In April a Tyler jury in Judge Leonard Davis' court rendered a verdict in favor of plaintiff Soverain Software (ed. note - my client), finding indirect infringement and $2.5 million in damages. Yesterday afternoon Judge Leonard Davis issued my favorite kind of order these days, which is a lengthy opinion resolving the parties' competing motions for judgment as a matter of law and for new trial, and entered final judgment. The order is as a result of Judge Davis' procedure on JMOL motions - he orders postjudgment motions filed after the verdict, not the judgment, so that the final judgment is not entered until after the parties' various complaints about the verdict are heard and ruled on.
The reason I like JMOL orders is that they provide concise treatises - from judges who know the law in this area very, very well - on all of the typical major issues that come up in patent cases, from standards for proving infringement and invalidity, and various other legal issues, to evidentiary and trial management issues, all based on a full trial record and written by a judge who has been managing the case for two years and was actually present in the courtroom during the trial. If you want to know what the law requires on just about any substantive issue in patent law, these are the orders to read, because they give you the law, the facts, and whether those facts compel a certain result so as to require setting aside what a jury found, all from a judge who knows the case and the applicable law intimately. Parties tend to file for JMOL on all of the claims and defenses asserted in the trial of a case, no matter how improbable a ruling in their favor might be (see par. 5 below), so the JMOL order tends to be an exposition on all of the issues in patent law that matter, along with notations on things like legal standards.
First of all, Judge Davis denied Newegg's motions for judgment as a matter of law and for new trial, finding that there was sufficient evidence supporting what the jury did, including the damages amount, if you're interested in current analysis of damages experts' opinions.
Of interest here to those of you interested in JMOL procedure is the court's ruling on Newegg's motion for JMOL in its favor or in the alternative for new trial as to its obviousness claims. Judge Davis noted that at trial Newegg did not elicit opinions on obviousness from its expert, or provide the jury with a Graham analysis, and that he accordingly granted Soverain's JMOL on obviousness and did not let that issue go to the jury (anticipation was a close call, he noted at trial, but he did submit it to the jury).
Interestingly (to me at least), Newegg was asserting not simply that the JMOL in plaintiff's favor was wrong, but that it was entitled to JMOL, which placed it in the unusual procedural posture of arguing that it had proved the essential elements of the claim to a certainty, when Judge Davis had previously concluded that it had not even made out a prima facie case of obviousness so as to get to the jury. It reminds me of the famous third-down play a couple of seasons ago where the snap flies over Tony Romo's head in the St. Louis game and instead of resulting in a fumble, or at least a 33 yard loss (he said later what was running through his mind was "Don't give up a touchdown. Don't get killed"), he manages to not just recover the ball, but also run for a first down. Well, it worked for Tony, but as is much more likely when the snap flies over your head and two defensive linemen are bearing down on you, it didn't happen here. Can you tell the Cowboys open preseason tonight in Arlington against Oakland? I may be a little preoccupied with that today.
With respect to the motion for new trial as to obviousness, which I suppose was procedurally the equivalent of asking the court to set aside his ruling granting Soverain's JMOL, and really the correct down and distance here (there I go again), Newegg argued that while it was true that it had not presented expert testimony on obviousness, it need not do so because expert testimony on the ultimate legal issue of obviousness is not required. Judge Davis disagreed, noting that the Federal Circuit had made clear that “[t]here must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness.” (citing Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1373 (Fed. Cir. 2008)) and noting that in Proveris Scientific Corp. v. Innovasystems, Inc., the Federal Circuit upheld the district court’s decision to require defendants to present expert testimony in order to establish anticipation and obviousness. 536 F.3d 1256, 1267–68 (Fed. Cir. 2008). "As in Proveris," he concluded, "the subject matter in this case 'is sufficiently complex to fall beyond the grasp of an ordinary layperson.'" Judge Davis also rejected various asserted claims of error justifying a new trial, noting in particular that Newegg's claim that corroboration is not required if the witness on invalidity is not an interested party was not a correct statement of the law, citing Finnigan Corp. v. Int’l Trade Comm’n, 180 F.3d 1354, 1369 (Fed. Cir. 1999).
He also denied Soverain's motion for a permanent injunction (another analysis for those of you interested in when injunctions are and are not granted) but did grant its motion for an ongoing royalty, and set the amount at 15 cents per transaction (for those of you interested in when an ongoing royalty is appropriate and what rate should be set. (Soverain had asked for 20 cents and Newegg argued eight cents was appropriate). The issue of a design-around was raised, and Judge Davis noted who had the burden to show whether the design-around was colorably different and what effect that would have when and if the issue was joined on that point. The Court also granted Soverain's motions for prejudgment interest, postverdict damages and postjudgment interest.
The really interesting part is that while Judge Davis denied Soverain's motions for judgment as a matter of law asking him to find direct infringement as a matter of law as to two of the asserted patents, he did grant it as to one claim of the third patent, finding direct infringement of claim 79 of the '639 patent as a matter of law, and ordered a new trial on damages once all appeals were exhausted. Judge Davis noted that the plaintiff's expert testified that all the steps contained in claim 79 were performed by Newegg's server system, and he was not cross-examined on this point. Newegg did not have an expert testify on claim 79 because its expert did not address the claim in his reports, and was precluded from testifying outside his reports. "To get around this", Judge Davis wrote, "Newegg questioned Tittel [Newegg's expert] about claim 1 of the '639 patent and attempted to equate claim 1 to claims 78 and 79." He went on to note that "[w]hen questioning Mr. Tittel about the storing action, Newegg’s counsel stated that “this limitation is also in Claim 78.” which the Court found was "likely to have misled the jury into thinking that claim 60, which depends from claim 1, and claim 79, which depends from claim 78, were one [and] the same. The wording of the claims clearly demonstrates this is not the case." He concluded that "[b]ecause Newegg did not refute Dr. Grime’s testimony that Newegg performs each properly defined step of claim 79, and because no reasonable jury could have found that claim 79 was not infringed, the Court GRANTS Soverain’s motion for JMOL of direct infringement of claim 79 of the ’639 patent."
Not counting last week's Hall of Fame game, the Cowboys open their preseason tonight against Oakland at 8pm central. I can't wait.