I have posted many times on the Tinnus v. Telebrands litigation, which involves water balloon patents. Another order is now out, this time involving postverdict motions including recovery of enhanced damages and attorneys fees for “exceptional” case status, as well as and entry of a permanent injunction. It is one readers will want to study, as it contains some actions that are extraordinary – even by patent litigation standards. When a court’s order uses the term “flagrantly” multiple times, you know things are about to get very interesting. There is much to be learned here, so let’s begin …
These postverdict orders arise out of a case tried last fall, and resolved the parties’ disputes over whether the jury’s damages award should be enhanced, and an ongoing royalty established.
A trip to the West Coast for a mediation kept me from posting this earlier, but Judge Schroeder’s unredacted opinion in the VirnetX case resolving the postverdict motions is now out, and provides the latest analysis on many issues of interest to practitioners, including most notably enhanced damages, as none were awarded.
After a four-day trial in December, a Marshall jury in Judge Roy Payne’s court found that Defendant TCL willfully infringed claims 1 and 5 of United States Patent No. 7,149,510 asserted by Plaintiff Ericsson by selling phones and devices equipped with the Google Android operating system, and the jury awarded $75 million as a lump sum royalty.
The court previously ordered a new trial on damages after finding Ericsson’s damages theory unreliable, but last Thursday the Court reconsidered that order, reinstated the jury’s verdict in full, and resolved all other remaining disputes, i.e. TCL’s motions for judgment as a matter of law, and Ericsson’s motions for enhanced damages and attorney’s fees.
We have another data point on whether a prevailing plaintiff gets enhanced damages, as well as whether the case is “exceptional” for purposes of attorneys fees.
Well, it’s certainly both an enhanced and exceptional day for me, as Paul Allen’s team located the wreck of the carrier Lexington in the Coral Sea, 76 years after it sank, along with – to date – 11 of the 35 aircraft it had on board when it went down.
Yes, I’m the crazy uncle that makes handcrafted wood Lexington toys for his cousins’ kids – as well as the occasional plastic model of one – but you know, every family has one of those, doesn’t it? So today, the Lexington comes with me to the office to celebrate.
Also celebrating this morning is plaintiff Eidos Display, which, following a lengthy campaign, won a 2x enhancement of its recent $4.1 million jury verdict against competitor Chi Mei Innolux. Like the Battle of the Coral Sea both sides won something, with Innolux defeating Eidos’ request for attorneys fees under Section 285. So let’s analyze what happened, note some significant comments in the opinion, and say hello to LBJ, Mr. Sam, and some East Texas lawyer sayings along the way.
They’re not quite the intellectual thrill of a JMOL ruling, but court orders determining whether to enhance damages and award ongoing royalties are where the money is, literally speaking. A recent order awarding ongoing royalties by declining to enhance damages provided more information when enhancement is and isn’t appropriate.
It’s been a busy few weeks finalizing some other projects, including tests, papers, seminar presentations and the like (and I finally finished that anime-ish P-40 for Parker with accurate paint colors), but I’m finally able to turn more of my attention to some of the very interesting activity in the district in the last few weeks. And speaking of interest, there are few cases that have generated more than VirnetX v. Apple, which just had its most recent trial’s postverdict motions come out. Most legal news is interested in the bottom line – that the verdict amount of $302 million resulted in a $439 million judgment, but for practitioners the analysis of how it got there is of great interest – I am not the only one out there that enjoys a good JMOL. So I wanted to work through the motions, but only after a short … well, that’s a lie, it’s not going to be short – procedural history.
Several recent opinions out of the EDTX provide litigants with more data points on enhanced damages – when are they appropriate and when are they appropriately set aside – on how future royalties are calculated, and and on when Section 285 awards of attorneys fees in “exceptional cases” are appropriate. They also provide a helpful analysis of which non-taxable fees and expenses are not recoverable under Section 285.
In an average year about fifteen patent cases are tried in the Eastern District of Texas. Statistically, about half are complete defense verdicts, and of the remaining ones, only a few have willfulness findings, so it’s a rare case that presents both a Section 284 claim for enhanced damages and a Section 285 claim for exceptional cases status. When we do have them it allows analysis of which conduct supports (or doesn’t) an award, since courts try to ensure that a party isn’t inadvertently penalized twice for the same conduct. But a recent case out of Beaumont presents both, and provides some useful insight into a trial court’s calculation of enhanced damages, as well as the more frequently presented question of whether a case is “exceptional” for Section 285 purposes.