By Mark Engstrom, J.D.
In a case on remand from the U.S. Supreme Court, the U.S. Court of Appeals for the Federal Circuit has decided that a federal district court did not err in granting judgment as a matter of law (JMOL) to defendant Life Technologies Corp. after a jury had awarded $52 million in lost-profits damages to Promega Corp. for the infringement of a genetic testing kit patent. Promega had expressly waived its right to any award based on a reasonable royalty, the court explained, and also waived any argument that the trial record could support a damages award based on a subset of total sales. Therefore, the only way that Promega could preserve the jury’s damages award was by showing that the record supported a finding that all of the accused products that did not infringe under 35 U.S.C. §271(f)(1) nevertheless infringed under §271(a). Because Promega failed to make that showing, the ruling of the district court was affirmed (Promega Corp. v. Life Technologies Corp., November 13, 2017, Chen, R.).
Prior adjudications. Defendants-Appellants Life Technologies, Invitrogen IP Holdings, and Applied Biosystems (collectively, "Life") sought review of the Federal Circuit’s 2014 decision (Promega I ), which held that a multicomponent product assembled overseas could infringe a U.S. patent, under §271(f)(1), when only a single component of the product was supplied from the U.S. The Supreme Court granted certiorari, reversed the judgment of the Federal Circuit (Promega II ), and remanded the case for proceedings that were consistent with its holding that §271(f)(1) did not cover the supply of a single component of a multicomponent invention.
Lawsuit, verdict, JMOL. From 2006 through 2012, Life sold genetic testing kits that detected the presence of repeating sequences of DNA ("short tandem repeats," or "STR") that were analyzed when profiling an individual’s DNA. Life’s kits, referred to as "STR kits," were assembled in the United Kingdom. Each of the kits had five components, and at least one of those components—Taq polymerase—was supplied from the United States. Promega was the exclusive licensee of U.S. Reissue Patent No. 37,984 (the "Tautz" patent), which expired in 2015. The Tautz patent claimed methods and kits for analyzing DNA to determine the identity and kinship of organisms.
Promega sued Life for patent infringement, arguing that Life’s STR kits infringed the Tautz patent. Promega sought damages for any infringement that occurred between 2006 and 2012. A jury found that all of Life’s $708 million in worldwide sales qualified as "United States sales," but also found that a substantial portion of those sales—approximately $637 million—were made for permitted uses under the 2006 license agreement. Nevertheless, the jury concluded that Life’s unlicensed sales had infringed the asserted patents under §271(a) and/or §271(f)(1), and thus awarded $52 million in lost-profits damages to Promega.
Life filed a renewed motion for JMOL under Federal Rule of Civil Procedure 50(b), arguing that Promega was not entitled to damages because it "failed to prove the applicable damages for patent infringement." The district court granted the motion. In the district court’s view, no reasonable jury could have found that all of the accused products had infringed under §271(a) or §271(f)(1), in light of the district court’s interpretation of "substantial portion." It further found that Promega had waived the argument that the trial record could support a damages calculation based on an amount other than worldwide sales because it failed to contest Life’s argument that the record contained no evidence that a jury could use to perform that calculation. Therefore, to defeat JMOL, the trial evidence and all reasonable inferences drawn in Promega’s favor "had to support a finding that all of the accused products infringed."
Because Promega had waived the argument that the trial evidence could support a damages calculation based on any subset of total sales, and because no reasonable jury could have found that all of the accused products infringed under §271(a) and/or §271(f)(1), the district court granted JMOL to Life.
Promega I. On appeal, the Federal Circuit found that a single component supplied from the U.S. could qualify as a "substantial portion" of a multicomponent product, depending on the circumstances in a given case. It then held that substantial evidence supported the jury’s finding that Life was liable for infringement under §271(f)(1) because a reasonable jury could indeed conclude that the Taq polymerase component that was supplied from the U.S. constituted a "substantial portion" of the components of each accused product. The appellate court also held that, based on Life’s own admissions, which were supported by evidence in the record, an "unquantified number" of Life’s kits that were "made, used, or sold in the United States" had infringed the Tautz patent under §271(a). Finally, the court vacated the district court’s denial of Promega’s request for a new trial, and it remanded the case for a new trial on damages, in light of its finding that the asserted claims of four of the five patents were invalid for lack of enablement.
Promega II. The Supreme Court reversed the Federal Circuit’s judgment and remanded the case for further proceedings that were consistent its opinion that "a single component does not constitute a substantial portion of the components that can give rise to liability under §271(f)(1)." That holding nullified the Federal Circuit’s conclusion in Promega I that all of the accused products that Life had made in the United Kingdom infringed under §271(f)(1). Because Promega had expressly waived its right to any award based on a reasonable royalty, the Federal Circuit confined its decision on remand to a consideration of whether Promega was entitled to an award of lost profits as "damages adequate to compensate for the infringement."
Waiver. Because some of the accused kits (those that contained only one component from the U.S. and were assembled and sold overseas, to foreign buyers, without ever passing through the U.S.) did not infringe under the Supreme Court’s interpretation of §271(f)(1), the Federal Circuit addressed the lower court’s waiver finding.
