United States Court of Appeals 

for the Federal Circuit 

__________________________ 

WORDTECH SYSTEMS, INC., 

Plaintiff-Appellee, 

v. 

INTEGRATED NETWORKS SOLUTIONS, INC., 

(DOING BUSINESS AS INTEGRATED NETWORK 

SOLUTIONS CORP., ALSO KNOWN AS

INTEGRATED NETWORK SOLUTIONS, 

INTEGRATED SYSTEMS, INTERNET NETWORK 

STORAGE COMPANY AND INSC), NASSER 

KHATEMI, AND HAMID ASSADIAN, 

Defendants-Appellants, 

and 

EHTERAM GHODSIAN, SHOHREH JAVADI, 

MICHAEL F. ELLSWORTH, 

AND BRIAN J. DEAN, 

Defendants. 

__________________________ 

2009-1454 

__________________________ 

Appeal from the United States District Court for the 

Eastern District of California in case No. 04-CV-1971, 

Judge Morrison C. England, Jr. 

__________________________ 

Decided: June 16, 2010 

__________________________ 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 2

CHRISTIAN J. MARTINEZ, General Counsel, Wordtech 

Systems, Inc., of Concord, California, argued for plaintiffappellee. With him on the brief was RICHARD ESTY 

PETERSON, Richard Esty Peterson, Patent Attorney, of 

Pacifica, California. 

CHRIS GIBSON, Boutin, Gibson Di Gusto Hodell Inc., of 

Sacramento, California, argued for defendants-appellants. 

With him on the brief was MICHAEL E. CHASE. 

__________________________ 

Before MAYER, GAJARSA, and LINN, Circuit Judges. 

LINN, Circuit Judge. 

This is a patent infringement case involving technology for automated duplication of compact discs. Wordtech 

Systems, Inc. (“Wordtech”) sued Integrated Networks 

Solutions, Inc. (“INSC”) and its employees Nasser 

Khatemi and Hamid Assadian (collectively “Defendants”) 

in the District Court for the Eastern District of California 

for infringement of U.S. Patents No. 6,141,298 (“’298 

patent”), No. 6,532,198 (“’198 patent”), and No. 6,822,932 

(“’932 patent”). A jury found INSC, Khatemi, and Assadian each liable for direct infringement, contributory 

infringement, and inducement of infringement, and 

awarded damages. Khatemi and Assadian appeal the 

liability verdicts against them as individuals; all three 

defendants appeal damages and the district court’s denial 

of their motion for leave to amend their answer to allege 

invalidity defenses. Because the jury instructions lacked 

legal tests necessary to determine Khatemi and Assadian’s individual liability, and because the damages 

verdict conflicts with the clear weight of the evidence, we 

reverse the district court’s denial of Defendants’ motion for 

new trial and remand. Because the district court did not 
3 WORDTECH SYSTEMS v. INTEGRATED NTWRK

abuse its discretion by denying Defendants’ motion for 

leave to amend, we affirm that ruling. 

BACKGROUND

The three asserted patents share a common parent 

application and cover “Programmable Self-Operating 

Compact Disk Duplication Systems.” Wordtech alleged 

that Defendants infringed the patents by modifying and 

selling disk duplication devices called “Robocopiers,” 

model numbers 600 and 8000. The accused devices copy 

video files from computer memory to multiple discs. 

Wordtech also alleged that INSC, Khatemi, Assadian, and 

other “INSC personnel” contributorily infringed and 

induced third parties to infringe “by selling infringing 

products to them.” First Am. Compl. ¶ 27. 

INSC was founded by Khatemi’s mother, Ehteram 

Ghodsian, and incorporated in Nevada on March 17, 1994.

Nevada law requires corporations to file annual forms 

that include the names and addresses of officers and 

directors. See Nev. Rev. Stat. § 78.150 (2009). Failure to 

file the annual forms results in revocation of the corporate 

charter, which cannot be reinstated after five consecutive 

years of noncompliance. Id. §§ 78.175, 78.180. INSC filed 

annual lists of corporate officers in 1994 and 1995, identifying Khatemi as President and as a Director, respectively.1 However, after 1995, INSC did not file the 

mandatory annual statements in Nevada. On November 

3, 2006, after Wordtech filed suit (on September 22, 2004), 

 1 The record contains additional copies of INSC’s 

1994 and 1995 forms that do not list Khatemi under any 

position. Wordtech claims that these copies were “falsified.” Wordtech’s Br. 11. On appeal, Defendants admit 

that the 1994 and 1995 filings listed Khatemi’s name. 

Defs.’ Principal Br. 17. 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 4

INSC filed a “Certificate for Revival for a Nevada Corporation.” 

Khatemi and Assadian worked for INSC but denied 

that they served as officers. Khatemi testified that he 

was a “salesman,” that his “specialty is software and 

software solution,” and that he sold Robocopier 600 and 

8000 models. Reporter’s Tr., Trial Proceedings, Nov. 4, 

2008, 144:20-146:21. Assadian described himself as an 

engineer responsible for INSC “product development.” 

Id., Nov. 5, 2008, 109:13-19; id., Nov. 10, 2008, 46:6-23. 

Khatemi said, “We generally never had titles at the 

company,” but identified Assadian as the company representative at the time of trial. Id., Nov. 4, 2008, 151:20-25, 

136:19-24. According to Assadian, INSC had at most “20 

and maybe 15” employees between 2000 and 2005, and 

only two full-time employees—himself and Khatemi—at 

the time of trial. Id., Nov. 10, 2008, 11:6-12, 22:14-18. 

Assadian also testified that “mostly Mr. Khatemi and 

myself” were responsible for the company, but neither 

held an office. J.A. 537. 

