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All-or-Nothing Damages Strategy Leaves Promega with Nothing

The Federal Circuit’s recent decision in Promega Corp. v. Life Technologies Corp. is a cautionary tale that failure to present evidence of damages closely tied to each alternative basis of liability may result in a hollow victory – infringement with no corresponding damages.  The Federal Circuit, on remand from the Supreme Court, affirmed the district court’s rulings in a patent suit against Life Technologies that both overturned the jury’s $52 million infringement verdict in favor of Promega, and denied Promega’s motion for a new trial on damages and infringement. The Federal Circuit held that Promega was not entitled to any damages under the narrow “all-or-nothing” damages strategy that Promega had pursued throughout the litigation, and that Promega had waived any alternative damages arguments. 

Promega had sued Life Technologies, a manufacturer of genetic testing kits, alleging infringement under 35 U.S.C. § 271(a) and § 271(f)(1).  The district court granted Promega’s motion for summary judgment on the issue of infringement, but that ruling did not resolve the liability issue.  That issue turned on how many of Life Tech’s kits, all but one component of which were assembled abroad, infringed under either § 271(a), which requires the products to be sold or imported into the United States, or § 271(f)(1), which requires that a substantial portion of the components of the products be supplied from the United States.

At trial, the parties stipulated to Life Tech’s total worldwide sales, and Promega did not introduce any evidence that would have shown a specific amount of any subset of sales attributable to domestic sales.  Promega also proposed jury instructions and a special verdict sheet that, in effect, prevented the jury from calculating separate damages under § 271(a) and § 271(f)(1), and instead required the jury to calculate a single damages amount under either section.

After the jury awarded Promega $52 million in lost profits, the district court vacated the jury verdict and granted Life Tech’s motion for judgment as a matter of law, concluding that no reasonable jury could have found that all of the accused products infringed under either § 271(a) or § 271(f)(1).  Regarding § 271(f)(1), the district court concluded that a single component could not qualify as a “substantial portion.”  And regarding § 271(a), Promega had not produced evidence supporting a finding that all of the accused products were sold or imported in the United States.  The court also found that Promega had waived any argument that the evidence at trial could support a damages calculation based on any subset of total sales by failing to respond to Life Tech’s argument on this issue in its briefing.  Promega moved for reconsideration or a new trial, but the district court denied this motion, again holding that Promega had waived this argument.

Promega appealed, and the Federal Circuit reversed, holding that a single component could, under some circumstances, constitute a substantial portion of a multicomponent invention.  The Supreme Court, however, reversed this decision, agreeing with the district court that a single component does not constitute a “substantial portion” under § 271(f)(1).

On remand to the Federal Circuit, Promega argued that the court should order a new trial on damages.  The Federal Circuit disagreed, and affirmed the district court’s rulings, based largely on Promega’s waiver of any argument that the trial record could support a damages award based on a subset of total sales.  The court noted that this waiver was consistent with Promega’s “all-or-nothing damages strategy” that it had pursued throughout the litigation.  At trial, Promega sought only to prove the fact of damages, rather than any particular amount of damages, and continued its strategy by asking the jury to determine a single “United States sales” figure for sales falling under both § 271(a) and § 271(f)(1).  The Federal Circuit noted that “Promega’s deliberate strategy to adhere to a single damages theory had the effect of winnowing out from the case any argument about damages based on a figure other than worldwide sales.”

After the Supreme Court reversed the Federal Circuit’s decision regarding § 271(f)(1), the only way Promega could have preserved the jury’s damages verdict was to show that the record supported a finding that all of Life Tech’s products that did not infringe under §271(f)(1) infringed under § 271(a).  But although there was evidence to support a finding that some of the products infringed under § 271(a), no evidence supported the proposition that all of the accused products infringed under § 271(a). 

The court noted that this was an “unusual case,” in that patent owners who prove infringement are usually awarded some amount of damages.  But again, the court explained that Promega had waived its right to a damages award by “deliberately abandon[ing] valid theories of recovery in a singular pursuit of an ultimately invalid damages theory.”