Treble The Trouble

It is always exciting to see an actual enhanced damages award being granted, if only because the factual circumstances leading up to the award are typically quite juicy.

One of the proverbial white whales for patent litigators is the often discussed, but rarely spotted in the wild, trebling of infringement damages for willful infringers. The dream of getting a treble damages award has long been shared by contingency lawyers with their smaller patent-owning clients, as well as by aggrieved corporate patentees looking to punish a competitor for egregious infringement. Since it is 2021, and we are in the age of litigation finance, we can add litigation funders to the list of treble damages aspirants as well.  While everyone is free to dream, the reality is that only a miniscule fraction of filed patent cases end up with an enhanced damages award — and even that reward only comes after years of bitter litigation coupled with appeal reversal risk. That said, it is always exciting to see an actual enhanced damages award being granted, if only because the factual circumstances leading up to the award are typically quite juicy.

And the decision in the patent case between EagleView and its competitor Xactware Solutions (as well as Xactware’s parent company, Verisk Analytics) does not disappoint. Both companies compete in the aerial imagery, data analytics, and geographical reporting business, selling their wares to a variety of customers, from roofers to government agencies. Over the years, EagleView made major investments in developing a robust patent portfolio — investments that paid off when it secured a $125 million verdict in September 2019 in a five patent infringement case filed and tried against Xactware in Camden, New Jersey.

A verdict of that size would already be a win in anyone’s book, but EagleView pressed forward based on the jury’s willful infringement finding in an attempt to secure enhanced damages. That effort was awarded by the trial judge a few weeks ago, with the court deciding to: “award Enhanced Damages, to the maximum allowable extent, pursuant to 35 U.S.C. § 284; award reasonable attorneys’ fees, beginning with the filing of motions in limine through trial, pursuant to 35 U.S.C. § 285; award pre-judgment interest, at the prime rate, beginning on September 23, 2015; and award post-judgment interest pursuant to 28 U.S.C. § 1961.” In short, a major bonus for Eagleview to the tune of an additional (pending appeal or settlement) $375 million in damages, plus the various incidentals also awarded.

Five hundred million damages in total damages is not a joke for any company to face, and the court’s willingness to enhance the verdict to the “maximum allowable extent” will surely face Federal Circuit scrutiny. Until then, however, it is worthwhile to consider how the parties ended up in their respective positions, particularly because treble damages awards are so rare. There is of course a lot to sift through in the court’s comprehensive 64-page opinion (worth a read in its entirety), so we will limit our focus to a couple of key highlights — especially those decision points that could be applicable to other patent cases. At the outset, as would be expected, the court lays out the significance of the jury’s willfulness finding as a prerequisite to an award of enhanced damages, before turning to a more comprehensive analysis of the Read factors that “serve as “useful guideposts” in the § 284 analysis.”

While the Read factors were a big part of the enhancement analysis, the court also took pains to sanction the defendants for their decision to “aggressively compete, head-to-head, with EagleView with the express goal of luring away EagleView’s customers and decreasing EagleView’s market share.” Deeming their tactics “egregious infringement behavior” as described in the Halo case, the court recognized that the unfair competition-like tactics supported a finding of “enhanced damages as a … punitive measure.” In fact, the court later noted its discomfort with how the hostility between the parties as competitors spilled over into the legal proceedings. In graphic language, the court describes how the “animus between the attorneys, clients, and witnesses oozed” throughout the litigation. That animus apparently made its way into the trial proceedings, with defendants taking the “regretful” step of trying to introduce inflammatory internal EagleView emails to the jury, despite their lack of probative value. In short, the hostility between the parties, especially as manifested by the defendants’ business and litigation tactics, was a significant contributor to the enhanced damages award.

In a similar vein, the court called out the “unnecessarily litigious and nasty” discovery process. Even though the court refused to only blame the defendants for the discovery conduct, it had no qualms about blaming them for the repeated attempts to introduce “impermissible evidence” and provoke a mistrial before the jury. Add in the fact that defendants already had a weak litigation position on validity, due to a host of failed IPRs that defendants continued to pursue in the form of “repeat challenges,” and conditions were as ripe as they could be for a vexatious litigation type-finding. Which the court entered, to the tune of hundreds of millions of dollars in punitive damages.

Ultimately, we may be hard pressed to find a case with such compelling circumstances to justify a trebling of already-sizable damages for patent infringement. At the same time, the EagleView case proves that courts will take a holistic view of the totality of the infringer’s conduct, both in the marketplace and in the litigation, in determining whether enhancement is appropriate. Where there is little to redeem that conduct, enhanced damages can and will be awarded in patent disputes. At a minimum, we can expect that this decision — especially if it holds up at the Federal Circuit — will embolden patent holders facing intransigent infringers to pursue enhanced damages with renewed resolve. For EagleView, it is clear that they faced a real struggle to see their investments in their IP strategy pay off. If they win on appeal, however, the treble will surely soothe the trouble.

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Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.


Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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