Docket Nos. 2016-2197
WALLACH, CHEN, STOLL
January 12, 2018
Brief summary: DC decision vacated and remanded as expert opinion on damages was insufficient, and to determine whether Briggs’ prior art defenses were “litigation-inspired” (Halo, US 2017).
Summary: Briggs appealed the DC’s grant of SJ that claim 1 of Exmark’s US 5,987,863 “directed to a lawn mower having improved flow control baffles” was “not invalid because the claim survived multiple reexaminations involving the same prior art”; denial of SJ that claim 1 is indefinite; denial of a new trial on the awarded $24 million in damages; evidentiary rulings related to damages; denial of a new trail on willfulness; and denial of Briggs’ laches defense. The FC panel found error with all but the indefiniteness and laches defense decisions. On the invalidity decision, the FC panel found the DC relied only on the fact that claim 1 survived the reexaminations and held “that a reexamination confirming patentability of a patent claim alone is not determinative of whether a genuine issue of fact precludes [SJ] of no invalidity” as it “would improperly give complete deference and preclusive effect to the PTO’s patentability determination, foreclosing challenges to patent validity in [DC] based on the same prior art” (Pfizer, FC 1985; Fromson, FC 1985; Interconnect Planning, FC 1985; SRI Int., FC 1994 (SJ granted but not “based on the reexamination outcome alone”) (the only deference is the presumption of validity of issued patents “which can be overcome by the patent challenger…by clear and convincing evidence”). The FC panel explained that “it is important to consider the substantive and procedural differences between challenging patentability in an ex parte reexamination and…federal court” such as claim construction (e.g., broadest reasonable interpretation with which, here, the DC “apparently did not agree with”) and that the “burden of proving unpatentability is merely a preponderance of evidence” at the USPTO. Thus, the FC panel concluded that “there mere fact that the asserted claims survived Briggs’ requested reexamination does not necessarily establish that it cannot meet its burden to overcome the presumption of validity under a broader claim construction” (i.e., that adopted by the DC). The FC panel also declined to consider Exmark’s arguments that the claims are nonetheless not anticipated or obvious, and vacated the judgment of no invalidity and remanded the same.
The FC panel agreed with the DC “that the claim language and specification of the ‘863 patent provide reasonable certainty as to the meaning of ‘elongated and substantially straight’” (pre-AIA; Nautilus, US 2014; UlimatePointer, FC 2016). “Though Briggs seeks to impose a strict requirement of how straight the baffle portions must be, no such numerical precision is required when using such terms of degree”,
“[a]ll that is required is some standard for measuring the term of degree” that “one skilled in the art would understand” (Sonix Tech., FC 2017; Apple, FC 2015; Enzo, FC 2010; Cox Comm., FC 2016; GE Lighting, FC 2016 (“elongated” indefinite as no “objective boundaries” provided)). The DC’s denial of SJ for indefiniteness was therefore affirmed.
Briggs also argued the jury’s damages award was incorrect because the sales price of the accused mowers was used to calculate the royalty base instead of the flow control baffles (apportionment); Exmark’s expert “failed to adequately explain how she arrived at her proposed 5% royalty rate”; and improperly excluded other evidence. On apportionment, the FC panel explained that “the patent makes clear that the patented improvement relates to the mower’s flow control baffle” and, therefore, “the patent owner must apportion or separate the damages between the patented improvement and the conventional components of the multicomponent product” (Ericsson, FC 2014; Commonwealth Sci., FC 2015; VirnetX, FC 2014; Garretson, US 1884). The FC panel concluded that using the lawn mower as the royalty base was acceptable because “claim 1 covers the infringing product as a whole, not a single component of a multi-component product” as long as “Exmark adequately and reliably apportions between the improved and conventional features”, which was done (AstraZeneca, FC 2015; Georgia-Pacific, SDNY 1970 (“one possible way to do this”); Lucent, FC 2009 (“hypothetical negotiation”)). However, the FC also found “Exmark’s damages expert’s opinion was inadmissible as it failed to adequately tie the expert’s proposed reasonable royalty rate to the facts of this case” (Uniloc, FC 2011, quoting Daubert, US 1993), and therefore vacated the damages award and remanded for a new trial. The FC panel also found the DC “abused its discretion by holding that prior art is relevant to damages only to the extent that the prior art was commercialized”, but not in only accepting evidence relating to one type of lawn mower as its decision was “commensurate with the scope of the asserted claims” or in exluding evidence of Exmark’s delay in filing suit as “not relevant to damages”.
The FC panel also vacated the jury’s finding of willfulness and the DC’s award of enhanced damages (which proceeded under the “former” Seagate standard (US 2007), subsequently replaced by Halo (US 2016 (party “cannot insulate itself from liability from enhanced damages by creating an (ultimately unsuccessful) invalidity defense for trial…”)) and remanded the decision to determine “[w]hether there is a genuine issue of material fact about when Briggs knew of its prior art defenses” (“litigation-inspired”?), and thus whether a new trail is required”.
The FC panel disagreed with Briggs’ laches defense because SCOTUS “recently held in SCA Hygeine” (US 2017) “that laches is no longer a defense against damages for patent infringement that occurred within 35 U.S.C. § 286’s six-year statute of limitations period.”