Posts Tagged ‘damages’

Supreme Court’s Stryker/Halo Decision Makes it Easier for Courts to Award Enhanced Damages In Patent Infringement Cases

Tuesday, June 14th, 2016

The recent Supreme Court decisions in the Stryker and Halo cases just made it easier for courts to award enhanced damages in patent infringement cases, discarding Seagate’s “objective recklessness” test.

The Seagate Test

In 2007, the Federal Circuit announced a test for enhanced damages whereby a plaintiff seeking enhanced damages had to show that the infringement of his patent was “willful.”  In re Seagate Technology, LLC,  497 F. 3d, 1360, 1371.  The Federal Circuit set forth a two-part test to establish such willfulness: First, “a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent,” without regard to “[t]he state of mind of the accused infringer.” Id., at 1371. This objectively defined risk is to be“determined by the record developed in the infringement proceedings.” Ibid. “Objective recklessness will not be found” at this first step if the accused infringer, during the infringement proceedings, “raised a ‘substantial question’ as to the validity or noninfringement of the patent.” That bar applied even if the defendant was unaware of the arguable defense when he acted.

Second, after establishing objective recklessness, a patentee had to show by clear and convincing evidence the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Seagate, 497 F. 3d, at 1371. Only when both steps were satisfied could the district court proceed to consider whether to exercise its discretion to award enhanced damages. Ibid. 

Stryker / Halo Decisions Restore Courts’ Discretion to Award Enhanced Damages

The Supreme Court’s recent decision in the Stryker and Halo cases discarded the Seagate test and restored courts’ discretion to award enhanced damages.  The Court held “[t]he Seagate test is not consistent with §284.”  The relevant language of § 284 contains “no explicit limit or condition on when enhanced damages are appropriate, and this Court has emphasized that the “word ‘may’ clearly connotes discretion.”  So the Court found no explicit requirement for Seagate’s “objective recklessness” test.

The Court also found Seagate unnecessarily required a finding of “objective recklessness” even when wrongdoing was demonstrated by the facts of a case.  The Court also disagreed with Seagate’s requirement of a “clear and convincing evidence” standard for showing recklessness, and held that the proper standard for enhanced damages was a “preponderance of the evidence” — the same standard as for patent infringement determinations.

The Court explained that its decision did not contradict § 298, that failure to present advice to the court may not be used to prove willful infringement:

Section 298 provides that “[t]he failure of an infringer to obtain the advice of counsel” or “the failure of the infringer to present such adviceto the court or jury, may not be used to prove that the accused infringer willfully infringed.” 35 U.S.C. § 298. Respondents contend that the reference to willfulness reflects an endorsement of Seagate’s willfulness test. But willfulness has always been a part of patent law, before and after Seagate. Section 298 does not show that Congress ratified Seagate’s particular conception of willfulness. Rather, it simply addressed the fallout from the Federal Circuit’s opinion in Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F. 2d 1380 (1983), which had imposed an “affirmative duty” to obtain advice of counsel prior to initiating any possible infringing activity, id., at 1389–1390. See, e.g., H. R. Rep. No. 112–98, pt. 1, p. 53 (2011).

Consequently, nine years after Seagate, the Supreme Court has made it easier for courts to make a determination of enhanced damages.  Time will tell if this decision will spur additional patent opinion practice, such as prior to the 2007 Seagate decision.

Federal Circuit Reinforces PTAB’s Authority to Institute Trial on Selected Claims in Synopsis v. Mentor Graphics Appeal

Thursday, February 11th, 2016

Newcomers to post-grant proceedings are often surprised by the PTAB’s claim-by-claim approach to patent challenges under the America Invents Act.  When reporting statistics about IPRs, commentators tend to ignore these considerations:

  • First, an IPR petition can be drafted to challenge all or some of the claims of a patent.  So the set of challenged claims can be less than the set of issued patent claims.
  • Second, if the PTAB decides to institute trial, it will exercise its authority to identify exactly which claims it will institute for trial.
  • Third, of the claims instituted for trial, should the case result in a final written decision, all or some of those claims may be found unpatentable and any remaining claims may pass through the process unscathed.

A recent Federal Circuit majority opinion reinforced the PTAB’s interpretation that the AIA gave it authority to institute trial on less than all of the challenged claims.  In Synopsis, Inc. v. Mentor Graphics the majority found that the PTAB could exercise its authority to institute trial on a subset of the challenged claims and to enter its final written decision on the instituted claims.  (Synopsis, Inc. v. Mentor Graphics v. Lee,  Fed. Cir., 2014-1516, 2/10/16).  Synopsis argued that the AIA required the PTAB to provide a patentability determination of every challenged claim.  But the Federal Circuit disagreed, finding instead that the PTAB need only issue its final written decision on the claims instituted for challenge.