Wordtech named the San Juan Unified School District 

(“School District”) of Carmichael, California as a codefendant for allegedly purchasing and using INSC 

Robocopiers. First Am. Compl. ¶ 28. In response, the 

School District pleaded “Patent Invalidity” as an affirmative defense. San Juan Unified Sch. Dist.’s Answer to 

First Am. Compl. 10. However, INSC, Khatemi, and 

Assadian did not plead invalidity defenses or counterclaims. The School District later settled with Wordtech 

and left the lawsuit. The remaining defendants learned of 

this settlement on January 23, 2007 and moved to amend 

their answer to allege invalidity defenses on February 13, 

2007. The district court denied this motion. Wordtech 

Sys., Inc. v. Integrated Network Solutions, Inc., No. 04-

CV-1971 (E.D. Cal. Mar. 22, 2007) (order denying motion). 
5 WORDTECH SYSTEMS v. INTEGRATED NTWRK

The district court conducted a jury trial on Wordtech’s 

infringement theories. The jury answered questions 

involving infringement on a sixteen-page verdict form. 

Part I of the verdict form, “INFRINGEMENT,” asked as 

to each defendant whether Wordtech proved that the 

Robocopier 600 and 8000 infringed each of the asserted 

claims of the three patents, but only displayed check 

boxes for “(A) Inducing Infringement in the U.S.” and “(B) 

Contributing to infringement in the U.S.” Joint Verdict 

Form 2-14. Part II, “Infringement Detail,” asked whether 

Wordtech proved that “any valid claim of these patents” 

was infringed by INSC, Assadian, and Khatemi. Id. 14-

15. The jury checked “Yes” for all infringement questions 

in Parts I and II. It also awarded damages of $150,000 for 

infringement of the ’298 patent and $50,000 for infringement of each of the ’198 and ’932 patents, for a total of 

$250,000. Finally, the jury found that all defendants 

infringed all three patents willfully. After trial, the 

district court found the case “exceptional” under 35 U.S.C. 

§ 285 and awarded treble damages, attorneys’ fees, interest, and costs to Wordtech. Wordtech Sys., Inc. v. Integrated Network Solutions, Inc., No. 04-CV-1971 (E.D. Cal. 

Jan. 15, 2009) (memorandum and order). Defendants 

filed pre- and post-verdict motions for judgment as a 

matter of law (“JMOL”) under Rule 50 of the Federal 

Rules of Civil Procedure, and a motion for new trial under 

Rule 59(a), all of which the district court denied. Wordtech Sys., Inc. v. Integrated Network Solutions, Inc., No. 

04-CV-1971 (E.D. Cal. May 26, 2009) (“Order”). 

Defendants do not appeal the verdicts of infringement 

against INSC, the verdicts of willfulness, or the court’s 

exceptional case determinations. They challenge only the 

liability verdicts against Khatemi and Assadian, the 

$250,000 damages award, and the court’s denial of their 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 6

motion to amend their answer. We have jurisdiction 

under 28 U.S.C. § 1295(a)(1). 

DISCUSSION

I. Individual Liability for Infringement 

Khatemi and Assadian appeal the district court’s denial of their motions for JMOL and new trial, arguing 

that they cannot be individually liable for direct infringement, contributory infringement, or inducement. 

We review denial of post-trial motions for JMOL and 

new trial under regional circuit law. Revolution Eyewear, 

Inc. v. Aspex Eyewear, Inc., 563 F.3d 1358, 1370 (Fed. Cir. 

2009). The Ninth Circuit reviews “a jury’s verdict for 

substantial evidence in ruling on a properly made motion 

under Rule 50(b).” Equal Employment Opportunity 

Comm’n v. Go Daddy Software, Inc., 581 F.3d 951, 961 

(9th Cir. 2009). “However, in ruling on a Rule 50(b) 

motion based on grounds not previously asserted in a 

Rule 50(a) motion, we are limited to reviewing the jury’s 

verdict for plain error, and should reverse only if such 

plain error would result in a manifest miscarriage of 

justice.” Id. (quotation and citation omitted). “Under 

Rule 50, a party must make a Rule 50(a) motion for 

judgment as a matter of law before a case is submitted to 

the jury.” Id. Rule 50(a) requires that a pre-verdict 

JMOL motion “specify the judgment sought and the law 

and facts that entitle the movant to the judgment.” See

Tortu v. Las Vegas Metro. Police Dep’t, 556 F.3d 1075, 

1082-83 (9th Cir. 2009) (quoting Fed. R. Civ. P. 50(a)(2)). 

The Ninth Circuit reviews a “ruling on a motion for a 

new trial under Rule 59(a) for an abuse of discretion.” Go 

Daddy, 581 F.3d at 962. “The trial court may grant a new 

trial, even though the verdict is supported by substantial 

evidence, if ‘the verdict is contrary to the clear weight of 
7 WORDTECH SYSTEMS v. INTEGRATED NTWRK

the evidence, or is based upon evidence which is false, or 

to prevent, in the sound discretion of the trial court, a 

miscarriage of justice.’” United States v. 4.0 Acres of 

Land, 175 F.3d 1133, 1139 (9th Cir. 1999) (citation omitted). We may reverse the denial of a Rule 59(a) motion 

“where the District Court has made a mistake of law.” 

Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 

2007) (quotation omitted). 

A. Direct Infringement 

According to Khatemi and Assadian, INSC’s corporate 

veil shielded them from direct infringement liability 

under 35 U.S.C. § 271(a) because they acted as company 

employees, and INSC was a valid corporation during all 

periods of alleged infringement. They insist that the 

validity of “INSC’s corporate status was not an issue at 

trial” and that Wordtech introduced insufficient evidence 

to justify piercing INSC’s corporate veil. Defs.’ Principal 

Br. 38-39. In their motions for JMOL and new trial, 

Defendants preserved these arguments by contending 

that they were not liable as INSC officers and did not 

personally participate in infringement. See Defs.’ Mot. for 

JMOL Pre-Verdict 5-7 (“Rule 50(a) motion”); Defs’ Memo. 

in Support of JMOL Post-Verdict 8-9, 16-17 (“Rule 50(b) 

motion”); Defs.’ Memo. in Support of New Trial 4-7 (“Rule 

59(a) motion”). 

