Opinion ID: 210274
Heading Depth: 2
Heading Rank: 2

Heading: Paice's Cross Appeal

Text: We next address the issues presented by Paice's cross appeal, namely, (1) the district court's denial of the motion for JMOL of no literal infringement of claims 11 and 39 of the '970 patent, claim 15 of the '672 patent, and claims 1 and 2 of the '088 patent; and (2) the district court's imposition of an ongoing royalty of $25 per Prius II, Toyota Highlander, or Lexus RX400h vehicle subsequently sold by Toyota. As with Toyota's appeal, we reject each of Paice's contentions with respect to infringement issues. With respect to the ongoing royalty, however, we are unable to determine whether the district court abused its discretion. Accordingly, we must vacate a limited portion of the district court's order and remand for further proceedings.
Paice argues that the verdict of no literal infringement of claims 11 and 39 of the '970 patent, which was based on the jury's determination that the CTTU limitation is not satisfied by Toyota's drive train, is unsupported by the evidence. With respect to Toyota's argument that the accused drive trains lack a multi-input device or component, Paice points out that nothing in the district court's claim construction prevents a single shaft from being both an input and an output shaft, or limit[s] the nature or the location of the input. Appellee's Br. 57-58. Paice's argument, however, misses the point of Dr. Caulfield's testimony. Because the combination of the fractional (72%) ICE torque with the MG2 torque does not occur until after the fractional ICE torque is output from the planetary gear unit to the ring gear, there is no single device or component in Toyota's design that can be characterized as multi-input. Although the jury, in light of its equivalence verdict, must have seen Dr. Caulfield's distinction as insubstantial, we believe that his testimony provided the jury with substantial evidence upon which to base its finding of no literal infringement of claims 11 and 39 of the '970 patent. Paice further argues that the jury's verdict of no literal infringement of claim 15 of the '672 patent and claims 1 and 2 of the '088 patent, each of which contains a clutch limitation, is unsupported by the evidence. The district court construed the term clutch as a device that selectively permits or prohibits transfer of torque and rotation. Claim Construction Opinion, slip op. at 33. According to Dr. Nichols, the court's construction is satisfied by a combination of the planetary gear unit, the ICE shaft, the shaft leading from the ring gear to the drive sprocket, and the drive sprocket itself. J.A. 1256-57. This combination can be controlled either by MG2, which is able to prevent torque transfer from the ICE shaft to the drive sprocket by providing a counter torque at the ring gear sufficient to negate torque provided by the ICE shaft, J.A. 1257, or by a parking pawl, which is simply a lock that prevents movement of the gears, J.A. 1552-53. However, because the court's construction literally requires a device, not a number of devices to act as the clutch, Dr. Caulfield explained that the planetary gear unit, as a single device, will always transfer any torque provided by the ICE to the ring gear output. J.A. 1522, 1553 (For clarity, [torque] gets out of the device, which is the planetary, and goes to the parking pawl, which is a couple of gears downstream. . . . ). Once again, we believe this testimony provided the jury with substantial evidence upon which to base its finding of no literal infringement of claim 15 of the '672 patent, and claims 1 and 2 of the '088 patent. Therefore, we hold that the district court did not err in denying Paice's motion for JMOL.
Finally, we address the district court's ongoing-royalty order, which allows Toyota to continue using the invention of the '970 patent at a cost of $25 per accused vehicle. [13] The district court's order reads: Defendants are hereby ORDERED, for the remaining life of the '970 patent, to pay Plaintiff an ongoing royalty of $25.00 per infringing Prius II, Toyota Highlander, or Lexus RX400H (the infringing vehicles). Royalties shall be paid quarterly and shall be accompanied by an accounting of the sales of infringing vehicles. Payments shall begin three months after the date of signing this judgment and shall be made quarterly thereafter. The first payment shall include royalties for all infringing vehicles sold that were not accounted for in the jury's verdict. Payments not made within 14 days of the due date shall accrue interest at the rate of 10%, compounded monthly. Plaintiff shall have the right to request audits. It is anticipated that the parties may wish to agree to more comprehensive and convenient terms. The parties shall promptly notify the Court of any such agreement. The Court maintains jurisdiction to enforce this portion of the Final Judgment. J.A. 110. Paice argues that the district court did not have the statutory authority to issue this order, and that, even if the court did have such authority, Paice was denied its right to a jury trial under the Seventh Amendment to determine the amount of the ongoing royalty rate. [14] We begin with the language of 35 U.S.C. § 283, which provides in relevant part: The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable. Perhaps the most apparent restriction imposed by § 283 is that injunctions granted thereunder must prevent the violation of any right secured by patent. We have previously held that this statutory language limits the scope of activities that may be enjoined. See, e.g., Joy Techs. v. Flakt, Inc., 6 F.3d 770, 777 (Fed.Cir.1993) (holding that