U.S. District Court Awards Nominal Damages for Patent Infringement

As some readers may recall, earlier this year I published an article titled Standing, Nominal Damages, and Nominal Damages 'Workarounds' in Intellectual Property Law After TransUnion, 56 UC Davis L. Rev. 1085 (2023).  I was therefore intrigued when I read Hailey Konnath’s recent article on Law360 titled $10M Verdict Against Intuitive Lowered to Just a Dollar, discussing an opinion by U.S. District Judge Maryellen Noreika in Rex Medical, L.P. v. Intuitive Surgical, Inc., C.A. No. 19-005 (MN) (D. Del. Sept. 20, 2023).  In 2019, plaintiff Rex sued defendant Intuitive for infringing Rex’s ‘650 and ‘892 Patents, relating to devices for stapling tissue during surgery.  Some months later, the parties agreed to dismiss with prejudice the claim asserting infringement of ‘892.  The case went to trial, and the jury concluded that Intuitive infringed claim 6 of ‘650 and awarded $10 million damages in the form of a lump-sum royalty.  Intuitive then filed a motion for JMOL or, in the alternative, a new trial.  In the above opinion, the court denies the motion for JMOL, concluding that there was sufficient evidence to sustain the jury’s decisions on infringement and validity.  I’ll skip over these issues and focus on the damages matter, which the court resolved in favor of Intuitive.

Rex initially planned to prove its damages case through the testimony of an expert, Mr. Kidder, who planned to rely on a $10 million license Rex had concluded with Covidien in settlement of litigation over both the ‘650 and ‘892 Patents; that license covered not only ‘650 and ‘892, but also eight other (apparently foreign) patents.  In a pretrial ruling on Intuitive’s Daubert motion, the court precluded Mr. Kidder from testifying about the Covidien license—but not from testifying altogether—on the ground that he had failed to apportion the value of the license between the ‘650 and ‘892 Patents, and had not substantiated this opinion that the other eight patents added little if any value.  Rex did not call Mr. Kidder to testify at trial, but instead relied on fact testimony by Rex’s president Mr. Carter, who based his opinion on the Covidien license.  But this testimony too did not adequately apportion the value among the patents licensed to Covidien, according to the court:

This testimony fails to provide any basis from which a factfinder could assign any portion of the $10,000,000 to the ’650 patent alone. Even if there is enough in the record to apportion the license with respect to the non-asserted patents⁷ (i.e., those other than the ’650 and ’892 patents), there is nothing in the record that addresses the extent to which the ’650 patent – as opposed to the ’892 patent – contributes to the $10,000,000 sum.⁸ In fact, Mr. Carter admitted that he could not assign any value to the ’650 patent. (Id. at 200:10-14). Plaintiff has thus failed to establish that the license is comparable to the hypothetical negotiation. . . .  So, for the same reason that the Court precluded Mr. Kidder from testifying about the license, given the evidence at trial about that agreement, the jury could not rely on the license to determine a reasonable royalty either.⁹

 

⁷ For example, there is testimony that the ’650 and ’892 were the only patents asserted in the Covidien litigation and that many of the other patents had lapsed or expired. (D.I. 259 at 166:6-14; 176:22-177:9). There was, however, also evidence that one foreign licensed patent was filed in 2002 and issued in 2010. (See id. at 177:6-180:12; DTX-539; JTX-007).

 

⁸ Based on the evidence presented at trial, it is entirely possible that the entire value of the Covidien license is attributable to the ’892 patent alone. Furthermore, the fact that, at the time Rex Medical and Covidien entered settlement negotiations, the ’650 patent had been dropped from the litigation seems to suggest that the ’892 patent may have held more value to Covidien. (See D.I. 166 at 4).

 

⁹ Furthermore, Plaintiff failed to offer any evidence as to the value of the patented technology in the Accused Products as compared to the non-patented features. Claim 6 is the sole asserted claim in this case. Claim 6 depends on claims 4 and 5 which have both been invalidated. (See D.I. 166 at 17). Plaintiff has failed to provide evidence from which a factfinder could attribute a specific value not only to the ’650 patent as a whole but also to the sole asserted claim of the patent.

 

The remaining evidence adduced at trial fails to provide any basis for a factfinder to tie a dollar amount to the value of the ’650 patent or support the $10,000,000 award. For example, Plaintiff cites to testimony including about the “market opportunity Defendants saw” and the “stipulated fact regarding accused product sales.” (D.I. 276 at 7 (citing D.I. 260 at 354:19-358:24, 476:2-4)). . . . This evidence fails to provide anything more than an entirely speculative basis for assigning value to the asserted patent. Therefore, the Court finds that the jury award is unsupported by the evidence (pp. 17-18).

The court further declines to reopen discovery and grant a new trial on damages, noting that “Plaintiff had the opportunity to conduct discovery and to call other witnesses, such as its damages expert, to offer other evidence potentially relevant to damages. (See D.I. 261 at 511:2-23). Instead, Plaintiff chose to hinge its damages theory on the very license that the Court had already precluded its expert from testifying about” (p.18 n.11).  The court further states, correctly in view for reasons discussed in my article above, that “A plaintiff is not entitled to an award of damages when none have been proven,” and remits the jury award to nominal damages of $1.