The U.S. Court of Appeals for the Federal Circuit, in a case involving damages and remittitur, has affirmed the denial of the patent owner’s request for a second trial of his infringement claims; the Court determined the damages award from his first trial fully compensated him for all the activities of the proposed second set of defendants. Glenayre Electronics, Inc. v. Phillip Jackson, Case No. 04-1568 (Fed. Cir. Apr. 11, 2006) (Prost, J.).

In Glenayre Electronics, the district court had granted a motion to remit the jury’s $12 million award. Despite the patent owner’s arguments, the district court granted the motion for remittitur, finding the jury’s damages award to be "grossly excessive" and reducing the award to $2.65 million. The patent holder accepted the remittitur amount, reflecting the damages from direct infringement, but then brought a motion to recover further damages for the same accused infringers’ indirect infringement. In this case, the indirect infringement charges were based solely on the accused and adjudged sales of infringing products to customers, which induced those customers to use the same products in an infringing manner.

The district court held that no claims survived the earlier award and remittitur, and the Federal Circuit agreed. After a lengthy review of relevant precedent, the Federal Circuit noted, "It is true, of course, that an award of damages for particular infringing acts, unlike a comprehensive license, does not automatically entitle the infringer or others to continue infringing conduct in the form of additional sales or uses of infringing products throughout the life of the patent. But in this case, the theory of recovery [the patent owner] presented at the first trial was based on a reasonable royalty for past manufacture and sale of infringing products by [the accused infringer] and, importantly, past benefits derived from use of the same products by [that infringer’s] customers."

On these facts, the Federal Circuit affirmed the holding of the district court.

Practice Note
Depending which side of the settlement table you are on, consideration should be given to the issue of downstream rights and whether to expressly address inclusion (or exclusion) of patent exhaustion and downstream licenses.

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