Exmark Mfg. Co. v. Briggs & Stratton Power Prods. Grp, LLC, No. 2016-2197, 2018 U.S. App. LEXIS 783 (Fed. Cir. Jan. 12, 2018) (Before Wallach, Chen, and Stoll, J.) (Opinion for the court, Stoll, J.).
Exmark Manufacturing was awarded $24 million in compensatory damages after a jury found that Briggs and Stratton infringed Exmark’s patent on a lawn mower with improved flow control baffles. The award was doubled by the court, after a finding that Briggs and Stratton’s infringement was willful. On appeal, Briggs challenged six holdings: (1) summary judgment that claim 1 was not anticipated or obvious; (2) denial of summary judgment that claim 1 is indefinite; (3) denial of a new trial on damages; (4) evidentiary rulings related to damages; (5) denial of a new trial on willfulness; and, (6) denial of Brigg’s laches defense. The Federal Circuit vacated findings of willful infringement and the underlying damages award, remanding to the trial court.
Summary Judgment of No Invalidity
The patent at issue has been through three reexaminations. Relying exclusively on those three reexaminations, the trial court found that no reasonable juror could have found invalidity by clear and convincing evidence. While the trial court states that it gave the reexaminations “some” and not “determinative” weight, the Federal Circuit found that, “in fact,” the court granted summary judgment based on the reexaminations alone because “[n]o other explanation for granting summary judgment was provided.” Reexamination alone, the Court held, “is not determinative of whether a genuine issue of fact precludes summary judgment of no invalidity.” Reexamination, like original issuance, entitles the patentee to a presumption of validity, capable of being overcome by clear and convincing evidence. The court also noted the important differences between reexamination and litigation, which could have led to a different outcome at trial.
Briggs challenged whether the patent sufficiently explains how to objectively determine whether a baffle is straight and long enough, as required by Claim 1; “elongated and substantially straight.” The Court found support for how to determine the parameters of the baffle in the claims, specifications, and drawings, and pointed to precedent that there is “no . . . numerical precision . . . required when using such terms of degree.” The Court further relied on the functional language bounding the relevant claim terms and specifying how the baffle is to operate: “one skilled in the art would understand that the elongated and straight portions of the baffle must be extended, straightened, and positioned in such a way that the grass cuttings from each blade deflect the clippings in to the direction of the next blade.”
Briggs challenged the damages award with three arguments: (1) Exmark improperly used the sales price of the accused mowers (instead of the baffles) as the royalty base; (2) Exmark’s damages expert should have been excluded for failing to adequately explain her royalty rate; and (3) the trial court improperly excluded evidence. While the Court agreed that apportionment was necessary, it disagreed that the sales price was an inappropriate base, pointing to precedent holding that “apportionment can be addressed in a variety ways, including … adjustment of the royalty rate so as to discount the value of a product’s non-patented features.” The Court ultimately agreed, however, that the opinion of Exmark’s damages expert was inadmissible, because if failed to “tie the expert’s proposed reasonable royalty rate to the facts of this case.” The Court rejected the expert’s “superficial” recitation of the Georgia-Pacific factors. Finally, the Court agreed with Briggs that the trial court had improperly excluded evidence after incorrectly construing the Georgia-Pacific factors as limiting; it disagreed that the prior art was not limited to side discharge mowers; and, it disagreed that evidence of delay in filing suit was relevant to the damages determination.
Willful Infringement Award
Briggs was prevented from presenting any evidence regarding the validity of Claim 1 or how closely the prior art tracks Claim 1, because the trial court found Briggs’ litigation defenses unreasonable under Seagate. Under Halo, however, the determination of willfulness is for the jury, not the judge, and therefore the Court agreed with Briggs that evidence relevant to the state of mind of the accused infringer is admissible. The Court remanded to the trial court, to determine whether “Briggs had developed any views about the prior art at the time of accused infringement or whether the evidence only relates to Briggs’ litigation-inspired defenses.”
Laches is no longer a defense to patent infringement. SCA Hygiene, 137 S. Ct. 954 (2017).
Reexamination alone is not determinative of whether a genuine issue of fact precludes a summary judgment of no invalidity. A reasonable royalty can be apportioned to a patented feature in a variety of ways, depending on circumstances, including determining the royalty base and adjusting the royalty rate. However, it was error to admit expert report that failed to tie proposed royalty rate to the facts of the case. It was error to exclude evidence by unduly narrowing the scope of relevant prior art. Large damages award was vacated, in part, by making Rule 59 motion for new trial, thus preserving issues for appeal.