A new trial on damages was held on May 14-18, 2018. The district court adopted a test formulated by the U.S. Solicitor General during the Supreme Court proceedings. The district court instructed the jury to consider the following four factors: (1) the scope of the claimed design in the patent including the drawings and written description; (2) the relative prominence of the design within the infringing product as a whole; (3) whether the design is conceptually distinct from the product as a whole; and (4) the physical relationship between the patented design and the rest of the product, including whether the design pertains to a physically separable, separately sold, or separately manufactured component. The jury then awarded $533M to Apple in design patent damages. The jury verdict form breaks down the damages among 16 Samsung smartphones without any details on the article of manufacture. Apple sought $1B in total lost profits while Samsung urged the jury to limit damages to $28M based on the infringing components.
On May 24, 2018, a California jury awarded Apple $533M in damages for design patent infringement by Samsung. Apple Inc. v. Samsung Elec. Co., No. 11-cv-01846 (N.D. Cal.). Apple asserted three design patents and a number of utility patents relating to iPhones and iPads against Samsung. The design patents cover ornamental features of smart phone devices including their shape and graphical user interface. After jury trials in 2012 and 2014, Apple was awarded $399M in damages for design patents infringement. The Federal Circuit upheld the damages in 2015 and the U.S. Supreme Court reversed it in 2016. In reversing and remanding the case, the Supreme Court held that in a multicomponent product, the relevant "article of manufacture" for arriving at a Section 289 damages need not be the end product sold to the consumer but may be only a component of that product.
A new trial on damages was held on May 14-18, 2018. The district court adopted a test formulated by the U.S. Solicitor General during the Supreme Court proceedings. The district court instructed the jury to consider the following four factors: (1) the scope of the claimed design in the patent including the drawings and written description; (2) the relative prominence of the design within the infringing product as a whole; (3) whether the design is conceptually distinct from the product as a whole; and (4) the physical relationship between the patented design and the rest of the product, including whether the design pertains to a physically separable, separately sold, or separately manufactured component. The jury then awarded $533M to Apple in design patent damages. The jury verdict form breaks down the damages among 16 Samsung smartphones without any details on the article of manufacture. Apple sought $1B in total lost profits while Samsung urged the jury to limit damages to $28M based on the infringing components.
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On September 11, 2017, Chief Judge Stark of the Delaware federal district court issued two decisions providing guidelines for addressing venue challenges in patent cases. Boston Sci. Corp. et al. v. Cook Grp. Inc. et al., No. 1:15-cv-00980 (D. Del.); Bristol-Myers Squibb Co. et al. v. Mylan Pharms., Inc., No. 17-379 (D. Del.).
Burden of Proof. Third Circuit law applies to burden of proof as it is a procedural, non-patent issue and accordingly, the moving party bears the burden of proof in a venue challenge. Physical Presence. While no fixed space in the sense of a formal office or store is necessary, some physical presence is nevertheless required for a regular and established place of business. Litigation activity is a relevant consideration and frequent participation in Hatch-Waxman litigation creates a regular and established place of business. Venue is Fact Intensive. Venue is a fact intensive inquiry and depends on the circumstances of each case. TC Heartland an Intervening Change. Defendants are permitted to pursue venue challenges even if they did not object to venue in their pleadings or in the years before TC Heartland issued because TC Heartland effected an intervening change in law creating an exception to the waiver rule. On September 7, 2017, the Federal Circuit, in a split decision, affirmed the district court's summary judgment of obviousness despite substantial and compelling evidence of objective indicia of non-obviousness. Intercontinental Great Brands LLC v. Kellogg N.Am. Co., No. 2015-2082, -2084 (Fed. Cir. Sept. 7, 2017). The Federal Circuit agreed with the district court's finding that significant copying, increased sales volume, customer and industry praise, and long-felt need were not enough to overcome the prima facie obviousness.
Kraft sued Kellogg claiming that Kellogg infringed its patent directed to a re-sealable food package that keeps cookies fresh. The district court determined that a person of ordinary skill in the art would have been motivated to combine the known elements of "frame" and "rigid re-sealable sushi tray" because the lack of a "convenient opening and reclosing arrangement" was a known problem for cookie packaging. The district court also acknowledged the substantial and compelling evidence of objective indicia of non-obviousness--Kraft's sales volume increase of 4% after new packaging, evidence of positive consumer feedback, survey results praising the invention, industry awards for innovative packaging technology, and Kellogg's intentional copying of its packaging. However, the district court granted summary judgment motion finding that the prima facie case of obviousness was too strong. On appeal, the dispute was the procedure used to determine obviousness under KSR namely, that the district court considered only the first three factors when assessing the prima facie case and then moved on to the fourth factor to decide if secondary considerations would overcome the prima facie obviousness. The majority of the panel agreed with the district court's analysis stating that its analysis fulfills KSR's requirement that the approach to determining obviousness be expansive and flexible. Dissenting in part, Judge Reyna expressed his concern that if "such significant evidence does not make a difference in this case, it is hard to imagine a situation in which it would." Full text of opinion is available here. The District of Delaware is the second federal district court after the E.D. Texas to deny a motion for improper venue under the second prong of 28 USC 1400(b) when it denied Apple's MTD for improper venue. Prowire LLC v. Apple, Inc., 1-17-cv-00223 (D. Del. Aug. 9, 2017) (Order, Kearney, J., Dkt. 46). In this case, Apple argued that one retail store in the district is insufficient to establish a "permanent and continuous presence" that meets the "regular and established place of business" test. In rejecting Apple's position, Judge Kearney noted that Apple "sells the alleged infringing technology to consumers on a daily basis."
As various federal district courts try to grapple with the Supreme Court's decision in TC Heartland, we can expect patent owners to challenge motions to dismiss for improper venue by contending that defendant has a regular and established place of business within the district. The Eastern District of Texas in Raytheon Co. v. Cray, Inc., 2017 WL 2813896 threw a curve ball at those who prematurely called the end of the district as a popular venue for patentees when Judge Gilstrap issued an opinion that took a broad view on venue. In TC Heartland, the Supreme Court held that a domestic corporation "resides" only in its State of incorporation. The patent venue statute 28 USC 14000(b) states that venue is proper "in the judicial district where the defendant resides" or "where the defendant has committed acts of infringement and has a regular and established place of business." Subsequent to TC Heartland, some courts have focused on the second half of the statute, namely the "place of business" provision for venue purposes.
In Raytheon, Judge Gilstrap articulated a four factor test for determination of whether a defendant has a regular and established place of business in the district for venue purposes. The four factors are: (1) physical presence; (2) the extent to which the defendant represents, internally or externally, that it has a presence in the district; (3) the extent to which a defendant derives benefits from its presence in the district, including but not limited to sales revenue; and (4) extent to which the defendant interacts in a targeted way with existing or potential customers, consumers, users, or entities within the district. Judge Gilstrap's venue decision was harshly criticized by Rep. Darrell Issa (R-CA) as a "reprehensible" end-run around the Supreme Court's TC Heartland. |
Disclaimer: The content in this blog is solely for informational purposes and does not constitute legal advice.
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