Fresh From the Bench: Precedential Patent Cases From the Federal Circuit
In the Micron Tech case, the Circuit rules that TC Heartlandchanged the law on patent venue such that Micron’s argument of improper venue is now much easier to present than it would have been at an earlier point in the case. This will permit Micron and most any other similarly-situated defendant to present an improper venue argument that otherwise would have been considered to be waived. On remand from the Supreme Court, in Promega v. Life Tech the panel rules that Promega waived the right to argue that domestic sales alone should be considered in calculating a damage award. The Supreme Court had rejected Promega’s argument, and the ruling of the Circuit, that the language “all or a substantial portion of the components of a patented invention” from § 271(f)(1) can cover a single important component. Therefore, Promega could no longer argue that all of Life Tech’s international sales were covered by the patent.
Thanks to my colleague Jeff Marlink for his help with this week’s report.
In Re: Micron Technology, Inc., Fed. Cir. Case 2017-138 (November 15, 2017)
Ruling that TC Heartland changed the law as to patent venue, the panel vacates a district court ruling that Micron waived its right to object to venue, and remands for the court to determine whether the Rule 12(b)(3) motion had been waived for other reasons. The opinion notes that for the crucial condition for Rule 12(g)(2) to apply, and an unmade venue objection to be waived under Rule 12(h)(1)(A), the venue defense had to be available when the initial Rule 12(b) motion was made.
Harvard sued Micron for infringement in the district of Massachusetts in June of 2016, alleging that venue was proper under 28 U.S.C. §§ 1391(b) and 1400. In August of 2016, Micron moved for dismissal under Rule 12(b)(6) for failure to state a claim, but did not include an objection for venue under Rule 12(b)(3). In May of 2017, the Supreme Court decided TC Heartland, in which 28 U.S.C. § 1400(b) was interpreted such that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” Micron subsequently filed its 12(b)(3) motion for improper venue.
The Circuit grants Micron’s petition for a writ of mandamus that TC Heartland constituted a change of law that would render the venue waiver inapplicable. Prior to the Supreme Court’s decision in TC Heartland, the Circuit’s interpretation of 28 U.S.C. § 1391(c) deemed a corporate defendant to reside in any judicial district in which it was subject to personal jurisdiction at the time the action was commenced, as defined by its 1990 V.E. Holding decision. It was and is undisputed that venue was proper in Massachusetts under that interpretation. As the venue objection was not available at the time of moving for dismissal, the panel holds that Micron’s failure to present the venue objection at the time did not operate as a waiver of the defense under Rule 12(h)(1)(A).
Although the court agrees with Micron as to the inapplicability of Rule 12(h)(1)(A), the opinion notes that Rule 12(h)(1) is not the sole basis on which a district court might rule that a defendant can no longer present a venue defense. In particular, the opinion notes “that a district court possesses inherent powers that are ‘governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’” Dietz v. Bouldin, Inc., 136 S. Ct. 1885 (2016). The two limits on these inherent powers are that the inherent power must be a reasonable response to the needs confronting the court’s administration of justice and that the exercise of the inherent power cannot be contrary to any express limitation on the district court’s power contained in a rule or statute. The Circuit remands to the district court to consider any non-Rule 12(h)(1)(A) arguments as to waiver and, if there is no waiver, to consider the merits of venue under 28 U.S.C. § 1400(b).
Promega Corp. v. Life Technologies Corp., Fed. Cir. Case 2013-1011, -1029, -1376 (November 13, 2017)
This case is on remand from the Supreme Court, where the Court ruled that § 271(f)(1) does not cover the supply of a single but important component of a multicomponent invention. In the present decision, the panel affirms the district court’s ruling on JMOL and a new trial that Promega waived the ability to claim the domestic sales portion of Life’s total sales. The prior judgment of $52 million was based on all of Life’s international sales, but Promega failed to provide sufficient evidence that a jury could determine damages based solely on domestic sales. What must be particularly troublesome to Promega—and perhaps to its counsel’s malpractice carrier—is that Life conceded that the claims read on its product, and yet it will recover nothing from the case.
Life sold genetic testing kits comprised of five components. At least one of the five components in each kit—Taq polymerase—was supplied from the U.S. Sections 271(f)(1) and 271(a) were the only infringement theories pursued by Promega at trial. Section 271(f)(1) states: “Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” Section 271(a) states: “[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.”
The district court had ruled that Promega waived any argument that the trial record supports a damages calculation based on a subset of Life’s total worldwide sales. At trial, the district court informed Promega that it needed to put forward evidence separately proving the amount of infringing acts under § 271(a) and § 271(f)(1). Promega did not object to the district court’s characterization of its burden of proof on infringement, nor did it move the district court for a continuance of the trial in order to reopen discovery and develop the evidence necessary to separately quantify domestic and foreign sales.
Promega presented no expert testimony on damages at trial. Instead, in its rebuttal case, Promega relied on exhibits and lay testimony, including testimony regarding financial spreadsheets showing sales of the accused products, without using any of this evidence to arrive at any numerical value that could have been used by a reasonable jury to calculate an award of lost profits damages. The panel agrees with Life that Promega did not produce a witness who could make sense of the documents from which a jury could calculate a damages award.