While I was taking a
blogging break last week, the Federal Circuit issued a precedential opinion in TecSec Inc. v.
Adobe, Inc., opinion by Judge Taranto, joined by Chief Judge
Prost and Judge Reyna. The principal substantive issues relate to patentable
subject matter and induced infringement. On the latter, the general rule,
according to the U.S. Supreme Court's decision in Commil USA, LLC v. Cisco
Systems, Inc., is that a defendant cannot be liable for active inducement
if it had a good-faith belief that the conduct it was inducing was
noninfringing. The Federal Circuit holds here, however, that even if
Adobe had an objectively good-faith basis for believing that the conduct it was
inducing was infringing--which it did, during the relevant time period, because
the district court had so held, prior to being reversed in an earlier appeal on
claim construction--it could still be liable if it had a subjective belief that
the conduct was infringing. So the matter will have to be retried on that
subjective theory, which (to me at least) seems like a colossal waste of
resources: how can it subjectively unreasonable to rely on a district
court's claim construction, and what exactly is the point of making inducement
liability hinge on evidence that a defendant should have doubted the
correctness of the district court's decision? But I'll leave those issues
aside and focus on damages. The court below also held that Adobe couldn't
be liable for damages for direct infringement, because TecSec hadn't proven any
damages resulting from the direct infringement, and on this issue the Federal
Circuit affirms:
TecSec argues that because the jury
found direct infringement of each asserted claim, 35 U.S.C. § 284 entitles
TecSec to a non-zero reasonable royalty. Specifically, TecSec highlights §
284’s statements that “[u]pon finding for the claimant the court shall award
the claimant damages adequate to compensate for the infringement, but in no
event less than a reasonable royalty” and that “[w]hen the damages are not
found by a jury, the court shall assess them.” 35 U.S.C. § 284. Taken together,
TecSec contends, those statements require an award of damages greater than zero
in all cases where the jury finds infringement.
The statute does not require an award
of damages if none are proven that adequately tie a dollar amount to the
infringing acts. We have explained that “a patent owner may waive its right to
a damages award when it deliberately abandons valid theories of recovery in a
singular pursuit of an ultimately invalid damages theory.” Promega Corp. v.
Life Techs. Corp., 875 F.3d 651, 666 (Fed. Cir. 2017). More generally, we
have observed that there can be an award of no damages where “none were
proven.” Gustafson, Inc. v. Intersystems Indus. Prods., Inc., 897 F.2d
508, 509–10 (Fed. Cir. 1990); cf. Gadsden Indus. Park, LLC v. United States,
956 F.3d 1362, 1372 (Fed. Cir. 2020) (Takings Clause does not require an award
of compensation without adequate proof). Although we have not upheld a zero
royalty rate in a case with an affirmative infringement finding—and have stated
that it is “unlikely” that a hypothetical negotiation would result in a zero
royalty rate—we have previously stated that “in a case completely lacking any
evidence on which to base a damages award, the record may well support a zero
royalty award.” Apple, Inc v. Motorola, Inc., 757 F.3d 1286, 1328 n.7
(Fed. Cir. 2014).
In this case, TecSec presented no
evidence of damages caused by Adobe’s direct infringement, which was the only
form of infringement that the jury found Adobe to have committed. . . . TecSec
did not, for example, provide any evidence regarding the number of Adobe
employees in the United States or the number of times that Adobe employees
installed Acrobat. . . . TecSec’s only damages evidence relied on “sales of
accused products.” E.g., J.A. 12840, 12842–44, 12854–56, 12866; see
also J.A. 13499–500 (TecSec’s closing argument, stating, “all that TecSec
is asking for here, a reasonable royalty based on [Adobe’s] sales of Acrobat
products”). But the district court found, and TecSec does not dispute, that
direct infringement occurs only after Acrobat is installed. . . . Sales of
Acrobat, therefore, cannot be a measure of damages for direct infringement by
Adobe—sales could serve here as a measure of damages only for TecSec’s indirect
infringement theory, which relies on infringement by Adobe customers. But the
jury found no indirect infringement.
On appeal, TecSec tries to rationalize
the jury’s award by theorizing ways the jury could have used sales data to
derive a value for Adobe’s conduct. For instance, TecSec argues that the jury
could have decided that sales were a good proxy for the value of TecSec’s
patented invention to Adobe’s development of Acrobat. . . . But this theory,
like the others that TecSec offers, is ultimately speculative and
insufficiently grounded in evidence. The district court therefore committed no
error in concluding that the jury’s damages award was not supported by the
evidence (pp. 19-20).