Judge Pauline Newman dissented, arguing that the PTAB’s interpretation it is contrary to the AIA and to the AIA’s purpose to provide an alternative and efficient forum for resolving patent validity issues, and that it leads to duplicative proceedings in the PTAB and the district courts.  Her interpretation of the AIA urges a final written decision for each of the claims challenged.  However, absent a petition for cert, the PTAB’s institution and final written practices will not be reversed any time soon based on Synopsis.

 

SAP’s Cert Petition Denied by Supreme Court in Versata Patent Infringement Suit

Thursday, January 23rd, 2014

In earlier posts, I described the $391 million patent infringement judgment awarded to Versata for SAP’s alleged infringement of US Pat. 6,553,350.  I also detailed SAP’s attempts to avoid the judgment by challenging the ‘350 patent in the first covered business method patent review conducted by the Patent Office under the America Invents Act.  (SAP v. Versata, CBM2012-00001)  SAP prevailed in the CBM proceeding in June 2013, but that was well after the district court judgment and about a month after a decision by the Federal Circuit upholding the damages portion of the judgment.  About two weeks before the CBM decision, SAP had filed a request for rehearing and a request for rehearing en banc in an effort to have the Federal Circuit reconsider its decision.

In light of the CBM decision finding the ‘350 patent claims unpatentable, SAP motioned the Federal Circuit to stay the litigation pending a final decision in the CBM proceeding.  The Federal Circuit denied SAP’s the rehearing requests.  On December 12, 2013, SAP petitioned for a writ of certiorari to the Supreme Court.  In its petition, SAP argued that the district court judgment action should have been stayed by the Federal Circuit in view of the unpatentability of  Versata’s  patent as determined by the Patent Office in the CBM review.

On Tuesday, January 21, 2014, the Supreme Court denied certiorari of SAP’s petition.  The case will return to the district court for its consideration of the vacation of the injunction by the Federal Circuit.  It remains to be seen how the district court will modify the injunction given the CBM decision and whether Versata will be able to collect its $391 million judgment against SAP in view of the Supreme Court’s refusal to take the matter.

Federal Circuit Appeal Decision in Versata Software v. SAP

Saturday, May 4th, 2013

A detailed discussion of the Versata v. SAP litigation and a timeline was provided in my earlier post.  I reported that there are three actions related to this dispute:  one in the PTAB, one in the Eastern District of Virginia, and one in the Federal Circuit.  On May 1, 2013, the Federal Circuit affirmed the lower court jury decision on infringement and damages awards and vacated part of the trial court’s permanent injunction and remanded for further proceedings based on the opinion.

SAP claimed the trial court’s failure to grant a JMOL of noninfringement of the ’350 Patent was two-fold error. It argued that its software cannot infringe because the software is not capable of performing customer and product hierarchies without added computer instructions. Further, it claimed that the software does not use “denormalized mnumbers” in its pricing tables.  However, the Federal Circuit found no reversible error by the trial court.

SAP argued that the code it shipped was not infringing.  It argued that the claim language “computer instructions capable of” and “computer instructions causing a computer to implement” are not directed to source code and that this language requires that the software, as shipped, contain computer instructions to perform the claimed functionality.  SAP asserted that the expert’s data setup added new computer instructions to its software, thereby changing and modifying a noninfringing product into an infringing product.  The Court disagreed:

SAP misinterprets the claim language. The only claim construction affecting these terms was the stipulated construction of “computer instructions to implement” which the parties agreed means “computer instructions causing a computer to implement.” It does not appear that SAP requested any claim construction of the term “computer instructions,” much less a construction that limits the phrase to exclude source code or require that the patented function be “existing as shipped” in the computer instructions. SAP cannot now collaterally attack the claim construction it has agreed to. Function Media L.L.C. v. Google Inc., 708 F.3d 1310, 1321–22 (Fed. Cir. 2013) (noting a party may not object to a claim construction it proposed or agreed to); Lazare Kaplan Int’l, Inc. v. Photoscribe Techs., Inc., 628 F.3d 1359, 1376 (Fed. Cir. 2010) (“As we have repeatedly explained, litigants waive their right to present new claim construction disputes if they are raised for the first time after trial.”) (internal quotation omitted).

Whether “computer instructions” can include source code thus becomes a pure factual issue. Versata’s expert testified that the source code is a computer instruction. He then presented evidence that the code, without modification, was designed to provide the claimed functionality. SAP cross-examined the expert, but the jury ultimately chose to credit the expert’s testimony and documentary evidence. SAP has not met the high standard needed to disregard the jury’s fact-finding function on this issue. See Bagby Elevator Co. v. Schindler Elevator Corp., 609 F.3d 768, 773 (5th Cir. 2010) (giving great deference to the jury’s findings and verdict); Agrizap, Inc. v. Woodstream Corp., 520 F.3d 1337, 1342–43 (Fed. Cir. 2008) (stating that this court owes the jury great deference in its role as the factfinder).

