U.S. 556, 559 (1982) (“Obviously, if a
manufacturer’s product cannot satisfy the [standard], it is at a great disadvantage in
the marketplace.”). After implementation has become widespread, the costs of
stopping implementation or developing a different standard are often “prohibitively
expensive” because that would require abandoning investments made to develop
and purchase products that conform to the existing standard. Broadcom Corp. v.
Qualcomm Inc., 501 F.3d 297, 310 (3d Cir. 2007).
Given these real-world consequences of standardization, reasonable royalties
for a standard-essential patent must be calculated so as to compensate the patentee
for only the “value of [the patent’s] technological contribution” and not “the value
of [the patent’s] widespread adoption due to standardization.” Ericsson, 773 F.3d
at 1233. The district court, however, made no attempt to isolate the value of the
claimed invention from the value added by its incorporation into the 802.11
standard. Instead, the court treated the industry’s widespread adoption of the
802.11 standard as a reason to increase the royalty rates. A28. That approach
violates this Court’s precedent requiring that reasonable royalties exclude the value
- 20 -
attributable to standardization. Ericsson, 773 F.3d at 1232-1233; see also
Microsoft, 2013 WL 2111217, at *18 (¶104); Innovatio, 2013 WL 5593609, at *9.
B. The District Court Misapplied The Georgia-Pacific Factors By

Neglecting To Consider The Context Of A Standard-Essential
Patent.
Despite having found the ’069 patent to be essential to the 802.11 standard,
the district court determined that “specific adjustments” to the Georgia-Pacific
framework were “not necessary.” A26. The court apparently believed that
modification of the Georgia-Pacific factors is not appropriate absent a
commitment by the patentee to license its standard-essential patent on reasonable
and non-discriminatory (“RAND”) terms. A26. As this Court recently recognized,
however, “[s]everal” Georgia-Pacific factors “need to be adjusted” not only for
RAND-encumbered patents but “for SEP patents generally.” Ericsson, 773 F.3d at
1231. The district court made no such adjustments here.
For example, in its discussion of factor 8 (commercial success), the district
court noted that “[a]t the time of the hypothetical negotiations, the market for
wireless products was growing rapidly, indicating increased commercial success.”
A28. The court attributed this commercial success in “significant” part to the ’069
patent and concluded that this factor favored an upward adjustment of the royalty
rates. A28. But the court failed to acknowledge that much of this commercial
success was attributable not to the patented technology, but to the fact that it was
- 21 -
adopted as an industry standard. The court’s analysis of factor 8 accordingly led to
an inflated royalty rate. Ericsson, 773 F.3d at 1231 (“[F]actor 8 accounts for an
invention’s ‘current popularity,’ which is likely inflated because a standard
requires the use of the technology.”). 6
Similarly, the district court misapplied factors 9 (utility and advantages of
patented invention over old modes) and 10 (commercial embodiment of licensor).
The court determined that both factors favored an upward adjustment of the royalty
rates because the patented technology purportedly offered “significant
improvements” over the prior art and alternative technologies “failed to achieve
commercial success.” A28-29. The court further noted that the patented
technology “has remained integral” to the 802.11 standard for a decade. A29. But
rather than demonstrate technological value, these facts indicate only that the
patented technology is being used because it has been adopted as an industry
standard. See supra pp. 19-21. Thus, factors 9 and 10 should have been
discounted. Ericsson, 773 F.3d at 1231 (“Factor 9 … is also skewed for SEPs
because the technology is used because it is essential, not necessarily because it is
6
Notably, the court found that the “commercial viability of the technology
escalated sharply” when the 802.11a standard was adopted in 1999 and “received a
greater boost” when the 802.11g revision was adopted in 2003. A22. However,
when discussing Georgia-Pacific factor 8, the court inconsistently stated that these
facts were “not an indication” that the value of the ’069 patent increased because it
was included in the standard. A28.
- 22 -
an improvement over the prior art. Factor 10, moreover, considers the commercial
embodiment of the licensor, which is also irrelevant as the standard requires the
use of the technology.”).
The district court’s analysis demonstrates the perverse effects of applying
the Georgia-Pacific framework without making adjustments to account for the
patent’s adoption into an industry standard. Had the court properly recognized the
role of standardization, Georgia-Pacific factors 8, 9, and 10 would have resulted in
downward adjustments (or, at most, no adjustment) of the royalty rates rather than
the upward adjustments that the court applied.
III. PATENT OWNERS SHOULD NOT BE PERMITTED TO USE THEIR OWN

