Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01731/USCOURTS-ca13-14-01731-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 

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NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

INNOVENTION TOYS, LLC,

Plaintiff-Appellee

v.

MGA ENTERTAINMENT, INC., WAL-MART 

STORES, INC., TOYS “R” US, INC.,

Defendants-Appellants

______________________ 

2014-1731

______________________ 

Appeal from the United States District Court for the 

Eastern District of Louisiana in No. 2:07-cv-06510-SMMBN, Judge Susie Morgan.

______________________ 

Decided: August 5, 2016

______________________ 

 JAMES C. OTTESON, Arnold & Porter, LLP, Palo Alto, 

CA, for plaintiff-appellee. Also represented by DAVID A.

CAINE, THOMAS T. CARMACK; BRANDON D. BAUM, Agility IP 

Law, LLP, Menlo Park, CA. 

 

DONALD ROBERT DUNNER, Finnegan, Henderson, 

Farabow, Garrett & Dunner, LLP, Washington, DC, for 

defendants-appellants. Also represented by ALLEN 

MARCEL SOKAL.

Case: 14-1731 Document: 66-2 Page: 1 Filed: 08/05/2016
2 INNOVENTION TOYS, LLC v. MGA ENTERTAINMENT, INC. 

______________________ 

Before LOURIE, PLAGER, and TARANTO, Circuit Judges.

TARANTO, Circuit Judge. 

In Innovention Toys, LLC v. MGA Entertainment, Inc., 

611 F. App’x 693 (Fed. Cir. 2015), we decided the appeal 

brought by defendants-appellants (MGA) from a judgment, entered after a jury trial, that awarded enhanced 

damages and attorney’s fees for MGA’s infringement of 

certain claims of Innovention’s U.S. Patent No. 7,264,242. 

We affirmed the rejection of MGA’s obviousness challenge 

and the ruling that pre-issuance damages under 35 U.S.C. 

§ 154(d) are proper in this case. Innovention, 611 F. App’x 

at 697–700. But we reversed the willfulness finding made 

by the jury, J.A. 118, and by the district court, e.g., J.A. 

57–58, 65, 69 & n.141. And because we found no willfulness as a matter of law, we reversed the enhancement of 

damages under 35 U.S.C. § 284—an enhancement the 

district court had found to be warranted after analyzing, 

J.A. 70–78, the factors enumerated in Read Corp. v. 

Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992), to guide an 

enhancement determination once willfulness is found. 

Innovention, 611 F. App’x at 700–01. We also vacated the 

award of attorney’s fees under 35 U.S.C. § 285, which

rested partly on the willfulness finding, J.A. 78–81. 

Innovention, 611 F. App’x at 701. We remanded for entry 

of a judgment awarding unenhanced damages and for 

reconsideration of the fee award. Id.

The Supreme Court has now vacated our decision and 

remanded the case to us for reconsideration in light of 

Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 

1923 (2016) (hereinafter “Halo”). See Innovention Toys, 

LLC v. MGA Entm’t, Inc., No. 15-635, 2016 WL 3369417, 

at *1 (U.S. June 20, 2016). Because Halo has no effect on 

our rulings as to obviousness and pre-issuance damages,

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INNOVENTION TOYS, LLC v. MGA ENTERTAINMENT, INC. 3

we reinstate our 2015 opinion as to those issues. But 

Halo does undermine the basis of our reversal of the 

willfulness finding and, hence, of our damagesenhancement reversal and fee-award vacatur. 

In our 2015 decision, we reversed the willfulness finding based solely on our conclusion, reached under a de 

novo standard of review, that the obviousness challenge 

presented by MGA in the litigation was not objectively 

unreasonable. On appeal, MGA did not dispute that, 

given the jury instructions, the jury, in finding willfulness, necessarily found subjective willfulness, and MGA 

presented no persuasive argument that the evidence was 

insufficient to support the finding of subjective willfulness. But our conclusion of no objective unreasonableness 

of MGA’s litigation defense by itself precluded a finding of 

willfulness, a precondition for enhancement, under In re 

Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 

2007) (en banc), and Bard Peripheral Vascular, Inc. v.

W.L. Gore & Associates, Inc., 776 F.3d 837, 844 (Fed. Cir. 

2015), as reflected in this court’s decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 769 F.3d 1371, 

1382–83 (Fed. Cir. 2014), vacated, 136 S. Ct. 1923 (2016). 

In Halo, the Supreme Court rejected the SeagateBard approach in respects relevant to our 2015 decision in 

this case. The Court held that objective reasonableness of 

the infringer’s litigation defense does not preclude a 

finding of “willful misconduct,” which is a permissible 

basis for enhancement and which may be found based on 

the infringer’s subjective willfulness at the time of its 

conduct, and that a district court’s enhancement determination is to be reviewed for abuse of discretion. 136 S. Ct. 

at 1932–34. In light of those Supreme Court rulings, our 

2015 decision as to willfulness in this case cannot stand.

Halo does not require that we now affirm the district 

court’s award of enhanced damages and fees. Instead, we 

conclude, Halo warrants a vacatur of those rulings and a 

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4 INNOVENTION TOYS, LLC v. MGA ENTERTAINMENT, INC. 

remand for reconsideration. Through its emphasis on 

egregiousness and otherwise, Halo clarifies the policies 

affecting whether to enhance damages. The district court 

should revisit its exercise of discretion to enhance the 

damages in this case in light of that clarification. The 

district court should also reconsider its fee award, which 

it viewed as related to its enhancement determination. 

J.A. 79–80. In so concluding, we do not suggest that the 

district court should reach results different from its preappeal rulings on enhancement and fees. 

The task on remand is limited in an important respect. There is no basis for a new trial on “willful misconduct,” which is a sufficient predicate, under Halo, to allow 

the district court to exercise its discretion to decide 

whether punishment is warranted in the form of enhanced damages. Halo, 136 S. Ct. at 1934 (“such punishment should generally be reserved for egregious cases 

typified by willful misconduct”). On the record in this 

case, including the jury instructions, J.A. 5534, the predicate of willful misconduct is established by the jury’s 

finding that MGA was subjectively willful under the 

second part of the Seagate standard. The jury made that 

finding under the clear-and-convincing-evidence standard, 

which is more demanding than needed. See Halo, 136 S. 

Ct. at 1934. The Supreme Court in Halo did not question 

our precedents on jury determination of that issue. See 

WBIP, LLC v. Kohler Co., Nos. 2015-1038, -1044, 2016 

WL 3902668, at *15 (Fed. Cir. July 19, 2016). Nor did it 

doubt that a finding favorable to the patentee on the 

second part of the Seagate standard suffices to establish 

the subjectively willful misconduct that, when present, 

moves the enhancement inquiry to the stage at which the 

district court exercises its discretion. The remand in this 

case, therefore, is for the district court to exercise its 

discretion in accordance with Halo, including the emphasis on egregiousness; willful misconduct has already been 

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INNOVENTION TOYS, LLC v. MGA ENTERTAINMENT, INC. 5

established by a verdict that Halo does not warrant 

disturbing. See Halo Elecs., Inc. v. Pulse Elecs., Inc., Nos. 

2013-1472, -1656, slip op. at 20–21 (Fed. Cir. Aug. 5, 

2016).

CONCLUSION

For the foregoing reasons, the judgment of the district 

court is affirmed in part and vacated in part, and the case 

is remanded for proceedings consistent with this opinion. 

No costs.

AFFIRMED IN PART AND VACATED AND 

REMANDED IN PART

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