Another Billion Dollar Patent Verdict

Another billion dollar verdict has been handed out in a patent case.  Read the verdict in Carnegie Mellon University v. Marvell Technology Group, LTD. here.  This latest case continues a string of billion dollar verdicts highlighted by Jonathan Kennedy in the latest edition of MVS Briefs. 

Carnegie Mellon brought suit alleging infringement of two of its patents, Patent No. 6,201,839 and Patent No. 6,438,180, relating to integrated circuits for computer memory systems.  Marvell asserted that it did not infringe the patents, and in the alternative, the patents were invalid because they were anticipated or rendered obvious by the prior art.

The jury in the case found for Carnegie Mellon on all counts of infringement—including indirect infringement—and invalidity.  In addition to the large damages award, the jury determined that Marvell had engaged in willful infringement of two patents held by Carnegie Mellon because Marvell knew of the asserted patents before the lawsuit, had no reasonable defense for its actions, and knew or should have known that its actions would infringe the asserted patents.  The determination of willfulness by the jury could allow the presiding judge, U.S. District Judge Norra Barry Fischer, to triple the damages award. 

 A final judgment in the case is expected in May 2013, pending post-trial motions from both sides.  Marvell has already announced its intent to appeal the verdict should its post-trial motions prove unsuccessful. 

Remittitur without new trial requires legal error, not error as a matter of law

In a recent decision, the Federal Circuit reversed a district court's reduction of the jury's damages award, remanding the case for a new trial on damages, and affirmed the jury's verdict of willful infringement and the district court's award of attorney fees under § 285.

The district court held there was insufficient evidence as a matter of law to support the jury's damages award, so it reduced the award from over $1 million down to just over $50,000. However, the court did not offer the patentee the option of a new trial. The Federal Circuit held this violated the Seventh Amendment, which requires a new trial unless the award was based on legal error, not present here.

Further, the Federal Circuit held the district court's jury instruction on the issue of actual notice under § 287 was legally incorrect, as it improperly foreclosed a finding of actual notice before the discovery of the defendant's infringement. As a result, the Federal Circuit remanded the case for a new trial on damages to address both the amount and the date from which damages should be calculated.

More detail of Minks v. Polaris Indus., Inc. after the jump.

 

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First Circuit: Don't expect to win on appeal if you admit 7 of 8 likelihood of confusion factors

In a decision Friday, the First Circuit affirmed a district court's summary judgment of trademark infringement and an associated award of the defendant's profits and attorney fees to the plaintiff.  The defendant used the plaintiff's registered marks in both the metatags of its website as well as in white text on a white background in the body of the site in an effort to cause consumers searching for the plaintiff's marks on an internet search engine to be more likely to go to the defendant's website instead.  Over the course of discovery, the defendant essentially admitted that seven of the eight Pignons factors weighed in favor of the plaintiff, and accordingly the district court granted summary judgment, awarding the plaintiff an equitable share of the defendant's profits and attorney fees.

The First Circuit affirmed, holding that even if the final factor, evidence of actual confusion, was neutral or favored the defendant, it was not error for the district court to grant summary judgment for the plaintiff given the admissions on the other seven factors.  Further, the court held the award of profits was proper, as the plaintiff only had to prove the defendant's gross sales under 15 U.S.C. § 1117(a).  Because the defendant did not offer evidence of its costs, the district court's award of profits was proper.  Further, the award of attorney fees was not an abuse of discretion, given the defendant's admission that it intentionally used the plaintiff's marks in order to divert traffic to its website.

This is an instance where companies would do well to remember that while how search engines work is generally secret, it is widely believed that metatags have no effect on search engine ranking, although some search engines may use them for indexing purposes.  However, if the point of their use is to increase the site's position in the search results (as it usually is, and was in this case), they are basically useless and, as shown here, a potential basis for liability.

More detail of Venture Tape Corp. v. McGills Glass Warehouse after the jump.

