Supreme Court, Federal Circuit Deny Damages for Patent Found to Be Valid and Infringed

The Federal Circuit affirmed the district court's decision on Life's JMOL motion, because the evidence only supported some unspecified amount of §271(a) infringement, and there was insufficient evidence to show that all worldwide sales infringed under §§271(a) and/or 271(f)(1). While it recognized that is unusual for a patent owner that proves validity and infringement to collect no damages, it explained that a plaintiff's burden of proving damages encompasses proving the amount of damages.

Reviewing whether to grant a new trial on damages under Seventh Circuit law, which is “extremely deferential” to the district court, the Federal Circuit affirmed the district court's denial of Promega's motion for a new trial on damages. The Federal Circuit rejected Promega's argument that “general verdicts” on damages do not forfeit the right to damages under each theory underpinning the general verdict. It found that the district court acted within its discretion because Promega had several opportunities to make arguments not based on worldwide sales, but instead chose to solely pursue an “all-or-nothing” damages strategy. The Federal Circuit explained that although 35 U.S.C. §284 “is unequivocal that the district court must award damages in an amount no less than a reasonable royalty”, Promega only sought damages in the form of lost profits, and its counsel expressly waived a reasonable royalty by stating: “Royalties? Don't want them. Wouldn't have taken them. Don't expect them.”

Additionally, the Federal Circuit reviewed de novo under Seventh Circuit law whether alternative damages arguments were waived. It agreed with the district court that Promega conceded that Life was entitled to judgment as a matter of law, because Promega's responsive JMOL brief did not respond to the fact that the record only included evidence of Life's total worldwide sales. Furthermore, the Federal Circuit rejected Promega's argument that the Seventh Amendment required a new trial or remittitur based on Life's admitted infringement, because a party's right to remittitur or a new trial was similarly waived by Promega's refusal to establish entitlement to a smaller damages award.

****
Howard J. Shire is Editor-in-Chief of this newsletter and a Partner in the New York office of Andrews Kurth Kenyon. He can be reached at [email protected]. Michael Block is an associate with the firm. He can be reached at [email protected].

On Nov. 13, 2017, a Federal Circuit panel of Chief Judge Prost, Judge Mayer, and Judge Chen issued a unanimous decision, authored by Judge Chen, in Promega Corp. v. Life Technologies Corp., Case Nos. 2013-1011, 2013-1029, 2013-1376. On remand from the United States Supreme Court in Life Techs. Corp. v. Promega Corp. , 137 S. Ct. 734, 741 (2017), the panel affirmed a grant of judgment as a matter of law by the United States District Court for the Western District of Wisconsin that the plaintiff failed to prove its infringement case under §§35 U.S.C. 271(a) and 271(f)(1). The panel affirmed the district court's denial for a new trial on damages and infringement, and reaffirmed its prior holdings on enablement, licensing, and active inducement issues.

Life Technologies Corporation (Life) sold genetic testing kits consisting of five components assembled in the United Kingdom. At least one of the five components in each kit was supplied from the United States. Promega Corporation (Promega) is the exclusive licensee of Reissue Patent No. 37,984, directed to methods and kits for analyzing DNA to determine the identity and kinship of organisms. Promega sued Life in district court, and was granted summary judgment that Life's accused products met all of the elements of the asserted claims of the patent. The parties stipulated that Life's total worldwide sales of the accused products were worth $707,618,247, and the district court entered judgment on the jury's verdict in this amount. The district court then granted Life's renewed motion for JMOL under Fed. R. Civ. P. 50(b), holding that no reasonable jury could have found that all of the accused products infringed under 35 U.S.C. §§271(a) and/or 271(f)(1). The district court also denied Promega's motion for a new trial, explaining that Promega waived any argument based on a subset of worldwide sales by failing to respond to Life's argument on this issue in its JMOL briefing.

Promega appealed to the Federal Circuit, which reversed the district court's decisions on both motions; holding that the single component supplied from the United States could qualify as a “substantial portion” of the kits assembled in the United Kingdom, and remanding with instructions to conduct a new damages trial. Life petitioned for writ of certiorari, and the Supreme Court granted the petition and reversed the Federal Circuit's judgments, remanding for consideration that “§271(f)(1) does not cover the supply of a single component of a multicomponent invention.” Life Techs., 137 S. Ct. at 743. On remand back to the Federal Circuit, Life argued that the Federal Circuit should affirm the district court's post-trial decisions, because Promega should be held “to its own considered strategic litigation decisions.” Promega argued that a new trial on damages should be ordered because to hold otherwise would result in a “windfall judgment of noninfringement” given Life's admissions that it committed infringing acts in the United States.

The Federal Circuit affirmed the district court's decision on Life's JMOL motion, because the evidence only supported some unspecified amount of §271(a) infringement, and there was insufficient evidence to show that all worldwide sales infringed under §§271(a) and/or 271(f)(1). While it recognized that is unusual for a patent owner that proves validity and infringement to collect no damages, it explained that a plaintiff's burden of proving damages encompasses proving the amount of damages.

Reviewing whether to grant a new trial on damages under Seventh Circuit law, which is “extremely deferential” to the district court, the Federal Circuit affirmed the district court's denial of Promega's motion for a new trial on damages. The Federal Circuit rejected Promega's argument that “general verdicts” on damages do not forfeit the right to damages under each theory underpinning the general verdict. It found that the district court acted within its discretion because Promega had several opportunities to make arguments not based on worldwide sales, but instead chose to solely pursue an “all-or-nothing” damages strategy. The Federal Circuit explained that although 35 U.S.C. §284 “is unequivocal that the district court must award damages in an amount no less than a reasonable royalty”, Promega only sought damages in the form of lost profits, and its counsel expressly waived a reasonable royalty by stating: “Royalties? Don't want them. Wouldn't have taken them. Don't expect them.”

Additionally, the Federal Circuit reviewed de novo under Seventh Circuit law whether alternative damages arguments were waived. It agreed with the district court that Promega conceded that Life was entitled to judgment as a matter of law, because Promega's responsive JMOL brief did not respond to the fact that the record only included evidence of Life's total worldwide sales. Furthermore, the Federal Circuit rejected Promega's argument that the Seventh Amendment required a new trial or remittitur based on Life's admitted infringement, because a party's right to remittitur or a new trial was similarly waived by Promega's refusal to establish entitlement to a smaller damages award.

****
Howard J. Shire is Editor-in-Chief of this newsletter and a Partner in the New York office of Andrews Kurth Kenyon. He can be reached at [email protected]. Michael Block is an associate with the firm. He can be reached at [email protected].