Lawyers for patent infringement cases in the U.S. District Court for the Eastern District of Texas were put on notice in July that juries in their trials may take up the question of “future damages” for ongoing violations of a patent.
U.S. District Judge Ron Clark, who sits in Beaumont, sent an identical July order to lawyers in nine Eastern District cases, saying that “under some circumstances, the court may award an ongoing royalty for patent infringement in lieu of injunctive relief.”
Clark’s order could set a new standard in an era when fewer permanent injunctions are issued in patent cases. It could also reduce time and resources spent litigating future infringement violations, the judge and lawyers say.
The judge’s move comes in the wake of the U.S. Supreme Court’s 2006 decision in eBay Inc. v. MercExchange, which said lower courts shouldn’t issue injunctions as automatic remedies in patent cases.
Clark is “saying in the post- eBay world you need to give a lot more attention to damages and remedies, because it’s no longer an automatic injunction,” says David Healey, a partner in New York-based Weil, Gotshal & Manges’ Houston office who received the orders for two cases he’s handling in the district. “The patent bar has to re-orient itself to focusing on these issues.”
Currently, a jury determines whether there was infringement and what, if any, damages should be awarded for past infringements. After the jury’s verdict, the judge rules on whether to grant a permanent injunction to halt any infringement and determines what future damages may be awarded for infringement that wasn’t covered in the trial. Those damages may include gaps just before and during the trial as well as infringement that continues after the case is wrapped up, especially if no permanent injunction is granted.
In eBay, the high court found that permanent injunctions issued in patent cases should satisfy all four of the same tests that must be met in nonpatent cases, including a showing of irreparable injury and that other legal remedies are inadequate to compensate for the injury.
Clark says in an interview that the order is an answer not only to the eBay decision, but also to two Federal U.S. Circuit Court of Appeals decisions since eBay: Amado v. Microsoft Corp. (2008) and Paice LLC v. Toyota Motor Corp. (2007). Both cases called for determining post-verdict infringement damages awards.
Clark also says having juries address the future-damages issue is a way to avoid having lawyers prepare, and the court hear, damages testimony twice, before and after a verdict, saving “the time and the resources of the court and the parties.
“I’m going to suggest it in every case for a while just to see what the response of counsel is,” he says.
Clark is introducing the time-saving approach in a federal district that has attracted patent cases partly because of its speedy handling of the litigation.
Cases that received the notice include Seoul Semiconductor v. Nichia, SciCo Tec v. Boston Scientific and Iovate Health v. Bio-engineered Supplements. The trials are scheduled between this September and June 2009.
He’s “putting everything on a track to move efficiently,” says Clyde Siebman, a member in Sherman-based Siebman, Reynolds, Burg, Phillips & Smith, which was involved in one of the cases.
Clark gave the lawyers 10 days to object to the proposal and said that if they didn’t, their experts should be prepared to address the topic during the trial.
“It’s a good idea to do the future royalties as part of the damages report, so you don’t have to go back and do a second trial later or come back for another proceeding,” says Stan Gibson, a partner in Los Angeles’ Jeffer, Mangels, Butler & Marmaro who represents SciCo GmbH. He expects plaintiffs will start including future damages in their reports more often.
While SciCo didn’t object to the proposal, defendant Boston Scientific Corp. did, saying in a filing that no depositions or expert reports on the topic had been done. Ed Han, a partner in Washington, D.C.’s Howrey who represents Boston Scientific, declines comment. The judge hasn’t made a final call in that case.
The court won’t issue the instructions in Iovate Health, because the plaintiff’s lawyers at Tyler-based Yarbrough & Wilcox and New York-based Kenyon & Kenyon objected, saying in a filing that there wasn’t enough time before the September trial to prepare additional expert testimony. Rakesh Amin, a member in Chicago-based Amin Hallihan and lawyer for the defendant, declines comment.
In Seoul Semiconductor, the lawyers didn’t object. Healey, who represents Seoul Semiconductor as well as SciCo, says he usually addresses future damages anyway, though it’s not common practice.
Lynne Marek is a staff reporter at The National Law Journal , a Texas Lawyer affiliate in which this article originally appeared.