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Massachusetts Patent Litigation Wrap Up – July 2019

September 23, 2019

Massachusetts Patent Litigation Wrap Up – July 2019

September 23, 2019

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This post is a part of a monthly series summarizing notable activity in patent litigation in the District of Massachusetts, including short summaries of substantive orders.

SiOnyx, LLC v. Hamamatsu Photonics K.K., No. CV 15-13488-FDS (D. Mass. July 25, 2019) (Saylor, J.)

SiOnyx, LLC and the President and Fellows of Harvard College (collectively “SiOnyx”) sued Hamamatsu Photonics and its U.S. subsidiary (collectively “HPK”) for patent infringement, correction of patent inventorship, and breach of contract.

At trial, the jury found that the HPK willfully infringed SiOnyx’s U.S. Patent No. 8,080,467. The jury also found that HPK breached a non-disclosure agreement it had with SiOnyx, because “HPK took [SiOnyx’s] inventive ideas, added other inventive ideas to it, and obtained [nine] patents as a result.”

The jury awarded SiOnyx $796,469 in damages for breach of contract and $580,640 in damages for unjust enrichment. But, despite finding willful patent infringement, the jury awarded $0 in damages for patent infringement.

On July 25, 2019, Judge Saylor decided several post-trial motions. Those motions are discussed below.

  1. Ownership of the Disputed Patents

SiOnyx moved for “an injunction awarding [it] ownership of [HPK’s nine] patents….” The Court considered the jury’s finding that “HPK [] took confidential information SiOnyx had entrusted to it and used it for its own gain [by filing nine patents].”

The Court then analyzed the non-disclosure agreement between SiOnyx and HPK, which provided that SiOnyx “claim[ed] ownership” of “all patent[s]” that “ar[ose] from” its confidential information. The Court held that since HPK used SiOnyx’s information to invent the patented subject matter, HPK’s patents “arose” from SiOnyx’s confidential information. The Court thus granted an affirmative injunction “awarding and transferring ownership of [HPK’s nine] patents to SiOnyx[].”

SiOnyx also argued that the jury should have found that SiOnyx’s employee was the sole inventor of HPK’s patents instead of just a co-inventor, arguing that the error “resulted from an erroneous jury instruction….” The Court found that SiOnyx did not show that “the instruction in question was legally erroneous.” Furthermore, the Court found that SiOnyx had waived the issue since it “did not object to the disputed instruction before the jury retired” and “did not raise [its] argument in a motion for a directed verdict.”

  1. Injunctive Relief for Breach of Contract and Patent Infringement

The Court additionally held that HPK’s breach of the non-disclosure agreement warranted an injunction against “making, using, offering for sale, selling, or importing products practicing [the nine patents HPK wrongfully obtained].”

The Court found it particularly important that in the breached non-disclosure agreement both parties specifically acknowledged that any breach would cause SiOnyx “irreparable harm.” The Court furthermore found that monetary damages would fail to fully compensate SiOnyx for its lost business opportunities. The Court also found relevant HPK’s testimony that the infringing products were an “insignificant” part of HPK’s business. On the other hand, the Court noted that SiOnyx’s assets were mainly its intellectual property, and thus “it is common sense that the misuse of [SiOnyx’s] confidential information, and the obtaining of patents based on that information, would constitute irreparable harm to the company.”

Next, the Court considered whether the jury’s finding that HPK willfully infringed SiOnyx’s ’467 patent justified a separate injunction against future infringement of that patent. The Court applied the eBay Inc. v. MercExchange factors and noted that there was “some question as to whether [SiOnyx] ha[s] shown ongoing irreparable harm” because SiOnyx did not manufacture a product directly competing with HPK’s infringing product. Ultimately, the Court found that the “principles of equity weigh in favor of granting an injunction.” The Court explained that “SiOnyx is a tiny company relying on a single type of technology, whereas HPK is a large company with a broad and diversified range of products.” Thus, the Court granted an injunction prohibiting HPK from “making, using, offering for sale, selling, or importing products infringing [SiOnyx’s] ’467 patent.”

  1. SiOnyx’s Motions for Attorneys’ Fees

The Court denied SiOnyx’s motion for attorneys’ fees under 35 U.S.C. § 285. SiOnyx argued that the case was “exceptional” due to HPK’s substantively weak non-infringement and invalidity positions and unreasonable litigation tactics. The Court disagreed that HPK’s positions were unjustifiably weak—noting that SiOnyx’s declined to move for summary judgment on non-infringement and invalidity. And the Court found that SiOnyx “provided no evidence that [HPK’s] counsel deliberately attempted to increase the cost and complexity of [the] case for any improper purpose.” For similar reasons, the Court also rejected SiOnyx’s motion for attorneys’ fees and costs under 28 U.S.C. § 1927.

  1. SiOnyx’s Motion for Enhanced Damages

The Court further denied SiOnyx’s 35 U.S.C. § 284 requests for enhanced damages. Section 284 provides that “[w]hen the damages are not found by a jury, the court shall assess them.” SiOnyx argued that the jury did not “assess” damages because it awarded $0 for patent infringement despite finding that infringement was willful. The Court rejected this argument, determining that, because the jury awarded damages for breach of contract and unjust enrichment, “it is certainly reasonable to interpret the jury’s verdict as a rational attempt to … avoid[] an award of duplicative damages.”

The Court also declined to award SiOnyx treble damages under 35 U.S.C. § 284 for HPK’s willful patent infringement. Because the jury verdict awarded $0 in patent infringement damages, the Court held that it is “impossible to ascertain precisely what the jury found [patent infringement] damages were, so it is impossible to treble that amount.”

  1. HPK’s Motion for Judgment as a Matter of Law

The Court also rejected HPK’s motion for judgement as a matter of law. HPK first argued that SiOnyx’s breach of contract and unjust enrichment claims were barred by the statute of limitations because “[SiOnyx] knew or should have known that defendants had breached the non-disclosure agreement when they failed to return [SiOnyx’s] confidential information….” But the Court declined to reconsider the jury’s verdict on this issue.

HPK also argued that SiOnyx’s damages award should be reduced because SiOnyx was “not owed damages for the breach of contract and unjust enrichment claims after the non-disclosure agreement expired….” The Court rejected this argument finding that “the jury’s verdict [could] be reasonably construed to incorporate a finding that [HPK] continued to reap the benefit of [its] earlier breach by selling products that [it] had designed using [SiOnyx’s] confidential information.”

Finally, the Court refused to overturn the jury’s finding that HPK willfully infringed SiOnyx’s patent because “[t]he jury’s verdict [could] be reasonably construed to mean that [HPK’s monitoring of related patents] gave defendant[] knowledge of the [infringed] patent….”

HPK appealed this case to the Federal Circuit in late August, and that appeal is pending.

Authors: Bobby Hampton, Matthew Berntsen

The opinions expressed are those of the authors on the date noted above and do not necessarily reflect the views of Fish & Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates. This post is for general information purposes only and is not intended to be and should not be taken as legal advice. No attorney-client relationship is formed.

Blog Authors

Bobby G. Hampton | Associate

Bobby Hampton is a litigation attorney and has handled a broad range of intellectual property cases, including patent, trademark, copyright, trade secret, and IP license matters. He has experience in a variety of forums, including in district courts across the country, the International Trade Commission (ITC), and the United States Patent and...