SRI International, Inc. v. Cisco Systems, Inc.
Docket No. 2020-1685, -1704 (http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/20-1685.OPINION.9-28-2021_1841166.pdf)
DYK, PROST, HUGHES
September 28, 2021
Brief Summary: DC finding of no willfulness reversed; grant of enhanced damages and attorney’s fee affirmed. Summary: SRI appealed DC denial of its motion to reinstate the jury’s willfulness verdict and the enhanced damages award. Cisco cross-appealed the DC award of attorney fees. In a first appeal (SRI II), the FC “held that the jury’s verdict of willful infringement before May 8, 2012 was not supported by substantial evidence because it was undisputed that Cisco did not know of SRI’s patents until after that date.” The DC then read the FC’s “opinion to require a more stringent standard for willful infringement than our other cases suggest—conduct rising to ‘the level of wanton, malicious, and bad-faith behavior’” and found “that substantial evidence did not support the jury verdict of willful infringement after May 8, 2012” (SRI III). FN1 of this opinion explains that “[t]he jury was instructed under the Seagate willful infringement standard, which required both (1) ‘clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent’ and (2) that ‘this objectively-defined risk . . . was either known or so obvious that it should have been known’” (In re Seagate, FC 2007) and the SCOTUS Halo decision (US 2016) that “rejected the objective recklessness requirement” but “did not disturb the substantive standard for subjective willfulness” (Arctic Cat, FC 2017). In this appeal, neither party challenged the DC’s jury instructions under which the FC panel “presume[d] that the jury found that Cisco knew of the patent, took action to encourage its customers to infringe, and knew that its customers actions (if taken) would infringe”. This FC panel explained that “a finding of induced infringement does not compel a finding of willfulness” as “the standard required for willful infringement is different than that required for induced infringement” and concluded that “the jury’s unchallenged findings on induced infringement, when combined with Cisco’s lack of reasonable bases for its infringement and invalidity defenses, provide sufficient support for the jury’s finding of willful infringement for the period after May 8, 2012, when Cisco had notice of the patent.” The FC panel explained that “[u]nder Halo, the concept of ‘willfulness’ requires a jury to find no more than deliberate or intentional infringement” (Eko Brands, FC 2020), which it found to be present in this case. The FC panel also explained that “an award of enhanced damages does not necessarily flow from a willfulness finding” (Presidio, FC 2017) and that it reviews DC awards of enhanced damages for an abuse of discretion and did not find it here (Va. Panel, FC 1997; Halo quoting Octane, US 2014). The FC panel also found no error in the DC’s finding the case to be “exceptional” and its award of attorney’s fees under section 285 (e.g., “Cisco crossed the line”). Thus, the DC’s JMOL of no willfulness was reversed but the enhanced damages and attorney’s fee awards were affirmed.