“Patent infringement is a tort,” Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1365 (Fed. Cir. 2008), and 

“[i]n general, a corporate officer is personally liable for his 

tortious acts, just as any individual may be liable for a 

civil wrong,” Hoover Group, Inc. v. Custom Metalcraft, 

Inc., 84 F.3d 1408, 1411 (Fed. Cir. 1996). However, the 

“corporate veil” shields a company’s officers from personal 

liability for direct infringement that the officers commit in 

the name of the corporation, unless the corporation is the 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 8

officers’ “alter ego.” See Wechsler v. Macke Int’l Trade, 

Inc., 486 F.3d 1286, 1295 (Fed. Cir. 2007). “To determine 

whether corporate officers are personally liable for the 

direct infringement of the corporation under § 271(a) 

requires invocation of those general principles relating to 

piercing the corporate veil.” Orthokinetics, Inc. v. Safety 

Travel Chairs, Inc., 806 F.2d 1565, 1579 (Fed. Cir. 1986).2 

On appeal, Wordtech defends the verdict on two 

grounds. First, Wordtech claims that INSC was “nonexistent” during the alleged infringement because, under 

Nevada law, INSC permanently forfeited its corporate 

charter when it neglected to file required annual statements for five consecutive years and cannot be “reinstated.” See Nev. Rev. Stat. § 78.180(4) (2006); 

Wordtech’s Br. 16. Defendants respond that they successfully “revived” INSC in 2006, with retroactive effect, by 

filing appropriate paperwork. See Nev. Rev. Stat. § 

 2 Commentators have argued that the corporate 

veil should apply only to owners, not to officers. See

Lynda J. Oswald, The Personal Liability of Corporate 

Officers for Patent Infringement, 44 IDEA 115, 130 (2003) 

(“Piercing is a mechanism for reaching the owners (i.e., 

shareholders) of a corporation, not the officers. It has no 

application in the context of officer liability.”); see also

Patrick T. Schmidt, Note, The Internalization of Corporate 

Patent Infringement, 88 Tex. L. Rev. 217, 233 (2009) 

(“[V]eil-piercing is a doctrine by which shareholders are 

held liable for obligations of the corporation and is generally thought to have nothing to do with non-owner liability.”). Wordtech does not argue that Khatemi and 

Assadian are owners of INSC, nor does it attempt to make 

any distinction between officers and owners on the corporate veil issue. Moreover, until such a challenge is presented and reconsidered by the full court, “[p]anels of this 

court are bound by previous precedential decisions until 

overturned by the Supreme Court or by this court en 

banc.” Barclay v. United States, 443 F.3d 1368, 1373 

(Fed. Cir. 2006). 
9 WORDTECH SYSTEMS v. INTEGRATED NTWRK

78.740 (2007); Redl v. Sec’y, 85 P.3d 797, 799-800 (Nev. 

2004). Alternatively, Wordtech contends that even if 

INSC was a valid corporation, the jury heard substantial 

evidence that supported piercing INSC’s corporate veil. 

We do not evaluate these arguments because the jury 

instructions did not address any issue relating to corporate status. We have held that the doctrine of piercing 

the corporate veil involves “general principles,” Orthokinetics, 806 F.2d at 1579, that do not apply only to patent 

cases, Wechsler, 486 F.3d at 1295 (noting that “the alter 

ego issue is not unique to patent law”). “More generally, a 

court may exert its equitable powers and disregard the 

corporate entity if it decides that piercing the veil will 

prevent fraud, illegality, injustice, a contravention of 

public policy, or prevent the corporation from shielding 

someone from criminal liability.” Manville Sales Corp. v. 

Paramount Sys., Inc., 917 F.2d 544, 552 (Fed. Cir. 1990). 

Here, the district court never instructed the jury on 

INSC’s corporate status. Neither the jury instructions 

nor the jury’s verdict form mentioned piercing the corporate veil or the Nevada statutory scheme that Wordtech 

asserts on appeal. Jury Instructions; Joint Verdict Form. 

When Wordtech’s counsel claimed that the instructions 

included corporate issues, the court replied: “That’s not a 

jury instruction here.” Reporter’s Tr., Trial Proceedings, 

Nov. 10, 2008, 35:5-11. 

Because the jury was not instructed about INSC’s 

corporate status, we must determine whether this omission requires a new trial. For issues not unique to patent 

law, we review jury instructions under the law of the 

relevant regional circuit. See Amgen Inc. v. F. HoffmannLa Roche Ltd., 580 F.3d 1340, 1368 n.13 (Fed. Cir. 2009). 

In the Ninth Circuit, if a party does not object properly to 

jury instructions at trial, the instructions are reviewable 

only for plain error. See Warfield v. Alaniz, 569 F.3d 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 10

1015, 1029 (9th Cir. 2009); Fed. R. Civ. P. 51(d)(2) (2007) 

(“A court may consider a plain error in the instructions 

that has not been preserved as required by Rule 51(d)(1) if 

the error affects substantial rights.”). The Advisory 

Committee Notes to the 2003 revision of Rule 51(d)(2), 

which explicitly authorized “plain error” review for jury 

instructions in the situation where no party objects, 

counsel that plain error depends on the “obviousness of 

the mistake,” the “importance of the error,” the “costs of 

correcting an error,” and the “impact a verdict may have 

on nonparties.” Notes of Advisory Committee on 2003 

Amendments, Fed. R. Civ. P. 51(d)(2) (2003); see also

United States v. Treadwell, 593 F.3d 990, 996 (9th Cir. 

2010) (noting, in criminal context: “On plain error review, 

we correct an error not raised at trial only if it is plain, 

affects substantial rights, and ‘seriously affects the fairness, integrity, or public reputation of judicial proceedings.’”). 

In this case, the jury’s verdict of Khatemi and Assadian’s individual liability, despite the lack of instructions on INSC’s existence or piercing its corporate veil, 

was plain error that requires a new trial. Defendants 

concede that they did not object to the jury instructions. 

