Federal Circuit sets aside injunction and $2.2m in patent quarrel
The US Court of Appeals for the Federal Circuit set aside a permanent injunction and a $2.2 million award of lost profits in a patent dispute yesterday.
US manufacturer Presidio Components had won the award and injunction against rival American Technical Ceramics (ATC) from a district court.
However, on appeal, the Federal Circuit vacated the relief, while affirming other parts of the lower court’s decision.
Presidio filed a patent infringement suit against ATC in the US District Court for the Southern District of California in September 2014.
ATC was accused of infringing US patent number 6,816,356, which claims a “Multilayer capacitor design and teaches a multilayer integrated network of capacitors electrically connected in series and in parallel”.
A capacitor is a passive electrical component that stores and releases energy.
In 2015, while the district court suit was pending, ATC sought an ex parte re-examination of the claims of the ‘356 patent in light of new prior art.
The examiner rejected the claims as anticipated and obvious, so Presidio amended the claims and the US Patent and Trademark Office issued a re-examination certificate.
At the district court, after separate jury and bench trials, the court held that the asserted claims were infringed and valid, and granted a permanent injunction.
The jury awarded Presidio $2.2 million in lost profits.
In addition, Presidio’s motion for enhanced damages was denied by the court, after it determined the damages were not warranted, despite a jury finding of wilful infringement.
The district court also granted ATC’s motion for summary judgment on the affirmative defence of absolute intervening rights, which barred damages for the period before December 8, 2015, the date that the re-examination certificate was issued.
ATC was entitled to the defence because a substantive amendment was made during re-examination, according to the Federal Circuit.
ATC then appealed, challenging the Californian court’s determination that the claims were not indefinite, and the awards of lost profits and a permanent injunction.
In a cross-appeal, Presidio challenged the district court’s determination on absolute intervening rights and the denial of enhanced damages.
The Federal Circuit denied ATC’s assertion that the claims were not indefinite, while also denying Presidio’s claim that ATC wasn’t entitled to intervening rights.
“We conclude that the evidence does not support an award of lost profits and, therefore, reverse the award of lost profits and remand for determination of a reasonable royalty,” said Circuit Judge Timothy Dyk, on behalf of the court.
“Because the jury instructions and verdict form only directed the jury to consider a reasonable royalty award if Presidio had not proven it was entitled to lost profits, the jury did not return a finding about a reasonable royalty rate,” added Dyk.
A new trial was ordered to determine the reasonable royalty award.
The Federal Circuit also held that the lower court hadn’t abused its discretion in declining to award enhanced damages.
Finally, the court vacated the permanent injunction, stating that “in light of our reversal of the lost profits award for lack of proof of past lost sales, we must vacate the injunction”.
The case was remanded for further proceedings with respect to the injunction.
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