Federal Circuit Says Exclusion of Expert Doesn't Nix Damages in Patent Claim
The ways of patent law are largely a mystery to your humble reporter, but that does nothing to stifle his desperate wish to comprehend.
By statute, the trial court is apparently required to assess damages against a patent infringer, in an amount not less than a reasonable royalty. In a jury trial, the court is even required to award such damages if the jury itself fails to do so (a procedure that wiser and more knowledgeable persons than myself have perhaps determined to be consistent with the Seventh Amendment). Whatever those statutory directives may mean, can they be circumvented by simply excluding the expert testimony offered to prove damages? Not necessarily, according to the Federal Circuit, which issued a decision yesterday reversing a trial court for refusing to award infringement damages in a bench trial after the trial court barred testimony from the patentees's damages expert. See Dow Chem. Co. v. Mee Indus., Inc., No. 03-1117 (Fed. Cir. Sept. 5, 2003) (Clevenger, Bryson, & Dyk, JJ.). The Court of Appeals did not reverse the Daubert exclusion, which the patentee had not even challenged on appeal, but rather held the district court to have erred in refusing to evaluate damages based on other record evidence. The panel relied in part on statutory language stating that the trial court "may" receive expert evidence on damages, concluding that the permissive statutory "may" implied the negation of "must." The statute, that is, imposes no general requirement that the patentee prove infringement damages through expert testimony, according to the ruling. The panel was careful to say that a patentee has no ground for appeal if the failure to award damages is attributable to the patentee's own failure to put on any satisfactory damage evidence whatsoever. But apparently, once such evidence is produced and admitted, whether from experts or otherwise, the trial court must issue a judgment in which that evidence is afforded at least some weight in light of controlling patent law standards for infringement damages -- at least if no contrary evidence is offered to support a different and lower award.
Dow Chemical v. Mee Industries was a mixed case, involving both expert and non-expert evidence, and no jury was involved. The claims were adjudicated in a bench trial. In such cases, it may be felt that no intolerable collision arises between Daubert, on the one hand, and the seeming requirement that the patentee's evidence on damages be afforded some weight (absent contrary evidence), on the other. In the common run, much of the information on which a damages expert would rely is likely to be admissible, independently, as garden-variety fact evidence, and that may leave significant room for appellate supervision of judicial damage awards, even when the trial court approaches the limit of sound discretion in excluding the expert's testimony under Daubert.
But what of cases where damages are supported only through expert testimony, or where expert opinion is essential to their reasonably accurate calculation? If the point of reference for such calculations is a "reasonable royalty," such occasions would seem likely to arise with some frequency. Does the patent statute arguably establish a more tolerant standard for expert testimony than the one supplied by Daubert and Kumho Tire in such circumstances? And does it arguably impose a more stringent standard of judicial review than Joiner's "abuse of discretion standard"? Or can the patent statute's command be effectively disregarded, whenever a district judge would have discretion, under Daubert and its progeny, to decide the admissibility of the expert testimony either way? Should the district court perhaps be required to appoint an expert of its own, in cases where expert testimony is indispensable and the parties' experts haven't done the job?
And what of cases that do involve juries? Among other conundrums, does this whole regime not leave room for at least the abstract possibility that the trial judge will exclude expert damage testimony, precipitating a no-damage verdict, and then end up being compelled to award damages itself, based on the very same information that the rejected expert evaluated? If the trial court does this, is its own damage award subject to any reliability analysis? Should it be? How would that work?
Maybe someone who does comprehend patent law can shed light. Your humble reporter's own analytical abilities have reached their limit here.
By statute, the trial court is apparently required to assess damages against a patent infringer, in an amount not less than a reasonable royalty. In a jury trial, the court is even required to award such damages if the jury itself fails to do so (a procedure that wiser and more knowledgeable persons than myself have perhaps determined to be consistent with the Seventh Amendment). Whatever those statutory directives may mean, can they be circumvented by simply excluding the expert testimony offered to prove damages? Not necessarily, according to the Federal Circuit, which issued a decision yesterday reversing a trial court for refusing to award infringement damages in a bench trial after the trial court barred testimony from the patentees's damages expert. See Dow Chem. Co. v. Mee Indus., Inc., No. 03-1117 (Fed. Cir. Sept. 5, 2003) (Clevenger, Bryson, & Dyk, JJ.). The Court of Appeals did not reverse the Daubert exclusion, which the patentee had not even challenged on appeal, but rather held the district court to have erred in refusing to evaluate damages based on other record evidence. The panel relied in part on statutory language stating that the trial court "may" receive expert evidence on damages, concluding that the permissive statutory "may" implied the negation of "must." The statute, that is, imposes no general requirement that the patentee prove infringement damages through expert testimony, according to the ruling. The panel was careful to say that a patentee has no ground for appeal if the failure to award damages is attributable to the patentee's own failure to put on any satisfactory damage evidence whatsoever. But apparently, once such evidence is produced and admitted, whether from experts or otherwise, the trial court must issue a judgment in which that evidence is afforded at least some weight in light of controlling patent law standards for infringement damages -- at least if no contrary evidence is offered to support a different and lower award.
Dow Chemical v. Mee Industries was a mixed case, involving both expert and non-expert evidence, and no jury was involved. The claims were adjudicated in a bench trial. In such cases, it may be felt that no intolerable collision arises between Daubert, on the one hand, and the seeming requirement that the patentee's evidence on damages be afforded some weight (absent contrary evidence), on the other. In the common run, much of the information on which a damages expert would rely is likely to be admissible, independently, as garden-variety fact evidence, and that may leave significant room for appellate supervision of judicial damage awards, even when the trial court approaches the limit of sound discretion in excluding the expert's testimony under Daubert.
But what of cases where damages are supported only through expert testimony, or where expert opinion is essential to their reasonably accurate calculation? If the point of reference for such calculations is a "reasonable royalty," such occasions would seem likely to arise with some frequency. Does the patent statute arguably establish a more tolerant standard for expert testimony than the one supplied by Daubert and Kumho Tire in such circumstances? And does it arguably impose a more stringent standard of judicial review than Joiner's "abuse of discretion standard"? Or can the patent statute's command be effectively disregarded, whenever a district judge would have discretion, under Daubert and its progeny, to decide the admissibility of the expert testimony either way? Should the district court perhaps be required to appoint an expert of its own, in cases where expert testimony is indispensable and the parties' experts haven't done the job?
And what of cases that do involve juries? Among other conundrums, does this whole regime not leave room for at least the abstract possibility that the trial judge will exclude expert damage testimony, precipitating a no-damage verdict, and then end up being compelled to award damages itself, based on the very same information that the rejected expert evaluated? If the trial court does this, is its own damage award subject to any reliability analysis? Should it be? How would that work?
Maybe someone who does comprehend patent law can shed light. Your humble reporter's own analytical abilities have reached their limit here.
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