Filewrapper® | A patent, trademark, and copyright law blog - Damages

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

Wed, 29 Oct 2008 09:44:00-0500

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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Anticipation no longer the epitome of obviousness? Claims can be anticipated but nonobvious

Thu, 16 Oct 2008 16:37:00-0500

The Federal Circuit recently affirmed a district court's finding of non-willful infringement for one product, reversed its claim construction and related finding of noninfringement of a second product, and vacated its judgment as a matter of law on the issue of anticipation. The district court, at the charge conference near the end of the jury trial in this case, decided not to instruct the jury on anticipation, holding the defendant's anticipation argument was "iffy," and that the arguments were "best captured by obviousness."

The Federal Circuit held this determination was in error. As stated by the court, "[a]n 'iffy' anticipation case, however, does not foreclose a favorable verdict." Further, the court noted it is the party's right to make the strategic decision about which defenses to present to the jury, so long as there is sufficient evidence to generate a verdict in the party's favor. The court rejected the contention that every anticipated claim is also obvious, and as a result of the lack of complete overlap between the defenses, remanded the case for a determination of whether the claims were anticipated.

Judge Mayer dissented on this issue. In his opinion, the majority's conclusion regarding the overlap of anticipation and obviousness is incorrect. He attacked the majority's citations as "unsupportable," observing the majority was "unable to cite a case remanding to the district court for consideration of anticipation, while at the same time sustaining a determination that the claims at issue are not obvious."

More detail of Cohesive Techs., Inc. v. Waters Corp. after the jump.

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Seventh Circuit reverses trademark damages award in default judgment because wrong standard applied

Mon, 22 Sep 2008 10:02:00-0500

The Seventh Circuit recently reversed the amount of damages in a district court's entry of default judgment in a trademark infringement dispute. At issue was whether the Plaintiff was entitled to additional relief on the grounds that the district court applied the wrong standard to its claim for an accounting of profits. The district court found the plaintiff's damage request to be "clearly excessive" and that it could not "be ascertained with reasonable certainty."

The Seventh Circuit reversed, finding that the claim at issue was a request for an equitable accounting of profits. The proper standard for this type of damages claim placed the burden on the defendant to prove any reduction in damages, and the plaintiff's burden was only to show gross income on goods and services bearing the infringing mark. Because the district court applied the wrong standard, the court reversed and remanded for a redetermination of the proper award.

More on WMS Gaming Inc. v. WPC Gaming Prods. Ltd. 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

Tue, 02 Sep 2008 09:20:00-0500

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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Efforts to terminate infringement after notice of patent doesn't avoid damages

Thu, 21 Aug 2008 15:35:00-0500

In a decision Tuesday, the Federal Circuit vacated a district court's grant of summary judgment of non-infringement of a patent on the basis of claim construction. Specifically, the district court had improperly imported limitations from nonasserted claims into the asserted claims, resulting in an unduly narrow claim construction.

The court also vacated the district court's grant of summary judgment of no liability for damages for infringement. The patentee had not marked articles with the patent number, and upon notice of the patent, the alleged infringer immediately took steps to redesign the accused products. However, the redesign took over six months to complete. The district court held that because the accused infringer took reasonable steps to cease infringement immediately upon notice, damages were unavailable. The Federal Circuit disagreed, and noted there is no exception for liability when an accused infringer is "expeditious" in its efforts to cease infringing after notice is given, so the court remanded for a determination of damages if the patents are determined to be valid.

More detail of DSW, Inc. v. Shoe Pavilion, Inc. after the jump.

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Ninth Circuit: No statutory damages for continuing infringement that began before registration

Mon, 16 Jun 2008 15:52:00-0500

In a decision last week, the Ninth Circuit reversed a district court's award of statutory damages for copyright infringement and affirmed the district court's default judgment award of attorney's fees for trademark infringement. The plaintiff's copyright registration had an effective date of approximately one month after the first act of infringement, and nearly two years after first publication.

The Ninth Circuit held that the first act of copyright infringement in a series of ongoing infringements of the same kind marks the commencement of one continuing infringement under 17 U.S.C. § 412, joining the Second, Fourth, Fifth, and Sixth Circuits in this conclusion. Because there was no legal significance between the defendant's re- and post-registration infringement, statutory damages were unavailable.

More detail of Derek Andrew, Inc. v. Poof Apparel Corp. after the jump.

