judgment as a matter of law/JMOL Archives

judgment as a matter of law/JMOL

No Money, Mo’ Problems: Speculative Damages Award Cannot Stand

by Kathleen Lynch | Oct 26, 2023 | Patents

The US Court of Appeals for the Federal Circuit upheld a district court’s claim construction and jury instructions but reversed a premature judgment as a matter of law (JMOL) on obviousness and an imprecise damages award. Cyntec Company, Ltd. v. Chilisin Electronics. Corp., Case No. 22-1873 (Fed. Cir. Oct. 16, 2023) (Moore, Stoll, Cunningham, JJ)

Cyntec sued Chilisin for willful infringement of two patents related to molded chokes, which are component parts in batteries and power supplies. Four events at trial led to this appeal. First, the district court construed the disputed “by means of” term by its plain meaning but also instructed the jury that when a result occurs “by means of” a factor, that factor “has an impact on”—but may not be the “only potential cause” of—the result. Second, Chilisin presented invalidity evidence, arguing that the asserted claims were obvious by one prior art reference in light of another.

Before Chilisin could cross-examine Cyntec’s rebuttal expert, the district court granted Cyntec’s JMOL, finding the patents not obvious. In the third event that led to the appeal, Cyntec presented a market-share lost profits theory of damages based on expert testimony. Chilisin unsuccessfully moved to exclude the testimony as being speculative and unreliable. The jury awarded more than $1.8 million in damages and the district court subsequently granted enhanced damages totaling more than $5.5 million. As for the fourth event, Chilisin unsuccessfully moved for JMOL and a new trial on multiple issues. Chilisin then appealed.

The Federal Circuit reviewed three issues on appeal:

The nonobviousness JMOL
The infringement findings
The damages award.

Starting with nonobviousness, the Federal Circuit reversed the JMOL and remanded. While obviousness is ultimately a legal question, it relies on “numerous underlying factual findings,” including the scope/content/differences of prior art, the skill level of a person of ordinary skill in the art and objective indicia of nonobviousness such as commercial success. The Court found Chilisin had presented enough evidence to allow a jury to find the asserted claims obvious in light of the two prior art references presented. The Federal Circuit also analyzed the district court’s reasoning regarding the prior art and found that its “conclusions are either insufficient to support JMOL or unsupported by the evidence.” Thus, it was improper to withhold a partial fact issue from the jury.

Next, the Federal Circuit analyzed the infringement issue, dividing the analysis into the district court’s claim construction and jury instructions, and the jury’s infringement finding. Chilisin argued that the disputed term “by means of” should signal but-for causation, meaning the factor must cause the result. The Court agreed that this was one possible reading, but because the claim language did not read “by exclusive/primary means” or something similar, the disputed term could also encompass “mere contribution.” The Federal Circuit cited to the specification in support of its claim interpretation and ultimately upheld the district court’s claim construction and the consistent jury instructions. The Court rejected Chilisin’s argument that there was insufficient evidence of infringement, concluding [...]

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No Winners Here: A Case Can Have No Prevailing Party

by Jodi Benassi | Jul 21, 2022 | Trademarks

In a matter of first impression, the US Court of Appeals for the Eleventh Circuit found that there may be no prevailing party for purposes of assessing costs and attorneys’ fees under Federal Rule of Civil Procedure 54(d). Royal Palm Properties, LLC v. Pink Palm Properties, LLC, Case No. 21-10872 (11th Cir. July 7, 2022) (Wilson, Rosenbaum, Covington, JJ.)

Royal Palm Properties sued Pink Palm Properties for trademark infringement. Pink Palm countersued, seeking cancellation of the trademark and a declaratory judgment of noninfringement. Following a three-day trial, the jury found that Pink Palm did not infringe the trademark and that the trademark was not invalid on the grounds asserted by Pink Palm. Pink Palm moved for judgment as a matter of law (JMOL), asking the court to overrule the jury’s determination that the trademark was valid. The district granted Pink Palm’s motion and invalidated the trademark. Pink Palm subsequently moved for costs, which the district court granted because Pink Palm was the prevailing party in light of the order granting JMOL. Royal Palm appealed.

The Eleventh Circuit reversed the district court’s grant of JMOL, reinstating the jury’s verdict and the trademark’s validity. In light of this reversal, the district court, on remand, ruled that Pink Palm was no longer the prevailing party for purposes of costs and was not entitled to an award of attorneys’ fees under the Lanham Act’s exception case doctrine. Pink Palm appealed.

Before addressing whether the district court erred by failing to name Pink Palm as the prevailing party, the Eleventh Circuit addressed the threshold question of whether courts are required to name a prevailing party in every case. The Court noted that while the Supreme Court of the United States has issued multiple opinions providing guidance on how to determine the prevailing party, it has not yet addressed whether there must be a prevailing party under Federal Rule of Civil Procedure 54.

Not finding any precedent in its own circuit, the Eleventh Circuit first looked to Federal Circuit precedent, which has stated that a district court must declare a prevailing party and that “punting is not an option.” The Court next explored holdings by the Eighth, Fifth and Second Circuits. Those courts have found that where the parties each brought unsuccessful claims and outcome did not materially alter the legal relationship between the parties, there is no prevailing party.

The Eleventh Circuit agreed with Eighth, Fifth and Second Circuit precedent and concluded that the text of Rule 54(d) does not allow for multiple prevailing parties, and there is not always a prevailing party in every case. A district court in the Eleventh Circuit may find (at most) one prevailing party, but it is not required to do so in every case. The Court found that both Royal Palm and Pink Palm had rebuffed the other’s claim regarding the trademark, leading to no material alteration in the legal relationship between the parties, and thus there was no prevailing party.

