Dive Brief:
- A U.S. district court has ordered Apple to pay Masimo $184.2 million in interest on the damages a jury awarded last year.
- The interest covers the $634 million in damages that a jury ordered Apple to pay Masimo one year ago. Apple received the order because its Apple Watch product infringed a pulse oximetry patent.
- A judge for the U.S. District Court for the Central District of California sided with Masimo in a ruling on interest Monday, bringing the total Apple needs to pay to more than $818 million. Danaher bought Masimo for $9.9 billion in June.
Dive Insight:
The U.S. legal standard requires that the patent owner is placed in as good a position as they would have been in had the infringer entered into a reasonable royalty agreement, according to the ruling. Interest is commonly awarded from the earliest date of patent infringement and based on the entire royalty award.
Masimo argued that the jury’s award of damages based on a per-watch running royalty negotiated at the time infringement began meant prejudgment interest is required to meet the legal standard. If the court denied interest, it would grant Apple a windfall, Masimo said.
Apple made the opposite case. The tech company argued that awarding Masimo prejudgment interest “would constitute a windfall,” the judge wrote in his ruling. Apple’s “stated justification, at bottom, is that the jury verdict is sufficient to compensate Masimo because it is ‘staggering,’” the judge added.
The judge ruled Apple owes Masimo prejudgment interest. Because district courts have discretion to set the rate of prejudgment interest, the judge also heard arguments about how much Apple should pay.
Masimo argued for the 7% rate set by the California Constitution, which would have resulted in a $242.7 million payout. Apple argued for a different rate that would lead to a $114.5 million payout. However, Apple’s expert also calculated prejudgment interest at Masimo’s borrowing costs. Accounting for annual compounding, Masimo’s borrowing cost rate resulted in prejudgment interest of $184.2 million.
The judge ruled Masimo’s borrowing cost rate is the appropriate way to put the company in as good a position as it would have been under a royalty agreement. The ruling brings the total size of Apple’s payment to Masimo to $818.5 million.
Apple must also pay postjudgment interest of 4% on the $818.5 million, starting on July 20 and “until judgment is satisfied,” the judge wrote. The tech company did not dispute the need to pay postjudgment interest or the rate.
