SRI International v. Cisco was decided on March 20, 2019 on appeal from the District of Delaware. The district court denied defendant Cisco’s motion for summary judgment of patent ineligibility and anticipation. At trial, the jury found willful infringement, and awarded plaintiff SRI a 3.5% reasonable royalty rate for a total of $23,660,000. Post-trial, the district court denied Cisco’s motion for JMOL of no willfulness, doubled the damages award, granted SRI’s motion for attorney fees, compulsory license, and prejudgment interest. Cisco appealed.
The Federal Circuit affirmed the denial of summary judgment of patent ineligibility and of anticipation, adopted the district court’s claim construction, vacated the denial of JMOL of no willfulness, vacated the enhanced damages, vacated the award of attorney fees, affirmed the ongoing royalty award and remanded.
The jury’s finding that Cisco willfully infringed the patents-in-suit prior to receive notice is not supported by substantial evidence. While district courts have discretion in deciding whether or not behavior warrants a finding of willful infringement, “such findings are generally reserved for egregious cases of culpable behavior.” “It is undisputed that Cisco did not know of SRI’s patent until May 8, 2012, when SRI sent its notice letter to Cisco.” So the record does not support a willfulness finding going back to 2000. Given the general verdict form, the Federal Circuit “presume[d] the jury also found that Cisco willfully infringed after May 8, 2012.” The Federal Circuit, however, left “it to the district court to decide in the first instance whether the jury’s presumed finding of willful infringement after May 8, 2012 is supported by substantial evidence.” The willfulness and enhanced damages findings were thus vacated.
The district court did not err in finding the case exceptional based on Cisco’s “aggressive” litigation strategy, which “created a substantial amount of work for both SRI and the court, much of which work was needlessly repetitive or irrelevant or frivolous.” The district court did not err in awarding attorney fees generally, “including keeping the attorneys’ billing rates without adjusting them to Delaware rates.” The district court, however, erred in granting all of SRI’s fees. “Section 285 permits a prevailing party to recover reasonable attorneys’ fees, but not fees for hours expended by counsel that were excessive, redundant, or otherwise unnecessary.” The district court “should have reduced SRI’s total hours to eliminate clear mistakes.” The Federal Circuit thus remanded “only for removal of attorney hours clearly included by mistake and consequent recalculation of reasonable attorneys’ fees.”
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The district court “did not abuse its discretion in awarding a 3.5% compulsory license for all post-verdict sales.” The “ongoing royalty on post-verdict sales is limited to products that were actually found to infringe and products that are not colorably different.” The district court did not abuse its discretion in finding that Cisco’s submissions “regarding alleged post-verdict design-around activity” were untimely. “Cisco did not redesign its products until after trial, and Cisco did not file its motion to supplement until after completion of post-trial briefing.”
Judge Lourie dissented, arguing that the claims are “directed to an abstract idea at Alice step one, without an inventive concept at step two.”
SRI Int’l, Inc. v. Cisco Sys., 918 F.3d 1368 (Fed. Cir. 2019)