Nevertheless, failure to instruct the jury was plainly 

erroneous because “[p]ersonal liability under § 271(a) . . . 

requires sufficient evidence to justify piercing the corporate veil.” Al-Site Corp. v. VSI Int’l, Inc., 174 F.3d 1308, 

1331 (Fed. Cir. 1999). Because resolution of INSC’s 

corporate status was a legal prerequisite to finding 

Khatemi and Assadian individually liable, the jury omissions were obvious, important, and seriously affected the 

trial’s fairness. Wordtech needed to prove either that 

INSC was not a valid corporation when Khatemi and 

Assadian committed infringing acts on its behalf, or that 

INSC’s corporate veil should be disregarded under state 
11 WORDTECH SYSTEMS v. INTEGRATED NTWRK

law. We recognize that if “the error in the jury instruction is harmless, it does not warrant reversal.” Dang v. 

Cross, 422 F.3d 800, 805 (9th Cir. 2005). In this case, 

however, we cannot deem the errors harmless. While 

Wordtech identified evidence that INSC did not exist or 

served as Defendants’ alter ego, a correctly instructed jury 

could have concluded otherwise. 

Moreover, the trial record shows that even though the 

district court ruled that Wordtech waived its arguments 

about INSC’s corporate status, it nonetheless allowed 

Wordtech to introduce evidence on these issues. The 

Final Pretrial Order did not mention any corporate issues. 

Accordingly, when Wordtech’s counsel tried to examine 

Assadian about INSC’s corporate filings, the court told 

the parties: “Nobody has asked to add in the issue of the 

corporate entity, corporate veil, anything else. . . . That’s 

not an issue. It was never brought up. In the Complaint, 

where did you say that they are not a valid corporation?” 

Reporter’s Tr., Trial Proceedings, Nov. 10, 2008, 33:2-9, 

35:12-14. On the trial’s final day, Wordtech moved to 

amend its complaint to address “the identity of the corporation,” but the court denied the motion, noting that 

“[a]nything with respect to issues of corporate ownership, 

filing of corporate documents, could have been brought up 

prior to the time of the Final Pretrial Order being issued . 

. . .” Id., Nov. 12, 2008, 3:16-4:22. However, in closing 

arguments later that day, the court allowed the parties to 

argue to the jury about whether Khatemi and Assadian 

were INSC officers. Id. 69:21-73:21, 86:12-87:17. The 

court then denied Defendants’ post-trial motions on 

individual liability because “Plaintiff produced evidence 

tending to prove that INSC was not operating as a corporation during the time of infringement.” Order at 6. 

However, because the jury instructions were plainly 

erroneous, we conclude that the proceedings rested on “a 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 12

mistake of law” that warrants retrial. Molski, 481 F.3d at 

729. We therefore reverse the district court’s denial of 

Defendants’ Rule 59(a) motion and remand for further 

proceedings on whether a new trial is warranted on 

Khatemi and Assadian’s personal liability for direct 

infringement. Because Defendants have not clearly 

established that Wordtech waived its arguments about 

INSC’s corporate status or failed to present substantial 

evidence on which a properly instructed jury could find 

Khatemi and Assadian personally liable, we affirm the 

denial of Defendants’ motion for JMOL. 

B. Inducement 

Defendants also challenge their individual liability for 

inducement. “Whoever actively induces infringement of a 

patent shall be liable as an infringer.” 35 U.S.C. § 271(b). 

“[I]nducement requires that the alleged infringer knowingly induced infringement and possessed specific intent 

to encourage another’s infringement.” DSU Med. Corp. v. 

JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc) 

(quotations and citations omitted). 

Khatemi and Assadian claim that Wordtech produced 

insufficient evidence of inducement to support the verdict. 

However, Defendants did not raise inducement in their 

Rule 50(a) or Rule 50(b) motions. Therefore, they may not 

challenge the sufficiency of the evidence on this issue. See

Go Daddy, 581 F.3d at 961-62. Defendants argued generally that INSC shielded them from personal liability. The 

corporate veil can shield officers from liability under § 

271(a). See Orthokinetics, 806 F.2d at 1578-79. However, 

“corporate officers who actively assist with their corporation's infringement may be personally liable for inducing 

infringement regardless of whether the circumstances are 

such that a court should disregard the corporate entity 

and pierce the corporate veil.” Manville, 917 F.2d at 553; 
13 WORDTECH SYSTEMS v. INTEGRATED NTWRK

see also Hoover, 84 F.3d at 1412.3 Thus, Defendants’ 

argument for JMOL was irrelevant to inducement. As a 

result, we review only their motion for new trial on inducement, asking whether the verdict conflicts with the 

clear weight of the evidence or involved a mistake of law. 

Molski, 481 F.3d at 728-29. 

We begin with the jury’s verdict form. In Part I, the 

jury was asked whether the Robocopier 8000 and 600 

devices infringed by “(A) Inducing Infringement in the 

U.S.” Joint Verdict Form 2-14. These verdict questions 

were nonsensical: inducement requires intent, and as 

Wordtech’s counsel acknowledged at the oral argument, 

“a device cannot induce infringement.” Oral Arg. 24:57-

25:01, available at

http://oralarguments.cafc.uscourts.gov/mp3/2009-

1454.mp3. The verdict form included no other inducement questions or instructions that might have mitigated 

these errors. 

Moreover, the legal test for inducement was never 

presented to the jury. As Wordtech’s counsel confirmed, 

inducement was not raised in the Final Pretrial Order, in 

the jury instructions, or in the closing arguments. See id.

27:41-29:34. Wordtech argues that the instructions did 

 3 In Power Lift, Inc. v. Lang Tools, Inc., we explained that the history of the 1952 Patent Act supported 

“a ‘broad’ reading of § 271(b) which, in our view, may 

include liability of corporate officials who actively aid and 

abet their corporation’s infringement.” 774 F.2d 478, 481 

(Fed. Cir. 1985). We noted that regional circuits previously held officers liable for inducement without piercing 

the corporate veil. E.g., Int’l Mfg. Co. v. Landon, Inc., 336 

F.2d 723, 729 (9th Cir. 1964). The differing rules for 

officer liability under §§ 271(a) and 271(b) and the treatment of officer liability as distinguished from owner 

liability in our precedent are important issues that cannot 

be resolved on this record and are left for another day. 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 14

not mislead the jury because the jury received proper 

instructions on willful infringement, and in fact found 

willfulness. Wordtech’s Br. 56-57. However, the legal 

standards for willfulness and inducement, such as the 

requisite intent, are not identical. Cf. Broadcom Corp. v. 

