Wednesday, January 16, 2008

Seagate Wipes Out Willfulness in the ND Illinois

Trading Technologies International Inc. v. eSpeed, Inc. (04 C 5312), Jan. 3, 2008

At trial, the court instructed the jury in light of the Seagate standard on willfulness. After trial, the jury rendered a verdict that defendants willfully infringed plaintiff's patents. The defendants moved for a judgment as a matter of law that their conduct was not willful.

The district court agreed with the defendants:

First, we find that plaintiff did not meed its burden of demonstrating that defendants acted despite an objectively high likelihood of infringement. When defendants first launched [the allegedly infringing product], plaintiff's patent had not yet issued. While defendants knew of plaintiff's patent application, this knowledge alone is not enough to demonstrate willfulness . . . Thus, the focus of a willfulness determination is generally on post-patent, rather than pre-patent conduct.

Here, plaintiff failed to provide any evidence of post-patent conduct indicative of willfulness . . . [o]nce defendants became aware of the patent there were no further sales, and they immediately began a redesign, resulting in a product that was on the market within five months of the patent's issuance, and which this court found did not infringe the patent. Plaintiff argues that during that period defendants should have pulled their infringing product from the customers who had already purchased it, or disabled the infringing screen. However, plaintiff offered no evidence that defendants could have done so. Thus, even if the likelihood of infringement could be considered objectively high, plaintiff adduced no evidence that defendants acted despite that likelihood.
The plaintiff argued that defendants' failure to assert a non-infringement defense demonstrated that they acted "despite an objectively likelihood of infringement." The district court disagreed, relying in part on the decision in Broadcom Corp. v. Qualcomm Inc. 2007 U.S. Dist. LEXIS 86627 (C.D. Cal. Nov. 21, 2007), which noted:

[w]hile a jury might find as a matter of fact that the absence of a reasonable belief of non-infringement or the invalidity on the patent in suit might on some records lead to a conclusion of disregard of an objectively high likelihood of infringement, that conclusion is hardly compelled. The two standards are not identical, even if there might be some theoretical overlap.

Thus the district court found in this situation that the analysis better rests with the consideration of defendant's subjective intent (that defendants knew or should have known of the objectively high likelihood of infringement). However, the district court noted that "the Federal Circuit provided little guidance to courts as to how to meld the new standard with a consideration of the totality of the circumstances."

Turning to the case at hand, the court noted:
Though in its preliminary injunction order this court stated that defendants appeared not to assert non-infringement of their original product, we note that the preliminary injunction inquiry did not focus on that product since it was no longer on the market. Additionally, defendants' answer to plaintiff's complaint denied that any product infringed. Furthermore, validity of plaintiff's patents has been hotly contested in this litigation. We find on this record that defendants sufficiently asserted defenses to infringement and those defenses were neither unreasonable nor frivolous.

[P]laintiff also offered [evidence noting] that defendants, like all the other independent software vendors, were attempting to create programs similar to plaintiff's in order to stay competitive. This evidence does not rise to the level of egregious copying . . . [r]ather, "[t]his is classic commercial gamesmanship under the patent system . . . not the kind of behavior courts have categorized in the past as willful infringement."

View/download the opinion here (link).

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