Opinion ID: 787679
Heading Depth: 2
Heading Rank: 2

Heading: Reasonable Royalty Damages

Text: 26 Ralph next argues that he is entitled to a new trial on damages for patent infringement. In particular, he contends that the court erred by refusing to limit damages to a reasonable royalty for the use that he actually made of the seed, rather than for the uses that he could potentially have made and that he has now been enjoined from making. According to Ralph, a reasonable royalty deduced through a hypothetical negotiation process can never be set so high that no rational self-interested wealth-maximizing infringer acting ex ante would ever have agreed to it. More particularly, Ralph asserts that Georgia-Pacific Corp. v. United States Plywood Corp., 318 F.Supp. 1116 (S.D.N.Y.1970), award modified and aff'd, 446 F.2d 295 (2d Cir. 1971), requires that an infringer be given a reasonable opportunity ex ante to make a profit. Ralph also contends that there was no need for a hypothetical negotiation in this case, because, he argues, lost profits were shown and those should have been the measure of damages. Even if lost profits had not been shown, Ralph argues, the standard Technology Fee that Monsanto charges all farmers is the most established royalty patent infringement litigation has ever seen. 27 Monsanto responds that the jury's award reasonably reflects that Ralph misappropriated a license to use the seed without restrictions, as his infringing use extended well beyond the licensed planting of a commercial crop for a single growing season. Counsel for Monsanto also asserted during oral argument that the assessed $55.04/bag and $52.12/bag reasonable royalty damages for saved and replanted soybean seed and the $548.00/bag and $556.80/bag reasonable royalty damages for saved and replanted cottonseed are all reasonable royalties for licenses to save and replant for a single year; and that $1113.36/bag is a reasonable royalty for a license to save and transfer cottonseed, notwithstanding the fact that Monsanto would not agree to ever grant any such unlimited licenses. 28 We agree with Monsanto that the court did not err in its determination of a reasonable royalty and its denial of Ralph's post-trial motion. The jury's award of damages is entitled to deference. Specifically, the jury's damages award must be upheld unless the amount is grossly excessive or monstrous, clearly not supported by the evidence, or based only on speculation or guesswork. Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1580 (Fed.Cir.1992) (internal quotation marks omitted). The record in this case reveals that the jury was instructed in the factors set forth in Georgia-Pacific for determination of a reasonable royalty and based its determination of a reasonable royalty on the testimony of an expert witness who was cross-examined by Ralph's attorney. Although that witness was hired by Monsanto, the jury apparently found his testimony to be credible, and awarded approximately 80% of the damages established by his analysis. Ralph chose to withdraw his own expert witness on the day on which he was to testify, and he therefore cannot complain that the only witness that testified was on Monsanto's payroll. In any event, Ralph has not satisfied his burden of showing that the award is, in view of all the evidence, either so outrageously high or so outrageously low as to be unsupportable as an estimation of a reasonable royalty. Lindemann Maschinenfabrik GmbH v. Am. Hoist & Derrick Co., 895 F.2d 1403, 1406 (Fed.Cir.1990). 29 Ralph's suggestion that the Technology Fee is an established royalty for the use that he made of the seed can be rejected as unsound. One of the most fundamental tenets of patent law is that a patent gives its owner the right to exclude others from making, using, selling, offering to sell, or importing the patented subject matter. 35 U.S.C. § 271 (2000). If the patent owner chooses not to totally exclude others, he or she may negotiate with a potential licensee to permit the licensee to make, use, sell, or import the patented subject matter under whatever terms the parties agree upon. Monsanto has chosen, as is its prerogative, to permit farmers to plant a commercial crop of the patented seeds in a single season in exchange for payment of the Technology Fee and a promise, manifested through the Technology Agreement, not to save those seeds that are harvested at the end of the growing season for replanting, production, sale, or transfer to others. The Technology Fee is a royalty, to be sure, but it is a royalty for only a narrow, contractually agreed-upon, use of the seed. It is undisputed in the record that Monsanto has not granted licenses to anyone to plant, produce, or transfer saved seed. The Technology Fee is therefore not an established royalty for planting or transferring saved seed, the uses that Ralph made of the patented invention. 30 Ralph argues that no sane farmer would ever negotiate a royalty in excess of his anticipated profits. However, although an infringer's anticipated profit from use of the patented invention is [a]mong the factors to be considered in determining a reasonable royalty, see Georgia-Pacific, 318 F.Supp. at 1120, the law does not require that an infringer be permitted to make a profit. And, where, as here, a patentee is unwilling to grant an unlimited license, the hypothetical negotiation process has its limits. As we explained in Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320 (Fed. Cir.1987), the imposition on a patent owner who would not have licensed his invention for [a given] royalty is a form of compulsory license, against the will and interest of the person wronged, in favor of the wrongdoer. Id. at 1328; see also Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554 n. 13 (Fed.Cir.1995) (The hypothetical negotiation is often referred to as a `willing licensor/willing licensee' negotiation. However, this is an inaccurate, and even absurd, characterization when, as here, the patentee does not wish to grant a license.). Just as Ralph asserts that he would never pay Monsanto such a royalty just to be able to save seed for replanting or transfer, Monsanto would apparently never permit Ralph to save seed for replanting or transfer at any price. 31 Because denials of motions for judgment as a matter of law, remittitur, or new trial are not unique to patent law, we apply regional circuit law in our review of those decisions. Under the Eighth Circuit's case law, the district court's denial of such motions is reviewed for manifest abuse of discretion or a verdict that is so grossly excessive as to shock the conscience. MacGregor v. Mallinckrodt, Inc., 373 F.3d 923, 932 (8th Cir.2004). We have held that a court has wide discretion in making the determination denying such a motion, Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 517 (Fed.Cir.1995), and that a court should grant such a motion only if the jury's verdict is against the clear or great weight of the evidence, Standard Havens Prods. v. Gencor Indus., 953 F.2d 1360, 1367 (Fed.Cir.1991). We see no abuse of discretion in this case, as the jury's determination on reasonable royalties was supported by the evidence of record and was properly accepted by the district court in its denial of Ralph's motion.