By Robert B. Barnett Jr., J.D.
Because a patent holder does not have the right to exact royalties for sales that occur after a patent’s expiration date, supplemental damages based on it are awarded in error.
A California federal court erred when it awarded supplemental damages of $175,000 to the winning party in a patent suit involving an invention for washing of airplane engines because the damage award was based primarily on the royalty fee from an expired patent rather than on the unexpired patent, the U.S. Court of Appeals for the Federal Circuit has ruled. The lower court’s rulings on all other matters, however, were upheld, including that the unexpired patent was eligible for patenting, that the unexpired patent was infringed, that the expired patent was not indefinite, and that the unexpired patent had been infringed before it expired (EcoServices, LLC v. Certified Aviation Services, LLC, October 8, 2020, Schall, A.).
EcoServices, LLC owned two patents, U.S. Patent No. 9,162,262 ("the ’262 patent") for using high-pressure water to wash airplane engines and U.S. Patent No. 5,868,860 ("the ’860 patent") for using a finely divided liquid to wash turbine compressors. EcoServices sued Certified Aviation Services (CAS) for infringing its patents in the development of CAS’s Cyclean Engine Wash system. The jury found for EcoServices on both patents and awarded damages of $1,949,600. Post-trial, the court denied EcoServices request for post trial relief and awarded EcoServices $175,000 in supplemental damages, representing the 314 engine washes at $400 per wash that CAS performed between the original trial date and the jury verdict. The court denied all post-trial motions. CAS appealed, arguing that (1) the ’262 patent was invalid, (2) the ’860 patent was invalid, and (3) the supplemental damages were awarded in error.
’262 patent validity. CAS argued on appeal that the lower court erred when it failed to rule that an idea of using a computer to do what humans had previously done was patent ineligible. The appeals court concluded that the lower court correctly ruled that the idea was patent eligible because it was directed to an improved system for washing jet engines and was not an abstract idea. The claimed invention recited a specific solution for washing jet engines rather than reciting the mere desired result of automated jet engine washing. As a result, the system achieved a level of automation over the prior art human-operated washing systems. "Just as the inclusion of a computer cannot ‘save’ an abstract idea," the appeals court said, "it cannot convert a non-abstract idea into an abstract one."
’262 construction. CAS argued that the lower court erred when it failed to construe the claim as requiring an "information detector" than was read from an "information unit." The appeals court rejected the argument, agreeing with the lower court that nothing in the ’262 patent indicated such a construction. Nothing in the patent could be interpreted to require that the information detector include an "information unit."
’262 claim validity. CAS also argued that three claims under the ’262 patent were invalid for obviousness. The dispute involved whether the lower court properly instructed the jury on obviousness. The appeals court concluded that no error occurred because CAS never produced clear and convincing evidence to establish abuse of discretion on obviousness.
’860 claim validity. CAS argued that the ’860 patent was either invalid for indefiniteness or it was not infringed. More specifically, CAS argued that the patent’s reference to spraying "a liquid particle size in the range of 250-120µm" was too vague for an artisan to understand what was meant. The appeals court agreed with the lower court that the term was not too indefinite because the claim also included a much more specific explanation of the washing method. Although the claim did not state a percentage of the liquid that had to be in the claimed particle size, it stated clearly enough what was required. As a result, the claim term "a liquid particle size in the range of 250-120µm" was not indefinite, and the jury verdict was supported by the evidence.
Supplemental damages. Supplemental damages are provided in the court’s discretion to compensate the patentee for infringement in periods the jury did not consider. Applying its discretion, the lower court awarded EcosSrvices $175,000 to cover the period occurring after the period the jury used to consider damages. The appeals court did not discern error in the awarding of the damages. Instead, it took issue with the way the court computed the $175,000.
Relying on expert testimony provided at trial, the lower court concluded that $400 per wash was a fair estimate of what CAS should be required to pay as a royalty. The appeals court, however, concluded that the expert testimony had considered a reasonable fee by applying the ’860 patent, which had expired while the case was pending. Further evidence indicated that the fee was determined almost entirely on the ’860 patent, without reference to the still-unexpired ’262 patent. A patent holder does not have the right to exact royalties for sales that occur after a patent’s expiration date. As a result, the award of supplemental damages based on the ’860 patent was reversed and remanded.
The court, therefore, affirmed the lower court decision in all respects except for the award of supplemental damages, which was vacated and remanded.
Dissent. Circuit Judge Timothy Dyk filed an opinion concurring-in-part and dissenting-in-part. Judge Dyk would not have ruled that the three claims from the ’262 patent were patent eligible. Thus, he would not have ruled that they were patent-eligible before even arriving at the issue of whether those three claims were obvious. Judge Dyk agreed with CAS that the ’262 patent claim was really nothing more than an automated approach to something that had previously been done by humans. "The mere automation," he said, "of manual processes using generic components is directed to an abstract idea."
The case is No. 2019-1602.
Attorneys: William M. Jay (Goodwin Procter LLP) for EcoServices, LLC. Stephen Eric Baskin (King & Spalding LLP) for Certified Aviation Services, LLC.
Companies: EcoServices, LLC; Certified Aviation Services, LLC
MainStory: TopStory Patent FedCirNews GCNNews
Interested in submitting an article?
Submit your information to us today!Learn More
IP Law Daily: Breaking legal news at your fingertips
Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on intellectual property legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.