Pre-Halo Willfulness And Increased Damages

  • Increased Damages And Willfulness From Seagate To Halo: Prior to Halo (U.S. 06/13/2016) (rejecting Seagate two-part test for awarding increased damages), Fed. Cir. held that (1) subjective willfulness be decided by jury in a jury trial, (2) a finding of no willfulness or bad faith bars an award of increased damages, (3) a finding of willfulness normally will lead to an increase in damages, and (4) a failure to have a timely opinion of counsel may lead to a finding of willfulness (if infringement is found, of course). Halo (U.S. 06/13/2016) overruled the en banc Federal Circuit, in In re Seagate Tech. (Fed. Cir. 08/20/07), which in turn had overruled Underwater Devices and its affirmative duty of due care to avoid infringement, and held that:
    • “proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness.”
      • “to establish willful infringement, 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.” See Global Traffic (Fed. Cir. 06/04/15) (non-precedential) (post-Commil USA) (“requires analysis of all of the infringer’s non-infringement and invalidity defenses, even if those defenses were developed for litigation”; rev’g willfulness finding because the “defenses during litigation were objectively reasonable”); Carnegie Mellon (Fed. Cir. 08/04/15) (rev’g willfulness, on de novo review of objective reasonableness prong, despite “blatant and prolonged copying of” the inventions and despite invalidity defense being developed only post complaint and presented only at summary judgment and not at trial, because “there was enough uncertainty about what [reference asserted for obviousness defense] discloses and what CMU’s claims require that we cannot say that the defenses were objectively unreasonable.”), en banc review petition held in abeyance pending Halo/Stryker S. Ct. decision (Fed. Cir. 11/17/15); Innovention Toys II (Fed. Cir. 04/29/15) (rev’g willfulness judgment based on “substantial, objectively reasonable, though ultimately rejected, defense” of obviousness, “no matter how irresponsible it was in actually considering the scope or validity of patent rights that it knew” the patent owner was seeking and later knew it had gained), vacated Innovention Toys III (Fed. Cir. 08/05/16) (non-precedential) (ivo Halo, remanding to trial court to exercise discretion; jury verdict established willful misconduct); Halo I (Fed. Cir. 10/22/14) (aff’g no objective recklessness based on reasonable albeit unsuccessful obviousness defense developed post-suit, despite notice of patents long before suit), vacated Halo (U.S. 06/13/2016); Bard Peripheral III (Fed. Cir. 01/13/15) (2-1) (aff’g willfulness in “an unusual case” despite dissenting op. in prior opinion on defendant’s joint-inventorship, non-joinder defense; “objective recklessness will not be found where the accused infringer has raised a ‘substantial question’ as to the validity or noninfringement of the patent.”); SSL Serv. (Fed. Cir. 10/14/14) (aff’g willfulness finding, failed to show invalidity in ex parte Reexamination, and most limitations not challenged as missing in accused product); but see Halo I (Fed. Cir. 10/22/14) (concurring op., asking en banc court to reconsider Seagate standard, requirement for clear and convincing evidence, and presenting willfulness to the jury, ivo Octane Fitness), granted (U.S. 10/19/2015).
      • “The state of mind of the accused infringer is not relevant to this objective inquiry.” See Global Traffic (Fed. Cir. 06/04/15) (non-precedential) (“The infringer’s knowledge of the patent is irrelevant to the first Seagate ”)
      • “If this threshold objective standard is satisfied, the patentee must also demonstrate that this objectively-defined risk … was either known or so obvious that it should have been known to the accused infringer.”
    • “there is no affirmative obligation to obtain opinion of counsel”
    • Pre Halo (U.S. 06/13/2016), some Fed. Cir. judges identified the following willfulness and damages-enhancement issues (and others later resolved by S. Ct.) as ones that should be revisited, partly ivo S. Ct. decisions regarding attorney fee awards Halo Elec. (Fed. Cir. 03/23/15) (2-judge concurring op. and 2-judge dissenting op. on decision denying en banc rehearing), vacated,
      • “whether willfulness should remain a necessary condition for enhancement under § 284’s ‘may’ language”
      • “Should a judge or jury decide willfulness, in full or in part?”; “whether § 284 requires a decision on enhanced damages to be made by the court, rather than the jury.” See WBIP (Fed. Cir. 07/19/16) (aff’g increase of damages by 50%; Halo did not overturn precedent that jury decides factual aspects of willfulness, but willfulness verdict does not require enhancement).
    • Subjective Vs. Objective In Different Contexts: 800 Adept (Fed. Cir. 08/29/08) (tortuous interference context: “This ‘bad faith’ standard has objective and subjective components. … The objective component requires a showing that the infringement allegations are ‘objectively baseless.’ … Absent a showing that the infringement allegations are objectively baseless, it is unnecessary to reach the question of the patentee’s intent. See id. Infringement allegations are objectively baseless if ‘no reasonable litigant could realistically expect success on the merits.’” Dominant Semiconductors (Fed. Cir. 04/23/08) (extended discussion of subjective vs. objective bad faith in context of sham litigation/infringement allegations).
