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The Objective Prong of the Willful Infringement Inquiry May Require Analysis by Both the Court and the Jury

November 14, 2011
Cyr Ph.D., Shana K.

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Last Month at the Federal Circuit - December 2011

Judges: Linn, Dyk (concurring-in-part and dissenting-in-part), Prost (author)

[Appealed from: S.D. Fla., Judge Hurley]

In Powell v. Home Depot U.S.A., Inc., Nos. 10-1409, -1416 (Fed. Cir. Nov. 14, 2011), the Federal Circuit affirmed the district court’s denial of JMOL in favor of Home Depot U.S.A., Inc. (“Home Depot”) on the issues of infringement, willfulness, and damages, and affirmed the district court’s conclusions as to claim construction, inequitable conduct, and attorneys’ fees.

Michael Powell is the owner of U.S. Patent No. 7,044,039 (“the ’039 patent”), directed to guards for radial arm saws. Mr. Powell had a business relationship with Home Depot for the installation and repair of radial arm saws used to cut raw lumber for Home Depot’s customers. After noticing that its employees were suffering injuries while operating the radial arm saws, Home Depot turned to Mr. Powell, who presented Home Depot with saw guard prototypes. Home Depot ordered production units for use and testing in stores, and Mr. Powell filed the patent application that issued as the ’039 patent. Home Depot invited another company to view Mr. Powell’s invention, and hired the company to build nearly identical copies of the invention at a lower price. Mr. Powell continued to confer with Home Depot, but could not reach an agreement to supply it with saw guards at the price Home Depot offered to pay. The ’039 patent subsequently issued, and Mr. Powell sued Home Depot for infringement.

At the trial, the jury unanimously found that Home Depot willfully and literally infringed the ’039 patent, and awarded Mr. Powell $15 million in damages. The district court enhanced damages by an additional $3 million and awarded attorneys’ fees totaling $2.8 million. The final judgment against Home Depot totaled over $23.9 million, including prejudgment interest. Home Depot appealed, challenging the district court’s denial of its renewed JMOL on the issues of infringement, willfulness, and damages; and the court’s determinations on claim construction, inequitable conduct, and attorneys’ fees. Mr. Powell conditionally cross-appealed, seeking enhanced damages if, for example, the compensatory damage award were reduced.

The Federal Circuit first addressed Home Depot’s challenge to the district court’s construction of the claim terms “dust collection structure” and “table top.” The Court found that the claim language, the written description, and the meaning to persons of ordinary skill indicated that Home Depot failed to rebut the presumption that the term “dust collection structure” is not a means-plus-function limitation. The Court noted that, according to the experts, the two requirements of the district court’s claim construction for “dust collecting structure” were embodied within the accused product, and concluded that the jury was entitled to rely on this testimony in finding infringement. Based on the consistent disclosure in the claims and specification, the Court found that the district court’s construction of the term “table top” was also correct, and that the jury was entitled to rely on the expert testimony to conclude that Home Depot infringed the “table top” element under the district court’s claim construction.

Regarding inequitable conduct, the Court held that, “[w]here, as here, the patent applicant fails to update the record to inform the PTO that the circumstances which support a Petition to Make Special no longer exist—that conduct does not constitute inequitable conduct.” Slip op. at 18. The Court reasoned that such conduct “obviously fails the but-for materiality standard and is not the type of unequivocal act . . . that would rise to the level of ‘affirmative egregious misconduct.’” Id. (citation omitted).

The Court next addressed willful infringement and, specifically, the parties’ disagreement as to whether the jury is the sole decider of the objective prong of the willful infringement inquiry. The Court held that “[i]n circumstances . . . where separate issues of fact and law are presented by an alleged infringer as defenses to willful infringement, the objective recklessness inquiry [of willful infringement] may require analysis by both the court and the jury.” Id. at 21. The Court found that the district court properly considered the denial of a preliminary injunction and unenforceability in analyzing the objective prong. The Court concluded that the jury’s verdict was supported by substantial evidence, and affirmed the district court’s determination to deny JMOL in favor of Home Depot on the issue of willful infringement.

Regarding damages, the Court dismissed Home Depot’s argument that a reasonable royalty could not exceed Mr. Powell’s expected profits from selling saw guard units to Home Depot. The Court stated that it was not convinced that the jury’s damages award was unsupported, based on the extensive evidence Mr. Powell presented to the jury. The Court reasoned that the jury was entitled to choose a damages award within the amounts advocated by the parties, that the award was not so outrageously high as to be unsupportable, and that the award was within the range encompassed by the record as a whole. The Court affirmed the district court’s denial of JMOL in favor of Home Depot on damages. The Court also concluded that, based on the record before it, it detected no abuse of discretion in the enhanced damages award or the grant of attorneys’ fees.

Judge Dyk concurred-in-part and dissented-in-part, stating that although he agreed with the majority with respect to claim construction, infringement, inequitable conduct, damages, and the legal framework for willfulness, he would find that Home Depot’s defense was not objectively unreasonable, at least with respect to its proposed claim construction of the term “table top.” Judge Dyk stated that because he would hold that Mr. Powell did not prove the objective prong of the willful infringement inquiry by clear and convincing evidence, he would set aside the willfulness finding and the enhanced damages award.

Summary authored by Shana K. Cyr, Ph.D., Esq.