Qualcomm, Inc., 543 F.3d 683, 699 (Fed. Cir. 2008). 

Therefore, these mistakes of law precluded legitimate 

verdicts on inducement. 

C. Contributory Infringement 

Khatemi and Assadian also challenge their individual 

liability for contributory infringement. Under 35 U.S.C. § 

271(c), a party who sells a component with knowledge 

that the component is especially designed for use in a 

patented invention, and is not a staple article of commerce suitable for substantial noninfringing use, is liable 

as a contributory infringer. See Ricoh Co. v. Quanta 

Computer Inc., 550 F.3d 1325, 1337 (Fed. Cir. 2008). 

Wordtech argues that Khatemi and Assadian waived 

any challenge to the sufficiency of the evidence for contributory infringement by failing to raise it in their preverdict Rule 50(a) motion. The district court denied 

Defendants’ post-verdict Rule 50(b) motion on the grounds 

that “Defendants failed to raise any contributory infringement theory in a pre-verdict Motion.” Order at 6. 

We agree. Defendants did not refer to contributory infringement in their Rule 50(a) motion, contesting only 

their individual liability as INSC employees. The district 

court thus correctly denied Khatemi and Assadian’s 

motion for JMOL on contributory infringement. As with 

inducement, a corporation does not shield officers from 

liability for personally participating in contributory 

infringement. See Hoover, 84 F.3d at 1411 (“When personal wrongdoing is not supported by legitimate corporate 

activity, the courts have assigned personal liability for 
15 WORDTECH SYSTEMS v. INTEGRATED NTWRK

wrongful actions even when taken on behalf of the corporation.”); Reynolds v. Bement, 36 Cal. 4th 1075, 1089-90 

(2005) (recognizing that “corporate directors . . . ‘may be 

joined as defendants if they personally directed or participated in the tortious conduct.’”). We therefore affirm the 

denial of Defendants’ motion for JMOL and review only 

their motion for new trial. 

The district court’s legal error in presenting the contributory infringement issue to the jury requires a new 

trial. While the jury received no instruction on inducement, it did receive an instruction on contributory infringement, which Defendants did not oppose. Jury 

Instructions No. 21. However, the verdict form asked the 

jury the confusing question of whether the Robocopier 

devices infringed by “(B) Contributing to infringement in 

the U.S.,” even though devices cannot possess knowledge 

required under § 271(c). Joint Verdict Form 2-14. 

A new trial is also required because Wordtech fails to 

identify proof of elements required for contributory infringement. Wordtech points to no evidence that Assadian (who testified that he was an engineer) personally 

participated in any sales of Robocopiers or nonstaple 

components. The record also fails to show that any parts 

that Defendants may have sold were especially designed 

for infringing products. Wordtech cites INSC invoices 

that show customer orders for abbreviated items such as 

“RC-8800 16X BARE,” “RIBBON RIMAGE BLACK,” and 

“Labor.” However, Wordtech identifies no evidence that 

these items are “a material part of the invention,” or 

“especially made or especially adapted for use in an 

infringement of such patent, and not a staple article or 

commodity of commerce suitable for substantial noninfringing use.” § 271(c). Moreover, the jury did not find 

any direct infringement corresponding to Khatemi and 

Assadian’s alleged contributory infringement. “A defen-
WORDTECH SYSTEMS v. INTEGRATED NTWRK 16

dant’s liability for indirect infringement must relate to 

the identified instances of direct infringement.” Dynacore 

Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1274 

(Fed. Cir. 2004). Although “[c]ircumstantial evidence can 

support a finding of infringement,” Golden Blount, Inc. v. 

Robert H. Peterson Co., 438 F.3d 1354, 1362 (Fed. Cir. 

2006), when asked at oral argument, Wordtech’s counsel 

could not identify any findings of direct infringement by 

INSC customers. See Oral Arg. 25:48-26:54. While the 

jury found that INSC infringed, § 271(c) requires a sale or 

offer to sell by the accused contributory infringer to a 

direct infringer. Here, no evidence shows that Khatemi or 

Assadian sold or offered to sell nonstaple components to 

INSC. 

Overall, multiple errors in the jury charge and the 

verdict form, across all infringement theories, compel the 

conclusion that, “looking to the instructions as a whole, 

the substance of the applicable law was [not] fairly and 

correctly covered.” Dang, 422 F.3d at 805 (citation omitted). 

* * * 

For the foregoing reasons, we vacate the liability verdicts against Khatemi and Assadian, reverse the denial of 

their Rule 59(a) motion on these issues, and remand for 

consideration of whether a new trial is warranted on their 

individual liability for direct infringement, inducement, 

and contributory infringement. On remand, the district 

court should address the issues of piercing INSC’s corporate veil and INSC’s corporate status, whether Wordtech 

preserved these arguments for trial, the law governing 
17 WORDTECH SYSTEMS v. INTEGRATED NTWRK

these issues,4 and whatever jury instructions might be 

necessary. 

II. Damages 

A. Arguments on Appeal 

Khatemi, Assadian, and INSC challenge the jury’s 

$250,000 damages award. As a threshold matter, we first 

determine what arguments Defendants preserved. On 

appeal, they assert two theories: (1) Wordtech’s evidence 

was “insufficient to support a finding of any ‘hypothetical 

royalty’” or to establish “the amount of INSC’s sales 

revenues,” and (2) the damages award was “excessive.” 

Defs.’ Principal Br. 25, 33, 34. Defendants’ first argument 

suggests that the record supports no possible damages 

and requests a new trial. Their second argument challenges the reasonableness of the award, without disputing 

that some damages were warranted, and requests either a 

new trial or a remittitur of $52,250. 

Defendants raised their second theory before the district court, but not their first. In their Rule 50(a), 50(b), 

and 59(a) motions, they did not argue that the evidence 

was insufficient as a matter of law to support any damages at all. Therefore, this argument is waived on appeal. 

