Shooting Blanks: Federal Circuit finds Knock-Off Manufacturer not a “Willful Infringer”

By Dennis Crouch

Jake Lee v. Mike’s Novelties (Fed. Cir. 2013)

Jake Lee’s patent No. 6,419,936 is directed to a novelty pipe whose bowl looks like a revolver cylinder and is actually rotatable so that there is more than one chamber for holding “tobacco.”

The accused device a knockoff version. In the infringement case, the jury awarded $40,000 in lost profits and the district court enhanced damages to $70,000 for willful infringement. The court also awarded $230,000 in attorney fees after finding an exceptional case.

On appeal, the Federal Circuit affirmed the infringement award but reversed on willfulness – finding that the defendant’s non-infringement arguments were “not objectively unreasonable.” Because the exceptional-case attorney fee award was partially based upon the finding of willful infringement (and also litigation misconduct), the court remanded for a determination as to whether the litigation misconduct alone was sufficient to warrant the exceptional case finding.

Technical experts testify in almost every patent case and explain to the jury how the accused product does (or does not) meet the limitations as construed by the court. In a low-value case such as this, an expert would have blown the budget wide open and so the patentee did not present expert testimony. On appeal, the Federal Circuit affirmed that expert testimony is not required to win a patent case – especially where the technology is “easily understandable” Quoting Centricut, LLC v. Esab Group, Inc., 390 F.3d 1361, 1369 (Fed. Cir. 2004).

Enhanced Damages: The text of the patent statute seemingly provides courts with broad discretion to award up-to treble damages. Under 35 U.S.C. § 284, “the court may increase the damages up to three times the amount found or assessed.” Despite the seeming broad discretion offered by the statute, the Federal Circuit tightly controls enhanced damage awards and requires that any award be based upon “willful patent infringement.” The willful component is further defined as requiring both (1) clear-and-convincing evidence that the infringer took steps to infringe the patent despite an objectively high likelihood that its actions constituted infringement of a valid patent and (2) that the accused infringer subjectively knew of the “objectively-defined risk” or should have known because the risk was so obvious. In re Seagate Tech., LLC, 497 F.3d 1360, 1368 (Fed. Cir. 2007). Further, this willfulness determination is not given to the discretion of the district court but instead reviewed de novo on appeal. Finally, a correct finding of willfulness permits the award of enhanced damages but does not require such an award.

In this case, the defendant had survived summary judgment based upon a “genuine issue of material fact” as to whether the accused turret met the weight limitation found in the claims. And, in oral arguments at the Federal Circuit, plaintiffs’ counsel admitted that the defendants’ argument was reasonable. One thing that is unclear from the case is when the defendant recognized its reasonable-but-wrong defense to infringement. Was there some time-period when the defendant continued to infringe prior to concocting its defense? And, would the infringement during that period constitute willful infringement?

Litigation Misconduct: The district court found several instances of litigation misconduct by the defendant and defendant’s counsel, including bad-faith settlement offers, bad faith conduct during discovery, and unacted-upon threats to report Lee’s counsel to state bar associations. However, the exceptional case award was based both on that misconduct and the willfulness finding. On remand, the district court will need to determine whether the misconduct alone is sufficient to make an exceptional case finding and award attorney fees. Depending upon the circumstances, the plaintiff in this case may do well to ask the district court to delay its determination until after the Supreme Court decides the two pending attorney-fee-award cases later this term.


29 thoughts on “Shooting Blanks: Federal Circuit finds Knock-Off Manufacturer not a “Willful Infringer”

  1. 7

    “tobacco”I had that same reaction, Dennis. This has been used for tobacco-smoking approximately zero times.

  2. 6

    I’m looking here for a gut instinct response. Consider Germany. Validity cannot be raised in court in defense to infringement or via DJ. If one believes a patent is invalid, one takes it to the patent office. Claim construction in the patent office and the courts can be different. But an advantage of the system is that an expert agency opines on validity, and its determinations become part of the patent. I am not sure about standing, timing and estoppels in Germany, perhaps someone familiar could help us there. For example, will a court stay an infringement case pending a validity trial in the patent office?Do you think such a system is constitutional under the US constitution? If not why not?

