The case is Provisur Technologies, Inc. v. Weber, Inc., precedential opinion by Chief Judge Moore, joined by Judge Taranto and by District Judge Claire Cecchi, sitting by designation. There were three patents in suit, all relating to food processing machinery. The jury returned a verdict in favor of the patentee on all three and awarded damages for each, separately, in the $3-$4 million range. The Court of Appeals holds that one of the three patents (’936) was noninfringed as a matter of law, so I will skip over that one and focus on the other two, ’436 and ’812. The jury returned a verdict of willful infringement as to four claims of ’436 and three claims of ’812. It awarded $3,747,046.50 for each of these, which the district court doubled. The Court of Appeals reverses, finding that the evidence was insufficient to support the finding of willfulness, and that the damages award violated the entire market value rule (EMVR). In regard to the latter, the court doubles down on the smallest-salable patent-practicing unit (SSPPU) rule.
On willfulness, the court holds that the plaintiff introduced testimony in violation of 35 U.S.C. § 298, on the defendant’s failure to obtain an opinion of counsel:
Section 298 states:
The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.
Patentees are prohibited from using the accused infringer’s failure to obtain the advice of counsel as an element of proof that the accused infringer willfully infringed. Prior to trial, Weber moved to exclude testimony from Provisur’s expert, Mr. John White, that Provisur asserted willful infringement based in part on Weber’s failure to present evidence of advice of counsel. J.A. 6. The district court granted Weber’s motion to exclude Mr. White’s testimony on Weber’s alleged failure to obtain advice of counsel. J.A. 8.
During trial, however, Mr. White testified about Weber’s failure to consult a third party to evaluate the allegedly infringed patents. . . . Specifically, Mr. White testified that Weber did not provide any evidence that it performed a number of evaluation steps, such as a freedom to operate analysis. In his expert report, Mr. White explained a freedom to operate analysis is “typically reviewed by a qualified patent attorney” which may include “‘opinions’ as to which patents may be problematic.” J.A. 9040–41 ¶ 57. Mr. White’s testimony referenced other potentially legal services that Weber allegedly failed to seek.
Mr. White’s testimony violated 35 U.S.C. § 298. Provisur argues Mr. White’s testimony is about industry standards for intellectual property management. . . . But Mr. White, an attorney, did not distinguish between legal and non-legal services when testifying about consulting a third party. Provisur cannot circumvent § 298 by substituting advice from a third party for advice of counsel. The district court thus erred in admitting the portion of Mr. White’s testimony related to seeking advice from a third party.
The remainder of Mr. White’s testimony is admissible, but insufficient as a matter of law to establish willfulness. Mr. White testified about Weber’s patent matrix that tracked patents in related food processing technologies, including the asserted patents. . . . He explained software and Weber personnel provided a rating out of 3 for each patent in the matrix. . . . These ratings were described as indicating whether the patent was relevant for purposes of further evaluation. . . . For the asserted patents, Mr. White testified each one was provided a high score of 3. . . .
At most, the patent matrix demonstrates Weber’s knowledge of the asserted patents and their relevance to Weber’s business in general. The patent matrix and corresponding testimony do not provide any level of specificity as to the relevance of the tracked patents for any of Weber’s products. There is no dispute Weber knew of the asserted patents. . . . The issue here is whether Weber knew of its alleged infringement and had a specific intent to infringe. . . . There is no evidence Weber knew of its alleged infringement. We have held “knowledge of the asserted patent and evidence of infringement is necessary, but not sufficient, for a finding of willfulness.” Bayer Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 988 (Fed. Cir. 2021). Provisur’s evidence as a matter of law is not enough to establish deliberate or intentional infringement. Id. The district court should have granted Weber’s motion for judgment as a matter of law. . . (pp. 11-13).
On the EMVR issue, the court notes that the patented features of the defendant’s machines “are parts of a larger component, either the slicer or automatic component, which themselves are each just one component of an entire multicomponent slicing line . . .” (p.13). The court concludes that the district court should have granted a new trial on damages:
“A patentee is only entitled to a reasonable royalty attributable to the infringing features.” Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 904 F.3d 965, 977 (Fed. Cir. 2018). We have required any royalties be apportioned between infringing and noninfringing features of the accused product. Id. An apportionment analysis generally requires determining a royalty base to which a royalty rate will be applied. Id. For elements of multicomponent products accused of infringement, the royalty base should be based on the smallest salable patent-practicing unit. LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 67 (Fed. Cir. 2012). A necessary condition for using “an entire multi-component product” as the base is that the patentee proves the patented feature is the basis for customer demand. Id.; see also Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009).
Provisur’s use of the entire market
value rule was impermissible because it failed to present sufficient evidence demonstrating
the patented features drove the demand for the entire slicing line. Provisur’s
damages expert, Ms. Julie Davis, used the value of the entire slicing line as
the royalty base and applied a royalty rate to calculate the reasonable royalty
damages. . . . Ms. Davis relied on Dr. Vorst’s testimony to support using the
entire market value as the royalty base. . . . Dr. Vorst testified that the
patented features drive the demand or substantially create the value of Weber’s
accused products. . . . But Dr. Vorst’s testimony was conclusory and did not
provide any evidence, e.g., evidence from customers, to show the patented features
drove the demand for the entire slicing line. . . (pp. 14-15).
In short, “[t]he district court should have granted a new trial on damages because there is no evidence, apart from conclusory expert testimony, that supports invoking the entire market value rule” (p.16).
Postscript: for further commentary, see posts on Patently-O, IPWatchdog, Law360, and Bloomberg.
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