Enhanced damages of 20% awarded under Halo

Originally published by Michael C. Smith.

Back in September, a Marshall jury in Judge Rodney Gilstrap's court returned a unanimous verdict finding that the claims asserted by Core Wireless against LG were infringed, willfully infringed, and not invalid. The jury set the damages at $2.28 million. Since the jury found that the infringement was willful, Judge Gilstrap exercised his discretion under 35 USC 284 to decide whether to award enhanced damages, noting the Supreme Court's recent decision in Halo, which gave district court's discretion in deciding whether to award enhanced damages, and in what amount.

The Court decided that an award toward the lower end of the spectrum was appropriate in this case, and set the award at $456,000 (20% of the potential 200%). The court noted the following factors as supporting an award in this range:

First, the court noted that it was undisputed that defendant LG had detailed knowledge of the patents in suit long before the filing of the lawsuit. That it was able to present a noninfringement position at trial the court concluded did not necessarily insulate it from enhanced damages. Additionally while it asserted and invalidity defense, the court noted that LG's corporate representative testified in his deposition that after a thorough review of the patents in suit he had concluded that the patents were novel and nonobvious.

But most important to the court appeared to be the manner in which LG abruptly terminated licensing negotiations.  After requiring the plaintiff to send a representative to Korea, LG simply delivered a one page document stating that it would prefer to litigate the portfolio and wait until another major cell phone manufacturer had licensed to the portfolio and established a royalty scheme. The court concluded that this meant that LG's decision to continue operations without a license was driven not by the merits or strength of its noninfringement and invalidity defenses, but its resistance to being the first in the industry to take a license.

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