Promega failed to address Life’s waiver argument, the court noted, and thus waived its own argument that the trial record could support a damages award based on a subset of total sales. Promega’s deliberate strategy to pursue a single damages theory removed any damages argument that was based on a figure other than worldwide sales. For that reason, the district court could properly conclude that Promega had abandoned an alternative basis for damages when it failed to rebut Life’s argument that Promega did not offer any evidence that a reasonable jury could have relied on to award damages based on a subset of total worldwide sales. The district court’s decision was "all the more reasonable" because the lower court had warned Promega, during trial, that it bore the burden to separately prove infringement under §§271(a) and 271(f)(1).
JMOL. Promega argued, and Life did not dispute, that the record contained evidence of admitted infringement, under §271(a), by Life. Promega also argued that the Federal Circuit should reaffirm its prior decision on §271(a) infringement and order a new trial on damages.
In Promega I, the Federal Circuit held that an unspecified number of Life’s accused products had infringed the Tautz patent under §271(a). It made no finding, however, regarding the quantity of infringing acts under §271(a)—because that finding was unnecessary in light of its holding that all of the accused products were infringed under §271(f)(1). Because the Federal Circuit’s prior holding under §271(f)(1) was reversed by the Supreme Court, and in view of the Federal Circuit’s waiver finding on remand, the only way that Promega could preserve the jury’s damages verdict was to show that the record supported a finding that all of Life’s accused products that did not infringe under §271(f)(1) nevertheless infringed under §271(a). Promega failed to make that showing, according to the court. Neither Promega’s arguments nor the facts and findings of record supported a ruling that all of the accused products that did not infringe under §271(f)(1) nevertheless infringed under §271(a).
In this case, the waiver finding "carried forward as law of the case to subsequent proceedings in the litigation." In the Federal Circuit’s view, the waiver limited the evidence on damages to the parties’ stipulated worldwide sales figure. Because the evidence was insufficient to show that all of the worldwide sales infringed under §271(a) or §271(f)(1), there was no evidence to support a lost profits damages calculation under the narrow damages theory that Promega had crafted over the course of the litigation. The Federal Circuit thus affirmed the district court’s grant of JMOL to Life.
New trial. Promega argued that Life’s admitted infringement, the Seventh Amendment, 35 U.S.C. §284, and case law from various circuits all required a new trial on damages. Life argued that a retrial should not be granted on a waived theory presented for the first time after judgment.
The Federal Circuit agreed with Life. Under the law of the case doctrine, the district court properly exercised its discretion by relying on its waiver finding in its JMOL ruling to support its decision to deny a new trial. In addition, the district court permissibly relied on the Seventh Circuit’s holding that "[a] party may not introduce evidence or make arguments in a Rule 59 motion that could or should have been presented to the court prior to judgment." If Promega wanted to argue that the evidence at trial supported a damages calculation based on anything other than worldwide sales, it should have raised that argument at trial and in response to Life’s Rule 50(b) motion, which specifically attacked Promega’s damages case on that very ground.
Promega, however, pursued an "all-or-nothing strategy" on damages, even though the district court had given it a second opportunity to supplement the record and present evidence by statutory subsection and quantity. In the Federal Circuit’s view, the district court had acted within its discretion when it concluded that Life and the judicial system should not suffer the consequences of Promega’s deliberate choice.
Promega’s Seventh Amendment argument and its arguments regarding §284, remittitur, and case law were unavailing because a party’s rights under the Seventh Amendment and §284, and its right to remittitur, could be waived. Promega cited no authority in support of the proposition that a party was entitled to a new trial on arguments and theories that were waived in prior proceedings.
When a plaintiff deliberately takes a risk by relying exclusively on a damages theory that is unsuccessful, and when challenged does not dispute its failure to present an alternative case for damages, a district court does not abuse its discretion by declining to give that plaintiff multiple chances to correct the deficiencies in its arguments or the record, the Federal Circuit concluded. It thus affirmed the district court’s decision on Promega’s motion for a new trial.
Disposition. Because Promega was not entitled to any damages, the Federal Circuit affirmed the district court’s denial of Promega’s motion for enhanced damages under §284. It also affirmed the district court’s denial of Promega’s motion for a permanent injunction (because the Tautz patent was now expired). Because Promega could not be the "prevailing party" under 35 U.S.C. §285, the court affirmed the district court’s denial of Promega’s motion for an exceptional case finding. Finally, to the extent Promega asked the court to exercise its own discretion and order a new trial, that request was denied.
The case is Nos. 2013-1011, 2013-1029, and 2013-1376.
Attorneys: Seth P. Waxman (Wilmer, Cutler, Pickering, Hale and Dorr, LLP) for Promega Corp. Edward R. Reines (Weil, Gotshal & Manges LLP) for Life Technologies Corp., Applied Biosystems LLC, and Invitrogen IP Holdings, Inc.
Companies: Promega Corp.; Life Technologies Corp.; Applied Biosystems LLC; Invitrogen IP Holdings, Inc.
MainStory: TopStory Patent FedCirNews
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