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In Exafer Ltd v. Microsoft Corp., No. 24-2296 (Fed. Cir. Mar. 6, 2026), the Federal Circuit reversed the district court's exclusion of Exafer's damages expert report and vacated the district court's order granting Microsoft summary judgment based on absence of a remedy.
Exafer alleged certain features of Microsoft's Azure platform infringed two of Exafer's patents. In calculating a reasonable royalty, Exafer's damages expert used virtual machines per hour (VM hours), based on Microsoft's VM pricing, as the reasonably royalty base. The district court excluded the expert's report under Enplas Display Device Corp. v. Seoul Semiconductor Co., 909 F.3d 398 (Fed. Cir. 2018), reasoning Enplas held that a hypothetical license used to calculate damages must be for accused products, not a blanket license covering all potentially infringing products. The district court found that because Exafer's damages expert's use of VM pricing would incorporate unaccused products, the royalty base was improper, and therefore, the court excluded the Exafer's damages expert's report and granted Microsoft summary judgment for absence of a remedy.
On appeal, the Federal Circuit reversed, holding that Enplas was not a blanket prohibition on using unaccused products in damages calculations; rather, Enplas prohibited using unaccused products with no causal connection to the accused products because it would inculpate activities that are not accused of infringement. The Court found that Exafer's damages expert's properly accounted for the causal connection between the accused features and VMs in his valuations.
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