In its nonprecedential opinion in Chrimar Holding Co. v. ALE USA Inc., the court, in an opinion authored by Judge Taranto and joined by Chief Judge Prost and Jude Wallach, affirmed an award of reasonable royalties as well as the denial of the plaintiff's attorneys' fees. The case involved four patents which (according to the plaintiff) are essential to the IEE's "Power over Ethernet (PoE) 802.3af standard (ratified in 2003) and 802.3at amendments to the IEEE PoE 802.3 standard (ratified in 2009)" (p.3). In 2015, Chrimar filed suit against ALE in the E.D. Texas, and ALE asserted "defenses of, inter alia, noninfringement, invalidity (including anticipation, obviousness, lack of enablement, lack of sufficient written description, and lack of proper inventorship), unenforceability based on unclean hands and inequitable conduct, prosecution laches, equitable estoppel, waiver, and implied license. ALE also asserted counterclaims of, inter alia, breach of contract with the IEEE (with ALE as a third-party beneficiary), fraud, and violation of section 2 of the Sherman Act, as well as declaratory judgment counterclaims corresponding to several of ALE’s affirmative defenses" (p.5). ALE stipulated to infringement in accordance with the district court's claim construction orders, and a jury trial was held on damages and on some of ALE's defenses and counterclaims, ALE eventually having withdrawn the majority of its defenses and its antitrust counterclaim. The jury returned a verdict for Chrimar in the amount of $324,558.34 and rejected ALE's defenses and counterclaims; the district court nevertheless denied Chrimar's motion for fees.
On appeal, ALE challenged three of the district court's claim constructions. The Federal Circuit affirms as to two of them and reverses as to the other. As a result, it affirms the infringement of three of the patents, and vacates and remands for further proceedings on infringement as to the remaining one. Nevertheless, the court concludes that this result
does not call for a new trial on damages. ALE did not ask for a new trial on damages based on our adoption of its construction of “adapted.” . . . And a new trial on damages is not warranted on that basis. Chrimar’s technical expert Dr. Vijay Madisetti testified that all four patents “cover the PSE [power sourcing equipment] and the PD [power device] aspects of classification, detection, and controlling the power,” J.A. 5892—a proposition that ALE agrees with on appeal, ALE Br. 8. Dr. Madisetti also testified that the smallest saleable patent-practicing units are ALE’s power sourcing equipment, which infringe the ’760 and ’838 patents, and ALE’s power devices, which infringe the ’012, ’107, and ’760 patents, J.A. 5921—a proposition ALE does not dispute on appeal. Given the (affirmed) judgment of infringement of the ’107 and ’760 patents, the absence of an infringement judgment on the ’012 patent is immaterial to damages because any damages that would result from the alleged infringement of the ’012 patent also results from the infringement of the ’107 and ’760 patents" (pp. 16-17).
That seems a bit counterintuitive, if the ’012 patent covers a distinct invention and is essential in fact, though I suppose it's possible; and for present purposes I'm not going to devote time to comparing the claims in suit of all four patents to see how they differ from one another or otherwise trying to get to the root of this.
Anyway, moving on to "ALE's independent arguments directed to damages," the court rejects ALE's challenges to the testimony of Chrimar's damages expert, namely that he "(1) relied on licenses not comparable to the hypothetical negotiation for the present case; (2) did not adequately separate the value of patented features from the value of standardization and the value of nonpatented features; and (3) prejudicially referred to ALE’s total net revenue and profit" (pp. 17-21). Finally, the court rejects ALE's challenge to the district judge's jury instruction on fraud, and affirms the denial of fees:
Chrimar’s argument relies chiefly on the ground that ALE pressed a large number of defenses and counterclaims for years, only to drop most of them (e.g., concerning antitrust, inequitable conduct, and some invalidity grounds) late in the litigation, even during trial. Chrimar does not meaningfully show that those dropped claims were objectively meritless. It focuses on the contention that ALE never truly intended to try them.
The district court did not abuse its discretion in making what here was a case-specific judgment that it was distinctively well-positioned to make. The court denied summary judgment as to a number of the claims ALE later dropped, allowing them to proceed. And the court determined that ALE’s litigation decisions fell within the range of ordinary practices involving the narrowing of claims for trial (pp. 25-26).
One final note: the PTAB has found all the claims in suit to be invalid, and appeals are either pending or expected (see p.6 n.1), so all of the above discussion could wind up being irrelevant anyway.
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