CAFC tackles estoppel, royalty rate in XY v. Trans Ova
The outcome in XY vs Trans Ova :
We affirm in part, vacate in part, and remand. Two
issues presented on appeal are moot. With respect to the
remaining issues, we affirm on all issues except the
district court’s ongoing royalty rate, which we vacate. We
remand for the district court to recalculate an ongoing
royalty rate in accordance with this opinion.
Note:
We do not find, as the Dissent states, that “in the
event of conflict the administrative agency’s decision
‘moots’ the district court’s decision.” Dissent at 6. Rather,
we find that an affirmance of an invalidity finding,
whether from a district court or the Board, has a collateral
estoppel effect on all pending or co-pending actions.
This court has long applied the Supreme Court’s holding
in Blonder-Tongue to apply collateral estoppel in mooting
pending district court findings of no invalidity based on
intervening final decisions of patent invalidity. See, e.g.,
Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1576
(Fed. Cir. 1994); Dana Corp. v. NOK, Inc., 882 F.2d 505,
507–08 (Fed. Cir. 1989). This court also recently applied
the Supreme Court’s holding in B&B Hardware, Inc. v.
Hargis Industries, Inc., 135 S. Ct. 1293, 1303 (2015), to
apply such estoppel to Board decisions. See MaxLinear,
Inc. v. CF CRESPE LLC, 880 F.3d 1373 (Fed. Cir. 2018)
The instant case is a straightforward application of this
court’s and Supreme Court precedent.
As to the Dissent’s concern of applying estoppel without
briefing, both precedent and the parties’ positions
allow application of collateral estoppel sua sponte here. A
remand for briefing is not a requirement to applying
estoppel when there is no indication from the Patent
Owner that “it did not have a full and fair opportunity to
litigate the validity” of its patent in the parallel case.
Dana Corp., 882 F.2d at 508. Here, in oral argument,
both parties assumed that an affirmance of the Board’s
decision would result in estoppel and thus simply disputed
the result of such estoppel. Trans Ova argued that an
affirmance would call for a remand of this case to reassess
damages in light of the Freezing Patent’s invalidity,
while XY argued that an affirmance would not require
a remand because the asserted patents were grouped in a
way where the invalidation of one patent would not affect
the damages award. Oral Arg. at 1:30–46, 18:10–19:20.
There is no indication that either party thought estoppel
would not apply. Thus, this court, in circumstances such
as this one, applies estoppel sua sponte to avoid “unnecessary
judicial waste” from remanding an issue that has a
clear estoppel effect. Arizona v. California, 530 U.S. 392,
412 (2000).
Of royalty:
XY points out that, if we were to affirm the result in
this case, it would result in the “absurd practical result
. . . that XY would have been better off forgoing the
12.5% ongoing royalty and suing Trans Ova repeatedly for
future infringement at the jury’s 15% reasonable royalty
rate.” XY Reply Br. at 13. Assuming no changed circumstances
exist (either good or bad for XY) between the date
of first infringement and the date of the jury’s verdict, we
agree with XY that allowing the district court’s ongoing
rates to stand in this case would create an odd situation.
Although district courts may award a lower ongoing
royalty rate if economic factors have changed in the
infringer’s favor post-verdict—for example, if a newlydeveloped
non-infringing alternative takes market share
from the patented products—the district court identified
no economic factors that would justify the imposition of
rates that were lower than the jury’s.1
0 Comments:
Post a Comment
<< Home