Summary
**Index Summary:** The Federal Circuit held that a fully paid, unappealed reasonable royalty judgment is not reopened by later patent invalidation, applying finality principles from *Fresenius*. For lost profits under 35 U.S.C. § 284, the court rejected a requirement of direct competition between patentee and infringer under *Panduit*, focusing instead on whether the products compete in the same market. However, because four of five asserted claims supporting the lost profits award were invalidated, a general verdict for lost profits required remand to the district court to determine whether the sole surviving claim (’520 claim 23) was necessary to the surveys, with a new trial ordered unless undisputed evidence shows that claim was essential. Apportionment of profits between patented and unpatented survey components was deemed waived on appeal.
Topics
Practice areas
Questions Presented
- Whether the reasonable royalty award should be reopened due to subsequent invalidation of asserted patent claims.
- Whether the lost profits award can be sustained given the invalidation of four of the five claims that supported it, and whether a new trial is required.
Holdings
- The reasonable royalty award constitutes a fully satisfied and unappealable final judgment, and the subsequent invalidation of asserted patent claims does not support reopening under Fresenius.
- The lost profits award cannot be sustained without determining whether the technology covered by the surviving claim (claim 23) was necessary to perform the surveys. The case is remanded to the district court to determine whether a new trial on lost profits is required.
Key quotations
“Fresenius only applies where a judgment is not final.” (at 6)
“When a 'jury was told it could rely on any of two or more independent legal theories, one of which was defective,' the general verdict must be set aside.” (at 10)
“The particular facts of this case establish that the reasonable royalty award constitutes a fully satisfied and unappealable final judgment such that the subsequent invalidation of asserted patent claims does not support reopening.” (at 7)
Factual background
WesternGeco and ION both manufacture devices for steering streamers in marine seismic surveys. WesternGeco uses its Q-Marine device to perform surveys for oil companies abroad; ION sells its DigiFin device to competitors who perform surveys abroad. WesternGeco sued ION for patent infringement under 35 U.S.C. § 271(f). The jury found infringement and awarded lost profits based on 10 surveys WesternGeco would have won but-for ION's sales. The Supreme Court held that the lost profits award was a permissible domestic application of § 284. Subsequently, the PTAB invalidated four of the six asserted patent claims, leaving only claim 23 of U.S. Patent No. 7,293,520 and claim 14 of U.S. Patent No. 6,691,038, with only claim 23 potentially supporting the lost profits award.
Procedural history
WesternGeco sued ION for patent infringement. After trial, jury found infringement and awarded $12.5 million reasonable royalty and $93.4 million lost profits. On appeal, the Federal Circuit reversed the lost profits award as impermissibly extraterritorial (WesternGeco I). The Supreme Court vacated and remanded in light of Halo. On remand, the Federal Circuit reinstated its reversal of lost profits but vacated the denial of enhanced damages (WesternGeco II). The district court then awarded $5 million in enhanced damages. The parties stipulated to a final judgment on all issues except lost profits. WesternGeco petitioned for certiorari on lost profits, and the Supreme Court reversed, holding that lost profits were a permissible domestic application of § 284 (WesternGeco III). Meanwhile, the PTAB invalidated four of the six asserted patent claims, which was affirmed by the Federal Circuit. On remand from the Supreme Court, the Federal Circuit addressed the impact of the invalidation on the reasonable royalty and lost profits awards.
Remand instructions
Remand to the district court to determine whether a new trial on lost profits is required. The district court may deny a new trial if it concludes that WesternGeco established at trial with undisputed evidence that '520 patent claim 23 covers technology necessary to perform the surveys upon which the lost profits award is based.