The Court also rejected the argument that its software does not use denormalized numbers in its pricing tables:

Again, sufficient evidence supports the jury’s verdict. Versata’s expert testified that SAP’s software contains numbers without “fixed units.” The numbers can assume a different meaning depending on which pricing operation is being performed by the software.

The Court did not find reversible error concerning the damages awards, but did remand the injunction to the trial court for correction of the injunction, stating:

SAP should be able to provide maintenance or additional seats for prior customers of its infringing products, so long as the maintenance or the additional seat does not involve, or allow access to, the enjoined capability.

Of course, the PTAB has yet to decide on the matter before it which is limited to 35 U.S.C.  101 issues.  It will be interesting to see what happens next.

Preissuance Submission Final Rules Published July 17, 2012

Friday, July 20th, 2012

The Patent Office has published its final rules for preissuance submissions under the AIA. A copy of the final rules can be found here (2012-16710). I briefly summarized the rule requirements in a presentation that can be found here (Preissuance Submissions Final Rule July 17 2012).

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En Banc Decision in Marine Polymer v. HemCon: Amended or New Claims are Candidates for Possible Intervening Rights

Tuesday, March 20th, 2012

In my earlier post, I summarized the panel opinion in Marine Polymer Technologies, Inc. v. Hemcon, Inc.  On September 26, 2011, a panel of the Federal Circuit reversed the district court’s decision, concluding that HemCon had acquired intervening rights in the ‘245 patent based on actions taken in a reexamination proceeding.   That opinion was vacated and Marine Polymer’s petition for rehearing en banc was granted on January 20, 2012.  In a divided decision, the Federal Circuit en banc affirmed the judgment of the district court.

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Do You Want That Post-Grant Review Super-Sized? – Part III

Tuesday, November 22nd, 2011

This is the third post in a series of articles on PGR strategies.  In Part I, I made the point that while patents come in all shapes and sizes, post-grant reviews (PGRs) basically come in two sizes.  By statute, the PGR must complete in 1 to 1 ½ years.  Part II addressed some of the issues that the Petitioner faces during a PGR and when the Petitioner may benefit from a 6 month extension.  This post will provide some insight to the Patent Owner’s analysis of what to do if its patent is tested in a PGR.

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Marine Polymer Technologies v. HemCon, Inc. and Intervening Rights

Sunday, October 30th, 2011

Marine Polymer Technologies, Inc. v. HemCon, Inc. (Fed. Cir. 2011) is a widely reported case that raises some questions about the scope of the application of intervening rights.  It involves a matter where the literal language of a claim was not amended, yet absolute intervening rights were still found to apply to the accused infringer.  Marine Polymer owns U.S. Pat. No. 6,864,245 (the ’245 patent), which claims a polymer p-GlcNAc that accelerates hemostasis (the process which causes bleeding to stop) and is useful in trauma units for treating serious wounds.  Marine Polymer sued HemCon, alleging that HemCon infringed claims 6, 7, 10, 11, 12, 17, and 20 of the ’245 patent.  (more…)

New, More Popular Post-Grant Patent Challenges Drive Patent Generation Strategy

Saturday, September 24th, 2011

Patent Generation and Enforcement Before the Popularity of Post-Grant Proceedings

Patent Owners adopt different approaches for drafting patent applications.  For large companies a patent production line approach is frequently adopted which limits the cost and the commensurate drafting efforts on any particular application.  There is a reasonable argument to use this “assembly line” approach for very large portfolios.  But for smaller companies and/or for extremely strategic portfolios this approach may fail.  Why?  Because when the effort expended to establish patent rights is limited, the resulting patent applications can be hastily drafted, or just plain incomplete.  They can also fail to consider relevant prior art.  Such applications can turn into weak patents.  And weak patents in litigation or in reexamination may lose the day for the patent owner.

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Fractus SA Gets $23M Verdict Against Samsung in Antenna Patent Litigation

Wednesday, May 25th, 2011

In Fractus, S.A. v. Samsung Electronics Co., Ltd., et al. (6:09-CV-203, EDTX), a jury gave a verdict of patent infringement of four different patents owned by Fractus S.A. against Samsung to the  tune of $23,129,321 in damages.  The jury found that Fractus proved the infringement was willful by clear and convincing evidence.  The Verdict Form provides details as to the patents and the particular claims found to be infringed.  The infringed patents are:

  • U.S. Pat. No. 7,015,868 (see the nonfinal rejections of claims 26 and 35 in reexamination control no. 95/001,390 for example);
  • U.S. Pat. No. 7,123,208 (see the nonfinal rejections of claims 7 and 12 in reexamination control no. 95/001,389 for example);
  • U.S. Pat. No. 7,397,41 (see the nonfinal rejections of claims 14 and 30 in reexamination control no. 95/001,482 for example); and
  • U.S. Pat. No. 7,394,432 (see the nonfinal rejection of claim 6 in reexamination control no. 95/001,483).

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