Notice to Low-Level Employees Triggers Enhanced Patent Damages
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"The defendants dispute the district courtâ€™s denial of JMOL on the juryâ€™s verdict of willful infringement. Willfulness requires a showing that the totality of the circumstances evince the egregious conduct that constitutes willful infringement. Actual notice of anotherâ€™s patent rights triggers an affirmative duty of due care. Constructive notice, as by marking a product with a patent number, is insufficient to trigger this duty. This court has identified several criteria for assessing damages, including, inter alia, whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed, and the duration of defendantâ€™s misconduct.
"Willful infringement in this case hinges on when the defendants had actual knowledge of Imonexâ€™s patent rights, and their actions after that time. The record shows that Imonex disclosed its coin selection devices to employees of the original equipment manufacturer, or OEM, defendants at trade shows years before it filed suit. Those Imonex devices were marked with the numbers of both of the patents in suit. Imonex also distributed advertising literature which stated that the products were patented. Imonex corresponded with employees of the OEMs about use of the patented devices in the OEMsâ€™ products. The record also disclosed that none of the OEM defendants commissioned an opinion of counsel about infringement, until after they were sued for infringement. The defendants do not deny that Imonex displayed its properly marked products at trade shows, but insist that this notice was insufficient to trigger its duty of due care, because no defendant employees with decision-making capacity received notice or studied the patents themselves.
"The jury could have reasonably concluded that several instances recounted in the record triggered the OEMâ€™s duty of care. Those instances that provide actual notice to the OEMs of the patents on Imonexâ€™s products include Imonexâ€™s display of its products at trade shows, the widespread distribution of literature depicting the products as patented, and correspondence with OEM employees about the use of patented devices in the OEM products.
"The defendants also argue that they exercised their duty of due care by obtaining
opinions of counsel regarding possible infringement of the patents in suit shortly after being served with the complaint. Imonex argues that the defendants should have obtained these opinions as soon as they learned of their possible infringement of Munzpruferâ€™s patents.
"This issue is informed, however, by this courtâ€™s recent decision in Knorr-Bremse, which was decided shortly after the briefs in this case were submitted. In that case, the affirmative duty of due care to avoid infringement was reiterated, but it was found no longer appropriate to draw an adverse inference with respect to willful infringement from failure to obtain legal advice. Therefore, while early receipt of legal advice would have strengthened the defendantsâ€™ argument that they had not willfully infringed, failure to have solicited such advice does not give rise to an inference of willfulness. Overall, the jury had substantial evidence to find willfulness, and this court affirms the district courtâ€™s denial of JMOL on this point."