Complicated outcome in Commil v. Cisco

From the case Commil v. Cisco

Of the issues on appeal:


Cisco appeals the district court decision on several
grounds.
First, Cisco contends that an erroneous instruction
allowed the jury to find inducement based on mere
negligence.
Second, Cisco argues that the district court
erroneously precluded Cisco from presenting evidence of
its good-faith belief of invalidity to show that it lacked the
requisite intent to induce infringement of the asserted
claims.
Third, Cisco argues that the district court abused
its discretion in granting a new trial and that the district
court violated the Seventh Amendment by granting a new
trial on certain issues, but not others.
Fourth, Cisco
claims the court erred in construing the term “short-range
communication protocol.”
Fifth, Cisco argues that there is
not substantial evidence to sustain the jury verdict on
infringement.
Sixth, Cisco contends the claims are indefinite,
not enabled, and lacking adequate written description.
Finally, Cisco objects to the damages award on the
grounds that Commil’s royalty base violates the entire
market value rule.


Of the outcome: Because we remand for
a new trial, we do not reach the issues of infringement
and damages. Rather, we leave them to be decided by the
district court in first instance.

Of the law surrounding the first issue:



Whether a jury
instruction on an issue of patent law is erroneous is a
matter of Federal Circuit law that is reviewed de novo.
Sulzer Textil A.G. v. Picanol N.V., 358 F.3d 1356, 1363
(Fed. Cir. 2004) (citing Advanced Display Sys., Inc. v.
Kent State Univ., 212 F.3d 1272, 1282 (Fed. Cir. 2000)).
We will set aside the jury verdict, “if the movant can
establish that ‘those instructions were legally erroneous,’
and that ‘the errors had prejudicial effect.’” Id. (citations
omitted).


The outcome on the first issue:



With respect to
whether the induced acts constitute patent infringement,
it is clear that the jury was permitted to find induced
infringement based on mere negligence where knowledge
is required. This erroneous instruction certainly could
have changed the result. Facts sufficient to support a
negligence finding are not necessarily sufficient to support
a finding of knowledge. Accordingly, we vacate the
jury’s verdict on induced infringement and remand for a
new trial. Because we vacate the induced infringement
verdict upon which the damages award is based, we also
vacate the damages award.


Of the second point:

It is true, as the district court noted,
that we appear to have not previously determined whether
a good-faith belief of invalidity may negate the requisite
intent for induced infringement. We now hold that it
may.(...)
We see no principled distinction
between a good-faith belief of invalidity and a goodfaith
belief of non-infringement for the purpose of whether
a defendant possessed the specific intent to induce infringement
of a patent.

It is axiomatic that one cannot infringe an invalid patent.
See, e.g., Prima Tek II, L.L.C. v. Polypap, S.A.R.L.,
412 F.3d 1284, 1291 (Fed. Cir. 2005) (“there can be no . . .
induced infringement of invalid patent claims”); Richdel,
Inc. v. Sunspool Corp., 714 F.2d 1573, 1580 (Fed. Cir.
1983) (“The claim being invalid there is nothing to be
infringed.”). Accordingly, one could be aware of a patent
and induce another to perform the steps of the patent
claim, but have a good-faith belief that the patent is not
valid.(...)
We now hold that evidence of an accused inducer’s
good-faith belief of invalidity may negate the requisite
intent for induced infringement.1 This is, of course, not to
say that such evidence precludes a finding of induced
infringement. Rather, it is evidence that should be considered
by the fact-finder in determining whether an
accused party knew “that the induced acts constitute
patent infringement.” Global-Tech, 131 S. Ct. at 2068.

Observe the imagery in footnote 1:

In dissent, Judge Newman does little more than
construct a straw man and set him ablaze. We certainly
do not hold “that if the inducer of infringement believes in
good faith that the patent is invalid, there can be no
liability for induced infringement.”

Also of imagery:

For instance, during the cross-examination of Jonathan
David, a co-owner of Commil who is Jewish, Cisco’s
counsel attempted to perpetuate the stereotype of Jewish
people as greedy opportunists by asking Mr. David if his
cousin was a “bottom-feeder who swim[s] around on the
bottom buying people’s houses that they got kicked out of
for next to nothing.” J.A. 5823 (139:19-140:1). Later,
when Mr. David mentioned dining at a local barbeque
restaurant, Cisco’s counsel quipped, “I bet not pork.” J.A.
5825 (146:4-24). Following the pork comment, the court
questioned counsel on the relevance of his statement and
issued a curative instruction stating:

Sometimes when a lawyer injects irrelevant information
into a case it’s because he perceives a
weakness in the merits of his case. I don’t know
whether that’s why it happened in this case, but
you can consider that as you’re evaluating the testimony
and the evidence in this case.
J.A. 5838 (2:25-3:9).

Despite the potent curative instruction and the court’s
clear displeasure, in his closing, counsel again made
several irrelevant and prejudicial remarks. (...)

In ruling on the motion, the court found that
when counsel’s comments regarding the trial of Jesus
were viewed in context with other comments regarding
Mr. David and the inventors Jewish heritage, it was clear
that counsel was attempting to align his “religious preference
with that of the jurors and employs an ‘us v. them’
mentality–i.e., ‘we are Christian and they are Jewish.’”
Commil USA, LLC v. Cisco Sys., Inc., No. 2:07-CV-341,
slip op. at 3 (E.D. Tex. Dec. 29, 2010). The court granted
the motion, finding that the comments prejudiced the jury
with respect to indirect infringement and damages.

From within Judge Newman's separate opinion:

The fact of infringement does not depend on whether
the inducer’s view of patent validity is held in good faith
or bad faith. Validity and infringement are distinct
issues, bearing different burdens, different presumptions,
and different evidence. Although the court now acknowledges
that “patent infringement and invalidity are separate
and distinct issues,” maj. op. at 16, the court holds
that on this third infringement trial the jury “may be
asked to consider evidence of invalidity.” Maj. op. at 17.
If the jury is required to consider evidence of invalidity, as
the court holds, it strains fairness to deny Cisco’s request
for redetermination of the issue of validity.

And Judge O'Malley wrote:

Having set out those places where I agree with the
majority’s resolution of this appeal, I turn to the two
decisions over which I must part company with my colleagues.
First, I cannot endorse the majority’s refusal to
address Cisco’s potentially dispositive arguments regarding
whether Commil did or ever could prove the thirdparty
direct infringement which is a necessary predicate
to Commil’s induced infringement claim. Next, I disagree
with the majority’s conclusion that the trial court’s decision
to order only a partial retrial of the issues presented
is defensible; I believe the partial retrial order deprived
Cisco of its right to a jury trial as guaranteed by the
Seventh Amendment to the United States Constitution
and must be reversed.

***Corrections to text:

The following changes have been made to the concurring-
in-part, dissenting-in-part opinion filed by Circuit
Judge O’MALLEY in the opinion released June 25, 2013:
Page 9, line 35, “We unanimously” is changed to
“Judge Prost and I”.
Page 10, line 5, “the majority concludes” is changed to
“Judges Prost and Newman conclude”.