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Irreparable harm to exclusive licensee cannot support injunction; willfulness vacated post-Seagate

In a decision Monday, the Federal Circuit addressed a range of issues and ultimately affirmed a district court's denial of injunctive relief and, in light of the intervening Seagate decision, vacated and remanded the case for reconsideration regarding willfulness. The court also affirmed the district court's finding of no invalidity and the infringement of some claims under the doctrine of equivalents.

Regarding the denial of an injunction, the Federal Circuit agreed with the district court that because the only irreparable harm alleged was to the plaintiff's exclusive licensee, rather than the plaintiff, there was no pertinent evidence of irreparable harm to support granting an injunction. Regarding willfulness, the court determined that the district court's jury instruction (based on the Underwater Devices affirmative duty of care standard) was not correct under the Seagate "objective recklessness" standard. The court held that the improper instruction was not harmless error and remanded the issue to the district court for further consideration as to whether the defendant's conduct was sufficiently reckless to be considered willful.

More on Voda v. Cordis Corp. after the jump.

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When market entry fee part of damages for patent infringement, permanent injunction inappropriate

In a recent decision, the Federal Circuit affirmed a finding of infringement of a patent relating to the detection and classification of Hepatitis C Virus, but remanded the case for a determination of anticipation. 

In arguably the most interesting aspect of the decision, the court vacated the permanent injunction entered against the defendant.  The plaintiff asked for and was awarded damages to compensate for the amount the defendant would have had to pay the plaintiff for a "market entry fee."  As a result, the court reasoned the plaintiff could not assert that it would be irreparably harmed by future sales by the defendant, having already been compensated for the harm caused by the defendant's entry to the market.  The court therefore instructed the district court on remand to determine the amount of royalty due on the defendant's compulsory license under the patent going forward.

The court briefly mentioned the issue of willful infringement after In re Seagate Technology, LLC, but only noted that there was no evidence of objective recklessness by the defendant and therefore the finding of no willful infringement was appropriate.  The court also gave a reminder to parties and lawyers of the potential consequences when being too cavalier toward obligations under the Federal Rules of Civil Procedure.  As explained in the court's footnote 4:

This case aptly demonstrates the pitfalls of playing fast and loose with rules of discovery. Conclusory expert reports, eleventh hour disclosures, and attempts to proffer expert testimony without compliance with Rule 26 violate both the rules and principles of discovery, and the obligations lawyers have to the court. Exclusion and forfeiture are appropriate consequences to avoid repeated occurrences of such manipulation of the litigation process.
More detail of Innogenetics, N.V. v. Abbott Labs. after the jump.

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Jury verdict finding Microsoft's product activation systems infringed two patents affirmed

In a decision Friday, the Federal Circuit affirmed a district court's finding of infringement and no invalidity of patents relating to the reduction of software piracy.  At issue was a finding of non-infringement based on the claim construction of claim limitations found in patents held by z4 Technologies.   

In affirming the district court decision, the court found that a reasonable juror could find that Microsoft infringed the contested claims notwithstanding the court's modification of the district court's construction of one of the claim limitations.  The court refused a remand to recalculate damages based on the Supreme Court's recent decision in Microsoft v. AT&T, finding that Microsoft had not presented any evidence that some of the infringment was under § 271(f).  As a result, the court affirmed the jury's finding of willful infringement of the asserted claims, and the concomitant damages award of $115 million against Microsoft, plus attorney's fees and $25 million in enhanced damages for willful infringement and litigation misconduct.  

More details of z4 Techs., Inc. v. Microsoft Corp. after the jump,

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Infringement and royalty rate affirmed; dismissal of willful infringement claim reversed

In a recent decision, the Federal Circuit affirmed-in part a district court's grant of summary judgment of infringement of a patent, finding that the claims were properly held to include measuring devices that either directly or indirectly compare two signals to determine the proper measurement.  The court reversed-in part the district court's damages award.  The district court properly determined the reasonable royalty rate, but improperly included sales from a company with no corporate relationship to the defendant in the royalty base.  