      1. 6.1.1

        LB, really? I don’t think so, but hopefully we will get some clarification from Europe.But, is your gut reaction based on some notion that the system is flawed in concept? Due Process problems for example?For example, you are sued in Germany, and the patent owner moves for a preliminary injunction. You believe the patent is invalid but have not yet filed a revocation proceeding. One cannot raise invalidity as a defense to the preliminary injunction. You are enjoined if the patent owner demonstrates infringement…. There are recent cases where that happened and we discussed them here. Because we are so used to our own system, we think there is something fundamentally flawed in the German system. But is that right?The German system seems on its face more pro-patent than the American system. Do you agree?


          There is a separate court in Germany for determining invalidity. I don’t think it is accurate to call it the patent office. I don’t think you can get the infringement proceedings stayed to wait for an invalidity ruling. I don’t know about the injunction rules, but if a system can shut down a business over infringement of an invalid patent then it does not strike me as a superior one.


            LB, thanks for the clarification on validity. Seems like we would have the same thing here if the PTAB judges that handled trials rather than ex parte appeals were moved into a special court and given Art. III status.But I do agree with you that dividing infringement from validity in practice seems fundamentally flawed even if one agrees that having experts deal with validity is a better system.Back in the day before reexaminations, I recall some cases where a court could refer validity to the PTO for their “views,” where the PTO would operate like a special master. For some reason, Congress did not like that system.In England, what they apparently have done is to create a special court to handle patent litigation, with both validity and infringement in the same court. I think that might be a better way to go than trying to adopt the German system, which where I think we are heading. The impetus to adopt the German system has always been to stop juries from deciding validity.


              Not constitutional in the US – under 7th amendment – right to a jury trial to determine legal damages for a patent. Wherein a subsequent invalidity ruling would render the prior judgment – advisory and not a final determination between the parties. But see of course my pet peeve, joy technologies and my lament against Judge Bryson on this issue. So who knows whether Hayburn’s case is still the law – in the new world of the administrative state.


                iwas there, I find it interesting that In re Lockwood, en banc, but vacated after the patent owner withdrew his jury trial demand, held there was a 7th Amendment right to a jury trial, overruling both Patlex and Joy. Reexaminations are constitutional only to the extent that patents are public rights. Patlex did not decide that issue under controlling precedent. It simply declared patents to be public rights. But the subsequent holding in Lockwood shows that Patlex was wrongly decided and not good law to the extent that Lockwood was correctly decided.I have mentioned this before, but the doctrine of public rights was well established and old at the time the SC ruled in McCormick Harvesting that reexaminations were unconstitutional. Nothing after McCormick Harvesting has fundamentally changed the public rights doctrine. So, presumptively, McCormick Harvesting was decided in view of the public rights doctrine such that Patlex cannot be correctly decided.I think the whole edifice of reexaminations and post grant reviews hangs by a thread — and that is the declaration, not decision, in Patlex that patents are public rights.


                iwas there, Cardinal Chemical did make it clear that if there was no further case or controversy regarding infringement, the invalidity DJ action would be mooted.


            Don’t you think it odd that if the ALJ’s were elevated to Art. III judges, they would require a petitioner to have “standing” to sue for invalidity but not, theoretically, they do not?


              I understand where you’re coming from, Ned, but no, I don’t think that is particularly odd, and it doesn’t offend my sense of justice overmuch. With regards to reexamination, Congress has enlisted the public to assist the administrative agency in fulfilling its intended purpose, i.e., to issue patents only to those who are entitled to receive them under the law. No matter what the ALJs do, the patentee still has recourse to Article III courts, so I just don’t see the constitutional issue.


                Assuming reexaminations are valid and that the government can constitutionally reexamine a patent against the will of the owner, then the member of the public would be acting Qui Tam to help enforce a public right, no standing being required to bring the complaint in the first place.But the position of the Qui Tam petitioner is the same as the government, and standing depends on the government’s standing. If the government finds the patent valid, the third party should not have a right to appeal.The result would be different if the petitioner would be required to have standing. That issue could be litigated at the outset, and the issue preserved for appeal if necessary. The petitioner would be harmed by an adverse ruling by the government and would then have standing to appeal.But because standing is today not required to bring any petition, and because I do not think that standing can be litigated first on appeal, I do not believe any losing petitioner has standing to appeal against the government.

