Wednesday, April 22, 2020

Federal Circuit Affirms Damages Judgment Despite Invalidity of One of Two Patents in Suit

The case is Hologic, Inc. v. Minerva Surgical, Inc., opinion by Judge Stoll.  This a complicated case, but basically its boils down to the following.  An inventor, Truckai, procured two patents, one including certain method claims and one a device claim.  He assigned the two patents to an assignee, and eventually they were acquired by Hologic.  Hologic later asserted that Truckai's firm, Minerva, was infringing the two patents.  Minerva petitioned for inter partes review of the two patents in suit.  The PTAB instituted review of the patent that includes the method claims in suit, and found those claims invalid; it did not institute review of the other patent.  The Federal Circuit, in a previous opinion, affirmed.  But before that happened, the district court entered summary judgment of validity and infringement, and held a trial on damages.  The jury awarded lost profits for a portion of the infringing sales and a reasonable royalty for the remainder, without distinguishing between the two patents.

Under Federal Circuit precedent, the doctrine of assignor estoppel precludes the defendant here from asserting the invalidity of the patents in suit as a defense to infringement.  However, the doctrine doesn't apply to IPRs. The defendant therefore asserts that the district court is bound by the doctrine of collateral estoppel to respect the PTAB finding, affirmed on appeal, of invalidity as to the method claims.  On appeal, the Federal Circuit agrees.  

One can debate the merits of this outcome as a matter of policy, but this blog is about damages, so I'll focus on the damages issues.  The most important of these is whether the damages case must be retried because the jury didn't distinguish between the valid and (subsequently determined to be) invalid patent.  The Federal Circuit says no:
“The general rule is that when a ‘jury was told it could rely on any of two or more independent legal theories, one of which was defective,’ the general verdict must be set aside.” WesternGeco L.L.C. v. ION Geophysical Corp., 913 F.3d 1067, 1073 (Fed. Cir. 2019) (citations omitted). “In a situation—such as this one—where the jury rendered a single verdict on damages, without breaking down the damages attributable to each patent, the normal rule would require a new trial as to damages.” Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295, 1310 (Fed. Cir. 2007) (citing Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 312 (1986)); see also DDR Holdings, LLC v., L.P., 773 F.3d 1245, 1262 (Fed. Cir. 2014) (vacating the damages award upon holding the claims of one of the two patents-in-suit invalid as anticipated and noting that its decision “could warrant a new trial on damages” (citing Verizon, 503 F.3d at 1310)).
We have recognized, however, an exception to this general rule. A single damages award “can be sustained” if, despite the fact that some of the asserted claims were held invalid or not infringed subsequent to the award, “undisputed evidence” demonstrated that the sustained patent claim was necessarily infringed by all of the accused activity on which the damages award was based. WesternGeco, 913 F.3d at 1074. In such cases, “we apply a harmlessness analysis similar to our approach in the case of erroneous jury instructions.” Id. (citation omitted); see also Chrimar Holding Co., LLC v. ALE USA Inc., 732 F. App’x 876, 886 (Fed. Cir. 2018) (holding that a new trial to determine damages on a patent-by-patent basis was unnecessary because the same royalty damages applied whether the claims of one or three asserted patents were infringed). For the reasons that follow, we conclude that a departure from the general rule is warranted in this case.
In each of WesternGeco, Verizon, and DDR, this court vacated the damages award and remanded to the district court to determine in the first instance whether a new trial on damages was warranted based on this court’s invalidity or noninfringement ruling. See WesternGeco, 913 F.3d at 1075; Verizon, 503 F.3d at 1310; DDR, 773 F.3d at 1262. By contrast, the district court in this case addressed the issue of apportionment and determined that the jury verdict on damages was “adequately supported by the finding of infringement of Claim 1 of the ’348 patent.” JMOL Op., 2019 WL 1958020, at *3. The district court’s determination is supported by undisputed evidence. Hologic’s damages expert explained to the jury that the same royalty rate he used in his damages calculation would apply to either the ’183 patent or ’348 patent, “individually or the two patents collectively,” since they “both cover the entire procedure and device respectively.” J.A. 30439 at 1084:7–25. The expert was then cross-examined about his reasoning. Thus, Hologic presented evidence to the jury that the damages award could be supported if either or both of the ’183 and ’348 patents’ claims were infringed and valid. Minerva did not present any contrary evidence. Accordingly, we conclude that a departure from the general rule requiring a new trial is warranted in this case.
Minerva asserts that it asked for a jury instruction on apportionment but that its request was denied. The district court reasoned, however, that Minerva had not presented any evidence to the jury explaining why apportionment was necessary. . . . When asked during oral argument on appeal whether there was any evidence on apportionment other than the testimony by Hologic’s expert, Minerva’s counsel could not identify anything in the record. . . . Likewise, following oral argument, this court did not receive any supplemental briefing identifying any testimony or other evidence to rebut Hologic’s expert’s testimony.
Because Hologic’s expert’s testimony remains undisputed, we see no error in the district court’s conclusion that the jury’s royalty award should stand. We have considered Minerva’s additional arguments concerning the jury’s damages award, including its award of lost profits, but we do not find them persuasive. Accordingly, we affirm the district court’s denial of Minerva’s motion for judgment as a matter of law of no damages or, alternatively, for a new trial on reasonable royalty damages (pp. 21-23).
The court also rejects various arguments relating to the award of supplemental damages (damages for infringing acts from April 1, 2018 to November 19, 2018).  Nevertheless, it finds that the district court erred in using the date of judgment on the jury verdict (August 13, 2018) as the date from which to calculate pre- and postjudgment interest on the supplemental damages, because for interest on the supplemental award the relevant date is the date of entry of the judgment on supplemental damages (here, June 3, 2019). 

No comments:

Post a Comment