Risk of Encouraging Infringement while Awaiting Appeal

TecSec, Inc. v. Adobe Inc.  (Fed. Cir. 2020)

The simple setup in this case:

  • 2011: Following claim construction, TecSec stipulated that use of Adobe’s product does not infringe the asserted patents.
  • 2013: Claim construction is reversed on appeal, and the infringement case started-up again.

The question on appeal:

  • During the 2011-2013 timeline — is it legally possible for Adobe to induce infringement? In other words, could Adobe have the have the requisite intent necessary to induce infringement?

The Answer:

  • Yes, intent to cause infringement may still be provable based upon subjective-bad-faith, even if the behavior was “objectively reasonable.”
  • The court writes: “As a logical matter, a defendant may have the liability-supporting subjective state of mind even if a person could believe, with objective reasonableness (though wrongly), that the induced conduct was not infringing. To make the point in terms of this case, Adobe may have had the requisite knowledge of infringement if it believed (as we ultimately held in 2013) that the March 3, 2011 claim construction was incorrect, even if that construction was objectively reasonable.”

= = = =

This case has been ongoing since 2010.  Back in 2011, the district court issued a narrowing claim-construction with the result of a stipulated dismissal of non-infringement.  The Federal Circuit reversed that outcome in 2013 with a broader construction — setting up the eventual 2018 trial.

TecSec’s theory focused on both direct and induced infringement.  Just before trial, the district court granted Adobe’s motion in limine to prevent TecSec from presenting any inducement evidence from between the 2011 claim construction and the 2013 reversal.

Defendant Adobe lacked the requisite intent to induce infringement or willfully infringe during the time period where the Court had reasonably, though erroneously, ruled in Adobe’s favor on infringement and TecSec had entered a stipulation of noninfringement.

InLimineOrder.  The trial went on and TecSec was able to convince the jury on the direct infringement claim, but not on inducement. [Verdict.] The Jury also awarded $1.75 million in compensatory damages.  At that point, however, the district court issued a JNOV order (renewed JMOL) that reduced the award down to ZERO DOLLARS — holding that the damages evidence was all tied to the inducement theory.

The record is … devoid of qualified testimony regarding appropriate damages for Adobe’s direct infringement … [T]he jury’s damages award of $1.75 million must be vacated in its entirety as inherently speculative and unsupported by the record.

DCT JMOL Opinion [JMOL Opinion].   

On appeal, the Federal Circuit has reversed — holding that it was not proper to exclude the evidence of 2011-2013 inducement as noted above.

Although this looks like a win for the patentee, on remand I expect that the district court will open the door for a pretrial summary judgment motion regarding whether TecSec can prove subjective-intent to infringe.

16 thoughts on “Risk of Encouraging Infringement while Awaiting Appeal

  1. 3

    I’d be interested in how a patent owner could find evidence of the subjective intent of the accused infringer that could supported induced infringement. Any conclusions about the purportedly incorrect claim construction would be legal issues by either the legal department or outside counsel directly in relation to the litigation. Attorney client privilege would protect most, if not all, of that kind of information. Does anyone see anyway to get around that so that a patent owner could find evidence of induced infringement?

    1. 3.1

      “Does anyone see anyway to get around that so that a patent owner could find evidence of induced infringement?”

      Depose those (allegedly) so induced?

      But would / has a court (ever) permitted such?

      1. 3.1.1

        Pro Say – being pro se – you miss the point of what a privileged communication means.

  2. 2

    It occurs quite often* after a district court Markman hearing issues a narrowing claim construction that there is a stipulated dismissal or a granted S.J. motion for non-infringement, enabling a more efficient immediate appeal. So what happens during the intermediate period before a Fed. Cir. reversal of that, as here, is of general interest.

    P.S. If a defendant really thinks the D.C. claim determination was wrong, even though they had won there, would that not be a good time to take a reasonable license settlement rather than wait for a likely Fd. Cir. reversal?

    *since the patent owner has the burden of proof on infringement, unlike invalidity

    1. 2.1

      “would that not be a good time to take a reasonable license settlement rather than wait for a likely Fd. Cir. reversal?”

      And given the $1.75M figure — while allowing for the potential additional damages — was this case even worth pursuing given its costs, time, and effort? (at least in retrospect)

      1. 2.1.1

        Yes, and I cannot see how a patent owner could recover enhanced infringement damages for willful infringement for sales made by a defendant winning at the D.C. and before a Fed.Cir. remand.

  3. 1

    There be eligibility issues at play here too.

    1. 1.1

      That’s incredibly insightful and helpful, Snowflake. Here’s 20 bucks. And 5 more.

      1. 1.1.1

        Thanks – I see your latest (rather unoriginal) meme/tell is showing itself.

      2. 1.1.2

        … do you not yet get that these posts of yours, seeking out old comments of mine and adding nothing of merit only TELL of your own obsess10ns?

        1. 1.1.2.1

          Wow. I did not see that coming. My colleagues have decided that such command of the English language is deserving of five (5) Yankee dollars.

          1. 1.1.2.1.1

            woohoo.

            Thank you.

            1. 1.1.2.1.1.1

              Sorry. With that “attempt” my colleagues have decided that you shall be billed for seven (7) US dollars.

              1. 1.1.2.1.1.1.1

                Lol – at least here a wrinkle on the ‘billing.’

                That may make one wonder though how deeply in debt YOU would be if you were billed for each of your own inanities.

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