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

Background

In this lawsuit, Exmark sued Briggs in the District of Nebraska for infringement of, inter alia, claim 1 of Exmark’s U.S. Patent No. 5,987,863. Claim 1 of the ’863 patent had been reexamined three times by the United States Patent and Trademark Office and found valid each time. Exmark moved for summary judgment that claim 1 was not invalid for anticipation or obviousness, and the district court granted the motion based upon the fact that claim 1 had survived reexamination three times. Briggs moved the district court for summary judgment that claim 1 was indefinite; the district court denied that motion.

The suit proceeded to a jury trial to determine whether Briggs infringed claim 1, whether Briggs’ infringement was willful, and the amount of damages. The jury found Briggs liable for willful infringement, and awarded Exmark reasonable royalty damages.

The district court then held a bench trial on Briggs’ motion for laches and Briggs’ motion for a new trial on willfulness and damages. In that trial, the district court denied Briggs’ laches motion and granted Exmark’s enhanced damages motion based on Briggs’ willful infringement.

Briggs appealed several of the district court’s determinations. As to willfulness, Briggs asserted that Halo warranted a new trial on willfulness and vacatur of the district court’s enhanced damages award. In Halo, the Supreme Court held that willfulness depended upon an infringer’s subjective intent or knowledge at the time of the accused infringement, and abrogated prior Federal Circuit precedent (In re Seagate Technology, LLC., 497 F.3d 1360 (Fed. Cir. 2007) (en banc)) requiring, as part of the willfulness inquiry, a threshold determination as to the objective reasonableness of the infringer’s defenses. 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’ state of mind at the time of accused infringement.

The Federal Circuit Decision

The Federal Circuit decision, by Wallach, Chen, and Stoll, first held that the district court erred in granting Exmark’s summary judgment motion of no anticipation or obviousness. The Federal Circuit explained that “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 reexamination 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.” (internal quotation and citation omitted).

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 willful infringement, vacated the district court’s enhanced damages award, and remanded for the district court to determine whether a new trial on willfulness is necessary. As to willfulness, the Federal Circuit specifically held that the district court erred in excluding as “unreasonable” prior art evidence concerning Briggs’ litigation defenses, because that evidence also may have been relevant to Briggs’ subjective intent or knowledge at the time of the accused infringement. In so holding, the Federal Circuit clarified that willfulness is an issue to be decided by a jury, rather than by 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’ indefiniteness summary judgment motion and the district court’s dismissal of Briggs’ laches motion.