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Sufficient Evidence Does Not Support Jury's Damages Award for Infringement

May 23, 2005

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Last Month at the Federal Circuit - June 2005

Judges: Rader (author), Archer, and Bryson

In Imonex Services, Inc. v. W.H. Munzprufer Dietmar Trenner GmbH, No. 04-1262 (Fed. Cir. May 23, 2005), the Federal Circuit affirmed the decisions of the trial court, which found two patents owned by Imonex Services, Inc. ("Imonex") willfully infringed.

Imonex's U.S. Patent Nos. 4,911,280 ("the '280 patent") and 5,988,349 ("the '349 patent") claim coin-selector machines that differentiate between coins of different diameters. A jury had initially found that the '280 and '349 patents were invalid, enforceable, and willfully infringed. The jury also awarded damages of over $10M, but the district court ruled that the jury had not heard sufficient evidence to support that award and ordered a second trial. The second jury awarded Imonex about $1.4M in damages. The district court also declared the case to be exceptional and awarded attorney fees to Imonex.Imonex appealed, arguing that sufficient evidence supported the first jury's damages award.

On appeal, the Federal Circuit reviewed the expert testimony confirming the infringement finding and concluded that it fully supported the verdict of infringement.

The willfulness issue turned on whether the Defendants had sufficient knowledge of the patents. The Defendants did not obtain opinions of counsel until after the lawsuit was filed. The Federal Circuit concluded that substantial evidence supported the jury's finding of willful infringement. In particular, the evidence supporting Defendants' knowledge of the patents included the display of patent markings on Imonex's products at trade shows, widespread distribution of literature depicting the products as patented, and correspondence with Defendants' employees about the use of patented devices in the Defendants' products.

Concerning damages, during the first trial, the district court had excluded testimony on the entire market-value rule because no evidence supported the conclusion that the coin selectors formed a basis for customer demand for laundry machines in which they were used. The trial counsel also used a confusing demonstrative exhibit during closing argument, which, according to the Federal Circuit, misled the jury. Therefore, the second trial on damages was appropriate.

The Court also agreed with the finding that the case was exceptional, because the original equipment manufacturer Defendants had continued to sell products with infringing coin selectors after the initial infringement verdict. Accordingly, the district court had properly awarded Imonex's attorney fees from the end of the first trial through the end of the case.