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No lost profits when patent owned by parent but practiced by subsidiary

Wed, 04 Jun 2008 13:25:00-0500

In a decision this week, the Federal Circuit affirmed a district court's grant of summary judgment in the damages phase of a patent infringement case denying recovery for lost profits. The patentee's wholly-owned subsidiary actually practiced the claimed invention, but the subsidiary paid a standard license royalty to the patentee for use of the invention, and the subsidiary's profits did not "flow inexorably" to the patentee. As a result, the court rejected the argument that lost profits were available, but did not decide whether lost profits would be available if proof of such inexorable flow of profits existed.

The court also found no abuse of discretion in a reasonable royalty of 7%, but held the patentee lacked standing for a period of the infringement, and thus held damages were unavailable during that period. The patentee assigned the patent to the subsidiary that practiced the invention, and then purportedly assigned it back, but the court found the later "reassignment" ineffective.

More detail of Mars, Inc. v. Coin Acceptors, Inc. after the jump.

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Fifth Circuit affirms injunction against trademark infringement in Saudi Arabia

Fri, 29 Feb 2008 09:42:00-0500

In a recent decision, the Fifth Circuit affirmed a district court's finding of infringement and disgorgement of profits, but increased the amount of profits awarded because the defendant failed to provide evidence of its costs to reduce the award. Interestingly, the infringement took place entirely outside the United States, namely in Saudi Arabia. Even though the products were not sold in the United States, under the Fifth Circuit's decision in American Rice, Inc. v. Arkansas Rice Growers Cooperative Association, enforcement of trademark rights extraterritorially was permitted if it was not an affront to Saudi sovereignty. Here, there was no such evidence of record (such as a finding by a Saudi court that there was no infringement), so the court determined that jurisdiction was properly exercised.

The court also vacated the district court's award of attorney's fees on the basis that it represented an inconsistent award. The district court awarded profits, but no attorney fees under the Lanham Act, and attorney's fees, but no other damages under a breach of contract theory. Because an award of both attorney fees and profits would mean portions of the award would come from different legal theories under Texas law, the court did not permit recovery of both.

More detail of Am. Rice, Inc. v. Producers Rice Mill, Inc. after the jump.

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Eleventh Circuit: One-satisfaction rule applies to copyright infringement awards

Thu, 28 Feb 2008 12:00:00-0500

In a decision this week, the Eleventh Circuit reversed the decision of a district court, holding the "one-satisfaction rule" does apply to infringement claims under the Copyright Act.

This appeal arose out of a jury award to copyright plaintiff of almost $1.6 million against two defendants who infringed the plaintiff's rights in its used boat price guide. Pursuant to the one-satisfaction rule, the two defendants moved the district court to reduce the final judgment against them by the amounts the plaintiff obtained from co-defendants that settled before trial. The district court declined.

The Eleventh Circuit held that the one-satisfaction rule, drawn from Rule 60(b)(5), is an appropriate rule to seek credit for settlement amounts obtained against joint tortfeasors. As a result, the court vacated and remanded the matter to the district court to reduce the award by the amount the plaintiff had already received from the settling codefendants.

More detail of BUC Int'l Corp. v. Int'l Yacht Council Ltd. after the jump.

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Post-verdict infringement royalty must take into account changed bargaining position of parties

Thu, 28 Feb 2008 11:49:00-0500

In a decision Tuesday, the Federal Circuit addressed the issuance, stay, and subsequent dissolution of a permanent injunction. Further, the court addressed how damages should be allocated from infringement during a stay. The district court took the jury's reasonable royalty for pre-verdict infringement and trebled it to determine the applicable post-verdict royalty.

The Federal Circuit vacated this decision, noting that this calculation did not take "into account the fact that the sales, although authorized under the terms of the district court's stay, were nevertheless infringing and subject to an injunction." The district court's use of willfulness was not the correct inquiry "when the infringement is permitted by a court-ordered stay," but instead should have taken "into account the change in the parties' bargaining positions, and the resulting change in economic circumstances, resulting from the determination of liability."

The court also remanded the case for a determination of whether the post-verdict damages should be altered in light of the Supreme Court's decision in Microsoft v. AT&T.

More detail of Amado v. Microsoft Corp. after the jump.

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Seventh Circuit: Sanction of no damages for improper witness contact too severe compared to harm

Mon, 25 Feb 2008 14:00:00-0500

In a decision Friday, the Seventh Circuit affirmed a jury verdict of trademark infringement, but reversed the district court's ruling holding the plaintiff had forfeited damages because of improper conduct towards a prospective witness. The court dealt with whether the burden of proof for the sanction was by clear and convincing evidence or as the district court concluded, by a mere preponderance of the evidence.