See In re Am. W. Airlines, Inc., 217 F.3d 1161, 1165 (9th 

Cir. 2000) (“Absent exceptional circumstances, we generally will not consider arguments raised for the first time 

on appeal, although we have discretion to do so.”). Defendants raised their second theory in their post-verdict Rule 

50(b) and 59(a) motions, arguing that the jury assessed 

“punitive/exemplary” damages compared to Defendants’ 

 4 In federal question cases with exclusive jurisdiction in federal court, such as bankruptcy, the court should 

apply federal, not forum state, choice of law rules.” In re 

Lindsay, 59 F.3d 942, 948 (9th Cir. 1995). 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 18

calculation of $17,114. Wordtech did not object to this 

argument at the trial court (or before us) on the grounds 

that Defendants failed to present it in their pre-verdict 

Rule 50(a) motion. See Pl.’s Opp’n to Defs.’ Mot. for 

JMOL. However, the district court denied Defendants’ 

Rule 50(b) motion for this reason, and denied their Rule 

59(a) motion because the verdict was “supported by the 

evidence at trial.” Order at 4, 12. Defendants did not 

request remittitur of $52,250 in their motion for new trial. 

On appeal, Defendants do not dispute the denial of 

their Rule 50(b) motion for waiver. In the Ninth Circuit, 

failure to challenge the sufficiency of the evidence for 

damages in a Rule 50(a) motion waives the right to raise 

it in a Rule 50(b) motion. See Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020, 1041-42 (9th Cir. 2003).5 

Therefore, we review Defendants’ challenge to excessiveness of damages only in the context of their Rule 59(a) 

motion. 

B. Reasonable Royalty 

When reviewing damages in patent cases, we apply 

regional circuit law to procedural issues and Federal 

Circuit law to substantive and procedural issues “pertaining to patent law.” Aero Prods. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d 1000, 1016 (Fed. Cir. 2006); see also

Fiskars, Inc. v. Hunt Mfg. Co., 279 F.3d 1378, 1381 (Fed. 

Cir. 2002) (noting that Federal Circuit law controls “the 

distinctive characteristics of patent damages law”). 

Under Ninth Circuit law governing motions for new trial, 

“[w]e must uphold the jury’s finding unless the amount is 

 5 Cf. Go Med. Indus. Pty, Ltd. v. Inmed Corp., 471 

F.3d 1264, 1272 (Fed. Cir. 2006) (“It would have been 

impossible, however, for MMG and Rüsch to challenge the 

jury’s award of damages as excessive in a Rule 50(a) 

motion.”). 
19 WORDTECH SYSTEMS v. INTEGRATED NTWRK

grossly excessive or monstrous, clearly not supported by 

the evidence, or based only on speculation or guesswork.” 

Del Monte Dunes at Monterey, Ltd. v. City of Monterey, 95 

F.3d 1422, 1435 (9th Cir. 1996) (citations omitted). 

A patentee is entitled to “damages adequate to compensate for the infringement, but in no event less than a 

reasonable royalty.” 35 U.S.C. § 284. A reasonable 

royalty can be calculated from an established royalty, the 

infringer’s profit projections for infringing sales, or a 

hypothetical negotiation between the patentee and infringer based on the factors in Georgia-Pacific Corp. v. 

U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 

1970). Lucent Techs. v. Gateway, Inc., 580 F.3d 1301, 

1324 (Fed. Cir. 2009); Minks v. Polaris Indus., 546 F.3d 

1364, 1372 (Fed. Cir. 2008). The hypothetical negotiation 

“attempts to ascertain the royalty upon which the parties 

would have agreed had they successfully negotiated an 

agreement just before infringement began,” and “necessarily involves an element of approximation and uncertainty.” Lucent, 580 F.3d at 1324-25 (citation omitted). 

At trial, Wordtech sought only a hypothetically negotiated royalty, and the jury received damages instructions 

for this theory alone. Jury Instructions No. 22, 23. 

Wordtech claimed that INSC sold $950,000 of infringing 

Robocopiers and asked for “at least 12 percent of the 

[$]950,000 or [$]114,000.” Reporter’s Tr., Trial Proceedings, Nov. 12, 2008, 48:6-9. However, the $250,000 verdict equates to a 26.3% royalty on the $950,000 total 

alleged sales. Wordtech offered no expert opinion on 

damages, but relied on testimony from its President, 

David Miller. Through Miller, Wordtech introduced 

thirteen patent licenses that it previously granted to third 

parties for rights to some or all of the patents-in-suit, 

along with roughly forty INSC invoices for Robocopier 

sales. 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 20

Defendants argue that Wordtech’s thirteen licenses 

cannot support the verdict because they reflect different 

economic circumstances. In this case, the licenses relate 

to Georgia-Pacific factor 1: “The royalties received by the 

patentee for the licensing of the patent in suit, proving or 

tending to prove an established royalty.” 318 F. Supp. at 

1120. We recently discussed the evidentiary value of past 

licensing agreements for estimating royalties under 

Georgia-Pacific. In Lucent, we held that a set of eight 

licenses lacked sufficient relevance to the proven infringement to support a lump-sum royalty verdict. 580 

F.3d at 1332. Those licenses reflected rates that the 

infringer paid to license comparable but different patents 

under Georgia-Pacific factor 2, not the rates that the 

patentee received for the patents-in-suit. Id. at 1325. 

However, Lucent is relevant because it explained general 

criteria for comparing patent licenses—specifically, the 

differences between lump-sum royalties (where the patentee receives a single upfront payment) and running 

royalties (where the patentee collects ongoing per-unit or 

percentage payments). We concluded that four of the 

eight licenses, though lump-sum agreements, were not 

“sufficiently comparable” because they arose from divergent circumstances and covered different material. Id. at 

1328-29. We rejected the remaining four licenses, which 

contained running royalties, because the patentee provided no basis for comparing those running royalties to 

the jury’s lump-sum award. Id. at 1329-30. Similarly, in 

ResQNet.com, Inc. v. Lansa, Inc. (decided after argument 

in this case), we overturned a running royalty verdict 

based on seven licenses, “five of which had no relation to 

the claimed invention,” and the other two of which arose 

from litigation. 594 F.3d 860, 870 (Fed. Cir. 2010). We 

stressed that comparisons of past patent licenses to the 

infringement must account for “the technological and 

economic differences” between them. Id. at 873. 
21 WORDTECH SYSTEMS v. INTEGRATED NTWRK

In this case, Wordtech’s licenses suffer from similar 

flaws. The jury awarded the $250,000 as a lump-sum 

royalty. The verdict form asked the jury: “If the above 

amount was based upon a running royalty rather than a 

lump sum, what percentage or per unit rate did you use? 

