Wednesday, September 21, 2016

WesternGeco v. ION: Federal Circuit Remands Another Case for Consideration of Enhanced Damages

Opinion by Judge Dyk, joined in its entirety by Judge Hughes, here.  The case was on remand to the Federal Circuit from the U.S. Supreme Court.  Vacating and remanding for reconsideration of enhanced damages in light of Halo, the June case in which the U.S. Supreme Court overturned the comparatively strict Seagate standard for awarding enhanced damages, is getting to be an almost weekly occurrence.  For last week's opinion in Stryker, see here.

No big surprise, then, that the court vacates its previous decision that an award of enhanced damages would have been unwarranted solely because "ION’s noninfringement and invalidity defenses were not objectively unreasonable" (p.4).  Instead, as Judge Dyk writes, "Halo emphasized that subjective willfulness alone—i.e., proof that the defendant acted despite a risk of infringement that was “‘either known or so obvious that it should have been known to the accused infringer,’” Halo, 136 S. Ct. at 1930 (quoting Seagate, 497 F.3d at 1371)—can support an award of enhanced damages" (p.7).  Judge Dyk also notes, however, that "After Halo, the objective reasonableness of the accused infringer’s positions can still be relevant for the district court to consider when exercising its discretion" (p.8).  The court further instructs (pp. 9-11):
On remand the district court must consider two questions. The first of these is subjective willfulness. The jury here was instructed on the Seagate standard for subjective willfulness. . . .  The jury found that WesternGeco had “prove[d] by clear and convincing evidence that ION actually knew, or it was so obvious that ION should have known, that its actions constituted infringement of a valid patent claim.” J.A. 77. We note that ION’s renewed motion for JMOL contended that the jury’s verdict of subjective willfulness was unsupported by substantial evidence. ION argued that “no reasonable jury could conclude that the subjective-prong of the willfulness inquiry was established by clear and convincing evidence.” WesternGeco I, No. 4:09-cv-01827, ECF No. 559, at 16 (ION’s renewed motion for JMOL of no willful infringement of Sept. 28, 2012). On remand, the district court must review the sufficiency of this evidence as a predicate to any award of enhanced damages, mindful of Halo’s replacement of Seagate’s clear-and-convincing evidence standard with the “preponderance of the evidence standard.” Halo, 136 S. Ct. at 1934.3/ 
3/  ION did not waive its challenge to the willfulness verdict based on the lack of subjective willfulness by failing to raise it on the first appeal. At the time of the first appeal it had raised the issue in a JMOL motion but the district court did not decide that issue (the district court having ruled that there was a lack of objective willfulness, a ground then sufficient to set aside the willfulness verdict). . . .
Thus, this case is distinguishable from our recent decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., where the accused infringer failed to raise the issue at the JMOL stage in district court or “challenge the propriety of the jury finding of subjective willfulness” on appeal. No. 13-1472, 2016 WL 4151239, at *10 (Fed. Cir. Aug. 5, 2016). We do not suggest that appellees in the future can avoid waiver by limiting discussion on the first appeal to just one aspect of the overall issue of enhanced damages since under the Supreme Court’s decision in Halo, objective and subjective willfulness are no longer distinct issues.
The second issue that the district court must consider on remand, if the jury’s finding of willful infringement is sustained, is whether enhanced damages should be awarded. Halo emphasized that the question of enhanced damages under § 284 is one that must be left to the district court’s discretion. The district court, on remand, should consider whether ION’s infringement constituted an “egregious case[] of misconduct beyond typical infringement” meriting enhanced damages under § 284 and, if so, the appropriate extent of the enhancement. Id. at 1935.
Judge Wallach dissents in part on the question of whether WesternGeco was entitled to recover foreign lost profits traceable to conduct found to be infringing under section 271(f) of the U.S. Patent Act.  This is the same position he took the two previous times this case came before the Federal Circuit.  (For previous discussion on this blog, see here and here.)  The majority this time concludes that the issue of lost profits is not within the scope of its remand from the Supreme Court (see Judge Dyk's opinion p.5 n.1), a matter on which Judge Wallach disagrees (see Judge Wallach's opinion, p.3 n.1).

No comments:

Post a Comment