On January 12 2018 the Federal Circuit handed down its decision in Exmark Mfg Co v Briggs & Stratton Power (2016-2197). It clarified that, in view of the Supreme Court's decision in Halo Electronics, Inc v Pulse Electronics, Inc (136 S Ct 1923 (2016)), wilful infringement is an issue to be decided by a jury, rather than a district court.

Background

In this suit, Exmark sued Briggs in the District of Nebraska for infringement of – among other things – Claim 1 of Exmark's US Patent 5,987,863. This claim had been re-examined and found valid three times by the US Patent and Trademark Office. Exmark moved for summary judgment that Claim 1 was not invalid for anticipation or obviousness, and the district court granted the motion based on the fact that the claim had survived re-examination three times. Briggs moved the district court for summary judgment that the claim was indefinite; the district court denied that motion.

The suit proceeded to a jury trial to determine:

  • whether Briggs had infringed Claim 1;
  • whether Briggs' infringement was wilful; and
  • the amount of damages.

The jury found Briggs liable for wilful infringement and awarded Exmark reasonable royalty damages.

The district court then held a bench trial on Briggs's motion for laches and Briggs's motion for a new trial on wilfulness and damages. In this trial, the district court denied Briggs's laches motion and granted Exmark's enhanced damages motion based on Briggs's wilful infringement.

Briggs appealed several of the district court's determinations. As to wilfulness, Briggs asserted that Halo warranted a new trial on wilfulness and vacatur of the district court's enhanced damages award. In Halo the Supreme Court held that wilfulness depended on an infringer's subjective intent or knowledge at the time of the alleged infringement, and abrogated prior Federal Circuit precedent(1) requiring, as part of the wilfulness inquiry, a threshold determination as to the objective reasonableness of the infringer's defences. In view of Halo, Briggs argued that the district court had improperly excluded as unreasonable certain evidence that may also have been relevant to Briggs's state of mind at the time of the alleged infringement.

Federal Circuit decision

The Federal Circuit decision by Wallach, Chen and Stoll first held that the district court had erred in granting Exmark's summary judgment motion of no anticipation or obviousness. The Federal Circuit explained:

"A reexamination confirming patentability of a patent claim alone is not determinative of whether a genuine issue of fact precludes summary judgment of no invalidity. [J]ust as an original examination resulting in patent issuance does not foreclose an invalidity attack in district court, so too does a re-examination confirming a claim not preclude a patent challenger from meeting its burden of proving invalidity. We thus affirm the obligation of the district court to reach an independent conclusion."(2)

The Federal Circuit then vacated the award of reasonable royalty damages and remanded for a new trial on damages, in view of:

  • insufficient support by Exmark's damages expert for the asserted royalty rate; and
  • the district court's improper exclusion of evidence relevant to those damages.

Next, the Federal Circuit vacated the jury's finding of wilful infringement and the district court's enhanced damages award, and remanded for the district court to determine whether a new trial on wilfulness was necessary. As to wilfulness, the Federal Circuit specifically held that the district court had erred in excluding as unreasonable prior art evidence concerning Briggs's litigation defences, because that evidence may also have been relevant to Briggs's subjective intent or knowledge at the time of the alleged infringement. In so holding, the Federal Circuit clarified that wilfulness is an issue to be decided by a jury, rather than a district court:

"In Halo, the Supreme Court held that '[t]he subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.' Id. Thus, under Halo, the district court no longer determines as a threshold matter whether the accused infringer's defenses are objectively reasonable. Rather, the entire willfulness determination is to be decided by the jury. In this case, the sole basis for excluding the prior art from the willfulness trial was the district court's determination that Briggs' litigation defenses were unreasonable. See id. (criticizing and abrogating our Seagate test because it improperly 'ma[de] dispositive the ability of the infringer to muster a reasonable (even though unsuccessful) defense at the infringement trial').

To the extent that decision excluded evidence relevant to Briggs' state of mind at the time of the accused infringement, however, it does not comport with the standard articulated in Halo, which mandates that willfulness is an issue for the jury, not the district court. WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 n.13 (Fed. Cir. 2016). ('[T]here is a right to a jury trial on the willfulness question.'). The district court must reconsider its decision to exclude evidence of the prior art during the jury trial on willfulness to determine whether Briggs had developed any views about the prior art at the time of accused infringement or whether the evidence only relates to Briggs' litigation-inspired defenses." (Emphasis added.)

The Federal Circuit also affirmed the district court's denial of Briggs's indefiniteness summary judgment motion and the district court's dismissal of Briggs' laches motion.

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For further information on this topic please contact Christopher Loh at Fitzpatrick, Cella, Harper & Scinto by telephone (+1 212 218 2100) or email (cloh@fchs.com). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.

Endnotes

(1) In re Seagate Technology, LLC, 497 F3d 1360 (Fed Cir 2007) (en banc).

(2) Internal quotation and citation omitted.