The amici brief was filed on behalf of 13 parties: 3M, GE, Johnson & Johnson, Proctor & Gamble, Exxon Mobil, du Pont, Eli Lily, Wyeth, InterDigital Communications, Dolby Labs, Qualcomm, Tessera, and a biotechnology industry lobbying group.

The thirteen amici joining this brief represent 18 different industry sectors, including manufacturing, information technology, consumer products, energy, financial services, medical device, pharmaceutical, and bio-technology. They have been leaders in America's technological innovation for over 100 years. Their patent portfolios protect enormous investments in research and development, and they regularly rank near the top ofthe annual list of United States patent recipients.

In their briefs, the amici supporting Microsoft suggest that limiting patent damages awards would somehow spur innovation. See, e.g., Brief of Amici Curiae Apple Inc. and Oracle Corp. in Support of Appellant Microsoft Corp. ("AppleIOracleBr.") at 23-24; Brief for Ten Amici Curiae Technology-Based Companies in Support of Appellant Microsoft Corp. ("TenAmiciBr.") at 10-11. The Amici filing this brief disagree. And they should know, as collectively the Amici and their corporate affiliates own more than 55,000 United States patents and invested more than $25 billion in research and development in 2008 alone. Rewriting patent damages laws in the radical ways urged by the amici supporting Microsoft would reduce the inherent value of patents and their ability to protect investments in research and development. And that, in tum, would undermine the willingness to invest in costly and speculative research and development efforts.

Moreover, dismantling the long-established framework for calculating reasonable royalties at trial could very well encourage infringers, and perhaps even existing licensees, to reject negotiated, market-based royalties in favor of pursuing a more favorable outcome in litigation. That is hardly a desirable outcome.

Our country's patent laws are premised on the belief that providing an economic incentive to potential inventors encourages innovation and benefits society. Starting with the Constitution, the U.S. patent system has always reflected a careful balancing of inventors' incentives against the rights of the public to be free from "monopolies which stifle competition without any concomitant advance in the 'Progress of Science and useful Arts. '" Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 146 (1989) (quoting U.S. Const. art. I, § 8, d. 8); see id. ("From their inception, the federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy.").

The Supreme Court has often recognized that rigid tests and categorical rules rarely assist in balancing these interests. Indeed, the Supreme Court's recent patent-law jurisprudence shows a distinct disfavor for strict formulations and per se rules.

Flexibility is particularly important in the calculation of damages. As the Supreme Court explained more than 150 years ago, "the immense variety of patents" prevents "anyone rule of damages which will equally apply to all cases." Seymour v. McCormick, 57 U.S. 480, 489 (1853).

The inflexible new damages rules that the amici supporting Microsoft propose threaten to upset the careful balance developed over 150 years of patent damages law. While Microsoft limits its arguments to this case, the amici justify their radical departure from Supreme Court and Federal Circuit precedent on the dubious and wholly unsupported premise that juries are running amok and district courts are doing nothing to prevent it.

In the reasonable-royalty context, it is common sense that where a product derives most of its value from the patented invention, a hypothetical licensee would pay more. Numerous courts have recognized this, including the court in Georgia-Pacific Corp. v. Us. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), which incorporated the principles of the entire market value rule and its corollary, apportionment, into its "Georgia-Pacific" factors:

13. The portion of the realizable profit that should be credited to the invention as distinguished from nonpatented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer.

Id. at 1120.2 See also Fonar Corp. v. General Elec. Co., 107 F.3d 1543, 1552-53 (Fed. Cir. 1997) (finding that "it was not improper for the jury to base a reasonable royalty on the value of the entire accused MRI machine" because there was substantial evidence that "the patented feature is the basis for customer demand for the entire machine").

As noted above, however, the concept of apportionment is embodied in the Georgia-Pacific factors, which appear in virtually every set of jury instructions concerning reasonable-royalty damages, including the jury instructions in this case. A00148-50. Moreover, nothing prevents a defendant's expert from explaining the concept of apportionment to the jury or defense counsel from arguing the point in closing, provided that sufficient evidence supports the concept.

In short, therefore, the law requires the reasonable-royalty analysis to be tied to economic reality, supported by competent evidence.