IP Law Daily New trial required and damages vacated in remote vehicle control patent dispute
Monday, April 8, 2019

New trial required and damages vacated in remote vehicle control patent dispute

By Peter Reap, J.D., LL.M.

Although a federal district court’s no-invalidity findings were affirmed, reversal of several findings of infringement required vacatur of the over-$15 million damages award and a new trial, in infringement suit brought by Omega Patents against CalAmp Corp.

In a patent infringement suit brought by Omega Patents against CalAmp Corp. alleging infringement of Omega’s U.S. Patent Nos. 6,346,876 (’876 patent), 6,756,885 (’885 patent), 7,671,727 (’727 patent), and 8,032,278 (’278 patent), the federal district court in Orlando’s judgment of no invalidity of the asserted claims was affirmed, the U.S. Court of Appeals for the Federal Circuit has decided. However, multiple errors required reversal of findings of infringement with respect to each of the patents-in-suit, requiring remand for a new trial on these issues. In addition, the lower court’s judgment was vacated and remanded for a new trial on its compensatory damages award, the jury’s willfulness finding, and the court’s enhanced damages and attorney fees award (Omega Patents, LLC v. CalAmp Corp., April 8, 2019, Dyk, T.).

Omega’s asserted patents generally relate to multi-vehicle compatible systems that can remotely control various vehicle functions (for example, remote vehicle starting), and read the status of various vehicle devices (for example, battery health). The systems can also be used to notify the driver, or the driver’s employer, if certain conditions occur (for example, speeding).

CalAmp sells its Location Messaging Unit (LMU) products, which are multi-vehicle compatible devices that include a GPS receiver for vehicle tracking. The LMU connects to a vehicle’s data communication bus via the onboard diagnostics port and can retrieve information (for example, battery health or vehicle speed) from the vehicle’s engine control unit.

Omega filed suit against CalAmp for patent infringement based on CalAmp’s LMU systems and related products. After a trial, a jury found all asserted claims to be not invalid and infringed, and the jury also found that CalAmp willfully "infringed a valid patent." The jury awarded Omega approximately $2.98 million in compensatory damages. The district court trebled damages for willful infringement, awarded attorney fees to Omega, awarded damages for sales made subsequent to the jury verdict, and added pre-judgment interest. The award totaled approximately $15 million with an on-going royalty rate of $12.76 per unit. CalAmp appealed.

Invalidity. CalAmp argued that the district court’s claim construction of the terms "transmitter," "receiver," and "data communication bus / vehicle data communications bus / vehicle data bus" were erroneous. It contended that had the district court adopted CalAmp’s proposed constructions, "CalAmp’s invalidity defenses would have included additional prior art references."

CalAmp did nothing in the district court Markman proceeding to specifically identify the prior art that would be impacted by the claim construction ruling, the appellate court observed. In its opening brief on appeal, CalAmp argued its "invalidity defenses would have included additional prior art references showing such wired connections." But in its opening brief CalAmp failed to present a developed argument as to why any actions by the district court after the Markman hearing had the effect of excluding or limiting prior art that CalAmp offered to present or even what relevant prior art was excluded by the claim construction ruling. Under these circumstances, CalAmp failed to properly preserve the issue. Thus, because CalAmp failed to satisfy the requirements of Federal Rule of Civil Procedure 46 by not seeking admission into evidence of, or at least specifically identifying, the additional prior art, the judgment as to the validity of the asserted patent claims was affirmed.

Infringement—’727 patent claim 11. CalAmp argued that there was insufficient evidence for the jury to find direct infringement by CalAmp of original claim 11, now amended claim 1, of the ’727 patent. CalAmp’s sole argument as to why it does not infringe was based on the claim limitation that the device "read[ ] the data related to vehicle speed from the vehicle data communications bus" and use that information to determine when "to send a remote vehicle speed exceeded notification."

CalAmp contended that its products do not use vehicle speed from the data bus to send a speed exceedance notification but instead use the GPS receiver on the LMU to make such determinations, and therefore it does not infringe. But the testimony by CalAmp’s witnesses could reasonably be interpreted by the jury as indicating that some small percentage, less than 5%, of its devices infringed by being programmed to use vehicle speed data from the data bus to send a speed exceedance notification. Although a close issue, there was sufficient evidence for a reasonable jury to find that CalAmp, at least under some circumstances, directly infringed original claim 11 of the ’727 patent and therefore affirm the judgment of infringement, according to the Federal Circuit. This conclusion mooted the issue of whether the same acts constituted indirect infringement by CalAmp, the court noted.

Infringement—’876 patent claims and ’885 patent claims. The Federal Circuit agreed with CalAmp that there was insufficient evidence for the jury to have found the claim limitation "a transmitter and a receiver for receiving signals from said transmitter" in the claims of the ’876 patent and the ’885 patent was satisfied by CalAmp’s selling its systems. The evidence at trial only showed that the LMU "transmitter" transmits signals to a "receiver" on a cell tower, which can then relay that information to CalAmp’s servers, and the LMU "receiver" receives signals from a "transmitter" on the cell tower. But CalAmp was not alleged to provide the cell tower. CalAmp therefore does not provide all the required claim elements. Thus, CalAmp was entitled to judgment as a matter of law (JMOL) of no direct infringement by CalAmp for all of the asserted claims of the ’876 patent and ’885 patent.

