After Syntrix Biosystems, Inc. ("Syntrix") filed a patent infringement action against Illumina, Inc. ("Illumina"), a jury returned a verdict against Illumina for patent infringement and awarded a reasonable royalty of 6%. Syntrix subsequently filed a motion for an ongoing royalty in the amount of 9% instead of seeking a permanent injunction.
The district court fist explained that after a jury verdict of infringement, a district court may award an ongoing royalty for continued patent infringement. See Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315 (Fed. Cir. 2007). The parties should ordinarily be given an opportunity to negotiate a license regarding future use of the patented invention, but if they are unable to reach agreement, the district court can "step in to assess a reasonable royalty in light of the ongoing infringement." Id.
An ongoing royalty is a form of equitable relief authorized under 35 U.S.C. § 283. See id. at 1315 n. 16, and the Court is not bound by the prejudgment royalty rate found by the jury. Amado v. Microsoft Corp., 517 F.3d 1353, 1361-62 (Fed. Cir. 2008). "[P]re-suit and post-judgment acts of infringement are distinct, and may warrant different royalty rates given the change in the parties' legal relationship and other factors." Paice, 504 F.3d at 1317 (Rader, J., concurring).
The district court then explained the factors for determining an ongoing royalty rate. "In Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992), the Federal Circuit provided guiding factors to determine whether and how much damages should be enhanced in light of Defendant's ongoing willful infringement. These factors include: (1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed; (3) the infringer's behavior as a party to the litigation; (4) the infringer's size and financial condition; (5) the closeness of the case; (6) the duration of the infringer's misconduct; (7) any remedial action taken by the infringer; (8) the infringer's motivation for harm; and (9) whether the infringer attempted to conceal its misconduct. See id., 970 F.2d at 827."
The district court then concluded that, although Syntrix had not made a strong showing under the Read factors, Syntrix had made a persuasive argument based on how strong its case was before the jury. "While the parties dispute the evidence and how it influences the Read factors, Syntrix has failed to show that any particular factor or combination of factors weighs in favor of a higher royalty rate for ongoing infringement. The one persuasive argument that Syntrix makes is the parties' relative bargaining positions post-verdict. Although the Court has continually expressed that there are close questions of law in this case, the jury quickly and soundly rejected Illumina's positions. After an eleven-day trial, the jury returned a complete verdict for Syntirx in two and an half hours. See Dkt. 284. Based on this decisiveness and the evidence offered at trial, the Court finds that Syntrix is in a stronger bargaining position than it was prior to the verdict. Additionally, Illumina has no readily apparent alternative if it seeks to continue its production and sale of the infringing product."
Based on these facts, the district court concluded that a 2% royalty increase was appropriate. "The Court further finds that a 2% increase in the ongoing royalty rate adequately compensates Syntrix for the stronger bargaining position. Therefore, the Court grants Syntrix's motion and imposes an 8% royalty rate for ongoing infringement."
Syntrix Biosystems, Inc. v. Illumina, Inc., Case No. C10-5870 BHS (W.D. Wash. June 18, 2013)
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