Opinions and Legal Insights

Risk of Encouraging Infringement while Awaiting Appeal

TecSec, Inc. v. Adobe Inc.  (Fed. Cir. 2020)

The simple setup in this case:

  • 2011: Following claim construction, TecSec stipulated that use of Adobe’s product does not infringe the asserted patents.
  • 2013: Claim construction is reversed on appeal, and the infringement case started-up again.

The question on appeal:

  • During the 2011-2013 timeline — is it legally possible for Adobe to induce infringement? In other words, could Adobe have the have the requisite intent necessary to induce infringement?

The Answer:

  • Yes, intent to cause infringement may still be provable based upon subjective-bad-faith, even if the behavior was “objectively reasonable.”
  • The court writes: “As a logical matter, a defendant may have the liability-supporting subjective state of mind even if a person could believe, with objective reasonableness (though wrongly), that the induced conduct was not infringing. To make the point in terms of this case, Adobe may have had the requisite knowledge of infringement if it believed (as we ultimately held in 2013) that the March 3, 2011 claim construction was incorrect, even if that construction was objectively reasonable.”

= = = =

This case has been ongoing since 2010.  Back in 2011, the district court issued a narrowing claim-construction with the result of a stipulated dismissal of non-infringement.  The Federal Circuit reversed that outcome in 2013 with a broader construction — setting up the eventual 2018 trial.

TecSec’s theory focused on both direct and induced infringement.  Just before trial, the district court granted Adobe’s motion in limine to prevent TecSec from presenting any inducement evidence from between the 2011 claim construction and the 2013 reversal.

Defendant Adobe lacked the requisite intent to induce infringement or willfully infringe during the time period where the Court had reasonably, though erroneously, ruled in Adobe’s favor on infringement and TecSec had entered a stipulation of noninfringement.

InLimineOrder.  The trial went on and TecSec was able to convince the jury on the direct infringement claim, but not on inducement. [Verdict.] The Jury also awarded $1.75 million in compensatory damages.  At that point, however, the district court issued a JNOV order (renewed JMOL) that reduced the award down to ZERO DOLLARS — holding that the damages evidence was all tied to the inducement theory.

The record is … devoid of qualified testimony regarding appropriate damages for Adobe’s direct infringement … [T]he jury’s damages award of $1.75 million must be vacated in its entirety as inherently speculative and unsupported by the record.

DCT JMOL Opinion [JMOL Opinion].   

On appeal, the Federal Circuit has reversed — holding that it was not proper to exclude the evidence of 2011-2013 inducement as noted above.

Although this looks like a win for the patentee, on remand I expect that the district court will open the door for a pretrial summary judgment motion regarding whether TecSec can prove subjective-intent to infringe.