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Promega Corp. v. Life Technologies Corp. (Fed. Cir. 2017)
By Donald Zuhn –-
At about this time last year, the Supreme Court reversed the Federal Circuit's determination that there are circumstances in which a party may be liable for infringement under 35 U.S.C. § 271(f)(1) for supplying or causing to be supplied a single component of a patented combination outside the United States (see "Life Technologies Corp. v. Promega Corp. (2017)"). This past November, the dispute between Promega Corp. and Life Technologies Corp. returned to the Federal Circuit on remand, with the Federal Circuit affirming the District Court's grant of judgment as a matter of law (JMOL) to Life Technologies and the District Court's denial of Promega's motion for a new trial.
The dispute between the two companies began in 2010 when Promega sued Life Technologies for infringement of U.S. Patent No. RE37,984 ("the Tautz patent") (as well as four other patents owned by Promega), alleging that Life Technologies had sold genetic testing kits that were not covered by a license agreement between the parties. The Tautz patent, which is owned by Max-Planck-Gesellschaft zur Förderung der Wissenschaften E.V. and exclusively licensed to Promega, claims a kit for testing at least one STR locus that contains: (1) a mixture of primers; (2) a polymerizing enzyme such as Taq polymerase; (3) nucleotides for forming replicated strands of DNA; (4) a buffer solution for the amplification; and (5) control DNA. Life Technologies manufactures genetic testing kits that provide components for carrying out a multiplex amplification of STR loci from DNA samples, wherein the kits contain (1) a primer mix; (2) Taq polymerase; (3) PCR reaction mix including nucleotides; (4) a buffer solution; and (5) control DNA. At trial, the parties moved for summary judgment on infringement and invalidity, with the District Court determining that Life Technologies' sales outside the license agreement's field of use were infringing. Following trial, the jury returned a verdict of willful infringement. Life Technologies then moved for judgment as a matter of law (JMOL) of noninfringement, and the District Court granted the motion, finding that Promega had failed to present sufficient evidence to sustain a jury verdict under § 271(f)(1), and the Court vacated the finding of infringement.
On appeal, the Federal Circuit determined in Promega Corp. v. Life Technologies Corp. ("Promega I") that substantial evidence supported a jury's finding that Life Technologies infringed the Tautz patent under § 271(f)(1), and therefore reversed the District Court's grant of JMOL of noninfringement. The panel was divided as to the finding of infringement under § 271(f)(1), but the divide centered on another aspect of the statute. With regard to the issue of whether infringement under § 271(f)(1) requires that at least two components be supplied from the U.S., the Federal Circuit held "that there are circumstances in which a party may be liable under § 271(f)(1) for supplying or causing to be supplied a single component for combination outside the United States," and "based on the facts of this particular case . . . conclude[d] that substantial evidence supports the jury's verdict that LifeTech is liable for infringement under § 271(f)(1) for shipping the Taq polymerase component of its accused genetic testing kits to its United Kingdom facility."
In reversing the Federal Circuit and remanding the case, the Supreme Court, in Life Technologies Corp. v. Promega Corp., determined "that a single component does not constitute a substantial portion of the components that can give rise to liability under §271(f)(1)." As the Supreme Court noted, Life Technologies manufactured all but one component of its kits in the United Kingdom -- manufacturing Taq polymerase in the United States and then shipping the Taq polymerase to its United Kingdom facility to be combined with the other four components of the kit.
On remand, the Federal Circuit noted that the Supreme Court's opinion required the Federal Circuit to reconsider two of its prior holdings: (1) its reversal of the District Court's grant of Life Technologies' motion for JMOL that Promega had failed to prove its infringement case under 35 U.S.C. §§ 271(a)3 and 271(f)(1), and (2) its vacatur of the District Court's denial of Promega's motion for a new trial on damages and infringement. In reconsidering these holdings, the panel first looked to the procedural history before the District Court, noting that the District Court did not decide how many of Life Technologies' kits, which were all assembled abroad, had been sold, offered for sale, or imported into the United States (i.e., were infringing under § 271(a)) or included a substantial portion of their respective components that were supplied from the United States (i.e., were infringing under § 271(f)(1)). In addition, while the parties stipulated at trial that Life Technologies' total worldwide sales of the accused products during the pertinent time period amounted to $707,618,247, a dispute arose with respect to the effect of this stipulation. In particular, Promega and Life Technologies disagreed as to whether Promega needed to separately quantify domestic and foreign sales. Ultimately, the District Court determined that Promega needed to prove the amount of damages attributable to infringement under § 271(a) and the amount of damages attributable to infringement under § 271(f)(1), and the Court provided Promega with a second chance to meet its burden by presenting evidence of infringing sales in its rebuttal case.
