Before Newman, Dyk, and Chen. Appeal from the District of Colorado.
Summary: (1) The Federal Circuit’s separate affirmance of a PTAB decision that a patent in suit is invalid renders an appeal from a district court on that patent moot due to collateral estoppel; and (2) an ongoing royalty determination should consider patentee’s improved bargaining position after the jury verdict.
XY sued Trans Ova for patent infringement. The district court upheld the jury’s findings of willful infringement and that none of the asserted claims were invalid. The district court also granted an ongoing royalty for future infringement. In calculating the royalty, the district court averaged the jury’s royalty rate and the royalty rate in prior licenses. Both parties appealed.
The Federal Circuit affirmed the validity finding on four out of five patents. The appeal on the fifth patent was moot because, in another decision issued the same day, the Federal Circuit affirmed the PTAB’s decision that the fifth patent was invalid. Thus, the Federal Circuit applied collateral estoppel sua sponte because the patentee had a full and fair opportunity to litigate validity in the parallel case. The Federal Circuit also vacated the ongoing royalty determination and remanded to recalculate based on XY’s improved bargaining position after the verdict, rather than relying on solely pre-verdict evidence.
Judge Newman dissented in part, arguing that the majority’s decision that an administrative agency decision “moots” the district court’s decision raises critical issues of constitutional balance. Judge Newman also argued that collateral estoppel should not be applied without affording an opportunity to respond.