    • Pre-Halo: Post-Filing Activity Normally Cannot Be Sole Basis For Willfulness: “A patentee who does not attempt to stop an accused infringer’s activities [by moving for preliminary injunction] should not be allowed to accrue enhanced damages based solely on the infringer’s post-filing conduct. Similarly, if a patentee attempts to secure injunctive relief but fails, it is likely the infringement did not rise to the level of recklessness.” In re Seagate Tech. (Fed. Cir. 08/20/07) (en banc); cf. Powell (Fed. Cir. 11/14/11) (aff’g willfulness finding despite denial of preliminary injunction, where trial court properly changed its claim construction after denying preliminary injunction); cf. Aqua Shield (Fed. Cir. 12/22/14) (vacating judgment of no willfulness, despite denial of preliminary injunction).
    • Pre-Halo: Favorable Court Ruling Is An Indication Of No Willfulness: Safeco (U.S. 06/04/2007) (where civil defendant (not a patent case) violated a statute based on its reasonable but incorrect reading of the statute, one factor against willfulness is that “its reading has a foundation in the statutory text, and a sufficiently convincing justification to have persuaded the District Court to adopt it and rule in Safeco’s favor.”) But see Smith & Nephew (Fed. Cir. 03/18/15) (non-precedential) (despite trial court JMOL of non-infringement, defendant not entitled as a matter of law to judgment of no knowing inducement of infringement.)
    • Pre-Halo: Reasonable Claim Construction Dispute Can Lead To A Finding Of No Willfulness: “Because ‘rigid’ was susceptible to a reasonable construction under which Waters’s products did not infringe, there was not an objectively high likelihood that Waters’s actions constituted infringement. See Seagate, 497 F.3d at 1371.” Cohesive Techs. (Fed. Cir. 10/07/08); accord Uniloc (Fed. Cir. 01/04/11) (aff’g JMOL of no willfulness, in part because infringement of a “means plus function” element is complex factually); Advanced Fiber (Fed. Cir. 04/03/12) (aff’g Summ. J. of no willfulness despite vacating Summ. J. of no infringement because objectively reasonable defense). Cf. Heien (U.S. 12/15/2014) (officer’s mistaken understanding that statute required two working brake lights was wrong but objectively reasonable based on statute’s language.)
    • Pre-Halo: Copying Relevant To Subjective Willfulness: “evidence of copying in a case of direct infringement is relevant only to Seagate’s second prong.” Depuy Spine (Fed. Cir. 06/01/09).
    • Pre-Halo: Prompt Redesign May Show Not Objectively Reckless: “Redesign efforts and complete removal of infringing products in a span of a few months suggest that eSpeed was not objectively reckless.” Trading Techs. (Fed. Cir. 02/25/10); Transocean (Fed. Cir. 08/18/10) (aff’g Summ. J. of no willfulness where defendant modified design post sale).
    • Difficult To Use Post-Issuance PTO Proceedings To Defeat Willful Infringement: While trial courts are reluctant to confuse jury with interim status of a pending reexam request, defendants should continue to argue that a reexam (or PTAB trial) grant or favorable office action or decision is highly probative of no willfulness. This should be an even stronger argument under AIA inter partes reexam threshold standard of “reasonable likelihood” that petitioner will prevail on at least one claim. (Sec. 6). Cf. Univ. of Pitt. (Fed. Cir. 04/10/14) (rev’g Summ. J. of objective prong of willful infringement; initial rejection of claims in Reexam over a prior art reference, “while not of substantial weight,” lent “some credibility” to argument that invalidity defense on that reference “was not objectively unreasonable when the PTO went so far as to issue an initial rejection of the claims,” even though PTO eventually allowed claims over that reference); contra VirnetX (Fed. Cir. 09/16/14) (not an abuse of discretion to exclude first-office-action rejections in an inter partes reexamination, on inducement); SynQor (Fed. Cir. 03/13/13) (no abuse of discretion to exclude evidence of first rejections of claims in pending reexamination, on inducement apparently.); SSL Serv. (Fed. Cir. 10/14/14) (no abuse of discretion to prevent evidence of early success in Reexamination and non-attorney testimony of belief in non-infringement); see Bose (Fed. Cir. 03/14/14) (non-precedential) (rev’g Summ. J. of no intent despite clearance opinion that relied on same art that later was applied in Reexam to reject the claims).
    • Selling Off Accused Inventory After Notice Of Infringement May Evidence Willfulness: “Moreover, while Wal-Mart claims that most of its sales were made prior to receiving the cease and desist letter, there is evidence that Wal-Mart continued to sell off its remaining inventory even after it had learned of its possible infringement. Based on this evidence, the district court’s finding of willful infringement was not clearly erroneous.” Golight (Fed. Cir. 01/20/04) (aff’g award of damages higher than Wal-Mart’s profits, and willfulness, and attorney’s fees; Wal-Mart did not know of the patent until the suit was filed; and received cursory assurances from manufacturer of no infringement. It sold off its inventory after the suit was filed. Bench trial willfulness finding, and award of attorneys’ fees, affirmed.); but see Calico Brand (Fed. Cir. 07/18/13) (non-precedential) (aff’g JMOL rejecting jury finding of willfulness; when learned of infringement charge, accused immediately demanded assurances from supplier that the products did not infringe and returned products when didn’t get those assurances, but did sell down inventory while awaiting the assurances).
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