United States: Golden Blount II: Federal Circuit Agrees-in-Part with District Court After Remand for Sufficient Reasoning

Addressing for the second time the district court’s findings on infringement and willfulness, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s findings as to those issues, vacated-in-part the district court’s lost profits damages calculation and remanded the case to the district court for the limited purpose of determining whether certain products should be included in that calculation. Golden Blount, Inc. v. Robert H. Peterson Co., Case No. 04-1609, 05-1141, 05-1202 (Fed. Cir. Feb. 15, 2006) (Linn, J.) (Golden Blount II). Interpreting Knorr-Bremse, the Federal Circuit found its prior ruling only precludes an inference that an undisclosed written opinion would have been negative. Once attorney-client privilege is waived, however, the opinions may be substantively challenged.

Golden Blount brought suit against Peterson alleging, among other things, that Peterson willfully infringed certain claims of his patent directed to fireplace burners. See Golden Blount, Inc. v. Robert Peterson Co., IP Update, vol. 7 no. 5, May 2004 (Golden Blount I). Following a three-day bench trial, the district court rendered its opinion concluding, among other things, that Peterson willfully infringed the asserted claims.

Peterson appealed and argued, among other things, the court erred in its claim construction, and the conclusion of infringement was flawed and not supported by evidence. On review, the Federal Circuit addressed the sufficiency of the district court’s opinion and concluded the district court’s analysis on infringement was insufficient. Thus, the Federal Circuit vacated-in-part and remanded the case for a more detailed infringement analysis.

Applying a clear error standard of review, the Federal Circuit decided the lower court properly considered the relevance of oral opinions of counsel and other evidence in finding willfulness. Peterson claimed reliance on three oral opinions of counsel. The lower court determined that these opinions were rendered based upon incomplete information and without review of the prosecution history or the accused product. The Federal Circuit’s opinion in Knorr-Bremse Systems Fuer Nutzfahrzeuge GmbH v. Dana Corp., (see IP Update, vol. 7, no. 9, September 2004) found that the failure to produce a written opinion of counsel does not permit an adverse inference that the opinion would have been negative. Here, however, the Federal Circuit found inference was not the issue, and Knorr-Bremse did not prevent a patent owner from challenging the competence of opinions of counsel when the attorney-client privilege was not invoked. Therefore, once privilege is waived, the patentee can challenge the competence of the opinion as evidence of willfulness.

On remand both parties filed proposed findings of fact. The district court adopted Peterson’s proposed findings of non-infringement. Shortly thereafter, Golden Blount filed a rule 52(b) motion to amend the judgment, and alternatively a rule 59 motion for a new trial. After hearing oral arguments on Golden Blount’s motion, the district court decided it had made a mistake in adopting Peterson’s findings and requested Golden Blount provide "the necessary findings and necessary final judgments." Golden Blount subsequently submitted another set of proposed findings, which the district court adopted and entered. Thereafter, the district court found Peterson had infringed. The district court also calculated lost-profit damages and trebled the award, and it awarded Golden Blount attorneys’ fees and post-judgment interest.

Peterson appealed, arguing the district court erred in vacating all of its findings because Golden Blount’s rule 52(b) motion only sought amendment of some of the findings, and the motion was untimely filed. Peterson also argued that certain of its burners should have been excluded from the damages calculation because they were returned before having been sold to retailers for assembly into a non-infringing configuration.

On review for the second time, the Federal Circuit explained rule 52(b) provides the district court discretion to amend any or all of its findings, and the district court did not abuse its discretion in amending its findings. The Court also concluded the rule 52(b) motion was timely. Accordingly, the Court affirmed the district court’s decision in regard to the motion. Because the district court failed to address the burners allegedly returned, the Federal Circuit vacated-in-part the district court’s lost profits damages calculation and remanded the case for the limited purpose of determining whether those burner products should be included in that calculation.

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