Federal Circuit Remands Lost Profits After Supreme Court Reversal

Last week, the United States Court of Appeals for the Federal Circuit decided WesternGeco v. ION Geophysical, 2013-1527, 2014-1121, 2014-1526, 2014-1528 (Fed. Cir. January 11, 2019). The Supreme Court remanded the case on the sole issue of lost profits, having reversed the Federal Circuit’s prior decision that an award of lost profits constituted an unauthorized extraterritorial application of the patent laws. On remand, the Court first considered whether the PTAB’s invalidation of most of the asserted patent claims after the parties stipulated to a final judgment on the reasonable royalty damages award affects that award. The Court held it does not, and that Fresenius does not apply because “[t]he particular facts of this case establish that the reasonable royalty award constitutes a fully satisfied and unappealable final judgment such that the subsequent invalidation of asserted patent claims does not support reopening.” On the issue of lost profits, the Court rejected ION’s argument that district court’s lost profits award could not be supported under Panduit because the parties do not compete in the same marketplace, concluding ION waived the argument by not raising it during supplemental briefing and asserting it for the first time at oral argument. The Court noted, however, that if the district court on remand orders a new trial on lost profits, the argument could be raised at that time. In terms of the impact of the PTAB’s invalidation of most of the asserted patent claims on the district court’s lost profits award, the Court decided the district court was in a better position to decide the issue in the first instance and instructed the district court to do so on remand. In its discussion of the issue, the Court noted the general rule is that “when a ‘jury was told it could rely on any of two or more independent legal theories, one of which was defective,’ the general verdict must be set aside.” Because several of the patent claims were invalidated and the jury did not specify, on a claim-by-claim basis, the basis for its lost profits award, a new trial on lost profits might be necessary. But, the Court concluded, a new trial is not automatically required if the jury must have found the remaining infringed claim “essential” to the infringement.