Exergen Corp. v. Kaz USA, Inc.

Docket No. 2016-2315, -2341

March 8, 2018


Brief summary: DC finding of § 101 eligibility affirmed as “the inventor” here “transformed the process into an inventive application”; jury determinations of infringement and damages affirmed for the ‘938 claims but not the ‘685 claims.

Summary: Kaz appealed DC decision finding certain claims of Exergen’s US 6,292,685 and 7,787,938 relating to a body temperature detector to be directed to patent eligible subject matter, and the DC’s denial of JMOL on noninfringement and it motion for a new trial on damages. Exergen cross-appealed DC finding of no willfulness. Two other trials regarding the patents-at-issue here have been pending and claim construction was consolidated; in “Brooklands” (D. Mass. 2015), ‘938 claim 54 was held ineligible under § 101, and in “Thermomedics” (D. Mass. 2015, aff’d FC 2016) ‘938 claims 51, 52, 54 and 55 were similarly held ineligible. Kaz unsuccessfully argued Thermometics had preclusive effect. In this case, the jury found all asserted claims infringed and not invalid and awarded Exergen ~$9.8 million in lost profits and ~$4.8 million in reasonable royalties. The FC panel reviewed the denial of JMOL de novo (under First Circuit law) to determine whether “the facts and inferences point so strongly and overwhelmingly in favor of the movant that a reasonable jury could not have reached a verdict against that party”, and “the denial of a motion for a new trial for abuse of discretion.” The issue of patent eligibility was review de novo with “clear error deference” (Intell. Ventures I (IV I), FC 2017; Mortg. Grader, FC 2016) using the Alice/Mayo two-step analysis (US 2014 and US 2012, respectively; step 1: are the claims “directed to a patent-ineligible concept”? step 2: do the claims “contain[] an ‘inventive concept’ sufficient to ‘transform the claimed abstract idea into a patent-eligible application’”?) It was undisputed here “that the asserted claims employ a natural law to achieve their purpose” (step one). The DC concluded “the claims recite additional steps” (“moving while laterally scanning”, “obtaining a peak temperature reading”, and “obtaining at least three readings per second”) “which…‘transformed the underlying natural laws into inventive methods’” (Diamond, US 1981). The FC explained that, here, “the step two dispute…turns entirely on” the factual determination of “whether the combination of elements was well-understood, routine, and conventional at the time of the invention” (Mayo; Content Extraction, FC 2014; IV I; In re Hall, FC 1986 (single copy of German thesis qualified as prior art, the FC panel explaining that such a reference “would not suffice to establish that something is ‘well-understood, routine, and conventional activity”)). The FC panel found this case to be unlike “either Mayo or Ariosa,” (FC 2015; see also Bascom, FC 2016) “where well-known, existing methods were utilized to determine the existence of a natural phenomenon” as “the inventor” here “transformed the process into an inventive application”. Thus, the FC panel agreed with the DC on its § 101 determination. The FC panel also concluded Kaz waived its right to a jury trial regarding the facts underlying that determination. The FC panel found support for the the jury’s findings of infringement of the ‘938 claims but not ‘685 claims 7, 14 and 17 as not supported by substantial evidence. The FC panel also found “both portions of the jury’s damage award” under § 284 to be “supported by substantial evidence” (except as to the ‘685 claims found not to be infringed). The FC panel also reviewed the DC’s decision of no enhanced damages under § 284 for abuse of discretion under the Halo standard (US 2016). It affirmed the DC’s pre-Halo decision because “the objective prong of Seagate was not the only rationale on the record” (e.g., no evidence of copying, no concealment or litigation misconduct (the Read factors (FC 1992)), noting that “[e]ven if the jury had found” willful infringement, “an award of enhanced damages does not necessarily flow from a willfulness finding” (Presidio, FC 2017). Judge Hughes’s dissent argued the § 101 step two analysis was incorrect as “the claimed inventions merely calculate a law of nature using conventional, commercially available technology.”

This entry was posted in Infringement, Lost Profits, Patentability, Royalties. Bookmark the permalink.

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