254 F. Supp. 3d 680
D. Del.2017Background
- SRI sued Cisco for infringement of U.S. Pat. Nos. 6,711,615 and 6,484,203 alleging that various Cisco and Sourcefire IPS products and services infringe asserted system and method claims. Jury trial occurred May 2–11, 2016.
- The jury found direct and indirect (inducement and contributory) infringement, no invalidity, and willfulness; it awarded a 3.5% running royalty totaling $23,660,000.
- Cisco moved post-trial for JMOL, a new trial, and remittitur; SRI moved for attorney fees. Cisco also sought to supplement the record with post-verdict redesign evidence.
- The court applied regional and Federal Circuit standards for JMOL/new trial, and Supreme Court/Federal Circuit precedent for willfulness and exceptional-case fee awards under 35 U.S.C. §§ 284, 285.
- The court denied Cisco’s motions for JMOL, new trial, and remittitur across liability, damages, and willfulness issues, denied the supplement motion, and granted SRI attorney fees, doubled damages (enhancement), a 3.5% compulsory post-verdict license, and prejudgment interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Direct infringement (products/services) | SRI: expert, user/customer testimony, docs, and surveys show accused features (correlation/meta engines, rule nesting/deployment) meet claim limitations | Cisco: accused features process single events/are not hierarchical; insufficient evidence of multi-event integration; services do not "redeploy" infringing features | Denied JMOL — jury verdict supported by substantial evidence; court will not reweigh credibility |
| Inducement | SRI: Cisco materials, user guides, customer support, survey results, and evidence Cisco knew or willfully avoided knowing patents show intent to induce | Cisco: no proof Cisco encouraged customers to enable nested rules; asserted reasonable non-infringement belief; lack of direct infringement evidence | Denied JMOL — sufficient circumstantial evidence for jury to find inducement, including willful blindness evidence |
| Contributory infringement | SRI: meta engine and critical signatures enabled by default, survey showing widespread enablement, and Cisco encouragement/support | Cisco: substantial noninfringing uses exist (survey shows some users disable feature); lacks intent/knowledge to support contributory liability | Denied JMOL — jury could find accused components had no substantial noninfringing use and Cisco had requisite knowledge |
| Damages (royalty form/rate/base/apportionment) | SRI: running royalty supported by prior licenses (Oki, IBM, others), expert apportionment and survey-based usage estimates; proposed 7.5% but jury chose 3.5% | Cisco: prior licenses support lump-sum much lower than jury award; royalty base should exclude non-using sales (survey shows many users may not enable features) | Denied JMOL/remittitur/new trial — jury had sufficient evidence to adopt a 3.5% running royalty on apportioned revenues; court will not substitute its judgment |
| Willfulness and enhanced damages/fees | SRI: evidence that Cisco employees did not review patents timely, pervasive litigation conduct, and postures support subjective willfulness and exceptional-case finding | Cisco: reasonable noninfringement defense (pre-Halo Seagate arguments) and Halo changed willfulness analysis | Denied JMOL on willfulness; court found sufficient evidence for subjective willfulness under Halo and awarded enhanced damages (doubling) and attorney fees under §285 as an exceptional case |
| Post-verdict redesign evidence (supplement record) | Cisco: post-verdict redesigns relevant to enhancement/ongoing royalties | SRI: untimely, would require discovery, and irrelevant to jury award | Denied — court found post-verdict redesign evidence irrelevant to jury damages and inappropriate to supplement at this stage |
Key Cases Cited
- Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014) (standard for exceptional case under 35 U.S.C. § 285)
- Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016) (willful infringement/enhanced damages standard)
- Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) (treatment of circumstantial evidence and usage data in reasonable royalty analysis)
- Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336 (Fed. Cir. 2011) (review standard for jury reasonable royalty awards)
- Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) (knowledge/willful blindness in inducement)
- WBIP, LLC v. Kohler Co., 829 F.3d 1317 (Fed. Cir. 2016) (applying Halo; standard of review for willfulness jury findings)