Federal Circuit Summaries

Before Wallach, Chen, and Stoll. Appeal from the United States District Court for the District of Nebraska.

Summary: Reexaminations of patents confirming validity are not dispositive of validity in district court. Furthermore, in a multicomponent product, damages must be apportioned between the patented improvement and conventional components, and expert testimony on damages must adequately tie a proposed reasonable royalty to the facts of the case.

Exmark sued Briggs for infringement of a patent directed to a lawn mower having improved flow control baffles. Three separate reexaminations confirmed patentability of Exmark’s patent. The district court, relying solely on the fact that the claim at issue had survived multiple reexaminations, granted summary judgment that the claim was not invalid. Following a jury award of damages for willful infringement, the district court denied Briggs’ motion for a new trial on damages.

On appeal, the Federal Circuit vacated the district court’s summary judgment of no invalidity. Although the district court stated it had given the reexaminations “some, though not determinative, weight,” the Federal Circuit disagreed, finding that the conclusory opinion written by the district court offered no other explanation for its determination. In doing so, the Federal Circuit found the district court had improperly deferred entirely to the PTO and neglected its obligation to reach an independent conclusion. The higher “clear and convincing” standard of proof in district court does not preclude the district court from reaching a different conclusion on validity than that reached by the PTO. In particular, because the district court suggested it was adopting a broader claim interpretation than that applied by the PTO during the reexaminations, the district court was required to independently assess validity in view of that construction.

The Federal Circuit also vacated the jury’s damages award. While the Federal Circuit agreed that it was permissible to apportion damages through the royalty rate rather than the royalty base, it found that Exmark’s expert failed to adequately tie her proposed royalty rate of 5% to the facts of the case. The expert considered the Georgia-Pacific factors, but failed to explain the extent to which those factors impacted the royalty calculation. It is not sufficient to analyze the Georgia-Pacific factors without carefully tying those factors to the proposed royalty rate. Additionally, the expert’s analysis ignored the value added by other patented components as well as non-patented elements such as durability, reliability, and branding. The Federal Circuit remanded to the district court for new determinations of invalidity and damages, including, if necessary, a new trial on damages.