Wbip v. Kohler was decided on July 19, 2016 on appeal from the District of Massachusetts. There, a jury found that defendant Kohler infringed all the asserted claims, that the asserted claims were not invalid, and that Kohler’s infringement was willful (under Seagate’s clear and convincing standard). After the verdict, the district court denied Kohler’s motion for JMOL that the claims are invalid, denied plaintiff Wbip motion for a permanent injunction, and granted Wbip’s motion for enhanced damages under § 284 (damages were enhanced by 50%). Kohler appealed the denial of JMOL that the claims were invalid, and the willfulness determination. Wbip appealed the denial of the permanent injunction.
The Federal Circuit affirmed the district court’s denial of judgment as a matter of law that the claims would have been obvious and that they lack sufficient written description, affirmed the enhancement of damages, vacated the denial of the injunction, and remanded.
As to willful infringement, the Federal Circuit noted that the district court decided the case under the defunct Seagate standard (Seagate is more lenient to willful infringers than Halo). Under Halo, the party seeking enhanced damages under § 284 bears the burden of proof by preponderance of the evidence; and a district court’s determination to award enhanced damages under § 284 is reviewed for abuse of discretion. The Supreme Court rejected Seagate’s objective recklessness prong: an invalidity defense at trial will no longer insulate an infringer from enhanced damages.
As to the subjective inquiry, “[k]nowledge of the patent alleged to be willfully infringed continues to be a prerequisite to enhanced damages,” and this factual component is to be resolved by the jury, and to be reviewed by an appellate court for substantial evidence. And here, substantial evidence supported the finding that Kohler had knowledge of the patents. Kohler admitted that it had pre-suit knowledge of the patents in suit. And there was testimony that Wbip marked its products with the patents in suit since their issuance.
The Federal Circuit affirmed the district court’s enhancement of damages under § 284, noting that it was not an abuse of discretion to enhance by 50%. “The district court has the discretion to decide whether the case is sufficiently egregious to warrant enhancing damages and to decide the amount of enhancement that is warranted (up to the statutory limit of treble damages)” (parenthesis in original).
The Federal Circuit then reviewed the denial of the permanent injunction. Both Wbip and Kohler produced and sold marine generators used on houseboats to create electrical power for appliances; the generators produced exhausts with low carbon-monoxide contents. Although Wbip was a much smaller producer of the generators, it had the manufacturing capacity to increase production. The district court, in denying the injunction, relied on the public interest factor, reasoning that an injunction would deprive the consuming public of access to a potentially life-saving product. In light of its public-interest finding, the district court decided not to address the remaining eBay factors. Despite that Wbip had the manufacturing capacity to meet the industry’s needs, the district court held that an ongoing royalty was more appropriate because it is in the public interest to have more than one company manufacture these generators.
The Federal Circuit held “the district court’s analysis… sufficiently flawed to constitute an abuse of discretion warranting” vacatur. The district court did not explain how the public interest to uphold patent rights was outweighed by the public interest of having more than one manufacturer of these generators, especially if Wbip has the capacity to meet the industry’s needs. The Federal Circuit noted that the district court’s reasoning would create categorical rule denying permanent injunctions for life-saving goods (such as pharmaceutical products), and that such a rule runs counter to Supreme Court precedent and congressional intent. The denial of the injunction was thus vacated, and the case remanded for the district court to conduct a more thorough analysis of the eBay factors.
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