IP Law Daily Evidence did not support verdict that F5 Networks’ infringement of Radware patent was willful
Tuesday, August 23, 2016

Evidence did not support verdict that F5 Networks’ infringement of Radware patent was willful

By Cheryl Beise, J.D.

Radware was not entitled to enhanced damages in its patent infringement suit against F5 Networks because there was insufficient evidence at trial to support the jury’s finding that F5’s infringement of Radware’s patent was willful, according to federal district court in San Jose. The court also denied Radware’s request for attorney fees, but granted in part its requests for a permanent injunction, supplemental damages, and interest (Radware, Ltd. v. F5 Networks, Inc., August 22, 2016, Whyte, R.).

Radware filed suit against F5 Networks in 2013, alleging that F5’s accused controller products infringed U.S. Patent Nos. 8,266,319 (the ’319 patent) and 6,655,702 (the ’702 patent) relating to link load balancing in a multi-homed environment. The court granted F5’s motion for summary judgment of non-infringement of the ’702 patent. On October 15, 2015, the court ruled on summary judgment that F5’s accused products infringed claim 24 of the ’319 patent, at least until F5 implemented a redesign known as the "First Hotfix" that removed the accused functionality. The parties then stipulated that the accused products infringed claims 1 and 12 of the ’319 patent until F5 implemented a "Second Hotfix" in January 2016.

Trial was held on the issues of invalidity, damages, and willfulness. The jury found that the ’319 patent was valid, and that F5’s infringement was willful. Before the court was F5’s renewed motion for judgment as a matter of law ("JMOL") or new trial as to willfulness and Radware’s motions for enhanced damages, attorneys’ fees, a permanent injunction, supplemental damages, and pre- and post-judgment interest.

Willful infringement. The jury found that F5’s infringement of the ’319 patent was willful. The court agreed with F5 that there was insufficient evidence at trial to support the jury’s willfulness finding, even under the more lenient preponderance of the evidence standard subsequently espoused by the U.S. Supreme Court in Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S.Ct. 1923 (2016).

Radware did not dispute that it did not provide notice of the ’319 patent to F5 before filing suit on May 1, 2013. The ’319 patent issued on September 11, 2012. Radware’s argument that F5 allegedly copied Radware’s LinkProof product to create the Link Controller was unpersuasive. At the time that F5 allegedly analyzed the LinkProof to introduce the Link Controller around 2002, Radware had not received any patents on link load balancing. The ’702 Patent issued in 2003, and the asserted ’319 Patent did not issue until 2012. Thus, F5’s sales of the Link Controller for a decade without any notice that the Link Controller infringed any Radware patent cannot support a finding of willfulness. To the extent that the evidence showed that F5 was fiercely competing with Radware between 2000 and 2003, this was years before Radware’s patent issued.

Radware also argued that F5 became aware of the ’319 patent as early as February 7, 2013, when F5’s outside patent prosecution counsel forwarded to F5’s in house counsel a USPTO Notice of Allowance for an F5 patent. The Notice of Allowance (NOA) and its attachments spanned over 100 pages and listed the ’319 patent once by number in a list of over a dozen "References Cited." Radware’s name did not appear in the NOA. The court agreed with several district courts that have ruled that mere citation to a patent number in correspondence from the Patent Office is legally insufficient to support a finding of willfulness. To the extent that Radware argued that F5 or its outside counsel had a duty to review the ’319 patent when they saw its number listed in the NOA, Radware was suggesting that willfulness can be proven by negligence, a proposition foreclosed the Supreme Court’s statement that "intentional or knowing" infringement may warrant enhanced damages. Halo, 136 S. Ct. at 1933. Radware also failed to provide evidence to show that F5 actually reviewed Radware’s November 2012 press release announcing issuance of the ’319 patent.

The court rejected Radware’s contention that F5’s continued infringement during the course of the litigation was evidence of willfulness. The Federal Circuit has held that a patentee who does not seek a preliminary injunction "should not be allowed to accrue enhanced damages based solely on the infringer’s post-filing conduct." In re Seagate Tech, LLC, 497 F.3d at 1374 (Fed. Cir. 2007) (en banc). F5’s motion for JMOL as to willfulness was granted.

Enhanced damages. Even if the evidence had supported the jury’s willfulness finding, the court would exercise its discretion to deny enhanced damages in this case. The Supreme Court has caution that enhanced damages "are not to be meted out in a typical infringement case, but are instead designed as a ‘punitive’ or ‘vindictive’ sanction for egregious infringement behavior." Halo, 136 S. Ct. at 1932. Radware contended that F5’s litigation conduct did not reflect a good faith belief that Radware’s patents were invalid or not infringed. The court disagreed. Radware’s motion for enhanced damages was denied.

Attorney fees. The court rejected Radware’s argument that the case qualified as exceptional because of F5’s litigation conduct. The court did not agree that F5’s non-infringement defenses or its assertion of multiple invalidity references made the case exceptional. The circumstances of this case and F5’s conduct did not warrant an award of attorneys’ fees, in the court’s view.

Supplemental damages and interest. Radware’s motion for accounting sought supplemental damages for infringing units that F5 sold between January 26, 2016—the last day F5 provided sales figures before trial—and April 14, 2016—the day F5 asserted it stopped selling infringing units. Radware also sought pre- and post-judgment interest.

Radware’s damages claims were based on sales of two F5 modules: the Link Controller and the Global Traffic Manager, or GTM. The jury awarded $5,000,000 in lost profits for Link Controller and $1,400,000 in reasonable royalties for GTM. Calculating the appropriate amount of per-unit damages for Link Controller was straightforward. The jury saw evidence of 500 infringing sales of Link Controller, and $5,000,000 divided by 500 units equals $10,000 in lost profits per Link Controller unit.

The parties disagreed on the appropriate per-unit royalty rate for GTM. Radware sought $203.34 per unit, but Radware’s expert acknowledged that the damages base could have been 39,240 units, yielding approximately $35.68 per unit. However, for the GTM units sold during the month after trial, the court awarded an enhanced royalty of $53.52, a 50% increase over the rate that the jury appeared to have awarded. In total, the court awarded supplemental damages to Radware in the amount of $444,360.35. The court also found it appropriate to award compounded pre-judgment interest at the T-Bill rate and post-judgment interest at the statutory rate.

Permanent injunction. The court found that injunctive relief was warranted in this case because after trial, Radware submitted evidence that F5 was still shipping infringing Link Controller and GTM units from its Milpitas, California facility to customers overseas, at least until April 14, 2016. However, Radware’s proposed injunction was overbroad. The court would issue an order that enjoins F5 from further infringing claims 1, 12, or 24 of the ’319 patent and claims 9, 10, 12, or 14 of a related patent, U.S. Patent No. 8,484,374, issued July 9, 2013.

The case is No. 5:13-cv-02024-RMW.

Attorneys: A. Marisa Chun (McDermott Will & Emery LLP) for Radware, Ltd. and Radware, Inc. Christina Jordan McCullough (Perkins Coie, LLP) and Nathaniel E. Durrance (Newman Du Wors LLP) for F5 Networks, Inc.

Companies: Radware, Ltd.; Radware, Inc.; F5 Networks, Inc.

MainStory: TopStory Patent TechnologyInternet CaliforniaNews

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