This morning, the Federal Circuit issued a nonprecedential, per curiam opinion in Fleet Engineers, Inc. v. Mudguard Technologies, LLC and Tarun Surti, affirming the district court’s judgment in every respect. According to the court, “Surti and Fleet have been locked in acrimonious litigation over mudflaps and Surti’s ’755 patent for over a decade” (p.3). “Fleet, a manufacturer of products for the trucking industry, brought an action seeking a declaratory judgment that its mudflaps do not infringe the ’755 patent, and that the patent was invalid. . . . Surti counterclaimed, asserting claims of patent infringement, breach of contract, and misappropriation of trade secrets” (p.4). “The jury ultimately found that although Fleet’s Group B products did not infringe the asserted claims of the ’755 patent, the Group A products did. . . . That infringement, however, was not found to be willful. . . . The jury declined to award lost profits and instead awarded damages based on 4% of the gross sales of the Group A products, amounting to an award of $228,000” (p.5). Both parties raise various issues on appeal, but for present purposes I will focus only on remedies. Long story short, the patentee argues that he was entitled to lost profits instead of a royalty, enhanced damages, fees, and a permanent injunction. The Federal Circuit rejects all of these arguments.
First, as for lost profits and enhanced damages:
Surti . . . asserts that the jury verdict that he was not entitled to lost profits was not supported by substantial evidence. . . . According to Fleet, however, the jury should not have even been presented with the question of lost profits because Surti was a non-practicing entity who had no lost profits. . . . We agree with Fleet.
Surti never assigned his patent to any company, including Mudguard, where he served as president. . . . Nor is there any evidence to suggest that Surti entered into any licensing agreement that could have provided the right to recover lost profits at trial. Moreover, Surti has made no attempt to satisfy the Panduit factors, which require a showing of (1) a demand for the patented product, (2) the absence of acceptable non-infringing substitutes, (3) its manufacturing and marketing capability to exploit the demand, and (4) the amount of profit it would have made. . . .
Finally, Surti asserts that the jury verdict finding that Fleet’s infringement was not willful was not supported by substantial evidence. . . . Fleet notes that the actions to which Surti points to make his assertions of willful conduct occurred two years before the asserted patent first issued. . . . Although, as the district court observed, the evidence establishes that Fleet was aware of Surti’s patent application . . . . , “[t]o willfully infringe a patent, the patent must exist and one must have knowledge of it. . . . [A]n application is no guarantee any patent will issue . . . . What the scope of claims in patents that do issue will be is something totally unforeseeable.”
The evidence adduced at trial, at best, may demonstrate Fleet’s knowledge of Surti’s patent issuing after Fleet was already selling its Group A products. Yet, even so, knowledge of the asserted patent and evidence of infringement, although necessary, is not sufficient for a finding of willfulness. . . . Rather, willfulness requires deliberate or intentional infringement. . . . The jury was free to weigh the relevant evidence of record, which included evidence suggesting that Fleet intended to avoid patent infringement. Moreover, even if some evidence existed to draw the opposite conclusion, that does not mean that the jury’s finding of no willfulness was unsupported by substantial evidence. . . (pp. 15-17; citations omitted).
As for fees and injunctive relief:
. . . Surti has been proceeding pro se since 2015 and has provided no evidence of legal fees incurred before that date. . . . Surti also failed to demonstrate that Fleet litigated this case in an unreasonable manner, asserted any plainly frivolous claims, or made any frivolous legal arguments during the course of this litigation causing the case to be exceptional. We therefore conclude that the court did not abuse its discretion in determining not to award Surti attorney fees under § 285.
Regarding the requested permanent injunction, Surti asserts that the district court erred in its decision to deny issuing a cease-and-desist order against Fleet. . . . The district court held that Surti did not provide sufficient evidence to support the issuance of a permanent injunction. . . . A finding of infringement does not automatically entitle a patent holder to a permanent injunction. eBay, 547 U.S. at 391−93. Although Surti may have suffered an injury from the sale of an infringing product, that injury was not one of irreparable harm. See Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1149 (Fed. Cir. 2011) (holding that, in the context of patent infringement cases, there is no presumption of irreparable harm when a party establishes liability for patent infringement). The district court did not err in determining that Surti’s injury was compensable through the reasonable royalty awarded by the jury.
In deciding Surti’s motion for injunctive relief, the district court did not expressly address two of the eBay factors: the balance of the hardships between the claimant and the infringer and whether or not an injunction would serve the public interest. . . . However, Surti did not independently argue those factors. . . . The court therefore did not abuse its discretion in declining to issue a permanent injunction based only on the first two eBay factors.
Moreover, the purpose of an injunction is to prevent future infringement. . . . There is no evidence in the record that Fleet continues to sell the infringing products. . . . It was therefore not an abuse of discretion for the district court to have held that, without evidence of future harm, Surti had not sufficiently established entitlement to injunctive relief. . . (pp. 18-20).
Finally, the patentee “further raises arguments that were not presented at the district court level, such as that he is entitled to additional damages “based on the mental stress this litigation has caused” him” (p.19). “Because Surti failed to raise the remainder of his arguments adequately in his opening brief or at the district court prior to this appeal, we consider those arguments forfeited” (p.20).
There's nothing here that seems incorrect to me--though it would have been interesting if the court had addressed this last issue, which I discuss briefly in my article on noneconomic damages in IP cases.
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