United States: Failure To Quantify U.S. Vs. Worldwide Sales Costs Life Sciences Company A Damages Award

Any patent plaintiff would be thrilled to get a ruling of infringement on summary judgment — but if that win ultimately resulted in zero damages, it would ring hollow. In a recent case that emphasizes the importance of introducing granular evidence on damages, the U.S. Court of Appeals for the Federal Circuit affirmed (on remand from the U.S. Supreme Court) a district court's ruling that overturned a jury's $52 million damages award.

In Promega v. Life Technologies, Promega (a life sciences company) sued Life Technologies (a biotech company) for infringement of a patent related to genetic testing kits used in both clinical research and forensic identification. Life Technologies assembles the kits in the United Kingdom and sells them worldwide. All of the kits sold by Life Technologies include one component — Taq polymerase — made in the United States. Promega won its infringement case against Life Technologies on summary judgment under two sections of U.S. patent law: 35 U.S.C. § 271(a) and § 271(f)(1).

Prior to the trial on damages, the parties stipulated that Life Technologies had worldwide sales of $708 million for the infringement period. Promega argued that all sales infringed under § 271(f)(1) because all kits contained the Taq polymerase component, which qualified as a "substantial portion" of the accused products. However, the jury verdict form did not break out a damages award under § 271(a) and § 271(f)(1) and did not provide an option for a lesser damages award based only on sales in the United States. The stipulation — and the jury verdict form — proved to be grave miscalculations by Promega.

The jury awarded Promega $52 million in lost damages based on the stipulated-to worldwide sales figure. Life Technologies then filed a motion for judgment as a matter of law. The company argued that the award was based on a misinterpretation of § 271(f)(1); it also argued that Promega had not provided adequate evidence of infringing sales under either § 271(a) or § 271(f)(1). The district court granted Life Technologies' motion, holding that no reasonable jury could have found, based on the trial record, that all of the accused products infringed under § 271(a) and § 271(f)(1) in light of the district court's interpretation of "substantial portion." It also held that Promega had waived any argument that the evidence at trial could support a damages calculation based on a subset of total sales. Subsequently, the district court also denied Promega's motion for a new trial, filed by the company's new counsel.

The Federal Circuit initially reversed the district court, holding that a single component supplied from the United States could qualify as a "substantial portion" of a multicomponent product, and thus could be found to infringe under § 271(f)(1) no matter where it was sold. The court also vacated the denial of Promega's motion for a new trial and remanded with instructions to conduct a new damages trial.

On appeal of that decision, the U.S. Supreme Court reversed the Federal Circuit's judgment and remanded for further proceedings, consistent with the justices' opinion that "a single component does not constitute a substantial portion of the components that can give rise to liability under § 271(f)(1)."

Because Promega relied on a single damages theory at trial, a significant issue the Federal Circuit considered on remand was waiver. Specifically, did Promega waive all other damages theories, or could it have a second shot at proving a lesser damages award despite its all-or-nothing gamble at trial? The court ruled that Promega had, in fact, waived all other damages theories, and that it could not have another bite at the apple. The ruling was based partly on Promega's decision to not present any expert testimony on damages at trial, as well as the company's decision to submit a jury verdict form that asked the jury to determine a single "United States sales" figure for sales falling under both § 271(a) and § 271(f)(1).

Proving damages is usually not the flashy part of any case. It is a rare trial where the lead partner has the starring role on damages. But as this case shows, it cannot be discounted. Although a jury might be convinced to reward an all-or-nothing strategy, they do not always have the last word. An alternate theory that results in a lower damages award might appear to be risky at trial, but it can be the difference between $52 million and nothing at all.

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