WCM v. IPS is a nonprecedential opinion decided on February 5, 2018 on appeal from the Western District of Tennessee. Plaintiff WCM sued defendant IPS in the District of Colorado for two patents which had issued within the prior month. WCM then voluntarily dismissed the Colorado suit and refiled the same complaint in the Western District of Tennessee about a month later. The jury found that IPS willfully infringed WCM’s patents, and awarded over $1 million in damages. The district court then trebled the damages award because of IPS’s willfulness. The district court also granted IPS’s motion for JMOL of no infringement under the doctrine of equivalents as to one of its product lines, but let stand the jury’s verdict of indirect infringement and willfulness. Both parties appealed.
The Federal Circuit reversed the grant of JMOL of no infringement under the doctrine of equivalents, affirmed the denial of JMOL of no indirect infringement, affirmed the denial of JMOL of no willfulness, vacated the award of maximum enhanced damages, and remanded.
The district court did not err in refusing to grant JMOL of no willfulness. A defendant need not have had knowledge of the patents-in-suit before the lawsuit began to be found a willful infringer. Rather, the inquiry looks to the “totality of the circumstances presented in the case.” Here, WCM provided sufficient evidence for a reasonable jury to conclude that IPS did know of the patents “as they issued, if not earlier.” It is undisputed that IPS had knowledge of the patents at least as of the date of filing of the first Colorado suit, about a month before the Tennessee action was initiated. Further, there was evidence that IPS failed to investigate the asserted patents, that an IPS employee “had monitored WCM’s products for decades,” and that there was “a culture of copying at IPS.” WCM provided sufficient evidence for a reasonable jury to have found willful infringement.
The district court abused its discretion in awarding treble damages. “Although district courts enjoy discretion in deciding whether to award enhanced damages, and in what amount, the channel of discretion is narrow and damages are generally reserved for egregious cases of culpable behavior.” The Read factors, although not mandatory, “assist the trial court in evaluating the degree of the infringer’s culpability and in determining whether to exercise its discretion to award enhanced damages at all, and if so, by how much the damages should be increased.”
Here, the district court’s analysis of the Read factors was “either non-existent or incorrect.” The first factor “whether the infringer deliberately copied the ideas of another” should not have been weighed very strongly in favor of enhancing damages because the email evidencing a culture of copying did not refer to a product involved in the litigation. The second factor “whether the infringer… investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed” weighed only slightly in favor of enhancing damages because the evidence cited involved patents or products not at issue in this case. The district court appropriately weighed the third, fourth, and fifth factors.
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The district court did not analyze the sixth factor, “the duration of the defendant’s misconduct.” This factor would likely weigh against enhancement as the patents issued only a short time before the filing of the lawsuit. The district court did not analyze the seventh factor, “remedial action by the defendant,” which would likely also weight slightly against enhancement as defendant modified its products and began selling a modified product during the pendency of this litigation.
Accordingly, the district court “made a clear error of judgment” in deciding to award the maximum amount of damages. “[W]here the maximum amount is imposed, the court’s assessment of the level of culpability must be high.” The district court is also “particularly obligated to explain the basis for the award where it awards treble damages.” Here the district court only provided a “single conclusory sentence as to why it was awarding the maximum amount.” The Federal Circuit thus vacated the decision to treble damages and remanded for the district court to reconsider the amount by which the damages should be enhanced.
WCM Indus., Inc. v. IPS Corp., 721 F. App’x 959 (Fed. Cir. 2018)