Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
1. The Federal Circuit held that reasonable royalty damages on non-accused, non-infringing products are not available. The Federal Circuit stated, “damages calculated by applying a royalty to sales of non-accused lenses cannot support a jury’s verdict on damages. To be sure, we have held that a jury may award a lump-sum, paid-in-full royalty in lieu of a running royalty on future sales. See Lucent, 580 F.3d at 1325. But that lump-sum must be based on an estimate of the extent of future sales of accused products, not on past sales of non-accused products.” The opinion raises the question as to whether convoyed or caravan sales remain recoverable under a reasonable royalty measure of damages. The Federal Circuit seems to realize this in footnote 3 to the opinion. The opinion is here (https://scholar.google.com/scholar_case?case=15528364477796777027&q=enplas+seoul&hl=en&as_sdt=2006&as_ylo=2018).
2. Federal Circuit holds that a demand letter in the patent context supports declaratory judgment (DJ) jurisdiction in the venue of the recipient of the demand letter. Prevailing wisdom (based at least in part on the Red Wing and Avocent CAFC cases) was that a demand letter alone was unlikely to support (or even could not support) DJ jurisdiction in the venue of the recipient of the letter. The Federal Circuit indicated that it never had a per se rule that a demand letter alone was not sufficient to support DJ jurisdiction. Patentee conceded at oral argument that the sending of a demand letter into the forum met the “purposeful direction” portion of the jurisdictional analysis, and the patentee did not make much of a showing on the reasonableness prong of the jurisdictional analysis. Thus, the letter was found to support jurisdiction and venue in the DJ plaintiff’s home venue. The opinion is here – http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/16-2700.Opinion.12-7-2018.pdf.
3. Continuing on the theme of declaratory judgment (DJ) jurisdiction, in the trademark context, a notice/demand letter that did not even threaten litigation per se was held sufficient to support DJ jurisdiction. The case is pending in the Middle District of Florida, Case No. 8:18-cv-02219 (Jan. 4. 2019).
4. Continuing even further with the theme of declaratory judgment (DJ) jurisdiction, the Eleventh Circuit Court of Appeals held that federal courts have jurisdiction to hear a DJ action regarding a copyright that has yet to be registered. In other words, if a party that claims to own a copyright, but has yet to secure registration, sends a demand letter or the like, the recipient of the letter is entitled to file a DJ action regarding the rights of the parties in regard to the assertion of copyright rights in the demand letter. The opinion is here – https://scholar.google.com/scholar_case?case=1690249661928058371&q=fastcase+lawriter&hl=en&as_sdt=2006.
5. In regards to Takeaways 2, 3, and 4, these rulings appear to open the door for more aggressive responses to demand letters.