In its rebuttal case, Promega presented additional evidence of infringement, but did not present evidence or elicit testimony intended to prove a specific amount of domestic, foreign, or any other subset of total sales, relying instead on the stipulated worldwide sales figure as a potential damages base. In addition, in its proposed special verdict form, Promega sought to have the jury calculate a single damages amount rather than separate damages numbers under § 271(a) and § 271(f)(1). The jury subsequently found that all of Life Technologies' worldwide damages qualified as U.S. sales, and further, that all of Life Technologies' unlicensed sales infringed Promega's asserted patents under § 271(a) and/or § 271(f)(1).
After trial, Life Technologies filed a renewed JMOL motion, arguing that Promega was entitled to no damages because, inter alia, it had failed to present adequate evidence of an amount of infringing sales under either § 271(a) or § 271(f)(1). Promega countered that the damages verdict should stand because all of the accused products infringed under § 271(f)(1) (since all of the products included Taq polymerase, which qualified as a "substantial portion" of each of the accused products) and all of the accused products also infringed under § 271(a). The District Court granted Life Technologies' JMOL motion, holding that no reasonable jury could have found that all of the accused products infringed under § 271(a) or § 271(f)(1), and finding that Promega had waived any argument that the trial record could support a damages calculation based on an amount other than worldwide sales. The District Court also denied Promega's motion for a new trial, reiterating that Promega had waived any argument based on a subset of worldwide sales by failing to respond to Life Technologies' argument on this issue in its JMOL briefing.
Following the Supreme Court's remand, the parties submitted statements to the Federal Circuit as to how the Court should proceed post-remand. Life Technologies argued that the Federal Circuit should affirm the District Court's post-trial decisions, contending that "[t]he trial judge with her 'first-hand knowledge of witnesses, testimony, and issues' simply held Promega to its own considered strategic litigation decisions, and appropriately denied Promega's retrial request." Promega, on the other hand, argued that the Federal Circuit should reinstate the judgment of infringement under § 271(a) and order a new trial on damages, because "[t]he Seventh Amendment, the Patent Act, and precedent all require a new trial on damages under § 271(a)—not a windfall judgment of noninfringement," in view of Life Technologies' admissions that it committed infringing acts in the U.S. (the opinion indicates in a footnote that "[i]t is undisputed that Life admitted to at least some infringement," pointing out that Life Technologies "admit[ed] at trial that there had been 'an infringement' and that Promega was 'entitled to be compensated for that infringement'").
The Federal Circuit began its discussion of the case by noting that Promega had expressly waived its right to any award based on a reasonable royalty, and instead only sought damages in the form of lost profits. The opinion explains that:
The linchpin of the district court's rulings on Life's JMOL motion and Promega's motion for a new trial is its finding that Promega waived any argument that the trial record supports a damages calculation based on a subset of Life's total worldwide sales. In Promega I, we held that all of the accused products infringed under § 271(f)(1) and that the jury's damages verdict—based on total sales—was supported by substantial evidence. It was therefore unnecessary for us to address the district court's waiver finding. However, now that it is undisputed that certain of the accused kits did not infringe under the Supreme Court's interpretation of § 271(f)(1)—specifically, kits containing only one component supplied from the United States that were assembled and sold overseas to foreign buyers without ever passing through the United States—we must address the district court's waiver finding [citations omitted].
