CAFC Courts Enplas Display Device Corp. v. Seoul Semiconductor Federal Circuit Federal Circuit Review IP News IPWatchdog Articles Articles JMOL Judge Kara Stoll Judge Pauline Newman Judge Todd Hughes patent infringement Patent Litigation Patents Technology US Patent No. 6007209 US Patent No. 6473554

Reasonable Royalty Cannot Include Activities That Do Not Constitute Patent Infringement – Federal Circuit vacated a $four million damages award to Seoul Semiconductor Co. (“Seoul”), holding that the district courtroom erred when it denied Enplas Show System Corp.’s (“Enplas”) movement for judgment as a matter of regulation that the damages award was not supported by substantial proof. See Enplas Show System Corp. v. Seoul Semiconductor Co., No. 2016-2599, 2018  (Fed. Cir. Nov. 19, 2018) (Earlier than Newman, Hughes, and Stoll, J.) (Opinion for the courtroom, Stoll, J.) (Concurrence-in-half and Dissent-in-half, Newman, J.).

The patents at concern, USPN 6,473,554 (“the ‘554 patent”) and USPN 6,007,209 (“the ‘209 patent”), claimed strategies for backlighting show panels, specifically LED shows utilized in digital units like laptops and televisions. Enplas filed a declaratory judgment motion towards Seoul, looking for a declaration that the patents have been invalid and never infringed. Seoul counterclaimed for infringement and sought damages.

At trial, the jury discovered that Enplas induced infringement of each patents. The jury awarded Seoul $four million in damages, representing a one-time freedom-to-function cost, for the ‘554 patent, and awarded $70,000 in damages for the ‘209 patent. Particularly, the award for the one-time freedom-to-function cost was for “all [Enplas] products,” together with merchandise that had not been accused of infringement. The district courtroom denied Enplas’s pre-trial motions to exclude the testimony of Seoul’s damages professional for together with merchandise that weren’t at concern, and in addition denied Enplas’s submit-trial motions for judgment as a matter of regulation (“JMOL”) of anticipation, no inducement, and extreme damages. Enplas appealed the denial of its submit-trial motions.

The Federal Circuit affirmed the district courtroom’s denial of JMOL with respect to anticipation and inducement. With respect to Enplas’s JMOL of extreme damages, nevertheless, the Courtroom reversed the district courtroom’s denial.

Enplas argued that the jury’s $four million damages award was extreme and never supported by substantial proof. Specifically, Enplas argued that the one proof supporting the $four million award was testimony from Seoul’s damages skilled and that this testimony improperly included non-infringing units when calculating royalties. The Federal Circuit agreed.

Previous to trial, Enplas filed a movement in limine in search of to exclude skilled damages testimony regarding units not at difficulty within the case. Nevertheless, the district courtroom denied the movement, holding that “[Seoul’s expert] may present evidence that under a lump-sum royalty negotiation, [Enplas] would seek to cover all of its potentially infringing products,” and that “[a]s long as [the] ultimate damages determination is adequately adjusted” to account just for the units at difficulty within the case, the testimony was permitted.


The Federal Circuit interpreted the district courtroom’s choice as limiting Seoul’s professional to a damages concept based mostly on infringing and “potentially infringing” merchandise, however not non-accused merchandise. At trial, Seoul’s professional opined that a hypothetical lump sum royalty for the patents, when restricted to the accused units, would have been $500,000 for the ‘554 patent at $70,000 for the ‘209 patent. However, Seoul’s professional went on to testify that Enplas and Seoul wouldn’t have restricted the license to the accused merchandise if there have been a danger of Enplas infringing the patents by manufacturing different comparable merchandise. The professional then concluded that a freedom-to-function license would have been a extra sensible answer to the events’ licensing dialogue and that Enplas would have agreed to pay $2 to $four million for a freedom-to-function license, relying on the “volume of sales of potentially infringing products beyond the ones in this case.”

After the jury awarded damages of $four million for the ‘554 patent and $70,000 for the ‘209 patent, Enplas moved for JMOL on excessive damages. In denying JMOL, the district court held that the expert’s testimony a few lump sum freedom-to-function license complied with its earlier ruling that Seoul might current proof relating to Enplas’s probably infringing merchandise in a hypothetical lump-sum negotiation. Nevertheless, the Federal Circuit overturned the damages award with respect to the ‘554 patent, as a result of an inexpensive royalty “cannot include activities that do not constitute patent infringement, as patent damages are limited to those ‘adequate to compensate for infringement.’” See AstraZeneca v. Apotex Corp., 782 F.3d 1324, 1343 (Fed. Cir. 2015). As a result of Seoul’s damages skilled opined that a freedom-to-function license would have been $2-$four million by contemplating a royalty base comprising gross sales of non-accused units, the testimony couldn’t help the jury’s damages award for the ‘554 patent, and the courtroom vacated and remanded the award for additional proceedings. Nevertheless, the Courtroom didn’t disturb the award for the ‘209 patent.

