Federal Judiciary

Federal Circuit vacates Finisar jury verdict and remans for new trial

By Michael Smith

Two years ago, Finisar obtained a jury verdict from a Beaumont jury in Judge Clark's court for about $74 million for willful infringement.  Judge Clark denied the request for an injunction and for attorneys fees, and enhanced the damages by $25 million - for more information click here.  Last Friday, in Finisar Corp. v. DirecTV Group, Inc., --- F.3d ----, 2008 WL 1757675, C.A.Fed. (Tex.), April 18, 2008 (NO. 2007-1023, 2007-1024) the Federal Circuit vacated the verdict and sent the case back, holding that one of the claim terms was construed too broadly.   As patent practitioners know, current statistics indicate that the Federal Circuits reverses at least part of district courts' claims construction 38% of the time, requiring reversal or vacatur 30% of the time.
Specifically, the court set aside the willfulness finding, not surprising since it was made prior to In re Seagate, and the plaintiff's proof - all directed towards the prior standard - was used to judicially estop it from claiming under the new standard.  It also invalidated one of the seven patent claims at issue as anticipated, and vacated the denial of JMOL on the others on both anticipation and obviousness grounds for Judge Clark to consider on a fuller record on remand.  Finally, it held that Judge Clark misconstrued what it determined was a key claim term ?downloading into a memory storage device? using what it held was too broad a construction, which required vacatur and remand for a new trial on both infringement and invalidity.  While the Federal Circuit believed that Judge Clark's construction of "information database" was also too broad, it held that that construction was harmless because it had no effect on the jury's verdict - or more precisely that DirecTV had not appealed another construction which would have made the distinction between the Sabine-Neches Channel and Potomac constructions of "information database" relevant. 
With respect to Finisar's cross-appeal claiming that Judge Clark should have issued an injunction, of course that was moot, but the Federal Circuit affirmed Judge Clark's finding that claims 1, 2, 7, 9, 10, 11, and 37 of the patent invalid for indefiniteness.  So the good news is that after a couple of years of litigation, a jury verdict and an appeal, the case is at least a little closer to being resolved - hopefully the next appeal (of whatever Judge Clark does on the invalidity issue and whatever the jury does on infringement) will resolve the case.

Full post as published by Eastern District of Texas Federal Court Practice on April 21, 2008 (boomark / email).