The appeals came to the Federal Circuit from two separate actions in the United States District Court for the Western District of Wisconsin. There, Taurus IP, LLC sued various defendants, alleging that their external websites infringed independent claim 16, as well as dependent claims 19, 22, 23, and 27 of Taurus’s U.S. Patent No. 6,141,658 ("the ‘658 patent”). The ‘658 patent generally relates to “a computer system for managing product knowledge related to products offered for sale by a selling entity.”
In the DaimlerChrysler suit, Taurus sued DaimlerChrysler and Mercedes-Benz for infringement. The defendants asserted license and release defenses, as well as a breach of contract counter-claim based on a 2006 patent licensing agreement. After construing the relevant claim terms, the district court entered summary judgment for the defendants, finding that the accused websites did not infringe any of the asserted claims and finding claims 16 and 27 invalid as anticipated by prior art.
In the Breach of Warranty suit, the district court was confronted with a host of non-patent issues. The court determined it had personal jurisdiction over the Orion and Spangenberg defendants through an alter ego theory, or alternatively through Wisconsin’s long-arm statute. The court then granted a motion for summary judgment, finding that certain articles of the 2006 settlement agreement did not provide a release to the infringement alleged in the DaimlerChrysler suit.
In its 67-page opinion, the Federal Circuit affirmed the vast majority of the district court’s holdings, reversing on only one issue. Specifically, in the appeal from the DaimlerChrysler suit, the Federal Circuit: (1) affirmed the district court’s construction of all the disputed claim terms; (2) affirmed the judgment of invalidity of claims 16 and 27; (3) affirmed the judgment of non-infringement; and (4) affirmed the finding of an exceptional case under 35 U.S.C. § 285 and the resulting award of damages. In the appeal from the Breach of Warranty suit, the Federal Circuit: (1) affirmed the denial of the motion to dismiss for lack of personal jurisdiction over Orion and Spangenberg; (2) affirmed liability for breach of the warranty provision; (3) affirmed the award of damages consisting of attorney’s fees incurred in prosecuting the suit, but reversed the award of damages incurred by defending the DaimlerChrysler suit; and (4) affirmed the imposition of evidentiary sanctions based on witness tampering.
Given the Federal Circuit’s agreement with the district court on the vast majority of issues, the Federal Circuit reversed the award of damages incurred by the defendants in defending theDaimlerChrysler suit. The court evaluated the $2,487,328.85 award for attorney’s fees incurred by the defendants in defending against the DaimlerChrysler suit and reasoned that the award was based on the jury’s finding that the breach of the warranty provision caused defendants to incur the attorney’s fees in the DaimlerChrysler suit. The award was properly viewed as damages for theBreach of Warranty counter-claim, not as post-trial attorneys fees, because it was based on the jury’s finding that the transfer of the patent was a breach of the warranty, which caused the defendants to incur expenses and fees in defending the lawsuit. The defendants failed to put on any evidence at trial to prove damages were sustained based on the breach, however, and thus failed to satisfy a required element of a breach of contract claim under Texas law. Instead, they only made Rule 54 post-trial submissions on the issue. The court found such submissions inadequate to prove the award and reversed based on that finding.
A copy of the opinion can be found here.