LICENSING PREFERENCES TO EVADE CONTROLLING DAMAGES LAW.
The district court attempted to justify its erroneous royalty base and rates by
pointing to CSIRO’s “Voluntary Licensing Program.” This was inappropriate for
two significant reasons: First, a patentee’s licensing preferences do not supersede
this Court’s binding precedent. Second, the program’s royalty rates merely
represented CSIRO’s licensing offers, not the results of any arms-length
transactions.
A. The District Court Erroneously Relied On CSIRO’s Licensing

Program To Avoid The Entire Market Value Rule.
CSIRO’s licensing program was based on a proposed royalty model focused
on end products, not Wi-Fi chips. As the district court noted, “CSIRO’s goal was
- 23 -
to negotiate licenses to the ’069 [p]atent based on finished 802.11 products, such as
access points, [network interface cards], and consumer electronics.” A25.
Similarly, several of CSIRO’s licenses entered into after the hypothetical
negotiation included a “flat-rate royalty on end products,” which the court viewed
as “indicative of how CSIRO prefers to license” its patents. A25.
Amici’s experience is that some patentees intentionally seek to license only
at the end-product level, even though the patented functionality is supplied by a
component. In Ericsson, for example, the patentee asserted several patents against
end-product manufacturers like Dell, but not chip suppliers like Intel. After Intel
intervened in the case, the patentee still “elected not to pursue damages from
Intel.” Ericsson, Inc. v. D-Link Sys., Inc., 2013 WL 4046225, at *16 (E.D. Tex.
Aug. 6, 2013). Patentees are likely motivated to attempt to license at the end-
product level in the hope that they can tax a much larger royalty base (e.g., laptops
and wireless routers) rather than just the component supplying the accused
functionality (e.g., Wi-Fi chips that cost just a few dollars).
Regardless of their motivations, patentees should not be permitted to use
their own licensing preferences as a justification for departing from the doctrinal
rules governing patent damages. Although a patentee may prefer to extract
royalties based on the sales prices of complex end products, that does not mean
that courts should award reasonable royalties in the same manner. Rather, to the
- 24 -
extent the patentee’s licensing practices or preferences depart from this Court’s
precedents, they should not be credited in a damages analysis. See, e.g., Innovatio,
2013 WL 5593609, at *31, *34 (finding “no credible basis” for using end-product
licenses as comparable in a hypothetical negotiation over patents claiming aspects
of the 802.11 standard); see VirnetX, 767 F.3d at 1329 (it is impermissible to
“simply hide behind [a party’s] sales model to avoid the task of apportionment”).
While this Court has held that a license based on end products may be
admissible as a comparable license in certain circumstances, it can only be relevant
and reliable evidence “where the damages testimony regarding those licenses takes
into account the very types of apportionment principles contemplated in
Garretson,” and where that testimony explains “the need to discount reliance on a
given license to account only for the value attributed to the licensed technology.”
Ericsson, 773 F.3d at 1228. Here, the district court did not discount its reliance on
CSIRO’s licensing program in any way; it actually adopted the high end of its
royalty range directly from that program. A31. And the court improperly credited
the one feature of the licensing program that this Court has instructed must be
discounted: that it was based on end products. A25.
B. The Licensing Program Merely Reflected CSIRO’s Licensing