__.” Joint Verdict Form 15. The jury left this item blank, 

indicating a lump sum. E.g., Lucent, 580 F.3d at 1325 

(finding that “the jury decided on a lump-sum award, not 

a running royalty” because “[t]he verdict form notes a 

lump-sum damages amount and no amount (i.e., zero or 

‘N/A’) on the lines for a running royalty.”). We explained 

in Lucent that lump-sum licenses are generally more 

useful than running-royalty licenses for proving a hypothetical lump sum because “certain fundamental differences exist between lump-sum agreements and runningroyalty agreements.” Id. at 1330. 

Of Wordtech’s thirteen licenses, only two were lumpsum agreements. The first such licensee paid Wordtech 

$175,000 for nonexclusive rights to the ’298 and ’198 

patents and any related or Wordtech-owned patents. The 

second licensee paid $350,000 for nonexclusive rights to 

the ’298, ’198, and ’932 patents on similar terms. Wordtech claims the verdict was reasonable because $250,000 

is roughly the average of these two lump-sum fees, or 

$262,500—even though Wordtech asked for only 

$114,000, or less than half the verdict. This “averaging” 

theory is flawed because the two lump-sum licenses 

provide no basis for comparison with INSC’s infringing 

sales. Neither license describes how the parties calculated each lump sum, the licensees’ intended products, or 

how many products each licensee expected to produce. 

Indeed, when asked if the record supplied “any idea of the 

volume of sales or projected sales,” Wordtech’s counsel 

admitted: “With the trial court, none of that was discussed.” Oral Arg. 19:19-54. Wordtech identified forty 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 22

Robocopier 600 and sixteen Robocopier 8000 models that 

INSC sold. Wordtech’s Br. 32. If Wordtech’s previous 

licensee paid $350,000 to produce one thousand devices, 

for example, INSC would not have agreed ex ante to pay 

$250,000 if it expected to make only fifty-six units. Thus, 

without additional data, the licenses offered the jury 

“little more than a recitation of royalty numbers.” Lucent, 

580 F.3d at 1329. 

The remaining eleven licenses, which used running 

royalties, also fail to support the verdict. Running-royalty 

agreements can be relevant to lump-sum damages, but 

“some basis for comparison must exist in the evidence 

presented to the jury.” Id. at 1330. The remaining licenses reveal no such basis. One license listed per-unit 

fees of $100-195 instead of a royalty percentage. By 

contrast, the verdict reflects a per-unit fee that exceeds 

$4400 ($250,000 for fifty-six units). The other ten licenses 

stated royalty rates in the range of 3-6% of the licensees’ 

sales—far less than the 26.3% rate that the jury effectively awarded. Wordtech claims that these rates actually 

ranged as high as 10%, but this argument distorts the 

record. The only rates above 6% would result from penalties for accounting lapses. A Wordtech license to An Chen 

Computer Company, for example, employed a 5% base 

rate that increased to 12% only if An Chen underreported 

its sales in more than two audits. More importantly, even 

a past royalty range of 3-12% fails to explain a 26.3% 

hypothetically negotiated rate. Wordtech signed several 

of these licenses after initiating or threatening litigation 

against the licensees, and “litigation itself can skew the 

results of the hypothetical negotiation.” ResQNet, 594 

F.3d at 872 (citing Hanson v. Alpine Valley Ski Area, Inc., 

718 F.2d 1075, 1078-79 (Fed. Cir. 1983)). 

Even if Wordtech’s licenses supported a high royalty 

percentage under Georgia-Pacific factor 1, Wordtech’s use 
23 WORDTECH SYSTEMS v. INTEGRATED NTWRK

of INSC’s invoices raises doubts about the sales volume to 

which the jury could have applied the royalty rate. Wordtech told the jury that INSC sold $950,000 of Robocopiers, 

but now argues on appeal that INSC’s sales totaled “at 

least $1,278,133” based on “reasonable inferences.” 

Wordtech’s Br. 35. Wordtech supplies no evidence that 

explains why its sales estimate abruptly increased by 

$328,133. Wordtech’s original $950,000 figure is itself 

suspect because Miller, who did not qualify as a damages 

expert, calculated it by using “the second highest value” 

from INSC’s invoices “as a phantom value.” Reporter’s 

Tr., Trial Proceedings, Nov. 10, 2008, 39:21-40:6 (emphasis added). The invoice dates also suggest that the jury 

incorrectly apportioned damages among the three patents. The jury was instructed to award damages for the 

’932 patent only for infringement after the patent issued 

on November 23, 2004. Jury Instructions No. 24, 25(c). 

Wordtech introduced only two INSC invoices that postdate the ’932 patent’s issue date, totaling $6620. However, the jury awarded $50,000 for the ’932 patent. Wordtech implies that INSC withheld records of Robocopier 

8000 sales, permitting the jury to infer greater sales. 

Wordtech’s Br. 14, 32; see Beatrice Foods Co. v. New Eng. 

Printing & Lithographing Co., 899 F.2d 1171, 1175 (Fed. 

Cir. 1990) (“An infringer can not destroy the evidence of 

the extent of its wrongdoing, and limit its liability to that 

which it failed to destroy.”). Yet the district court did not 

find that Defendants withheld or destroyed any documents. Moreover, the jury needed to infer almost 

$417,000 of post-issuance sales to award $50,000 in 

royalties at Wordtech’s proposed 12% royalty rate. Therefore, it was impossible for the verdict to fall “within the 

range encompassed by the record as a whole.” Unisplay, 

S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 519 (Fed. Cir. 