Additionally, the Federal Circuit reversed the district court's dismissal of the plaintiffs' willful infringement claim, finding the dismissal for failure to prosecute improper, as the district court's grounds for the dismissal was just that the plaintiff did not move for summary judgment on the issue.  Finally, the court affirmed the dismissal of a licensee of the patent as a party, as it did not have standing.

More details of Mitutoyo Corp. v. Cent. Purchasing, L.L.C. after the jump.

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En banc Federal Circuit scraps affirmative duty of care to avoid infringement

In a unanimous en banc decision issued late yesterday afternoon, the Federal Circuit granted a petition for mandamus requested by a party who was ordered by a district court to produce attorney-client privileged and work product protected material of its trial counsel, and to permit deposition of its trial counsel.  The order was entered after the defendant disclosed it would rely upon an opinion of counsel as a defense to willful infringement; the district court held that the waiver of attorney-client privilege and work product protection extended to the work trial counsel performed relevant to the opinions (a full recitation of the underlying facts can be found in this post.)

The Federal Circuit disagreed, and held that in most circumstances, such material will remain protected assuming trial counsel and opinion counsel are different.  The court went a step further, however, and decided to overrule its 1983 decision in Underwater Devices Inc. v. Morrison-Knudsen Co., which established that once a party had notice of a patentee's rights, that party had an affirmative duty of care to avoid infringement of the patent.  One way companies could comply with this duty was to obtain a competent opinion of counsel that the patent was either invalid or not infringed.

The Federal Circuit unanimously abrogated the affirmative duty of care.  The court adopted a recklessness standard for willful infringement, holding that to act "willfully," an infringer must act "despite an objectively high likelihood that its actions constituted infringement of a valid patent."  The risk must also be "known or so obvious that it should have been known to the accused infringer."

More detail of In re Seagate Tech., LLC after the jump.

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Thursday at the Federal Circuit: en banc arguments on the duty of care and waiver of privilege

This Thursday, the Federal Circuit will sit en banc to hear oral argument in In re Seagate Technology LLC, a mandamus case regarding a district court's order to produce certain attorney-client privileged materials.  (Update (6/7): the audio of the oral argument is now available online at this link.)  Like in many patent cases, one of the defendants, Seagate, chose to obtain an opinion from counsel regarding noninfringement and invalidity of the asserted patents in order to defend itself from a charge of willful infringement.  The district court, however, found that a subject matter waiver of attorney-client privilege occurred when the opinions were disclosed, and granted a motion to compel stating:

Seagate shall produce all documents, answers to interrogatories, and deposition testimony concerning communications between Seagate (or its in-house counsel) and any of its attorneys, including trial counsel, with respect to the subject matter of Mr. Sekimura's opinions, i.e., the infringement, validity, and enforcement of the '635, '267, and '473 patents.

(emphasis added).  The order further required that trial counsel's advice regarding infringement, validity, and enforceability "must be disclosed even if it [was] communicated in the context of trial preparation." Thus, the court essentially ordered Seagate to produce its trial strategy, if requested, because of the subject matter waiver of privilege.

This case is even more interesting because the court, sua sponte, raised the issue of whether the court should reconsider the duty of care established in the court's 1983 Underwater Devices decision in light of its effect on attorney-client privilege.

More thoughts on the upcoming argument after the jump.

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Willful infringement affirmed; injunction vacated in light of eBay

The Federal Circuit affirmed a finding of willful infringement against a medical device manufacturer, but vacated a permanent injunction entered based on the old injunction standard to be reevaluated by the district court in light of the Supreme Court's decision in eBay v. MercExchange.

The infringer obtained opinions of counsel regarding infringement at two different times.  Initially, two of its lawyers advised that its product would likely be found to infringe, and that that claims at issue would likely be found valid.  The second time, however, one of the attorneys revised his opinion, and instead stated that not only would the product not infringe, but also that the patent was likely invalid.  The infringer's problem?  The infringer filed an application with the FDA to sell the infringing device before the second opinion was given.  That, among other things, led the jury to conclude that the second opinion was not relied upon, and the willful infringement finding and concomitant 50% damages increase were affirmed.

More details of the case after the jump.

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