Enplas wins on damages; Judge Newman dissents

The outcome of Enplas:



Enplas Display Device Corporation appeals the district
court’s summary judgment that claim 20 of Seoul
Semiconductor Company, Ltd.’s (“SSC”) U.S. Patent
No. 6,007,209 is not anticipated. Following a jury trial on
the remaining infringement and invalidity issues, Enplas
also appeals the district court’s denial of judgment as a
matter of law (“JMOL”) that SSC’s U.S. Patent
No. 6,473,554 is anticipated; denial of JMOL of no induced
infringement; and denial of JMOL that the jury’s
damages award is excessive and not supported by the
trial evidence.

For the reasons below, we affirm the district court’s
judgment that claim 20 of the ’209 patent and the asserted
’554 patent claims are not anticipated. Although a
close question, we also affirm the district court’s denial of
JMOL of no inducement. We hold, however, that the
district court erred when it denied JMOL that the damages
award was not supported by substantial evidence. We
therefore vacate the jury’s damages award, and remand
for further proceedings.




Judge Newman wrote separately:


I concur in the court’s decision sustaining the validity
of the Seoul Semiconductor Company (“SSC”) patents in
dispute and affirming the judgment of induced infringement.
The jury verdicts were reached on correct instructions
of law, and are supported by substantial evidence. I
must, however, dissent from the reversal of the jury’s
damages verdict. On the unrebutted testimony presented
to the jury, the verdict is supported by substantial evidence
and requires affirmance.

A jury’s damages verdict receives substantial deference.
See Los Angeles Mem’l Coliseum Comm’n v. Nat’l
Football League, 791 F.2d 1356, 1365 (9th Cir. 1986)
(“[W]e undertake only limited review of jury damages
awards, in order to avoid encroaching upon the jury’s
proper function under the Constitution.”); Handgards,
Inc. v. Ethicon, Inc., 743 F.2d 1282, 1297 (9th Cir. 1984)
(“A jury’s finding of the amount of damages must be
upheld unless the amount is grossly excessive or monstrous,
clearly not supported by the evidence, or only
based on speculation or guesswork.” (internal quotation
marks omitted) (quoting Blanton v. Mobil Oil Corp., 721
F.2d 1207, 1216 (9th Cir. 1983)). On procedures not
unique to patent law, we apply the procedural law of the
regional circuit. The standard of review of the jury’s
damages verdict is the standard of the Ninth Circuit, the
forum of the jury trial. The court today departs from
these procedural principles, although these principles
constitute binding precedent.

(...)

In direct analogy, the district court herein properly allowed
SSC’s damages expert to testify concerning a hypothetical
negotiation for a freedom-to-operate license.
Deference is owed to the district court’s evidentiary
ruling, which comports with precedent. See Harper v.
City of Los Angeles, 533 F.3d 1010, 1030 (9th Cir. 2008)
(“We afford broad discretion to a district court’s evidentiary
rulings.”); see also Zhang v. Am. Gem Seafoods, Inc.,
339 F.3d 1020, 1038 (9th Cir. 2003) (“We must accept any
reasonable interpretation of the jury’s actions, reconciling
the jury’s findings by exegesis if necessary . . . ; a search
for one possible view of the case which will make the
jury’s finding inconsistent results in a collision with the
Seventh Amendment.”) (internal citations omitted). The
majority’s view produces such a collision.

(...)

My colleagues state that “Enplas was not required to
produce a witness to rebut SSC’s damages theory.” Maj.
Op. at 20 n.1. While this is correct in the abstract, it does
not atone for Enplas’ litigation decision to leave the
damages theory unrebutted. “Vigorous crossexamination,
presentation of contrary evidence, and
careful instruction on the burden of proof are the traditional
and appropriate means of attacking shaky but
admissible evidence.” Daubert, 509 U.S. at 596. The
failure to provide contrary evidence, or even challenge the
evidence SSC presented, may well have affected the jury’s
verdict.
Here, the damages testimony was clearly relevant,
the jury was correctly instructed, and the verdict was in
conformity with the evidence. There is no basis to overturn
the denial of JMOL, for substantial and unrebutted
evidence supported the jury verdict. See Cataphote Corp.
v. De Soto Chem. Coatings, Inc., 356 F.2d 24, 26 (9th Cir.),
opinion modified on denial of reh’g, 358 F.2d 732 (9th Cir.
1966) (“It is not [the Appellate Court’s] function to reevaluate
the evidence presented below. We cannot substitute
our judgment for the first-hand evaluation made by the
trier of fact. Pursuant to Rule 52(a) of the Federal Rules
of Civil Procedure our obligation is to determine if the
findings below were ‘clearly erroneous.’ This statutorily
imposed standard does not vests us with power to reweigh
the evidence presented at trial in an attempt to assess
which items should and which should not have been
accorded credibility.”). It is not the appellate judge’s role
to provide the evidence that a party declined to provide at
trial.

(...)

The Court has cogently stated: “Few bodies of law
would be more difficult to reduce to a short and simple
formula than that which determines the measure of
damage recoverable for actionable wrongs.” F. W. Woolworth
Co. v. Contemporary Arts Inc., 344 U.S. 228, 232
(1952). Until today, “we have never laid down any rigid
requirement that damages in all circumstances be limited
to specific instances of infringement proven with direct
evidence.” Lucent Techs., 580 F.3d at 1334. Faced with
unopposed expert testimony describing a hypothetical
negotiation for a freedom-to-operate license, my colleagues
“create a hypothetical negotiation far-removed
from what parties regularly do during real-world licensing
negotiations.” Id.
The damages verdict was the product of correct jury
instructions, and testimony on examination and crossexamination
before the jury. The lump-sum verdict was
for “all past and future infringement,” Maj. Op. at 19, as
the jury was instructed. My colleagues’ insistence that
the payment was for non-infringing products was not
presented at trial, and has no support in the record. The
jury verdict is supported by substantial evidence, and
should be affirmed. I respectfully dissent from the court’s
contrary ruling.