Docket No. 2015-1038, -1044
MOORE, O’MALLEY, CHEN
July 19, 2016
Brief Summary: DC denial of JMOL to Kohler on obviousness and WD grounds affirmed. Decision of willfulness affirmed under Halo (US 2016) (“infringer’s subjective bad faith alone may support an award of enhanced damages”; “the appropriate time frame for considering culpability” is “at the time of the challenged conduct…[p]roof of an objectively reasonable litigation-inspired defense to infringement is no longer a defense to willful infringement”). Denial of permanent injunction vacated for “a more thorough analysis of the eBay factors”.
Summary: Kohler appealed DC denial of JMOL that the claims of WBIP’s US 7,314,044 and 7,832,196 relating to marine electrical generator exhaust systems that produce low carbon monoxide (CO) would have been obvious and lack written description (WD) and the determination of willful infringement. The jury awarded WBIP over $9 million in damages which the court reduced to $3.75 million but also increased that award by 50% under 35 USC § 284 (Read Corp., FC 1992) and awarded attorney fees under 35 USC § 285. WBIP’s request for a permanent injunction was denied.
On obviousness, Kohler argued (with expert testimony) that one of ordinary skill in the art could have combined a prior art “land-based engine with the known coolant related elements necessary for marine engines” with predictable results and that there were “‘design incentives and other market forces’ prompting one of skill in the art to adapt [it] to boats” (citing KSR). The FC opinion explains that the question of motivation is a question of fact and presumed the jury did not find such motivation, and without evidence that that fact finding is not “supported by substantial evidence, [the FC] may not reverse it.” The FC found evidence of a motivation and no motivation from each side and therefore moved to a consideration of objective considerations “which can be powerful, real-world indicators of what would have been obvious” (“we have repeatedly stressed that objective considerations of non-obviousness must be considered in every case” (Transocean, FC 2012) as one of the four Graham factors). The FC concluded the objective considerations “collectively support the jury verdict”: evidence of a nexus between the claims and the accused products (which were not rebutted by Kohler (Rambus, FC 2013 (proof of nexus is not limited to only when objective evidence is tied to the supposedly ‘new’ feature(s)”)); that the claimed invention solved a long-felt unmet need (e.g., known problem in the industry regarding CO poisonings); industry praise (awards); industry skepticism (“Expression of disbelief by experts constitute strong evidence of nonobviousness.” (US v. Adams, US 1966)); copying (Windsurfing, FC 1986); and commercial success (Merck, FC 2005).
Kohler argued it should have prevailed regarding WD because “compound control scheme” was not described and cited passages from the patents supporting its position. But the FC opinion notes that the arguments presented in the appeal were not presented to the jury (“[g]eneral and conclusory testimony…does not suffice as substantial evidence of invalidity”, Koito FC 2004). It therefore found no error with the DC denial of JMOL for lack of written description.
The FC opinion also explained that “[t]his case was decided [willful infringement]…under the then-applicable willful infringement standard” (Seagate, FC 2007). The DC “concluded that Kohler’s defenses at trial [obviousness, written description] were objectively unreasonable.” Kohler argued the defenses were reasonably under Halo (FC 2014; US 2015) and Bard (FC 2012) and that WBIP did not present evidence that Kohler knew of the patents (subjective prong). The FC opinion explained that Halo (US 2016; issued after the DC decision) rejecting the Seagate test as “unduly rigid”, rejecting “the notion that objective recklessness must be found in every case involving enhanced damages”, and “impermissibly encumber[ing] the statutory grant of discretion to” DCs. The FC panel wrote that under Halo an “infringer’s subjective bad faith alone may support an award of enhanced damages” and that “the appropriate time frame for considering culpability” is “at the time of the challenged conduct” (not at trial as in Seagate). Thus, “[p]roof of an objectively reasonable litigation-inspired defense to infringement is no longer a defense to willful infringement.” As Kohler’s arguments were developed during litigation, these were found to be objectively unreasonable and the DC was not found to have abused its discretion on this point. The FC opinion also explained that “[k]knowledge of that patent alleged to be willfully infringed continues to be a prerequisite to enhanced damages” (“We do not interpret Halo as changing the established law that the factual components of the willfulness question should be resolved by the jury” (“Willfulness of behavior is a classical jury question of intent.”)) And Kohler admitted “it…had pre-suit knowledge of the patents in suit.” “Consistent with Halo”, the DC decided to enhance damages by 50% and the FC did not find that the DC abused its discretion. The FC panel also vacated the DC decision denying a permanent injunction to WBIP and remanded that decision to the DC for “a more thorough analysis of the eBay factors” (e.g., the public interest).