ED Va reversed on evidentiary issues in Tecsec case

TecSec appeals. It challenges the district court’s motion-in-limine ruling, as well as certain jury instructions and the post-trial damages reduction. Adobe cross-appeals, challenging the district court’s ruling on eligibility. We reverse the evidentiary ruling that eliminated TecSec’s inducement case for a substantial period, and we reject Adobe’s challenge to the district court’s eligibility ruling. For those reasons, and others stated in this opinion, we reverse the judgment in part and remand for further proceedings on TecSec’s claim of induced infringement. Of details A defendant is liable for “induced infringement under § 271(b)” if the defendant took certain affirmative acts to bring about the commission by others of acts of infringement and had “knowledge that the induced acts constitute patent infringement.” Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765–66 (2011); see Commil USA, LLC v. Cisco Systems, Inc., 135 S. Ct. 1920, 1928 (2015); Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 843 F.3d 1315, 1331 (Fed. Cir. 2016). The intent element requires “knowledge that the induced acts constitute patent infringement,” which can be established by a proper finding of “willful blindness.” Global-Tech, 563 U.S. at 766–71; see Commil, 135 S. Ct. at 1926–28 (reiterating requirement of knowledge of infringing character of induced conduct, not just knowledge of patent). This intent element was the basis for the district court’s primary rationale for its motion-in-limine ruling, a ruling that assumed that the induced conduct was in fact infringing. (...) The district court in this case erred when it concluded as a matter of law that, after the district court’s (later reversed) claim construction on March 3, 2011, Adobe “lacked the requisite intent to induce infringement.” J.A. 27. The court explained that it had “reasonably, though erroneously, ruled in Adobe’s favor on infringement,” and, accordingly, Adobe was entitled to rely on that ruling as proof that the relevant induced acts were non-infringing. Id. That reasoning makes dispositive what Adobe, with objective reasonableness, could have believed. The Global-Tech inducement standard, however, can be met by proof of what Adobe in fact subjectively believed. For example, Adobe might have believed that the March 2011 claim-construction ruling was erroneous (though reasonable) and would likely be reversed (as it was in 2013). Thus, the district court’s March 2011 ruling “could, at most, create a factual question, not an entitlement to a no-knowledge finding as a matter of law.” Smith & Nephew, 603 F. App’x at 989– 90. For those reasons, we conclude that the district court legally erred in its primary rationale for ruling out inducement after March 3, 2011, namely, that the claim-construction ruling of that date furnished an objectively reasonable basis for a belief that use of the accused products did not infringe, even if Adobe did not have such a belief. Also The district court’s second ground for its motion-inlimine ruling was that “allowing TecSec to argue [postMarch 3, 2011] induced or willful infringement . . . would taint the trial and any verdict with undue prejudice and juror confusion.” J.A. 28. Whether we review that ruling de novo or for an abuse of discretion, we conclude that the district court erred in relying on this rationale to preclude TecSec from proving inducement after March 3, 2011. In defending the district court’s rationale, Adobe invokes Rule 403 of the Federal Rules of Evidence, which provides that a court “may exclude relevant evidence if its probative value is substantially outweighed by a danger of,” among other factors, “unfair prejudice” or “confusing the issues.” But the district court in this case went beyond excluding a single piece, or even a fixed set, of evidence and leaving TecSec to present such other relevant, admissible evidence as it may have on inducement in the period at issue. Instead, the court foreclosed the introduction of any evidence on the issue of post-March 3, 2011 inducement of infringement. This is materially different from any application of Rule 403 Adobe has identified. Cf. General Dynamics Corp. v. United States, 563 U.S. 478, 484–85 (2011) (distinguishing case involving “purely evidentiary dispute” over state-secret privilege, where “the privileged information is excluded and the trial goes on without it,” from case involving foreclosure of a claim). The district court reasoned that if TecSec was allowed to argue inducement of infringement after that date, Adobe would be prejudiced were it not allowed to introduce the March 3, 2011 claim construction and the stipulation by TecSec that, under that construction, Adobe’s customers did not directly infringe. J.A. 28. The court then concluded that “it would also be substantially and unduly prejudicial and confusing for the jury to see a prior ruling in this case and TecSec’s stipulation that Adobe’s products did not infringe.” J.A. 28–29. On that basis, the district court precluded TecSec from offering any proof of post-March 3, 2011 inducement. Adobe has not cited any authority that supports such foreclosure of liability for a given period in the circumstances present here. Any conclusion that post-March 3, 2011 inducement could not be fairly tried would have required consideration of what other admissible evidence TecSec had that was relevant to the intent element of inducement, as well as of the possible measures for effectively but fairly reducing jury confusion. But the district court did not undertake, and because of the limited scope of Adobe’s motion in limine was in no position to undertake, that required consideration. Adobe’s motion, besides what it suggested on the legalimpossibility point, was limited to arguing for Adobe’s ability to introduce the claim-construction ruling and TecSec’s stipulation. It did not call for TecSec to identify all evidence of intent—as a motion for summary judgment would have done—so that the district court could determine if there was a triable issue of post-March 3, 2011 inducement of infringement. See J.A. 10429. TecSec therefore properly limited its response to arguing against the admission of the construction and stipulation. See J.A. 10849. On the motion as framed, the district court lacked the basis to consider the totality of TecSec’s post-March 3, 2011 inducement evidence to determine whether that issue could fairly be tried. And the court did not consider the totality of such evidence. Nor, in taking the extraordinary action of foreclosing liability for a substantial period, did the district court set forth an analysis of potential means, such as cautionary jury instructions, that could reduce jury confusion and allow a fair trial considering the totality of relevant evidence. Adobe cites several cases to support the proposition that “there are circumstances where, for willfulness or inequitable conduct, there can be no intent as a matter of law.” Appellant’s Br. at 28. None of those cases support the ruling in this case. The cited cases all involved ordinary motions for summary judgment that, with proper procedural protections, duly enabled the court to consider all evidence relevant to the particular liability issue. See Ferring B.V. v. Barr Labs., Inc., 437 F.3d 1181, 1190–94 (Fed. Cir. 2006) (finding lack of intent for inequitable conduct after consideration of evidence on summary judgment); Intercontinental Great Brands LLC v. Kellogg N. America Co., 869 F.3d 1336, 1352 (Fed. Cir. 2017) (same). By contrast, Adobe’s motion in limine did not call for, or provide a basis for, consideration of all relevant material evidence. Without such consideration, the district court could not properly resolve the issue as a matter of law.2 As Adobe acknowledges in this court, see Cross-Appellant’s Principal and Response Br. at 15, 20, when the district court stated that it would be “substantially and unduly prejudicial and confusing for the jury to see” the claim-construction ruling and TecSec’s stipulation, J.A. 28–29, the court was determining that the evidence Adobe was entitled to introduce would be “unduly prejudicial” to TecSec. But TecSec never stated that, if that evidence had to be admitted at Adobe’s behest, TecSec would drop its inducement claim for the post-March 3, 2011 period. To the v