Objectively Reasonable Defense Precludes Enhanced Patent Damages

26 November 2013 PharmaPatents Blog

In the non-precedential opinion in Lee v. Mike’s Novelties, Inc., the Federal Circuit affirmed the district court’s judgment of infringement and no invalidity, but reversed the finding of willful infringement. In so doing, the court provides a summary of the black letter law on enhanced patent damages. 

The Patent at Issue

The patent at issue was Lee’s U.S. 6,418,936, directed to a “a metal tobacco pipe designed to resemble Colt Six Shooter pistol.” The Federal Circuit cited claim 1 as representative:

A metal tobacco pipe in its assembly comprising a manifold . . .
a stem . . .
a turret having a plurality of magazines rotatably mounted on said manifold . . .
. . .
whereby any one of said magazines . . . provides for inhalation of tobacco smoke through . . . said stem wherein said turret is of heavier weight than the weight of said manifold, such that said turret remains in a stationary [position] upon said manifold in any particular relative rotation between said turret and said manifold.

The court noted that independent claim 11 also recite a metal tobacco pipe with a “turret being of a heavier weight than that of the manifold so that both turret and manifold remain stationary relative to one another . . . .”

Willful Infringement

In addressing the award of enhanced damages for willful infringement, the Federal Circuit cited In re Seagate Tech. (Fed. Cir. 2007) as setting forth “a two-pronged test for willfulness, one prong of which is objective, and the other prong of which is subjective.” The patentee must show by “clear and convincing evidence” that:

  1. “[T]he infringer acted despite an objectively  high likelihood that its actions constituted infringement of a valid patent.”
  2. “[T]he accused infringer subjectively  knew of the ‘objectively-defined risk’ or should have known because the risk was so obvious.”

Explaining the first prong, the court stated:

The threshold inquiry into objective recklessness “entails an objective assessment of potential defenses based on the risk presented by the patent.” …. When an “accused infringer relies on a reasonable defense to a charge of infringement,” the risk of infringement is not high enough to satisfy the objective prong of the willfulness inquiry. …. Because the objective inquiry is a question of law, if the court decides that “the infringer’s reliance on a defense was not objectively reckless, it cannot send the question of willfulness to the jury.”

Turning to the case before it, the Federal Circuit focused on MWI’s non-infringement position, which was based on claim language requiring the turret to be heavier than the manifold so that they remain stationary relative to one another. The Federal Circuit noted that the district court had denied summary judgment because there was a genuine issue of material fact as to this issue, and that Lee’s counsel had agreed at oral argument that MWI’s argument “that the weight differential was insufficient to ensure stability” “would be a reasonable argument.” The Federal Circuit emphasized that the fact that the jury reached a different conclusion does not render the defense “objectively unreasonable.”

The Federal Circuit therefore reversed  the finding of willful infringement and vacated  the award of enhanced damages.

Litigation Misconduct

There often is more to the story when a district court seems to get a simple issue “wrong,” and here rest of the story includes litigation misconduct by MWI that may have colored the district court’s finding of willfulness, and that provided other grounds for awarding attorney fees. Because of that misconduct, the Federal Circuit remanded the case to the district court “to determine whether MWI’s litigation misconduct is independently sufficient to make this an exceptional case such that attorney’s fees are warranted.”

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