Goals, Not Accepted Royalty Rates.
The district court’s reliance on CSIRO’s licensing program was also
misplaced for a second reason. Although the court purported not to consider
- 25 -
Georgia-Pacific factors 1 and 2 (established royalty and comparable licenses)
(A27), it effectively adopted CSIRO’s licensing program as an established royalty.
In truth, it is exactly the opposite, since no party ever accepted CSIRO’s offer to
license under the program. Cisco Br. 21; see Lucent Techs. Inc. v. Gateway, Inc.,
509 F. Supp. 2d 912, 939 (S.D. Cal. 2007) (“‘[M]ere offers to license’ without
actual consummated licenses are insufficient to show an ‘established’ royalty rate
for the technology.” (citation omitted)), aff’d, 543 F.3d 710 (Fed. Cir. 2008).
The district court offered no basis for its reliance on royalty rates that
nobody ever agreed to other than the absence of “reliable external market data.”
A25. That is no excuse to use a patentee’s mere offer to license that was never
accepted. Were this Court to approve of such reasoning, patentees would be
encouraged to offer licenses with inflated royalties to obtain higher damages
awards in litigation, even if their offers were never accepted. Further, it is out of
line with the settled assumptions underlying the hypothetical negotiation, under
which the fact-finder “attempts to ascertain the royalty upon which the parties
would have agreed had they successfully negotiated an agreement.” Lucent, 580
F.3d at 1324. A licensing program indicating only the patentee’s goals and never
consummated cannot show what two parties would have negotiated in an arms-
length transaction.
- 26 -
IV. REAL-WORLD IMPLICATIONS DEMONSTRATE THAT THE DISTRICT

COURT’S DAMAGES AWARD IS EXCESSIVE AND DISPROPORTIONATE.
The damages award in this case demonstrates the real-world problems that
this Court’s jurisprudence—when followed—is designed to avoid. The district
court set a royalty between $0.65 and $1.90 per device (A31), yet Wi-Fi chips sell
for just a few dollars each. See Microsoft, 2013 WL 2111217, at *93 (¶581)
(Wi-Fi chips sold for under $3); Br. of Wi-Fi Chip Companies Broadcom
Corporation, Marvell Semiconductor, Inc., and MediaTek as Amici Curiae
Supporting Appellants at 7, Ericsson, Inc. v. D-Link Sys., Inc., 2013 WL 7173257
(Fed. Cir. Dec. 23, 2013) (“Chip Companies Br.”) (Wi-Fi chips sold for $1 to $3).
Meanwhile, each of these chips is covered by potentially 3,000 standard-essential
patents. See supra p. 18. The economic relationships implicated by these numbers
are disproportionate in several respects.
First, consider the implied value of CSIRO’s single patent. There were
roughly 2.5 billion Wi-Fi chips sold worldwide in 2014, a significant portion of
which were sold in the United States. Chip Companies Br. 9. If half of those chips
were sold in the United States and each of the end products incorporating those
chips was subject to the lowest royalty awarded by the district court, the ’069
patent would be worth $812.5 million for 2014 alone. If sales of Wi-Fi chips grow
as expected, the value would reach $1.3 billion per year by 2019, for just one of the
3,000 patents potentially essential to the 802.11 standard.
- 27 -
Second, consider what this valuation would mean for Wi-Fi chip makers.
Wi-Fi chips have a profit margin between 9.4% and 14.4%, or a raw profit of 9¢ to
45¢ per chip. See Chip Companies Br. 7-8 (citing Innovatio, 2013 WL 5593609, at
*42). The royalty here ($0.65 to $1.90 per unit) exceeds the profit margin of even
the most profitable Wi-Fi chips, and in many cases exceeds the cost of the entire
chip. If the district court’s methodology were the law, it would render the chip
manufacturing business economically unsustainable. A rational licensee would not
agree to pay a royalty for a single license that would eliminate its ability to pay for
other necessary licenses or make any profit. See, e.g., Lindemann Maschinenfabrik
GmbH v. Am. Hoist & Derrick Co., 895 F.2d 1403, 1408 (Fed. Cir. 1990) (finding
“absurd” expert’s opinion that accused infringer “would agree to pay a royalty in
excess of what it expected to make in profit”).
Third, if the district court’s analysis were upheld, patentees could seek to
rely on it to value all 3,000 patents potentially needed to implement the 802.11
standard. If royalties for all these patents were set at the rates reflected in the
court’s award, the royalty required to implement the 802.11 standard would be
between $1,950 and $5,700 per chip—for chips that typically cost $1 to $3 each. 7
Even if it were assumed that total royalties for all 3,000 patents could not exceed
7
The court’s royalties were flat fees ranging from $0.65 to $1.90. A31.
3,000 patents x $0.65 per patent = $1,950; and 3,000 patents x $1.90 per patent =
$5,700.
- 28 -
the price of a chip, that would imply that those 3,000 patents are collectively worth
somewhere between $0.35 and $2.35, or an average of $0.00011667 to
$0.00078333 per patent.8 That would mean that the ’069 patent is thousands of
times more valuable than the average 802.11 patent. Yet even that approach
ignores the Wi-Fi chip manufacturer’s own contributions to its products, including
the costs of research and development, production, sales, marketing, and
distribution, as well as the value of the company’s brand and goodwill.
Although these examples seem extreme, they reflect the real-world
implications of what happens when the value of a patented invention is not
apportioned from the value of a multi-component end product. Because the district
court ignored this Court’s entire market value rule and apportionment
jurisprudence, it never attempted to compare the value of the ’069 patent to the
other technologies included in the accused end products or Wi-Fi chips. Had it
done so, it could not have valued the ’069 patent as worth more than the profit
margin on the Wi-Fi chip or more than the other thousands of 802.11 patents
combined.
8
If the ’069 patent commands royalties of $0.65, that implies that all other
value associated with the chip is worth $0.35 (for a $1 chip) or $2.35 (for a $3
chip). Dividing $0.35 by the 3,000 patents potentially required by the 802.11
standard yields $0.00011667 per patent, and dividing $2.35 by 3,000 yields
$0.00078333 per patent.
- 29 -
CONCLUSION
This Court has established important precedents to ensure that patentees
receive reasonable royalties that “reflect the value attributable to the infringing
features of the product, and no more.” Ericsson, 773 F.3d at 1226. The district
court’s methodology here is contrary to those precedents and, if adopted, would
unfairly allow patentees to receive royalties that extend well beyond the value of
their inventions. This Court should accordingly vacate the damages award and
reaffirm its governing precedents for determining reasonable royalty damages.
Respectfully submitted,
/s/ Lauren B. Fletcher

