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Polara Engineering Inc. v. Campbell Corp.

Closeness of Public Use Defense Should Have Been Considered in Damages Enhancement

Polara Engineering Inc. v. Campbell Corp., __ F.3d __, 2018 WL 3352611 (Fed. Cir. July 10, 2018) (LOURIE, Dyk, Hughes) (C.D. Cal.: McCormick) (3 of 5 stars)

Fed Cir part-affirms, part-vacates judgment of liability for patent infringement and damages enhancement. Polara’s patent related to a two-wire control system for a push-button crosswalk station. Substantial evidence supported the jury’s determination that pre-filing public use by Polara of its claimed invention was experimental, and thus not invalidating. Testimony that extensive testimony was needed to ensure safety and durability related to the claimed features was sufficient, as per City of Elizabeth, 97 U.S. 126 (1877), to support application of the experimental use exception. Although Polara did not enter into a confidentiality agreement with the city of Fullerton, CA (where the invention was tested), there was evidence that it protected confidentiality in other ways, such as by having its own employees install and maintain the devices, and not explaining to Fullerton how they worked. Noting that there was some testimony indicating that the Fullerton testing related to commercial features, the court declines to reweigh the evidence on this “close” issue of public use.

The district court also did not err in its jury instruction on claim interpretation, for purposes of evaluating prior art defenses. The opinion finds “disingenuous” Campbell’s assertion that it did not advocate plain and ordinary meaning for a key term, where the record showed that it had done so, and the court “look[s] with extreme disfavor” on Campbell’s argument that the district court erred in adopting such a construction. Further, per Interactive Gift Express, 256 F.3d 1323 (Fed. Cir. 2001), Campbell is judicially estopped from making such argument. Even absent these considerations, there was no material error, as Campbell’s argument seemed to mischaracterize the content of the prior art. Polara presented sufficient evidence to support the jury’s determination of neither anticipation nor obviousness.

Substantial evidence also supported the jury’s finding of willful infringement, and the opinion recites the evidence in the record. It notes that Campbell presented no documentary or third-party evidence to substantiate its allegation that it had an opinion of counsel to support a good faith belief in noninfringement and invalidity as to at least all independent claims. Campbell’s contention that it was not allowed to present defenses to willfulness pre-litigation was also inconsistent with the record, and with Campbell’s waiver of the issue when it agreed to present the jury with a verdict form with simple “yes” and “no” lines, and no division between pre-litigation and post-litigation. Campbell also waived its argument that the district court failed to take into account that Polara did not seek a preliminary injunction.

The district court erred, however, in failing to explain its basis for enhancing damages by 2.5x, and by failing to even mention the close issue of public use. The damages enhancement is vacated, and on remand the district court should “provide a more complete explanation, including a discussion of the public use defense, in exercising its discretion.” Op. at 26.

KEYWORDS: EXPERIMENTAL USE; PUBLIC USE; ANTICIPATION; CLAIM CONSTRUCTION; WILLFULNESS; DAMAGES ENHANCEMENT