Friday, October 9, 2020

Three Federal Circuit Damages Opinions in a Week

Yesterday, the court handed down its nonprecedential decision in EcoServices, LLC v. Certified Aviation Services, LLC.  The patents in suit relate to a system and method for cleaning jet engines.  The principal issues are patentable subject matter (regarding which Judge Dyk dissents from the majority), claim construction, claim definiteness, and nonobviousness, but there is a damages issue as well.  There were two patents in suit, but one of them had expired before the trial began.  Because the expert witness based his opinion regarding the amount of the royalty the parties would have negotiated ex ante, in part, on that now-expired patent--and, according to the panel opinion, "awarded little, if any, value to the" other one--the court concludes that the lower court abused its discretion in awarding $400 per wash, and remands for further proceedings.

Earlier in the week, in the nonprecedential Exmark Mfg. Co. v. Briggs & Stratton Corp., the court affirmed a judgment of infringement and validity, as well as the district court's calculation of prejudgment interest.  In an earlier proceeding, the district court had awarded prejudgment interest at the T-Bill rate (rather than, as the plaintiff requested, the prime rate) in part because it faulted the plaintiff for delaying suit and in part because it was also awarding substantial enhanced damages.  That judgment was reversed on appeal and remanded.  On remand, the the court awarded lower enhanced damages and adjusted the interest into a prejudgment and postjudgment component.  For the prejudgment component, the court still awarded the T-Bill rate but for the postjudgment interest it awarded the prime rate.  The Court of Appeals finds no abuse of discretion, stating:

Because the lower interest rate initially awarded was intended to penalize Exmark for its delay in filing suit, it became less representative as more time passed after the suit was filed. Under the circum-stances in this long, drawn-out litigation, we cannot con-clude that it was an abuse of discretion for the district court to correct the initially assigned interest rate by bifurcating the prejudgment interest award between pre-suit and post-suit time periods (p.17).

Finally, a week ago, the court in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., the court reversed a JMOL and reinstated that the jury verdict that Teva induced physicians to infringe GSK's method of treatment patent after Teva started marketing carvedilol with a "full" instead of a "skinny" label.  (Chief Judge Prost dissented.  For discussion of the substantive issues, see Dennis Crouch's write-up on Patently-O.)  The court also reinstated a $234 million lost profits judgment, affirming the district court's decision that other generic carvedilol products on the market were infringing, rather than noninfringing, alternatives, and thus didn't reduce the damages award.  At first blush, that sounds correct--but wouldn't that also potentially have been true in cases such as State Industries v. Mor-Flo Industries, where the court awarded market share lost profits damages against the infringer?  It was alleged in that case that the other firms in the market were infringing the plaintiff's patent too, and I've long thought that an implication of that case was that the patent owner would have had to file suit against those other firms to recover the sales it lost to them.  Maybe there's a difference in that (according to Professor Crouch) GSK is pursuing infringement actions against the other generic firms--though I'm not sure why that would matter, and I would hope that the courts in those other cases apply the single recovery rule, so that GSK doesn't recover more than once for the same loss.       

Correction:  As Norman Siebrasse has pointed out to me, GSK was seeking only to recover the profit it lost on sales to Teva (I think), not all the sales it lost to generic competitors.  If so, then it appears the decision is correct and the market share theory wouldn't come into play.

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