January 28, 2015 WILLIAM F. LEE
JOSEPH J. MUELLER
LAUREN B. FLETCHER
REBECCA A. BACT
HALE AND DORR LLP
60 State Street
Boston, MA 02109
(617) 526-6000
KENNETH H. MERBER
HALE AND DORR LLP
1875 Pennsylvania Avenue, NW
Washington, DC 20006
(202) 663-6000
Attorneys for Amici Curiae

Intel Corporation, Dell Inc., and
Hewlett-Packard Company
- 30 -
CERTIFICATE OF SERVICE
I hereby certify that, on this 28th day of January, 2015, I filed the foregoing
Brief for Amici Curiae Intel Corporation, Dell Inc., and Hewlett-Packard Company
with the Clerk of the United States Court of Appeals for the Federal Circuit via the
CM/ECF system, which will send notice of such filing to all registered CM/ECF
users.

LAUREN B. FLETCHER
HALE AND DORR LLP
60 State Street
Boston, MA 02109
(617) 526-6000
CERTIFICATE OF COMPLIANCE
Pursuant to Fed. R. App. P. 32(a)(7)(C), the undersigned hereby certifies
that this brief complies with the type-volume limitation of Fed. R. App. P.
32(a)(7)(B) and Circuit Rule 32(b).
1. Exclusive of the exempted portions of the brief, as provided in Fed. R.
App. P. 32(a)(7)(B), the brief contains 6,999 words.
2. The brief has been prepared in proportionally spaced typeface using
Microsoft Word 2010 in 14 point Times New Roman font. As permitted by Fed.
R. App. P. 32(a)(7)(C), the undersigned has relied upon the word count feature of
this word processing system in preparing this certificate.