With respect to the District Court's waiver finding, the Federal Circuit determined, after looking at the procedural history of the case before the District Court, that:
In the instant case, the district court could properly conclude that Promega abandoned any alternative damages base when it failed to rebut Life's argument in its Rule 50(b) motion that Promega did not present evidence that a reasonable jury could have relied on to award damages based on any subset of total worldwide sales. The district court's decision was all the more reasonable given that it warned Promega during trial that it bore the burden to separately prove infringement under § 271(a) and § 271(f)(1).
In affirming the District Court's grant of JMOL to Life Technologies, the Federal Circuit noted that:
Promega argues, and Life does not dispute, that the record contains evidence of admitted infringement by Life under § 271(a). It further argues that we should reaffirm our prior decision on § 271(a) infringement and order a new trial on damages. In Promega I, we held that an unspecified number of Life's accused products infringed the Tautz patent under § 271(a). We made no finding regarding the quantity of infringing acts under § 271(a), because such a finding was unnecessary in light of our holding that all of the accused products infringed under § 271(f)(1). Now that our holding under § 271(f)(1) has been reversed by the Supreme Court, and in view of the waiver finding discussed, supra, the only way Promega could preserve the jury's damages verdict is by showing that the record supports a finding that all of Life's accused products that did not infringe under § 271(f)(1) infringed under § 271(a). Promega has failed to make this showing [citations omitted].
The opinion explains that "[t]his is a case where there was a finding of waiver that carried forward as law of the case to subsequent proceedings in the litigation," adding that "[t]he nature of the waiver under the circumstances of this case had the effect of limiting the trial evidence on damages to only the parties' stipulated worldwide sales figure." And "[b]ecause there was insufficient evidence to show that all worldwide sales infringed under § 271(a) or § 271(f)(1)," the Federal Circuit concluded that "there was no evidence to support a lost profits damages calculation under the narrow damages theory Promega crafted over the course of litigation." As a result, the panel affirmed the District Court's grant of JMOL to Life Technologies.
With respect to Promega's motion for a new trial, the Federal Circuit determined that "[u]nder the law of the case doctrine, the district court properly exercised its discretion by relying on its waiver finding from its JMOL ruling to support its decision to deny Promega's motion for a new trial." The panel explained that:
If Promega wanted to argue that the evidence at trial supported a damages calculation based on anything other than worldwide sales, it should have raised such an argument at trial and in response to Life's Rule 50(b) motion, which specifically attacked Promega's damages case on that very ground. Promega did not, choosing instead to continue to solely pursue an all-or-nothing damages strategy. Moreover, the district court afforded Promega a second opportunity to supplement the record and present evidence broken out by statutory subsection and quantity. Yet Promega declined to use this opportunity to prove any lesser damages amount [citations omitted].
The panel also noted that:
The only relevant law affecting the outcome in this case that was addressed by the Supreme Court was the "substantial portion" provision of § 271(f)(1). No law stood in the way of Promega's proving liability and damages separately under § 271(a), and Promega's reading of § 271(f)(1) was untested. Indeed, the district court itself ultimately rejected Promega's interpretation of § 271(f)(1), and so did the Supreme Court. And, from the time the district court gave Promega a second chance to put in evidence at trial to prove liability separately under § 271(a) and § 271(f)(1), Promega was on notice that its untested interpretation of § 271(f)(1) might not prevail. But Promega nonetheless declined to use its opportunity to establish entitlement to an alternative, smaller damages award.
The opinion conceded that "[t]his is an unusual case," noting that "[p]atent owners who prove infringement are typically awarded at least some amount of damages." However, in this case, Promega waived its right to a damages award "when it deliberately abandon[ed] valid theories of recovery in a singular pursuit of an ultimately invalid damages theory." The Federal Circuit therefore concluded that the District Court did not abuse its discretion by declining to give Promega "multiple chances to correct deficiencies in its arguments or the record." As a result, the panel also affirmed the District Court's denial of Promega's motion for a new trial.
Panel: Chief Judge Prost and Circuit Judges Mayer and Chen
Opinion by Circuit Judge Chen
Posted at 11:00 PM in Federal Circuit | Permalink