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Damages Not Enhanced Even Though Infringement Was Willful

April 18, 2001
Raciti, Eric P.

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Last Month at the Federal Circuit - May 2001

Judges: Rader (author), Michel, and Schall

In Electro Scientific Industries, Inc. v. General Scanning Inc., No. 99-1523 (Fed. Cir. Apr. 18, 2001), the Federal Circuit affirmed a grant of SJ that General Scanning Inc. (“GS”) literally infringed two patents owned by Electro Scientific Industries, Inc. (“ESI”) directed to laser technology used to sever or “blow” links to defective memory cells during manufacture of silicon-based memory chips.

In the district court, a jury had determined that ESI’s U.S. Patent No. 5,265,114 (“the ‘114 patent”) was not invalid, while U.S. Patent No. 5,473,624 (“the ‘624 patent”) was invalid as being obvious over the prior art. The jury also had found that the infringement was willful and awarded $13.1 million.

During posttrial motions, the district court denied ESI’s motions to overturn the jury’s finding that the ‘624 patent was invalid and to impose enhanced damages and attorney fees and awarded postjudgment interest at a rate lower than ESI had requested. The district court also denied GS’s motion to overturn the jury’s finding that the ‘114 patent was not invalid, to limit the finding of infringement to specific implementations, and to set aside the finding of willfulness.

GS argued on appeal that the prior art contained the “inherent capability” to blow links in memory and, therefore, ESI’s ‘114 patent was also anticipated. The Federal Circuit dismissed this argument, pointing to substantial evidence to the contrary. GS also argued that the district court had erred in denying its JMOL motion for remittitur based on the noninfringing use of its products to cut nonmetallic links, which use was only covered by the invalidated ‘624 patent. The Federal Circuit found that the jury’s damage award was properly based on lost sales and that any existing noninfringing uses were not factually developed on the record.

ESI appealed the district court’s handling of damages, arguing that a finding of willful infringement entitled them to enhanced damages and attorney fees. The Federal Circuit disagreed, however, concluding that a finding of willfulness does not mandate an increase in damages. The trial court had opined that the holding of willfulness was a close one, and the totality of the circumstances, including the fact that GS had received opinions of invalidity, did not justify enhanced damages.