By Mark Engstrom, J.D.
In a lawsuit involving the alleged infringement of an Exmark patent that described a lawn mower with improved flow-control baffles, a federal district court erroneously based its summary judgment finding of no invalidity solely on the fact that the patent claim at issue had survived multiple reexaminations, the U.S. Court of Appeals for the Federal Circuit has ruled. In addition, the district court erred in denying defendant Briggs & Stratton a new trial on damages. Because a damages expert failed to support her proposed five-percent royalty rate with an adequate explanation of how she had arrived at that rate, her testimony was inadmissible. Finally, the district court abused its discretion by limiting the evidence for damages to "commercialized" prior art, and by excluding from the willfulness trial evidence related to patent validity. The lower court’s findings on indefiniteness and laches were affirmed, however, so the judgment of the district court was affirmed in part, vacated in part, and remanded for further proceedings (Exmark Manufacturing Company, Inc. v. Briggs & Stratton Power Products Group, LLC, January 12, 2018, Stoll, K.).
Lawsuit. Exmark Manufacturing sued Briggs & Stratton Power Products Group for the infringement of U.S. Patent No. 5,987,863 ("Lawn mower having flow control baffles and removable mulching baffles"). Claim 1 of the patent recited a "first arcuate baffle portion," a "first elongated and substantially straight baffle portion," and a "second arcuate baffle portion" with the elongated and substantially straight baffle portion "angularly disposed … in a chord-like fashion" with respect to the second cutting blade. The parties referred to that disclosed shape as a "curved-straight-curved" baffle.
Findings below. Relying solely on the fact that claim 1 had survived three reexaminations, the district court concluded that the claim was not invalid because "no reasonable juror could find that the defendants have met their burden of proving by clear and convincing evidence that the claims of the patent are invalid." The district court thereafter granted summary judgment of infringement with respect to some of the accused mowers (the "original" mowers), but found that genuine issues of material fact precluded summary judgment with respect to others (the "redesigned" mowers).
The case proceeded to trial on the issue of whether the redesigned mowers infringed claim 1, whether Briggs’ infringement was willful, and damages. With respect to the original mowers, the jury found that Briggs had willfully infringed claim 1. With respect to the redesigned mowers, the jury found no infringement. The jury awarded $24,280,330 in damages.
Thereafter, the district court held a bench trial on Briggs’ motion for a judgment of laches. The district court denied the motion, concluding that Briggs failed to prove that equitable defense. In addition, the district court denied a motion for a new trial on damages and willfulness. It granted, however, Exmark’s motion for enhanced damages based on Briggs’ willful infringement. The jury award was therefore doubled. Briggs appealed.
Review of summary judgment ruling. Briggs challenged the district court’s grant of summary judgment of no invalidity because the court’s decision was based solely on the fact that claim 1 had survived multiple reexaminations involving the same prior art. The Federal Circuit agreed.
The district court had purportedly given the patent reexaminations "some, though not determinative, weight," but it failed to proffer any other explanation for its grant of summary judgment. The Federal Circuit thus concluded that the district court’s "cursory" decision indicated that summary judgment had in fact been based on the claim’s survival of multiple reexaminations. Accordingly, the appellate court had to decide whether a reexamination that confirmed the patentability of a claim could form the sole basis for granting summary judgment of no invalidity based on the same prior art.
The Federal Circuit ruled that a reexamination that confirmed the patentability of a claim was, by itself, not determinative of whether a genuine issue of fact precluded summary judgment of no invalidity. Surviving reexamination did not warrant ipso facto summary judgment that a patent was not invalid, the court explained; and holding otherwise would improperly give complete deference and preclusive effect to the PTO’s patentability determination, foreclosing challenges to patent validity based on the same prior art.
Exmark argued that the appellate court should affirm the district court because no reasonable juror could conclude that the prior art anticipated or rendered obvious claim 1 of the patent. The parties adamantly disputed whether the prior art disclosed the claimed "first flow control baffle" and "discharge opening," and they seemed to present a claim construction dispute on appeal: whether the claims of the asserted patent required that "the first flow control baffle be spaced apart from the front wall." However, the extent to which those arguments were raised before the district court was unclear, and the Federal Circuit refused to "scour the record to determine in the first instance whether genuine issues of fact preclude summary judgment with respect to the teachings of the prior art, particularly where claim construction issues were not clearly presented or addressed by the district court."
For those reasons, the Federal Circuit vacated the summary judgment finding of no invalidity and remanded the matter to the district court, instructing the court to consider the entire record and to reach its own independent conclusion on whether a genuine issue of fact regarding invalidity was present. The reexamination evidence should be considered, the court added, but it should not be dispositive of the invalidity issue on summary judgment.
