To Preserve Rights to Appeal, Appellant Must Move for Pre-Verdict JMOL Motions

i4i L.P. v. Microsoft Corp., No. 2009-1504 (Fed. Cir. Dec. 22, 2009):

Holding:

A party must file a pre-verdict JMOL motion on all theories, and with respect to all prior art references, that it wishes to challenge with a post-verdict JMOL. Slip op. at 14.

When a party has waived its right to challenge the factual findings underlying the jury’s implicit obviousness verdict because it did not file a pre-verdict JMOL on obviousness for certain prior art references, the Federal Circuit is limited to determining whether the district court’s legal conclusion of nonobviousness was correct, based on the presumed factual findings. Id. at 14-15.

When a party did not a pre-verdict JMOL on the reasonableness of the other side’s damages calculation, the party has waived this argument for appeal. Id. at 36.

Relevant Facts:

i4i accused that the custom XML editor in certain versions of Microsoft Word infringed i4i’s patent. Slip op. at 1. The jury found Microsoft liable for willful infringement, rejected Microsoft’s argument that the patent was invalid, and awarded $200 million in damages to i4i. Id. The district court awarded $40 million in additional damages for willful infringement. Id. at 2. The district court denied Microsoft’s JMOL motions and motions for a new trial, finding that Microsoft had waived its right to challenge the validity of the patent based on all but one prior art and the sufficiency of the evidence supporting the jury’s damage award. Id. The district court also granted i4i’s motion for a permanent injunction. Id. The Federal Circuit affirmed the issuance of the permanent injunction, though it modified its effective date to accord with the evidence, and affirmed all other rulings. Id.

Comments:

In this case, it appears that Microsoft made several procedural missteps and did not file several pre-verdict JMOL motions including the one on the reasonableness of the damages calculation.

As a neutral observer and former IT consultant, I think the damages award seems unreasonably high for an XML editor. Had Microsoft preserved this issue for appeal, the Federal Circuit would have had a chance to weigh the evidence and might have reduced the damages award.

So what is the lesson? One may say that a party needs to move for pre-verdict JMOL motions on all issues that may be appealed. However, this is easy to say, but hard to do in terms of knowing what issues would be important. Instead, for a high profile case, one should include an appellate specialist in the trial preparation and trial to preserve issues in preparation for the potential appeals.