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.
- Here is an infringing version for sale on Amazon: http://www.amazon.com/Revolver-Novelty-Six-Hitter-Pipe/dp/B00FGL8BFE/ref=pd_sim_sbs_hpc_1. You can literally get it while its hot.