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Promega Corporation v. Life Technologies Corp.

United States Court of Appeals, Federal Circuit

November 13, 2017

PROMEGA CORPORATION, Plaintiff-Cross-Appellant
v.
LIFE TECHNOLOGIES CORPORATION, INVITROGEN IP HOLDINGS, INC., APPLIED BIOSYSTEMS, LLC, Defendants-Appellants MAX-PLANCK-GESELLSCHAFT ZUR FOERDERUNG DER WISSENSCHAFTEN E.V., Plaintiff

         Appeals from the United States District Court for the Western District of Wisconsin in No. 10-CV-0281, Judge Barbara B. Crabb.

          Seth P. Waxman, Wilmer Cutler Pickering Hale and Dorr, LLP, Washington, DC, for plaintiff-cross-appellant. Also represented by Kevin Lamb, Thomas Saunders; Mark Christopher Fleming, Eric Fletcher, Janine Marie Lopez, Boston, MA; Proshanto Mukherji, Fish & Richardson, PC, Boston, MA; Susan Rebecca Podolsky, Law Offices of Susan R. Podolsky, Alexandria, VA.

          Edward R. Reines, Weil, Gotshal & Manges LLP, Redwood Shores, CA, for defendants-appellants. Also represented by Marion McLane Read, Derek C. Walter; Carter Glasgow Phillips, Sidley Austin LLP, Washington, DC.

          Daryl Joseffer, King & Spalding LLP, Washington, DC, for amicus curiae The Internet Association. Also represented by Paul Alessio Mezzina; Adam M. Conrad, North Carolina Business Court, Charlotte, NC.

          Peter J. Brann, Brann & Isaacson, Lewiston, ME, for amici curiae Newegg, Inc., Acushnet Company, Limelight Networks, Inc., QVC, Inc., SAS Institute, Inc. Also represented by Stacy O. Stitham, David Swetnam-Burland.

          Before Prost, Mayer, and Chen, Circuit Judges.

          Chen, Circuit Judge.

         This case returns to us on remand from the Supreme Court. See Life Techs. Corp. v. Promega Corp., 137 S.Ct. 734, 741 (2017) (Promega II). Defendants-Appellants (collectively, Life) sought review of our decision in Promega Corp. v. Life Technologies Corp., 773 F.3d 1338 (Fed. Cir. 2014) (Promega I), arguing, inter alia, that we erred in holding that a multicomponent product assembled overseas could infringe a United States patent under 35 U.S.C. § 271(f)(1)[1] when only a single component of the product is supplied from the United States. The Supreme Court granted Life's petition for a writ of certiorari, reversed our judgment, and remanded for further proceedings consistent with its holding that "§ 271(f)(1) does not cover the supply of a single component of a multicom-ponent invention." Promega II, 137 S.Ct. at 743.

         The Supreme Court's opinion did not affect several of our prior holdings. First, we held that the asserted claims of four patents owned by Promega Corporation (Promega) were invalid for failure to comply with the enablement requirement in 35 U.S.C. § 112, ¶ 1. Promega I, 773 F.3d at 1346-50. Second, we held that certain of Life's alleged acts of infringement were not licensed under a 2006 license agreement between Life and Promega.[2] Id. at 1357-58. Finally, we held that Life was not required to "actively induce" a third party to combine the components of the accused products to be liable under § 271(f)(1). Id. at 1351-53. Rather, the active inducement requirement could be met if Life had the specific intent to combine the components itself. Id. We reaffirm our holdings on the enablement, licensing, and active inducement issues.

         The Supreme Court's opinion, however, requires us to reconsider two of our prior holdings. First, we must reexamine our reversal of the district court's grant of Life's motion for judgment as a matter of law (JMOL) that Promega failed to prove its infringement case under 35 U.S.C. § 271(a)[3] and § 271(f)(1).[4] See id. at 1358. Second, we must reconsider our vacatur of the district court's denial of Promega's motion for a new trial on damages and infringement. Id. For the reasons below, we now affirm the district court's decisions on these motions.

         Background

         In our prior opinion, we described the asserted patents, accused products, and procedural history before the district court. See id. at 1341-45. We recite below only the facts relevant to our analyses of the district court's rulings on Life's JMOL motion and Promega's motion for a new trial.

