Page 117 - Intellectual Property Disputes

In Fujifilm, fn 23 the Federal Circuit found that a patent owner’s foreign sales do not exhaust its U.S.
patent rights. This case clarified precedent from Quanta by citing that it "did not involve foreign sales."
Jack C. Benun and Jazz bought the used Fujifilm LFFPs, as previously discussed, refurbished them in
China, and sold them new. The Federal Circuit asserted that "a practicing use may be ‘outside the
country,’ while an infringing use must occur in the country where the patent is enforceable." Further
addressing the "territoriality requirement for patent exhaustion," the court cited the Supreme Court
decision in Quanta for the proposition that "exhaustion occurs when the only reasonable and intended
use of the products sold is to complete the patented combination." fn 24

Permanent Injunction and Post-Infringement Damages

In eBay, Inc. v. MercExchange, LLC, fn 25 the U.S. Supreme Court held that the issuance of a permanent
injunction in a patent infringement lawsuit is governed by the same four-factor test used in other areas of
the law. If an injunction is not granted, the issue of post-verdict royalties becomes relevant. As Judge
David Folsom wrote in Paice LLC v. Toyota Motor Corp., fn 26 when the court decides not to enter a
permanent injunction but the adjudged infringer continues to sell infringing product in the market, "what
amount of money would reasonably compensate a patentee for giving up his right to exclude yet allow
an ongoing willful infringer to make a reasonable profit?" The relatively sparse precedent in this area
reveals few answers and many questions. Who determines the post-verdict royalty rate: parties, judge, or
jury? What is the role of the Georgia-Pacific factors in the ongoing royalty analysis? Can an analytical
approach be used to determine post-verdict royalties? What types of evidence should parties submit, and
when should they submit it? The following cases provide some answers to these questions.

Amado v. Microsoft Corp. fn 27 addressed the difference between the context of the hypothetical
negotiation for pre-verdict and post-verdict reasonable royalty awards, concluding that a "fundamental
difference" exists between a reasonable royalty for pre-verdict infringement and damages for post-
verdict infringement. "Prior to judgment, liability for infringement, as well as the validity of the patent,
is uncertain, and damages are determined in the context of that uncertainty. Once a judgment of validity
and infringement has been entered, however, the calculus is markedly different because different
economic factors are involved." "This is not a case like Paice, however, where the court’s task was to
assess an appropriate level of damages for ongoing infringement under circumstances in which an
injunction was not warranted. Here, Microsoft was enjoined from further activity yet was permitted to
continue only by virtue, and with the imprimatur, of the court-ordered stay." "When a district court
concludes that an injunction is warranted, but is persuaded to stay the injunction pending an appeal, the
assessment of damages for infringements taking place after the injunction should take into account the

fn 23 Fujifilm Corp. v. Benun, 605 F.3d 1366 (Fed. Cir. 2010). The patents at issue relate to single-use cameras or LFFPs.

fn 24 Id.

fn 25 Ebay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006).

fn 26 Paice LLC v. Toyota Motor Corp., 609 F. Supp. 2d 620 (E.D. Texas 2009).

fn 27 Amado v. Microsoft Corp., 517 F.3d 1353 (Fed. Cir. 2008). The patent at issue is directed to a point-and-shoot interface for
linking database records to spreadsheets. Upon finding infringement, the jury awarded the plaintiff $0.04 for each infringing sale. An
injunction was awarded but stayed, requiring the defendant to deposit into escrow $2.00 for each infringing sale. Upon appeal, the
escrow was reduced to $0.12 for each infringing sale (the jury’s award of $0.04 trebled). This decision was again appealed. This case
was different from Paice because it related to compensation for a stay of injunction and not post-verdict damages without an
injunction.

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