Westerngeco L.L.C. v. Ion Geophysical Corp.
837 F.3d 1358
| Fed. Cir. | 2016Background
- WesternGeco sued ION for patent infringement; a jury found infringement and awarded lost profits and a reasonable royalty, and found subjective recklessness.
- District court denied enhanced damages under 35 U.S.C. § 284, concluding ION’s defenses were objectively reasonable under the Federal Circuit’s Seagate two-part test and granted JMOL of no willful infringement.
- On appeal this court reversed the lost-profits award (foreign lost profits) and affirmed denial of enhanced damages under Seagate; Judge Wallach dissented on lost profits.
- WesternGeco sought certiorari and the Supreme Court issued Halo, which rejected Seagate’s rigid objective-prong requirement for enhanced damages. The Supreme Court GVR’d and remanded this case for reconsideration in light of Halo.
- On remand the Federal Circuit vacated the district court’s judgment as to willfulness/enhanced damages, reinstated its earlier opinion in other respects, and instructed the district court to (1) reassess the sufficiency of evidence of subjective willfulness under the appropriate standard and (2) exercise discretion whether to award enhanced damages considering Halo’s guidance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard for awarding enhanced damages under § 284 | Seagate’s two-part test is applicable and defendant was willful | Seagate required objective recklessness; defendant’s defenses were objectively reasonable | Halo overturned Seagate’s rigid objective-prong rule; subjective willfulness can alone support enhancement and district court has broad discretion |
| Effect of Halo on this case | Remand required to reconsider enhanced damages under Halo | Prior JMOL of no willfulness should stand because defenses were reasonable | Vacated district court’s JMOL on willfulness; remand to reassess willfulness and discretionary enhancement under Halo |
| Burden/standard of proof for subjective willfulness on remand | Jury found subjective willfulness by clear and convincing evidence | Defendant argued no substantial evidence supported subjective willfulness | District court must review sufficiency of evidence; Halo replaces Seagate’s clear-and-convincing requirement with preponderance standard for enhanced-damages inquiry |
| Recoverability of foreign lost profits as damages | WesternGeco argued foreign activities could measure U.S. damages when sufficiently connected | ION argued foreign uses are extraterritorial and not compensable | Majority did not reconsider prior holding here (foreign lost profits rejected); Judge Wallach dissented, urging a proximity-based analysis for foreign lost profits |
Key Cases Cited
- Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. (Sup. Ct. 2016) (rejecting Seagate’s rigid objective-prong requirement and restoring discretion to district courts on enhanced damages)
- In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc) (previous two-part test for willful infringement)
- Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (Sup. Ct. 2014) (totality-of-the-circumstances discretionary standard for fee awards; guidance applied in Halo)
- Fogerty v. Fantasy, Inc., 510 U.S. 517 (Sup. Ct. 1994) (nonexclusive factors for fee-shifting; referenced for relevant considerations)
- Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348 (Fed. Cir. 2013) (discussing limits on using wholly extraterritorial foreign sales to measure U.S. patent damages)
- Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd., 807 F.3d 1283 (Fed. Cir. 2015) (rule on when foreign manufacture/use/sale units may be used to measure damages for patented methods)
- Brown v. Duchesne, 60 U.S. (19 How.) 183 (U.S. 1856) (foreign use generally not an infringement, but certain connections can make foreign use relevant to U.S. damages)