         I. Factual Background

         From 2006 through 2012, Life sold genetic testing kits designed to detect the presence of "short tandem repeats" (STR), which are repeating sequences of DNA that are analyzed when profiling an individual's DNA. Id. at 1341-42, 1344. Life's kits, referred to as "STR kits, " were assembled in the United Kingdom. Id. at 1350. Each of the kits was comprised of five components. At least one of the five components in each kit-Taq polymerase-was supplied from the United States. Id. at 1344.

         Promega was the exclusive licensee of United States Reissue Patent No. 37, 984 (Tautz patent), which expired in 2015. The Tautz patent claimed methods and kits for analyzing DNA to determine the identity and kinship of organisms. See, e.g., Tautz patent, J.A. 406, col. 11 l. 51- col. 12 l. 64; J.A. 407, col. 13 ll. 28-47.

         II. Proceedings in District Court

         A. Pretrial Proceedings

         Promega sued Life for infringement of the Tautz patent by Life's STR kits, seeking damages for infringement occurring between 2006 and 2012.

         At summary judgment, Promega moved for a ruling that Life's accused products meet all of the elements of the asserted claims of the Tautz patent. See generally J.A. 688-703. Life did not challenge this assertion. Therefore, the district court granted Promega's motion. Promega did not request a ruling on Life's liability under any particular subsection of § 271 or any ruling quantifying Life's infringing acts. Therefore, the district court's summary judgment ruling did not resolve the ultimate issue of Life's liability for infringement-that is, the district court did not decide how many of Life's kits, all assembled abroad, were sold, offered for sale, or imported into the United States (§ 271(a)) or included a substantial portion of their respective components that were supplied from the United States (§ 271(f)(1)).[5] The district court explained, in a later opinion resolving the parties' various motions in limine, that, at summary judgment, it "did not enter judgment in favor of plaintiff on liability generally." J.A. 36.

         B. Trial

         The case proceeded to a jury trial. On the first day of trial, the parties stipulated that Life's total worldwide sales of the accused products during the pertinent time period amounted to $707, 618, 247. J.A. 189. Later, during Life's case-in-chief, a dispute arose as to the effect of the parties' stipulation. During Life's direct examination of Mr. Guido Sandulli, one of Life's employees, counsel for Life asked Mr. Sandulli to quantify the amount of United States sales of Life's accused products since 2006. J.A. 6126. Promega objected to the question on the basis that the amount of United States sales was irrelevant to any issue in dispute at trial. The district court overruled the objection. Promega then requested a sidebar at which it argued that "[t]he whole purpose of [the stipulation] was to remove from this case the need for the plaintiff to go into [a] series of witnesses to prove up sales of infringing kits." J.A. 6127. Life countered that there was still a live issue as to whether Promega was entitled to "damages on worldwide sales or simply on U.S. sales." J.A. 6130. Promega responded that prior statements by Life had created the impression that Promega was not required to prove anything at trial regarding the amount of domestic versus foreign sales, in view of the stipulation.

         The district court expressed its own confusion regarding whether the parties had agreed that Promega did not need to separately quantify domestic and foreign sales. This confusion arose from prior statements by Life indicating that the only disputed issues for trial related to licensing, damages, and willfulness. For example, when Promega attempted to introduce sales evidence during its case-in-chief, Life objected, stating that the evidence was irrelevant to any issue at trial and that "[t]he reason for [the] stipulation was so the plaintiffs would not need to use underlying sales data to prove some overall sales number." J.A. 5571-73. After acknowledging that neither party had gotten to the "nub of the problem" until the above-described dispute arose, the district court indicated to the parties that Promega still needed to prove the amount of damages attributable to infringement under § 271(a) and the amount of damages attributable to infringement under § 271(f)(1). J.A. 6190; see also id. ("[P]laintiff thought that it didn't have to put in any more than it already had, and that's not correct."). In other words, the fact that Life's accused kits met all the limitations of the asserted claims did not automatically mean that Promega had proven it was entitled to a damages amount based on Life's total worldwide sales. But in view of Life's statements, which Promega apparently understood as conceding the issue of liability entirely, and in view of the district court's "miscommunication" on this issue, the district court proposed that Promega be given a second chance to meet its burden by presenting evidence of infringing sales in its rebuttal case. Id. The parties agreed to this proposal.