Damages. Briggs challenged the district court’s denial of a new trial on damages, arguing that: (1) the district court had erred by permitting Exmark to use the sales price of the accused mowers, instead of the sales price of the flow control baffles, as the royalty base; (2) the opinion of Exmark’s damages expert should have been excluded because the expert failed to adequately explain how she had arrived at her proposed five-percent royalty rate; and (3) the district court had improperly excluded evidence that was relevant to damages. The Federal Circuit rejected the first and third arguments, but agreed with the second. In the circuit court’s view, the district court had abused its discretion in denying Briggs’ motion for a new trial on damages.
With little explanation, Exmark’s expert concluded that Exmark and Briggs would have agreed to a five-percent reasonable royalty rate on the sales of the accused lawn mowers as the value for the improved baffle, the Federal Circuit noted. However, the expert failed to tie the relevant Georgia-Pacific factors to the five-percent royalty rate, or to explain how she had calculated a five-percent royalty rate by using those factors. To be admissible, expert testimony on a reasonable royalty had to "sufficiently [tie the expert testimony on damages] to the facts of the case." If the patentee failed to tie the theory to the facts, the testimony had to be excluded.
It was not enough to simply explain the advantages of the claimed baffle and then state that those advantages would have been important in a hypothetical negotiation, the court added. That information merely told the jury that the patented technology was important and commercially successful. A reasonable-royalty analysis required a trial court to carefully tie the proof of damages to the claimed invention’s footprint in the market place; to sufficiently tie the advantages of the patented baffles to the royalty rate in this case, Exmark’s expert had to explain the extent to which those advantages factored into the value of the lawn mower and the proposed royalty rate of five percent.
Other parts of the expert’s opinion similarly recited a particular Georgia-Pacific factor and then offered a cursory explanation of the evidence or merely stated that the factor did not apply. According to the Federal Circuit, the expert’s opinion was devoid of any analysis that tied either the evidence or the specific Georgia-Pacific factors to the proposed five-percent royalty rate.
Because the expert’s proposed royalty rate lacked sufficient ties to the facts of the case, the Federal Circuit found that the district court had: (1) erred by not excluding the expert’s opinion and (2) abused its discretion by denying Briggs a new trial on damages, based on inadmissible evidence. The appellate court thus vacated the damages award and remanded the matter for a new trial on damages.
Willfulness. In Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016), the Supreme Court ruled that "[t]he subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless." District courts no longer determine, as a threshold matter, whether the defenses of an accused infringer are objectively reasonable, the Federal Circuit explained; the entire willfulness determination is decided by the jury.
In this case, the sole basis for excluding prior art from the willfulness trial was the district court’s determination that Briggs’ litigation defenses were unreasonable. Therefore, to the extent that the district court had excluded evidence that was relevant to Briggs’ state of mind at the time of the accused infringement, the court failed to comply with Halo, which mandated that willfulness was an issue for the jury, not the district court.
The Federal Circuit thus vacated the jury’s finding of willful infringement, vacated the district court’s award of enhanced damages, and remanded the matter for the district court to determine whether a new trial on willfulness was necessary. The district court was instructed to reconsider its decision to exclude evidence of prior art during the jury trial on willfulness, and to determine whether Briggs had developed any views about the prior art at the time of accused infringement. Whether a genuine issue of material fact was present as to "when" Briggs knew about its prior art defenses—and thus whether a new jury trial would be required—was left for the district court to determine.
Indefiniteness. The Federal Circuit agreed with the district court’s conclusion that claim 1, when read in light of the patent’s specification, informed skilled artisans of the scope of the limitation "elongated and substantially straight." The court thus affirmed the district court’s denial of summary judgment that claim 1 was indefinite.
Laches. The Federal Circuit rejected Briggs’ argument that the district court had erroneously dismissed its laches defense. The appellate court noted that the U.S. Supreme Court had recently held in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017), that laches was no longer a defense against damages for patent infringement that had occurred within the six-year limitations period of 35 U.S.C. §286. Because Exmark sought damages for the six-year period that preceded the date of its complaint against Briggs, the defense of laches could not be asserted.
The case is No. 2016-2197.
Attorneys: J. Derek Vandenburgh (Carlson, Caspers, Vandenburgh, Lindquist & Schuman, PA) for Exmark Manufacturing Company Inc. Matthew Wolf (Arnold & Porter Kaye Scholer LLP) for Briggs & Stratton Power Products Group, LLC.
Companies: Exmark Manufacturing Company Inc.; Briggs & Stratton Power Products Group, LLC
MainStory: TopStory Patent FedCirNews
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