The court ultimately decided that when the appropriate burden of proof is not clear, the issue is resolved within the limits of proportionality. Specifically, a larger sanction requires a higher degree of harm caused by the misconduct. Since, there was no harm caused by the misconduct, the district court's imposition of the sanction was revered. The harm was mitigated in this case because the defendant decided not to call the witness in question, which turned out to be a tactical mistake, as the witness was going to offer testimony on a potentially meritorious defense, namely that the mark at issue was generic.

More detail of Ty Inc. v. Softbelly's, Inc. after the jump.

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Federal Circuit once again affirms that saving patented seeds for replanting is infringement

Wed, 06 Feb 2008 16:47:00-0500

In a decision yesterday, the Federal Circuit once again affirmed a finding of infringement against a farmer who saved seeds covered by a patent to replant the following year. The plaintiff in this case, Monsanto, has brought similar cases in the past, and they have resulted in similar outcomes.

Here, the asserted claims covered the genetic sequence for Monsanto's Roundup Ready gene, which, when incorporated into plants, causes the plants to exhibit tolerance to the herbicide glyphosate. The defendant farmer argued that because the claims were directed to the sequence rather than the seeds or plants incorporating the sequence, the seeds were not covered by the patent.

This argument was flatly rejected by the Federal Circuit. The court noted that the authority on which the defendant relied, J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., actually leads to the opposite result, as in that case the Supreme Court held that despite the availability of plant patents and PVPA certificates, utility patents were also available for plants, assuming the requirements for patentability were met. In fact, the Court refused "to narrow the reach of § 101 where Congress has given us no indication that it intends this result." Here, the infringing act was the use of the gene by planting the seed incorporating the gene, so the Federal Circuit affirmed the finding of infringement. While the court vacated a portion of the damages award for recalculation, it affirmed the award of costs and attorney fees to Monsanto.

More detail of Monsanto Co. v. David after the jump.

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Infringement of two claims and $74 million in damages affirmed, injunction reinstated

Tue, 05 Feb 2008 14:18:00-0500

In a decision last week, the Federal Circuit affirmed-in-part and reversed-in-part a jury verdict of infringement of a patent owned by Tivo relating to its DVR technology. The ruling was based on claim construction, with the court finding that, based on the correct construction of claims directed to the DVR hardware, there was no infringement of those claims. However, the claims directed to the software were correctly construed and infringed, and as a result, the jury's award of nearly $74 million in damages was affirmed.

In addition, the district court's permanent injunction had been stayed pending appeal. Based on the court's disposition, that stay was dissolved, and the case was remanded for a determination of the amount of damages to be assessed for infringement while the case was on appeal.

In an interesting footnote, the Federal Circuit acknowledged that perhaps, in some cases, claim construction is more appropriately considered a question of fact. In this case, the district court's construction was "largely based on the court's assessment of extrinsic evidence." As a result, the court noted that "there is substantial force to the proposition that such a conclusion is indistinguishable in any significant respect from a conventional finding of fact, to which [the court] typically accord[s] deference." Perhaps this signals that the court may be willing to revisit its en banc decision in Cybor that determined claim construction was a pure issue of law reviewed without deference in all cases.

More detail of Tivo, Inc. v. Echostar Commc'ns Corp. after the jump.

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No damages for convoyed sales when no functional relationship between patented and unpatented goods

Tue, 29 Jan 2008 15:49:00-0500

In a decision today, the Federal Circuit affirmed a district court's decision setting aside the portion of a jury verdict awarding convoyed sales to a patentee, and sustaining the portion of the verdict finding the alleged infringer had not shown invalidity via public use. There was no evidence of a functional relationship between the patented and unpatented goods, instead the two were sold together as a matter of "convenience or business advantage." As such, damages for convoyed sales were unavailable.

Regarding the alleged public use, the court held that the absence of a written confidentiality agreement did not mandate the conclusion that the pre-critical date uses were public. Instead, based on the circumstances, it was proper for the jury to imply an "understanding of confidentiality." The pre-critical date uses were for a select group of individuals and involved a series of evolving prototypes, permitting the jury to conclude that there was no invalidating public use.

More detail of Am. Seating Co. v. USSC Group, Inc. after the jump.

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

Mon, 21 Jan 2008 09:27:00-0500

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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