The Federal Circuit Court of Appeals reduced a $4.7 million award of damages in a patent infringement suit, finding that the jury improperly trebled the damages.
Innovention Toys LLC sued MGA Entertainment (as well as two major retailers) for allegedly infringing Innovention’s patent for a laser beam strategy board game called Khet (shown above).
MGA, which is best known for its Bratz dolls, sold a similar game called Laser Battle.
MGA argued that the game patent should be invalidated as obvious in light of prior art.
In 2012, a jury found that MGA had infringed the patent and awarded Innovention $1.6 million in damages based on reasonable royalties and lost profits. The judge trebled the damages on the grounds that the infringement was willful.
The judge also found that the case qualified as “exceptional” and awarded Innovention attorneys’ fees of more than $1.8 million.
The Federal Circuit noted that
willfulness is not established where the defendant has a substantial, objectively reasonable, though ultimately rejected, defense, including an obviousness defense.
The court concluded that the district court erred in finding MGA’s obviousness defense objectively unreasonable:
Under any reasonable view, the gap between the prior art and Innovention’s claims, while large enough to allow the jury to find that MGA did not successfully establish the required motivation to combine with a reasonable expectation of success, was not particularly large. Indeed, it was sufficiently small that MGA’s defense was reasonable as a matter of law even considering evidence of objective indicia of obviousness.
Because the infringement was not willful, the attorney fee award was also vacated.
The case is Innovention Toys LLC v. MGA Entertainment Inc.
“Obviousness” can be a particularly tricky concept to convey to a jury, which is made up of laypeople rather than persons “skilled in the art” covered by the patent.
MGA argued that because lasers and chess-like board games were both well-known concepts, combining the two was “obvious.”
However, Innovention’s patent litigator convinced the jury otherwise, using the analogy of paper and glue being combined to create the patented Post-It Note.
35 U.S.C. § 285 states that courts “in exceptional cases” may award reasonable attorney fees to the prevailing party in a patent infringement case.
Since the recent US Supreme Court rulings in Octane and Highmark relaxed the standard for recovering attorney’s fees in patent cases, motions for attorney’s fees have been granted at a rate almost three times as high as in the year before Octane.
This risk of fee-shifting has been seen as both discouraging patent owners from bringing weak suits, and encouraging defendants to settle rather than raise questionable defenses.
The Innovention decision may lower the risk of fee-shifting to a defendant that raises an “obviousness” defense, at least in a close case.
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Photo Attribution: “Khet strategy game” by Eseymour – Own work. Licensed under Public Domain via Wikimedia Commons.