                1. That reasoning looks OK to me, Ned. But if the petitioner doesn’t have the right to appeal to an Article III court, then he shouldn’t be estopped from making the same arguments in a case where he does have standing. Right?

                2. Agreed. The Feds are only now looking into standing as a bar to appeal. I would think that to the extent a petitioner did in fact appeal, or chose not to appeal, then collateral estoppel should apply.For the future, in IPRs and the like, I would think that petitioners should make sure they demonstrate standing in their petitions. If not, they should not have a right to appeal.The Board should make a finding on standing in its institution decision so that the issue of appealability is determined on the record. In contrast to district courts, standing should not be presumed.

  3. 5

    “A federal jury Thursday returned its damages verdict against Samsung Electronics, saying it should pay Apple $290 million in the patent dispute involving technology used in iPhones and iPads.”

  4. 3

    Speaking of “shooting blanks,” looks like the Senate Republicans are going to have a hard time filibustering the next 100 or so of Obama’s judicial appointments.That’s huge. Even better, that progress was achieved without shutting down the government and forcing everybody else in the country to suffer because the Senate can’t do its job.

  5. 1

    And people are upset about ‘trolls’ when a tool for controlling those ‘nefarious’ attorneys goes unused here…

    1. 1.1

      This case has very little to do with typical “patent trolling”. For starters (and this is just one of many differences we could recognize), I’m pretty sure there is an actual device that was claimed and sold, not just some “instructions” or “functions” that someone thought would be fun to implement on a computer.Also, what “tool” went “unused” here? You seem to be trying to make a point but once again you left out all the relevant information except for the implied insult of some “people” who are “upset”.

      1. 1.1.1

        I see that you wish to ‘target’ “typical” patent trolling only to those areas of patent eligibility that you have a philosophical animosity towards.Completely unfounded – and a clear indicator that you are merely playing the name-calling FUD card.As to the rest of your baseless reply, the tool is the ability of the courts to sanction, as has been put forth in articles by Chief Judge Rader and Prof. Hricik. However, here, we see the red cape charge little circle of up-votes that simply cannot be bothered with any thinking of the substantive content involved.


          The plaintiff in this case sold the patented device, and alleged that the defendant copied his product. The plaintiff also proved infringement at trial. The plaintiff is not only not a “typical” troll, he’s not a troll under anybody’s definition.


            This adoration of yours for Malcolm really creates a blind spot for you Leopold.It was Malcolm who (constantly) identifies the “Troll” (over-hyped) problem with ‘specific’ people, namely attorneys.Whether or not limited to ‘Trolling,” this selected group of people can be controlled without ANY additional legislation. It is the same judicial tool that can serve BOTH the so-called “Troll” problem AND the immediate problem as evidenced by the story on this thread.Wake up.


              “It was Malcolm who (constantly) identifies the ‘Troll’ (over-hyped) problem with ‘specific’ people, namely attorneys.”It was you who brought up trolls in this thread in the first place, in an incoherent attempt to link this case to proposed anti-troll legislation.It was you who insulted “the red cape charge little circle of up-votes” by charging them with a lack of “thinking of the substantive content involved,” when the only lack of thinking appears to be yours.It is you who is now trying to mask your foolishness with a transparent post-hoc reconstruction of your original comment. The litigation misconduct “problem” in the story on this thread, and the remedies for such misconduct (which failed in this case, by the way) have nothing to do with any “troll” problem, and the “exceptional case” sanction at issue in the present case is of very little use against trolls who are typically not interested in ever getting to or completing a trial.Wake up.


                The judicial tool for BOTH problems is the same tool.This can only be ‘incoherent’ if you choose to clench tight your eyes and refuse to see it.Telling me to wake up when it is you that needs to open your eyes is, well, not so funny.(and yes, “the fail”, by the way, is noted in my initial comment – but you are in too much of a hurry to charge to notice that)

                1. Why don’t you say what you mean for a change, instead of being a judicial tool?For all you know, we might even agree with you if you state your point clearly and persuasively. But where’s the sport in that, right?

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