         In its rebuttal case, Promega presented additional evidence of infringement. For example, Promega submitted financial spreadsheets generated by Life showing sales of the accused products to certain law enforcement agencies in the United States. Promega elicited testimony from Mr. Sandulli indicating that, although all of the accused kits were assembled in the United Kingdom, the Taq polymerase component used in all of the accused kits originated from the United States. In addition, Promega introduced evidence that three of the accused products-the "Identifiler" kits-included primer components that were supplied from the United States. However, Promega did not proffer evidence or elicit testimony intended to prove a specific amount of domestic, foreign, or any other subset of total sales. Instead, Promega relied only on the stipulated worldwide sales figure as a potential damages base. See, e.g., J.A. 6416-19 (counsel for Promega identifying, at closing argument, only Life's total worldwide sales as a potential damages base).

         Promega continued to rely solely on the worldwide sales figure when it submitted a proposed special verdict form to the district court that asked the jury to determine a single amount for sales falling under either, or both, of § 271(a) and § 271(f)(1). Life objected to Promega's proposal because, inter alia, "it [did] not make clear that Promega [bore] the burden of proof of establishing the quantum of kits that were made, used, sold in the United States, or imported into the United States." J.A. 2441. The district court adopted Promega's proposal, over Life's objection, and incorporated it into Question No. 2 of the special verdict form: "What is the total dollar amount of defendants' sales of STR kits that were United States sales as that term has been defined for you in the instructions?" J.A. 202. In turn, the jury instructions used Promega's proposed definition of "United States sales" to include "all kits made, used, offered for sale, sold within the United States or imported into the United States, as well as kits made outside the United States where a substantial portion of the components are supplied from the United States." J.A. 189. Promega, in effect, sought to prevent the jury from calculating separate damages numbers under § 271(a) and § 271(f)(1), proposing instead that the jury calculate a single damages amount. This strategy succeeded when the district court adopted Promega's proposed Question No. 2 in the special verdict form and Promega's definition of "United States sales."

         The jury found that all of Life's $708 million in worldwide sales qualified as "United States sales, " and also found that a substantial portion of these sales, approximately $637 million, were for permitted uses under the 2006 license agreement. J.A. 202. The jury found that all of Life's unlicensed sales infringed Promega's five asserted patents under § 271(a) and/or § 271(f)(1) and awarded Promega $52 million in lost profits damages. The district court entered judgment on the verdict.

         C. Post-Trial Proceedings

         1. Life's JMOL Motion

         Life filed a renewed motion for JMOL pursuant to Federal Rule of Civil Procedure 50(b), arguing that Promega "failed to prove the applicable damages for patent infringement" and was therefore entitled to no damages. J.A. 2296.[6] Life contended that Promega was not entitled to any damages award because, inter alia, (1)the damages verdict could not stand because it was premised on a misinterpretation of § 271(f)(1), and (2)Promega had failed to present adequate evidence of an amount of infringing sales under either § 271(a) or § 271(f)(1). Life's briefing in support of the motion emphasized Promega's failure to quantify and categorize the accused acts of infringement. See Life Open. JMOL Br., No. 10-CV-281 (W.D. Wis. Mar. 22, 2012), ECF No. 581 at 11 ("[W]ith only an aggregate sales number for all kits combined, the jury had no evidence upon which it could partition that sales number up among any smaller collection of kits to award damages for any infringement proven for any such lesser group of kits."). Promega's response focused on preserving the entirety of the damages verdict, arguing, inter alia, (1) that all of the accused products infringed under § 271(f)(1) because all of the products included the Taq polymerase component, which qualified as a "substantial portion" of each of the accused products' components, and (2) that all of the accused products infringed under § 271(a). Importantly, Promega did not dispute Life's separate argument that Promega presented insufficient evidence to support a lesser damages award.

         The district court granted Life's JMOL motion, holding that no reasonable jury could have found, based on the trial record, that all of the accused products infringed under § 271(a) or § 271(f)(1), in light of the district court's interpretation of "substantial portion." It further found that Promega had waived any argument that the trial record could support a damages calculation based on an amount other than worldwide sales by failing to contest Life's argument in its opening JMOL brief that the record contained no evidence that a jury could use to perform such a calculation. Therefore, in order to defeat Life's JMOL motion, trial evidence and all reasonable inferences drawn in Promega's favor had to support a finding that all of the accused products infringed.

         Regarding infringement under § 271(f)(1), the district court held as a matter of law that a single component could not qualify as a "substantial portion" of the components of the accused products under the district court's reading of the statute. The district court then concluded that Promega's evidence was insufficient to support a finding that all of the accused kits assembled in the United Kingdom contained two or more components originating from the United States. Therefore, the ...


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