Can’t Overturn Jury Verdicts Based on Reasonable Inferences, but Broad Injunction Is Nonstarter Even for Willfully Misappropriated Trade Secrets

by McDermott Will & Emery | Jan 6, 2022 | Trade Secrets

In a rare appellate trade secret opinion, the US Court of Appeals for the Eleventh Circuit affirmed a district court’s denial of a defendant’s request for a new trial on liability and its refusal of the plaintiff’s requested injunction. It also reversed in part the district court’s denial of judgment as a matter of law (JMOL) on damages for clear error because the plaintiff failed to deduct marginal costs when calculating lost profits. Financial Information Technologies v. iControl Systems, Case No. 20-13368 (11th Cir. Dec. 22, 2021) (Jordan, Newsom, JJ., and Burke, Distr J.).

Competitors Financial Information Technologies (Fintech) and iControl Systems both sell software that processes alcohol sales invoices within 24 hours. Fintech was a lone operator for several years until iControl started servicing the alcohol industry and began selling a very similar product at a lower price point. After Fintech lost its vice president of operations (who was very involved in designing Fintech’s software), a sales representative and several customers to iControl, Fintech filed suit alleging misappropriation of trade secrets. The jury ruled in Fintech’s favor and awarded compensatory and punitive damages. iControl sought a new trial on liability, contending that Fintech’s alleged trade secrets were readily ascertainable and not “secret,” and JMOL on damages since Fintech hadn’t proved lost profits because it hadn’t deducted fixed and marginal costs from its lost revenue calculations. Fintech sought a permanent injunction prohibiting iControl from using either company’s software. The district court denied all three motions, and both parties appealed.

As to the jury verdict, the Eleventh Circuit noted that jury liability findings are generally difficult to overturn, and that the verdict was general and nonspecific regarding which of the seven alleged trade secrets iControl had misappropriated, so Fintech only needed to show evidence under the Florida Uniform Trade Secrets Act (FUTSA) of misappropriation as to one. iControl also did not move for JMOL on liability, and therefore, under the abuse-of-discretion standard of review, the Court could only overturn if “there is an absolute absence of evidence to support the verdict.” However, the Court found that Fintech and its witness presented sufficient evidence at trial to permit a reasonable jury to find that Fintech possessed at least one of the seven alleged trade secrets and that it was misappropriated. The evidence included emails indicating that its former vice president helped iControl discover Fintech’s internal processes to aid software developments, assisted iControl’s chief technology officer in troubleshooting issues in a manner similar to Fintech, shared screenshots of Fintech’s user portal and prompted customers to switch to iControl.

Similarly, the Eleventh Circuit found that the jury reasonably could have inferred from the evidence that iControl schemed to hire Fintech employees to misappropriate Fintech’s software features—an act that demonstrated willfulness.

After assessing the meanings of fixed and marginal costs and the properly fact-intensive revenue and profits figures of the businesses, the Eleventh Circuit agreed that the jury was not required to deduct Fintech’s fixed costs from its revenues to arrive at a proper “actual [...]

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The Skinny Label That Wasn’t—Federal Circuit Reinstates Induced Infringement Verdict

by Paul Devinsky | Aug 12, 2021 | Patents

The US Court of Appeals for the Federal Circuit vacated the district court’s grant of judgment as a matter of law (JMOL) of non-infringement where substantial evidence supported the jury’s verdict of induced infringement by an attempted “skinny label” that nonetheless encouraged doctors to engage in a patented use. GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., Case Nos. 18-1876, -2023 (Fed. Cir. Aug. 5, 2021) (Moore, C.J.) (Prost, J., dissenting).

GlaxoSmithKline LLC (GSK) sells a drug called carvedilol (brand name Coreg®), which is approved for three indications: Hypertension, congestive heart failure (CHF) and left ventricular dysfunction following a myocardial infarction (post-MI LVD). In 2002, Teva filed an abbreviated new drug application (ANDA) for US Food and Drug Administration (FDA) approval of its generic carvedilol for all three indications. At that time, GSK’s patent on the carvedilol compound was still in force; Teva certified that it would not launch its product until the patent expired in 2007. GSK also had a second patent on a method of treating CHF using carvedilol and a second agent. In 2002, Teva sent GSK a Paragraph IV notice contending that the claims of that patent were invalid over prior art. Rather than sue Teva, GSK applied for reissue of the patent. In 2004, Teva received FDA “tentative approval” for its ANDA “for the treatment of heart failure and hypertension,” which was to become effective at the expiry of the compound patent in 2007.

In January 2008, the method-of-use patent reissued with claims directed to a method of decreasing mortality caused by CHF by administering carvedilol with at least one other therapeutic agent. Just before its launch in 2007, Teva certified to the FDA that its label would not include the indication listed in the Orange Book as covered by the original method-of-use patent (i.e., “decreasing mortality caused by congestive heart failure”), and thus included only the hypertension and post-MI LVD indications. Teva’s press releases stated that its generic carvedilol was “indicated for treatment of heart failure and hypertension.” In 2011, the FDA asked Teva to revise its labeling to be identical with GSK’s. Teva obliged (listing again the CHF indication) and took the position that it did not need to provide certification for the reissued patent because it received final approval of its ANDA before the patent reissued. GSK sued.

GSK won a jury verdict that the challenged patents had not been shown to be invalid and that Teva was liable for induced infringement. At trial, GSK contended—and the jury heard evidence—that post-MI LVD is a form (and fell within the Court’s construction) of CHF such that Teva’s attempted skinny label nonetheless encouraged doctors to engage in a patented use. After trial, however, the district court granted JMOL of non-infringement because the CHF and post-MI LVD indications were different. On appeal, the Federal Circuit found that substantial evidence supported the implied jury, finding that post-MI LVD is a form of CHF such that the label with the post-MI LVD indication induced infringement of the reissued [...]

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