As for induced infringement, first, CalAmp argued that "Omega failed to identify even one instance of direct infringement" by CalAmp’s customers that could support liability for inducement. But there was evidence from which the jury could infer that customers controlled and used the system and received the required benefits, the appellate court said. Based on the record, this theory did not warrant setting aside the jury verdict.

Next, CalAmp argued that Claim 12 of the ’876 patent and all asserted claims of the ’885 patent require a "device code." Omega’s primary theory at trial was that the LMU was a "vehicle device" and the signals it sent to the engine control unit were infringing "device codes." This theory was inconsistent with the proper claim construction to which Omega agreed, however. Therefore, the jury’s verdict of infringement as to claim 12 of the ’876 patent and all asserted claims of the ’885 patent was required to be set aside, the court opined. Accordingly, a new trial on this issue was warranted.

CalAmp also argued that there was no infringement of claim 12 of the ’876 patent and all of the asserted ’885 patent claims because its products do not satisfy the claim limitation "determining a match between a read device code and the stored device codes." However, contrary to CalAmp’s argument, the plain and ordinary meaning of the term "determining a match" does not require any particular order of steps. Omega’s technical expert testified that the LMU operates by first sending out a series of signals based on stored device codes and then determines a match if it receives a response from a vehicle device based on one of those signals. This capability was consistent with the above claim language, and thus in this respect there was no error in the jury verdict.

The court next considered CalAmp’s argument that it was entitled to JMOL of no inducement of all of the asserted claims of the ’876 patent and ’885 patent. CalAmp argued that because written questions regarding direct infringement were submitted to the jury, the absence of such questions on induced infringement precluded the jury from awarding damages on that basis. But one cannot use the answers to special questions as weapons for destroying the general verdict, the Federal Circuit observed. Induced infringement was properly before the jury, and, thus, CalAmp was not entitled to JMOL of no induced infringement on this basis, the court held.

CalAmp also argued that it was entitled to a new trial on inducement as to claims 1, 3, 4, 5, 14, and 16 of the ’876 patent—claims as to which the appellate court had already affirmed the judgment of direct infringement by CalAmp’s customers. As for whether CalAmp knowingly induced infringement and possessed specific intent to encourage another’s infringement, the district court’s erroneous exclusion of Gallin Chen’s and David Bailey’s testimony as to CalAmp’s state of mind substantially prejudiced CalAmp’s ability to present its defense for indirect infringement, the appellate court reasoned. It therefore vacated the jury’s findings as to indirect infringement and remanded for a new trial as to claims 1, 3, 4, 5, 14, and 16 of the ’876 patent.

Infringement—’278 patent claims. The ’278 patent claims are device claims, and the sole theory of infringement as to these claims was direct infringement by CalAmp’s sale of its products. For the same reasons discussed above for claim 12 of the ’876 patent and all asserted claims of the ’885 patent, a new trial was required on direct infringement by CalAmp for these claims, the court ruled.

Compensatory damages. As decided above, the judgment of CalAmp’s infringement was only affirmed as to original claim 11 of the ’727 patent, and a new trial ordered as to the remaining claims. There was insufficient evidence to support the damages award of approximately $2.98 million based on the evidence presented based on infringement of claim 11 of the ’727 patent, the sole claim as to which the Federal Circuit affirmed the verdict of CalAmp’s infringement, the court held.

Omega’s damages theory was premised on CalAmp’s total actual sales of its accused products. The court had affirmed infringement of claim 11 of the ’727 patent (a device claim) only as to a subset of CalAmp’s products that were programmed to function in an infringing manner. Such evidence could not support an award of damages with respect to all of CalAmp’s devices. Therefore, the damages award was vacated and remanded for a new trial.

Willful infringement and enhanced damages. The appellate court was unable to determine, based on the record, which patent(s) or claim(s) the jury found to be willfully infringed, and such a finding could be based on an infringement finding that has been set aside, it noted. Under these circumstances, neither party contested that the jury’s verdict as to willfulness must be vacated and a new trial conducted. Because the jury’s willfulness finding must be vacated, so too must the resulting enhanced damages and attorney fees award by the district court, both of which were explicitly based on the willful infringement finding. Because willful infringement will be retried, the Federal Circuit concluded its opinion by addressing certain evidentiary issues as to intent that will likely arise again on remand.

This case is No. 2018-1309.

Attorneys: Brian R. Gilchrist (Allen, Dyer, Doppelt, & Gilchrist, PA) for Omega Patents, LLC. Constantine L. Trela, Jr. (Sidley Austin LLP) for CalAmp Corp.

Companies: Omega Patents, LLC; CalAmp Corp.

MainStory: TopStory Patent FedCirNews

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