All-In-One: Direct Infringement, Contributory Infringement, and Damages

Lucent Techs., Inc. v. Gateway, Inc., Nos. 2008-1485, -1487, -1495 (Fed. Cir. Sept. 11, 2009):

Holdings:

Direct infringement may be found based on circumstantial evidence. Slip op. at 20-21.

To prove contributory infringement, a patentee may focus the “substantial noninfringing use” inquiry under 35 U.S.C. § 271(c) on the specific infringing feature or component rather than the entire product. Id. at 26-27.

A lump-sum royalty agreement may, during the license negotiation, consider the expected or estimated usage or production of a given invention. Id. at 38.

For a jury to use a running-royalty agreement as a basis to award lump-sum damages, some basis for comparison must exist in the evidence presented to the jury. Id. at 43.

Relevant Facts:

Lucent asserted U.S. Patent No. 4,763,356, which is generally directed to a method of entering information into fields on a computer screen without using a keyboard, against Microsoft. The jury returned a verdict that the patent is not invalid and infringed by Microsoft, and awarded more than $357 million to Lucent. Microsoft appealed, and the Court affirmed the validity and infringement findings, but vacated and remanded the damage award to the district court for further proceedings.

Comments:

Regarding the point that direct infringement may be found based on circumstantial evidence, the Court distinguished other cases on the basis that the patentees in these other cases failed to present any circumstantial evidence while Lucent noted that “Microsoft not only designed the accused products to practice the claimed invention, but also instructed its customers to use the accused products in an infringing way.” Slip op. at 21.

It is still desirable, however, to present at least one instance of infringing activities. Relying on circumstantial evidence should only be the last resort.

Regarding contributory infringement, the Court again rejected the argument that an otherwise infringing product may automatically escape liability merely because it contains a noninfringing staple ingredient. Id. at 26.

Regarding damages, the Court illustrated the difficulties in applying the Georgia-Pacific factors. Really, there is no easy way to calculate the damages, but any reasonable calculation must be legally sound and logical in order to be upheld on appeal.