Decide Newman’s Concurrence-in-half and Dissent-in-half.

Decide Newman concurred within the Courtroom’s choice with respect to validity and inducement however dissented from the Courtroom’s reversal of the damages verdict. Decide Newman discovered that the district courtroom appropriately denied JMOL on the damages verdict. She famous that Enplas didn’t problem Seoul’s skilled testimony at trial, nor did they attraction the district courtroom’s Daubert ruling or movement in limine ruling associated to Seoul’s skilled testimony. Decide Newman additionally argued that the Courtroom misapplied AstraZeneca; she discovered that the case didn’t exclude a patentee from presenting proof that “a potential infringer would reasonably include all potentially infringing products in a paid-up license, in order to avoid the uncertainty of possible infringement and future litigation.” Subsequently, Decide Newman discovered that the Courtroom carried out an improper de novo hypothetical negotiation on attraction in figuring out that the damages award was faulty and that this hypothetical that was faraway from what the events would have completed in actuality.

Take Away

An inexpensive royalty award can’t embrace royalties obtained from actions that don’t represent patent infringement, as patent damages are restricted to these enough to compensate for infringement.

Robert Schaffer

Robert Schaffer

is an mental property associate at Troutman Sanders. Bob applies greater than 30 years of expertise to IP counseling and litigation. His work consists of patent procurement, strategic planning and transactional recommendation, due diligence investigations, district courtroom patent instances, and Federal Circuit appeals. He commonly handles complicated and excessive-profile home and worldwide patent portfolios, mental property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed courtroom instances Bob’s work consists of representing and counseling shopper in ANDA litigations, complicated patent infringement instances and appeals, and multidistrict and worldwide instances. In disputed Patent Workplace issues his work consists of representing and counseling shoppers in interferences, reexaminations, reissues, submit-grant proceedings, and in European Oppositions. For extra info and to contact Bob please go to his profile web page on the Troutman Sanders web site.

Robert Schaffer

Joseph Robinson

has over 20 years of expertise in all features of mental property regulation. He focuses his follow within the pharmaceutical, life sciences, biotechnology, and medical gadget fields. His apply encompasses litigation, together with Hatch-Waxman litigation; licensing; counseling; due diligence; and patent and trademark prosecution. He has served as litigation counsel in quite a lot of patent and trademark disputes in many various jurisdictions, and has additionally served as appellate counsel earlier than the Courtroom of Appeals for the Federal Circuit. Joe additionally focuses on complicated inter partes issues earlier than the U.S Patent and Trademark Workplace, inventorship disputes, reexaminations and reissues. His expertise consists of quite a few interferences, a specific benefit in new U.S. Patent and Trademark Workplace publish-grant proceedings. He additionally counsels on patent–associated U.S. Meals and Drug Administration points, together with citizen petitions, Orange Ebook itemizing, and trademark points. For extra info and to contact Joe please go to his profile web page on the Troutman Sanders web site.

Robert Schaffer

Dustin Weeks

is an affiliate within the mental property apply group at Troutman Sanders. His apply spans all areas of mental property regulation, together with patent prosecution, patent litigation (together with Hatch-Waxman litigation), and shopper counseling. He represents shoppers starting from begin-ups and solo inventors to Fortune 500 corporations. Dustin works intently together with his shoppers to study their enterprise goals in order that he can tailor methods to acquire, shield, and implement their mental property. Dustin focuses on publish-grant proceedings (e.g. Inter Partes Evaluations) earlier than the Patent Trial and Attraction Board (PTAB) the place he has in depth expertise representing each patent house owners and petitioners throughout a variety of applied sciences, together with wi-fi networking, prescription drugs, MEMs units, medical units, and electro-mechanical shopper units. Dustin’s broad expertise in patent prosecution, counseling, and patent litigation uniquely positions him to navigate the blended follow of submit-grant proceedings.

For extra info or to contact Dustin, please go to his Agency Profile Web page.