The case is Rex Medical, L.P. v. Intuitive Surgical, Inc., precedential opinion by Judge Stoll, joined by Judges Dyk and Prost. Rex sued Intuitive for infringing two surgical stapling patents, U.S. Patent Nos. 9,439,650 and 10,136,892, but while the litigation was pending Rex agreed to dismiss with prejudice its claims regarding ‘892. The infringement action with respect to ‘650 then went to trial and resulted in a jury award of $10 million, but the trial judge granted Intuit’s motion for JMOL and awarded $1 in nominal damages. On appeal, Rex challenges the exclusion of its damages expert’s testimony and the reduction of the damages award, while Intuit cross-appeals the district court’s rulings on infringement and validity. The Federal Circuit affirms the judgment in its entirety. As is my practice on this blog, I will confine my remarks to the remedies issues.
Rex’s damages expert’s report opined “that a hypothetical negotiation between Rex and Intuitive for a license to the ‘650 patent would have resulted in a lump sum payment of $20 million,” and that the closest comparable was a settlement agreement between Rex and (nonparty) Covidien in which the latter agreed to pay $10 million for a portfolio that included the ‘650 and ‘892 patents, as well as seven pending U.S. applications and nineteen foreign patents or applications. (The expert also analyzed an agreement between Rex and Boston Scientific, but "Rex concedes that its expert did not form an opinion about a reasonable royalty based on that license," see pp. 6 n.2, 17; and it's possible that some of the other patents that formed part of the Covidien license had expired before that agreement was signed, but there was no admissible evidence confirming that point, see p.15 & n.4.) During trial, however, the district court granted Intuit’s motion to exclude the expert’s testimony to this effect, on the ground that the expert had “failed to adequately address the extent to which [the] ‘892 and the other patents contributed to the lump sum payment in the Covidien license” (p.7). In the event, neither party’s damages expert testified at trial, although Rex’s president Mr. Carter did. On appeal, the Federal Circuit (citing, inter alia, EcoFactor, Inc. v. Google LLC, 137 F.4th 1333 (Fed. Cir. 2025) (en banc)), finds no abuse of discretion in the exclusion of the damages expert’s testimony. The court notes, among other matters, that the expert “opined that most of the value in a license to Rex’s patent portfolio ‘is contained in a license to either the ‘892 Patent or the ‘650 Patent” (emphasis added by the court), but as noted above only the ‘650 was at issue at trial, and the expert didn’t apportion value among all of the licensed patents and applications. In addition, the court affirms the district court’s judgment in the amount of $1, concluding that there was insufficient evidence in the record from which the trier of fact could have derived an appropriate reasonable royalty:
. . . the patent damages statute, 35 U.S.C. § 284, “does not require an award of damages if none are proven that adequately tie a dollar amount to the infringing acts.” TecSec, Inc. v. Adobe Inc., 978 F.3d 1278, 1291 (Fed. Cir. 2020). Damages “must not be left to conjecture by the jury. They must be proved, and not guessed at.” Promega, 875 F.3d at 660 (citation omitted). Section 284 “requires the award of a reasonable royalty, but to argue that this requirement exists even in the absence of any evidence from which a court may derive a reasonable royalty goes beyond the possible meaning of the statute.” Devex Corp. v. Gen. Motors Corp., 667 F.2d 347, 363 (3d Cir. 1981) (affirming an award of zero damages for lack of evidence). “[T]here must at the least be enough evidence in the record to allow the factfinder to formulate a royalty.” Id. (p.14).
Further to this point, “Rex presented no evidence that would allow the jury to overcome the deficiencies in [the] excluded expert opinion.” The testimony of the company’s president didn’t suffice, for the following reasons:
Mr. Carter testified that the “factors” that Rex considered in licensing to Covidien were: (1) Covidien settled “very early in the litigation process,” (2) Covidien was “very cooperative,” (3) Covidien “wanted special language in the license,” (4) Covidien did not challenge Rex’s patents in the U.S. Patent and Trademark Office, and (5) Covidien “saw real value in licensing the ’650 and the ’892 Patents.” . . . But the jury heard no testimony on how to consider these five “factors” to apportion the value of the ’650 patent—or whether all, some, or none were applicable. Moreover, Mr. Carter also testified that (1) there may be a royalty rate range for licensing the ’650 patent, but he was not sure of an established royalty rate; (2) he did not know what Intuitive would conclude is a reasonable royalty or what Intuitive hypothetically would have paid for a license to the ’650 patent; (3) he was not sure whether the Covidien license was relevant to damages; (4) Covidien did not agree to the $10 million figure based on the amount of its product sales, rather, Covidien and Rex just came to a negotiated agreement; and (5) he could not actually assign any value to the ’650 patent. . . .
. . . The record does not provide evidence from which the jury could find or infer a damages number for a license to the ’650 patent between ~$1 and $10 million. Nor does there appear to be any other record evidence that would allow reasonable apportionment. The jury would have to speculate as to how much of the $10 million would be allocated to the ’650 patent. But damages may “not be determined by mere speculation or guess.” Oiness v. Walgreen Co., 88 F.3d 1025, 1030 (Fed. Cir. 1996) (citation omitted). . . .
The outcome here is fact-specific. Had Rex (or Intuitive) put forth other evidence from which a jury could reasonably determine damages for infringement of the ’650 patent without speculation, JMOL of no damages would be inappropriate and a new trial might be appropriate. But the parties did not, and it was Rex’s burden to do so. Because, on this record, awarding damages between ~$1 and $10 million for a license to the ’650 patent would require improper guesswork, we affirm the JMOL of no damages.
We also discern no abuse of discretion in the district court’s denial of Rex’s request for a new damages trial (p.17).
The opinion seems correct to me, based on previous Federal Circuit case law including TecSec, which I have written about in my article Standing, Nominal Damages, and Nominal Damages “Workarounds” in Intellectual Property Law After TransUnion, 56 UC Davis L. Rev. 1085, 1142-45 (2023). As I noted there, the court has rejected the argument that § 284 entitles the prevailing patent owner to some nontrivial reasonable royalty award if no damages are proven, even if it seems unlikely that the actual value of the patent in suit is greater than zero.
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