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Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in <a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/17-2223.Opinion.3-20-2019.pdf" target="" rel="noopener"><em>SRI International v. Cisco, Nos. 2020-1684, -1704 (Sept. 28, 2021)</em></a>, reversing a district court’s refusal to reinstate a willfulness verdict and enhanced damages award and affirming an attorney fee award.

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SRI sued Cisco for patent infringement. At trial, the jury found Cisco willfully infringed the asserted patents, and the district court awarded enhanced damages and attorney fees. In a first appeal, the Federal Circuit reversed the district court’s decisions on willfulness, enhanced damages, and attorney fees. It concluded that substantial evidence did not support willfulness before May 8, 2012, the earliest date Cisco knew of the asserted patents, and vacated the enhanced damages and attorney fee awards as depending on the willfulness findings.

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On remand, the district court determined that substantial evidence also did not support willfulness after May 8, 2012, as the evidence did not show “wanton, malicious, and bad-faith behavior.” The district court awarded attorney fees, however, deeming the case exceptional even without willfulness. SRI appealed, and Cisco cross-appealed.

On appeal, the Federal Circuit held substantial evidence showed Cisco willfully infringed after May 8, 2012. The Court presumed that the jury, consistent with its instructions, found Cisco lacked reasonable invalidity and non-infringement defenses. Regarding invalidity, the Court credited evidence showing Cisco’s only prior art-based defense relied on a reference the Patent Office twice rejected; Cisco’s expert failed to consider the Patent Office’s rejection analysis; and the reference lacked a key limitation. Regarding non-infringement, the Court observed that Cisco’s defenses contravened applicable claim construction or internal documents and deposition testimony. The Court also explained that, when combined with its unreasonable defenses, Cisco’s failure to challenge the jury’s inducement findings—including that Cisco knew of the patents and knew of and encouraged its customers’ infringement—supported willfulness. The Court stated that willfulness requires “no more than deliberate or intentional infringement” and that “wanton, malicious, and bad-faith behavior” belongs to the separate enhanced damages standard.

The Court also restored the enhanced damages award, citing as its basis Cisco’s litigation misconduct, status as the “world’s largest networking company,” disdain for SRI, and loss on all issues during summary judgment and trial. On the cross-appeal, the Court affirmed the attorney fee award, agreeing with the exceptional case finding and stating that Cisco’s litigation strategies created a “substantial amount of work” that was “needlessly repetitive[,] irrelevant, or frivolous.”

10_05_21 CAFC Reinstates Willfulness and Enhanced Damages

CAFC Reinstates Willfulness and Enhanced Damages

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