Omega Patents, LLC, v. CalAmp Corp., Appeal Nos. 2020-1793, -1794, (Fed. Cir. Sept. 14, 2021)

In its only precedential patent case this week, the Federal Circuit sent a case back for a third trial on the issue of damages. This appeal comes after the second jury trial, in which Omega accused CalAmp of infringing claims of four of its patents. In the prior appeal and the instant appeal, the Court affirmed on the underlying issues of infringement and validity. But the Court held that the damages determination was improper by excluding relevant evidence and failing to properly apportion.

This is our second Case of the Week write-up in less than a month involving damages issues, including apportionment. See our write-up of similar issues in MLC Intellectual Property, LLC v. Micron Technology, Inc., here.

The Court first addressed the district court’s JMOL denial regarding direct ‎infringement by CalAmp’s customers. The jury had found that Omega’s customers directly infringed, but that Omega was nonetheless not liable for induced infringement. On appeal, Omega appealed the finding with respect to its customers. Because CalAmp was the prevailing party “as to Omega’s claim of ‎induced infringement of the ’885 patent,” the Court declined to review the merits of ‎CalAmp’s appeal of the direct infringement finding. However, the Court agreed that ‎CalAmp “could suffer harm from the jury’s finding of direct infringement by way of ‎indemnification claims, reputational injury, or attorneys’ fees,” and that such finding ‎should thus be vacated. In reaching this conclusion, the Court explained that a “party ‎who seeks review of the merits of an adverse ruling, but is frustrated by the vagaries ‎of circumstance … ought not in fairness be forced to acquiesce in that ruling. Under ‎such circumstances, the equitable remedy of vacatur ensures that those who have been ‎prevented from obtaining the review to which they are entitled are not treated as if ‎there had been a review.” Accordingly, the Court vacated the jury’s finding of direct ‎infringement of the ’885 patent by CalAmp’s customers.‎

Second, the Court addressed the district court’s “denial of JMOL and a new trial on CalAmp’s infringement of the ’278 patent.” The Federal Circuit affirmed the infringement finding, finding the evidence sufficiently supported the verdict.

Finally, the Court addressed the district court’s “denial of remittitur and a new trial as to damages for the ’278 patent.” CalAmp appealed the district court’s findings on two grounds. First, CalAmp argued, “that the district court erroneously precluded CalAmp’s damages expert [ ] from testifying in rebuttal.” The district court refused to permit CalAmp’s expert from testifying, finding it was bound by its evidentiary ruling (Daubert exclusion of CalAmp’s expert) in the first trial. However, in an appeal from the first trial, the Court “instructed both parties to achieve clarity by clearly presenting evidence in the retrial as to compensatory damages so that [the Court could] effectively fulfill its appellate function in any further review arising from the retrial.” Here, the Court found that its previous “instruction to the parties necessarily implied that the district court was to consider damages consistent with the principles set forth in the opinion, including by reconsidering prior orders regarding evidence of damages.” Thus, the Court found that the district court’s order regarding the exclusion of CalAmp’s expert was legal error insomuch as it was contrary to its mandate and opinion in the first appeal. Further, the Court found that the district court had no other legal basis for excluding CalAmp’s expert and thus had abused its discretion in doing so.

Second, CalAmp argued that “Omega’s damages theory [regarding apportionment was] legally flawed, [thereby] leaving the jury’s award unsupported by the record.” As an initial matter, Omega argued that apportionment was not necessary as the infringing systems had no component parts outside of what was claimed in the ’278 patent. The Court rejected this argument, explaining that “even if the [systems] have the same components as those set forth in the asserted claims, Omega still must adequately and reliably apportion between the improved and conventional features of the accused product when using the [systems] as a royalty base.”

Addressing the merits of CalAmp’s challenge regarding the sufficiency of Omega’s evidence used in support of its apportionment theory, the Court agreed, finding that Omega failed to “present sufficient evidence to the jury to sustain its damages award.” In sum, the Court found that (1) Omega failed to present evidence that its patented improvement drove demand for the entire product, and (2) in the alternative, “Omega failed to show the incremental value that its patented improvement added to the [ ] product as apportioned from the value of any conventional features.” In light of Omega’s insufficient evidence on damages, the Court found that the district court abused its discretion in denying CalAmp’s request for a new trial on damages for infringement of the ’278 patent. Accordingly, the Court vacated and remanded for a new trial regarding the same.

Circuit Judge Hughes joined in part and dissented in part, explaining that while he agreed “with the majority regarding infringement, [he] conclude[d] that the district court properly excluded CalAmp’s damages expert on retrial and that the evidence presented by Omega constituted sufficient evidence to support the jury’s finding [on] royalty for infringement of the ’278 patent.”

A copy of the opinion can be found here.

By Annie White

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