noninfringing acts may not be enjoined). The more difficult question raised by this case, however, is whether an order permitting use of a patented invention in exchange for a royalty is properly characterized as preventing the violation of the rights secured by the patent. Under some circumstances, awarding an ongoing royalty for patent infringement in lieu of an injunction may be appropriate. In Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613, 628 (Fed.Cir.1985), this court upheld a 5% court-ordered royalty, based on sales, for continuing operations. Although the parties in that case contested the amount of the royalty, styled a compulsory license by the court, there was no dispute as to the district court's authority to craft such a remedy. See id. In the context of an antitrust violation, mandatory sales and reasonable-royalty licensing of relevant patents are well-established forms of relief when necessary to an effective remedy, particularly where patents have provided the leverage for or have contributed to the antitrust violation adjudicated. United States v. Glaxo Group Ltd., 410 U.S. 52, 59, 93 S.Ct. 861, 35 L.Ed.2d 104 (1973). But, awarding an ongoing royalty where necessary to effectuate a remedy, be it for antitrust violations or patent infringement, does not justify the provision of such relief as a matter of course whenever a permanent injunction is not imposed. In most cases, where the district court determines that a permanent injunction is not warranted, the district court may wish to allow the parties to negotiate a license amongst themselves regarding future use of a patented invention before imposing an ongoing royalty. Should the parties fail to come to an agreement, the district court could step in to assess a reasonable royalty in light of the ongoing infringement. In this case, the district court, after applying the four-factor test for a permanent injunction and declining to issue one, imposed an ongoing royalty sua sponte upon the parties. But, the district court's order provides no reasoning to support the selection of $25 per infringing vehicle as the royalty rate. Thus, this court is unable to determine whether the district court abused its discretion in setting the ongoing royalty rate. Accordingly, we think it prudent to remand the case for the limited purpose of having the district court reevaluate the ongoing royalty rate. Upon remand, the court may take additional evidence if necessary to account for any additional economic factors arising out of the imposition of an ongoing royalty. [15] The district court may determine that $25 is, in fact, an appropriate royalty rate going forward. However, without any indication as to why that rate is appropriate, we are unable to determine whether the district court abused its discretion. Cf. Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) (It [is] important . . . for the district court to provide a concise but clear explanation of its reasons for the fee award.). The district court should also take the opportunity on remand to consider the concerns Paice raises about the terms of Toyota's permissive continuing use. Finally, we address Paice's argument that it was entitled to a jury trial to determine the amount of the ongoing royalty rate. The Seventh Amendment provides that `in Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved. . . .' Markman v. Westview Instruments, Inc., 517 U.S. 370, 376, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996). The constitutional question of whether a party is entitled to a jury trial is a question of law that this court reviews de novo. Tegal Corp. v. Tokyo Electron Am., Inc., 257 F.3d 1331, 1339 (Fed.Cir. 2001). [16] [W]e ask, first, whether we are dealing with a cause of action that either was tried at law at the time of the founding or is at least analogous to one that was. Markman, 517 U.S. at 376, 116 S.Ct. 1384. If the action in question belongs in the law category, we then ask whether the particular trial decision must fall to the jury in order to preserve the substance of the common-law right as it existed in 1791. Id. In contending that it was improperly deprived of a jury trial, Paice merely states that [i]t is well settled that the determination of damages is a legal question which carries a Seventh Amendment right to a jury trial. Appellee's Br. 64. While Paice may be correct as a general matter, not all monetary relief is properly characterized as damages. See, e.g., Root v. Ry., 105 U.S. 189, 207, 26 L.Ed. 975 (1881) (When, . . . relief was sought which equity alone could give . . . in order to avoid a multiplicity of suits and to do complete justice, the court assumed jurisdiction to award compensation for the past injury, not, however, by assessing damages, which was the peculiar office of the jury, but requiring an account of profits. . . .); cf. Bowen v. Massachusetts, 487 U.S. 879, 910, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988) ([E]ven if the District Court's orders are construed in part as orders for the payment of money by the Federal Government to the State, such payments are not `money damages'. . . . That is, since the orders are for specific relief (they undo the Secretary's refusal to reimburse the State) rather than for money damages (they do not provide relief that substitutes for that which ought to have been done) they are within the District Court's jurisdiction. . . .). As such, the fact that monetary relief is at issue in this case does not, standing alone, warrant a jury trial. Accordingly, Paice's argument falls far short of demonstrating that there was any Seventh Amendment violation in the proceedings below.