LAUREN B. FLETCHER
HALE AND DORR LLP
60 State Street
Boston, MA 02109
(617) 526-6000
January 28, 2015

Brief For Amici Curiae Intel

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Case: 15-1066 Document: 52 Page: 1 Filed: 01/28/2015

UNITED STATES COURT OF APPEALS

COMMONWEALTH SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION,

CISCO SYSTEMS, INC.,

BRIEF FOR AMICI CURIAE INTEL CORPORATION, DELL INC.,

KENNETH H. MERBER WILLIAM F. LEE

Attorneys for Amici Curiae

Counsel for amicus curiae Intel Corporation certifies the following:

1. The full name of every party or amicus represented by us is:

2. The names of the real party in interest represented by us is:

WILMER CUTLER PICKERING HALE AND DORR LLP: William F. Lee,

Dated: January 28, 2015 /s/ Lauren B. Fletcher

Counsel for amicus curiae Dell Inc. certifies the following:

1. The full name of every party or amicus represented by us is:

2. The names of the real party in interest represented by us is:

Dell is a privately held corporation, and its direct parent company is

WILMER CUTLER PICKERING HALE AND DORR LLP: William F. Lee,

Dated: January 28, 2015 /s/ Lauren B. Fletcher

Counsel for amicus curiae Hewlett-Packard Company certifies the

1. The full name of every party or amicus represented by us is:

Hewlett-Packard Company (“HP”)

2. The names of the real party in interest represented by us is:

There is no real party in interest other than HP.

There are no parent corporations or any publicly held companies that

WILMER CUTLER PICKERING HALE AND DORR LLP: William F. Lee,

Dated: January 28, 2015 /s/ Lauren B. Fletcher

TABLE OF AUTHORITIES ....................................................................................vi

INTEREST OF AMICI CURIAE ............................................................................... 1

I. WHERE THE PATENTED TECHNOLOGY DOES NOT DRIVE DEMAND

A. The District Court Erroneously Used Multi-Component End

B. The District Court Should Have Used The Value Of The

1. The royalty base is usually determined with reference

2. The Wi-Fi chip is the smallest component that

3. The supposed depression of Wi-Fi chip prices does

C. The District Court Also Failed To Apportion Between

II. THE VALUE OF STANDARDIZATION MUST BE CONSIDERED WHEN

A. The District Court Failed To Factor Out The Value Of

B. The District Court Misapplied The Georgia-Pacific Factors

III. PATENT OWNERS SHOULD NOT BE PERMITTED TO USE THEIR OWN

A. The District Court Erroneously Relied On CSIRO’s

B. The Licensing Program Merely Reflected CSIRO’s

IV. REAL-WORLD IMPLICATIONS DEMONSTRATE THAT THE DISTRICT

Broadcom Corp. v. Qualcomm Inc.,

Commonwealth Scientific and Industrial Research Organisation v.

Cornell University v. Hewlett-Packard Co.,

Golden Bridge Technology v. Apple Inc.,

GPNE Corp. v. Apple Inc.,

Hanover Shoe, Inc. v. United Shoe Machinery Corp.,

In re Innovatio IP Ventures, LLC Patent Litigation,

Keurig, Inc. v. Sturm Foods, Inc.,

LaserDynamics, Inc. v. Quanta Computer, Inc.,

Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co.,

Lucent Technologies, Inc. v. Gateway, Inc.,

Lucent Technologies Inc. v. Gateway, Inc.,

Microsoft Corp. v. Motorola, Inc.,

Quanta Computer, Inc. v. LG Electronics, Inc.,

ResQNet.com, Inc. v. Lansa, Inc.,

Ricoh Co. v. Quanta Computer Inc.,

VirnetX, Inc. v. Cisco Systems, Inc.,

INTEREST OF AMICI CURIAE

Intel Corporation is the world’s leading semiconductor manufacturer. Intel

develops, manufactures, and sells microprocessors, chipsets, motherboards,

wireless and wired connectivity products, platforms incorporating those