1995). 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 24

Apart from licenses and invoices, Wordtech insists 

that the verdict is supported by Georgia-Pacific factor 13: 

the portion of the infringer’s profit that “should be credited to the invention as distinguished from non-patented 

elements.” 318 F. Supp. at 1120. Wordtech claims that 

INSC purchased Robocopier hardware at low prices, 

added only software, and resold the machines at much 

higher prices. According to Wordtech, claims 13 and 14 of 

the ’298 patent cover INSC’s software; therefore, INSC’s 

entire profit corresponded to the inventions. Defendants 

respond that the ’298 patent claims do not cover Robocopier software and that Wordtech’s profit projections are 

baseless. Even if Wordtech is correct that its patents 

account for the entire value of the Robocopiers, its profit 

arguments rest on speculation. For example, Wordtech 

claims that INSC purchased the Robocopier 600 hardware 

for $2000 per unit and sold the finished machine for 

$14,000, reaping a $12,000 profit. Wordtech’s Br. 31. 

This assumes, however, that INSC incurred zero costs. 

Using these unproven profit numbers, Wordtech then 

posits that “a reasonable 50% royalty on the infringer’s 

profit of $800,000 would net $400,000. A reasonable 30% 

royalty on the gross profit would net $240,000.” Id. 32. 

Again, Plaintiff did not pose this theory to the jury, nor 

explain why 50% or 30% would be “reasonable.” Wordtech also postulates that “it is likely that Miller would be 

more interested in a share of the expected profit than a 

percentage royalty,” and that “[c]ommon sense would 

dictate that Miller would ask for half of the profit or a 

lump sum fee.” Id. 33-34. Instead of providing plausible 

explanations for the verdict, these unsupported rationalizations highlight the speculative nature of the evidence. 

Wordtech’s remaining Georgia-Pacific arguments continue this pattern of guesswork. Wordtech argues that 

numerous infringers existed when the ’298 patent issued, 
25 WORDTECH SYSTEMS v. INTEGRATED NTWRK

and therefore “the jury could well infer that signing up 

licensees and bagging cats were equally difficult.” Id. 27-

28. But it provides no grounds for estimating how this 

licensing environment (if accurate) would influence 

INSC’s royalty payments. Wordtech also cites prior 

decisions where we affirmed certain royalty percentages. 

E.g., Mitutoyo Corp. v. Cent. Purchasing, LLC, 499 F.3d 

1284, 1292 (Fed. Cir. 2007) (29.2% royalty). Yet Wordtech 

never tethers the facts of those cases to the circumstances 

here. Furthermore, the district court’s order sheds no 

light on Wordtech’s arguments because it provided no 

damages analysis—only the conclusory statement that 

the verdict was “supported by the evidence at trial.” 

Order at 12. 

Because the verdict was “clearly not supported by the 

evidence” and “based only on speculation or guesswork,” 

Del Monte, 95 F.3d at 1435, we reverse the denial of 

Defendants’ Rule 59(a) motion and remand for a new trial 

on damages. We deny Defendants’ request for remittitur 

as untimely. In their Rule 59(a) motion, Defendants 

suggested $17,114 as a proper award, but did not request 

remittitur or propose the alternative $52,250 calculation 

that they seek for the first time on appeal. We therefore 

decline to calculate in the first instance “the maximum 

amount sustainable by the proof” for remittitur. D&S 

Redi-Mix v. Sierra Redi-Mix & Contracting Co., 692 F.2d 

1245, 1249 (9th Cir. 1982). 

III. Motion to Amend 

Defendants claim that the district court erred by denying their motion to amend their answer to allege invalidity affirmative defenses. We disagree. 

In the Ninth Circuit, denial of a motion for leave to 

amend a pleading is reviewed for abuse of discretion. See

Lockheed Martin Corp. v. Network Solutions, Inc., 194 
WORDTECH SYSTEMS v. INTEGRATED NTWRK 26

F.3d 980, 983 (9th Cir. 1999). Leave to amend pleadings 

after the trial court enters a final scheduling order requires good cause, which “primarily considers the diligence of the party seeking the amendment.” Coleman v. 

Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000) 

(citation omitted). 

On September 13, 2006, the district court issued its 

Rule 16(b) scheduling order, which closed discovery on 

November 7, 2006 and prohibited amendments to pleadings absent good cause. Defendants filed their motion on 

February 13, 2007—five months after the scheduling 

order, three months after the close of discovery, and 

almost three weeks after it first learned that the School 

District intended to settle. They offer no explanation for 

their tardiness, arguing instead that the School District’s 

pleading gave Wordtech notice of possible defenses. 

However, the School District’s answer provided little 

notice because it stated simply: “On information and 

belief, the claims of the Patents are invalid for failure to 

comply with the requirements of 35 U.S.C. §§ 102, 103, 

and/or 112.” San Juan Unified Sch. Dist.’s Answer to 

First Am. Compl. 10. Wordtech protests that it would 

suffer prejudice from additional discovery for these defenses, and the Ninth Circuit recognizes that “[a] need to 

reopen discovery and therefore delay the proceedings 

supports a district court’s finding of prejudice from a 

delayed motion to amend the complaint.” Lockheed, 194 

F.3d at 986. The district court also noted that INSC 

retained an expert and secured an invalidity report as 

early as November 10, 2004, and therefore should have 

known its relevant defenses long before the Rule 16(b) 

order. This delay resembles the situation in Coleman, 

where the movants hired experts and obtained a report 

“over a year before filing for summary judgment,” and 

were therefore denied leave to amend their complaints. 
27 WORDTECH SYSTEMS v. INTEGRATED NTWRK

232 F.3d at 1295. Considering all these factors, we conclude that the trial court did not abuse its discretion. 

CONCLUSION

For the foregoing reasons, we reverse the denial of Defendants’ motion for new trial on Khatemi and Assadian’s 

individual liability for direct infringement, inducement, 

and contributory infringement. We also reverse the 

denial of Defendants’ motion for new trial on damages. 

However, we affirm the denial of Defendants’ motions for 

JMOL and for leave to amend, and remand for further 

proceedings. 

REVERSED-IN-PART, AFFIRMED-IN-PART, and 

REMANDED