$48 Million Willful Infringement Award Vacated by Federal Circuit

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.

Indefiniteness

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.”

Damages

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

Laches is no longer a defense to patent infringement. SCA Hygiene, 137 S. Ct. 954 (2017).

Summary

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.

The Author

Robert Schaffer

Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

Robert Schaffer

Joseph Robinson has over 20 years of experience in all aspects of intellectual property law. He focuses his practice in the pharmaceutical, life sciences, biotechnology, and medical device fields. His practice encompasses litigation, including Hatch-Waxman litigation; licensing; counseling; due diligence; and patent and trademark prosecution. He has served as litigation counsel in a variety of patent and trademark disputes in many different jurisdictions, and has also served as appellate counsel before the Court of Appeals for the Federal Circuit. Joe also focuses on complex inter partes matters before the U.S Patent and Trademark Office, inventorship disputes, reexaminations and reissues. His experience includes numerous interferences, a particular advantage in new U.S. Patent and Trademark Office post-grant proceedings. He also counsels on patent–related U.S. Food and Drug Administration issues, including citizen petitions, Orange Book listing, and trademark issues. For more information and to contact Joe please visit his profile page at the Troutman Sanders website.

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Discuss this

There are currently 9 Comments comments.

  1. Invention Rights January 19, 2018 10:46 am

    Heads the infringer wins, tales the inventor loses. No matter how many times the inventor wins, the infringer can take another wack at the patent. Yet if the inventor loses once his patent is toast.

  2. angry dude January 19, 2018 11:15 am

    and this is about lawn mower, not some “computer-implemented” invention

    sigh

  3. Dan Hanson January 19, 2018 12:30 pm

    The Federal circuit often gives short shrift to some advocates’ arguments (e.g., by issuing summary rulings or by saying no more than “None of the other arguments is persuasive”); but the Federal Circuit gives little deference to district court decisions that give short shrift to advocates’ arguments, especially to those where particular pieces of evidence are not specifically discussed by the district court. Evidence that is not specifically mentioned is presumed to have been ignored.

    In Exmark Mfg., the district court said, “The court has considered the PTO reexaminations and affords them some, though not determinative, weight.” But because the district court offered no explanation for its summary judgment other than the reexaminations, the Federal Circuit concluded that the reexaminations formed the sole basis for the summary judgment. In other words, even though the district court recited the correct legal standard, the Federal Circuit concluded that there was no evidence in the record showing that the district court had followed this standard.

    Of some similarity is the Bayer case (1 November 2017), in which the district court said that it had made its decision “after having considered the entire record in this case.” Because the district court did not explicitly discuss some specific references that the Federal Circuit found to be “key” and “highly relevant,” the Federal Circuit concluded that the district court, despite its statement that it had considered the entire record, had not really considered these references at all. The Federal Circuit further determined that that the district court’s failure to consider/discuss these references was a clear error, and in addition, the Federal Circuit went on to rule that the supposedly unconsidered references outweighed all other evidence in the case.

  4. Anon January 19, 2018 12:51 pm

    Comity appears to be a lacking concept throughout the Article III and non-Article III “judicial” renderings.

    One only has to look at the top (the Supreme Court) to see why this is so.

  5. loblolly January 23, 2018 3:35 am

    >Claim 1 requires a side wall discharge opening and a “first flow control baffle” having a certain shape.

    The fact that a part as trivial as a mower baffle can be patented is a disgrace. I’ve seen far too many patents for the standard use of COTS power transmission components to think this kind of thing is an outlier. Drugs and software patent abuse are destroying our economy, patent trolls are robing us of our peace of mind and cartels are inflating the cost of every bit of technology.

    The scale and scope of patent-ability has grown beyond logic and reason, and needs massive pruning back.

  6. Anon January 23, 2018 12:27 pm

    loblolly,

    What you view as a “disgrace” impugns you more so than you realize.

    The type of Elitism that you display with such a comment, divorced from any support (legal support, as in a 102/103/112 proposition) paints you as wanting patents only for Flash of Genius types of innovation.

    In the real world, innovation often times works very differently than that, and the US patent system was especially built to promote the incremental as well as game-changing innovations.

    I suggest that you read up on how innovation actually works in order to better inform your opinions.

  7. Anon January 23, 2018 12:35 pm

    Gene,

    I have to wonder what the chances are that “loblolly” is posting in accord with your rules and is not using a fake email address.

    Her (his?) post simply reminds me of the anti-patent (anti-software patent) dreck that has no basis in law or reality.

    I get that anyone can have any opinion, but the better choice for any conversation is taking a modicum of time to have an informed opinion – and by that, I do not mean the “too many patents must be bad” type of mantra being displayed here – as we both have seen many times now, this notion of “pruning back” is simply code words for wanting to take others’ work and reuse it without paying for it.

  8. Gene Quinn January 23, 2018 4:35 pm

    loblolly-

    You are certainly entitled to your opinion, but excuse me for pointing out that your opinion is not base upon any shred of factual foundation. Patents on pharmaceuticals are hardly destroying the economy. If drug companies cannot recover the $4 to $12 billion it takes to bring a drug to market then obviously we won’t get any new drugs. And please save for those who are ignorant any specious claims that drugs don’t cost that much to take to market. Fantasy is not a substitute for fact.

    As for your comment that patent trolls are robbing “us”, while there are no doubt some bad actors the patent troll narrative is one that is largely fictional. Even Obama’s FTC (which set out to crucify patent trolls) concluded that calling patent owners patent trolls is unhelpful and not accurate.

    As for your quoting from the article about what claim 1 requires, before you complain about this or any other patent being ridiculous you should actually (1) read the patent itself; and (2) read the entire patent prosecution history, which has legal relevance when interpreting the scope of any claim; and (3) spend years understanding the nuances of patent law so you can offer an informed opinion.

    Finally, Anon does raise a good point. You are quite clearly trying to hide your identity. That is fine, but when you say things that are so egregiously incorrect it makes it difficult to determine whether you are misinformed or whether you are a troll. So I’d encourage you to based your comments and arguments upon fact, and allow the fantasy to be kept to the big screen and comic books.

  9. Mark February 5, 2018 10:56 pm

    The Unconstitutional judges must be removed. The inventor is not suppose to SOMETIMES win, the Constitution says the inventor wins everytime. I have better things to do than fight in court for years for my idea and then lose. Its a bad time to be a startup with a new product.

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