IP UPDATE
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Exploring the latest in intellectual property law
Results for "Patent infringement"
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Damages? Apportionment among licensed properties is essential, $10 million award reduced to $1

by | Oct 9, 2025 |

The US Court of Appeals for the Federal Circuit affirmed a district court decision excluding a damages expert’s testimony and reducing a jury’s $10 million damages award to nominal damages. The Court found that the plaintiff failed to put forth evidence from which a jury could reasonably determine damages without speculation. Rex Medical, L.P. v. Intuitive Surgical, Inc., Intuitive Surgical Operations, Inc., Intuitive Surgical Holdings, LLC, Case No. 24-1342 (Fed. Cir. Sept. 8, 2025) (Dyk, Prost, Stoll JJ.)

Rex Medical sued Intuitive for patent infringement. Initially, Rex asserted two related patents directed to systems for stapling tissue during surgery. Intuitive filed a petition for inter partes review (IPR) against one of the patents, and Rex withdrew it from the case.

Rex’s damages expert then opined that a hypothetical negotiation for a license to the remaining patent would have resulted in a $20 million payment. As support, he cited a prior settlement agreement between Rex and Covidien in which Rex asserted both patents before dropping the remaining asserted patent here from that case. Rex and Covidien ultimately settled, with Covidien paying $10 million to license both of the originally asserted patents alongside “eight other U.S. patents, seven U.S. patent applications and nineteen patents or applications from countries outside the United States.”

Intuitive moved to preclude Rex’s expert’s testimony regarding the Covidien license, and the district court granted the motion. Nonetheless, the jury returned an infringement verdict and granted $10 million in damages. Intuitive filed a renewed motion for judgment as a matter of law (JMOL). The district court denied the motion with respect to infringement and validity, but agreed on damages, reducing the award to $1. Rex appealed, challenging the exclusion of its expert’s testimony and the reduction of the damages award.

The Federal Circuit first addressed the exclusion of the expert testimony, reviewing for abuse of discretion. The Court noted that “[w]hen relying on comparable licenses to prove a reasonable royalty, we require a party to ‘account for differences in the technologies and economic circumstances of the contracting parties.’” The district court had held that Rex’s expert failed to adequately address the extent to which the patent dropped from this case and other patents included in the Covidien license contributed to the value of the license. As the Federal Circuit explained, the expert did not allocate the payment between the licensed patents and applications. Thus, the Federal Circuit ruled that the district court did not err in excluding the testimony.

Second, the Federal Circuit addressed the reduction in damages. Rex argued, and the Court agreed, that the reduction was in essence a grant of JMOL of no damages. The Court reviewed for abuse of discretion and described how, at trial, Rex relied primarily on the Covidien license and lay witness testimony to prove damages. While the lay witness testified that the focus of the Covidien license was both of the patents originally asserted here, the Court noted that the patent remaining at issue in this case had been dropped from [...]

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The smoke has cleared – and so has your invalidity defense

by | Sep 25, 2025 | ,

The US District Court for the Northern District of Iowa issued an instructive decision clarifying the scope of statutory estoppel under the Leahy-Smith America Invents Act (AIA) following post-grant review (PGR) proceedings before the Patent Trial & Appeal Board. Intirion Corp. v. College Products, Inc., Case No. 23-cv-4023-CJW-KEM (N.D. Iowa Sept. 16, 2025) (Williams, J.)

Intirion brought a patent infringement suit against College Products, which responded by petitioning the Board for PGR, challenging the patents based on obviousness and indefiniteness. While the PGR was pending, the district court proceeded with claim construction and initially found the terms “level of smoke,” “amount of smoke,” and “dangerous condition” indefinite. Intirion moved for reconsideration, and College Products filed a motion for partial summary judgment asserting invalidity. Intirion also sought a stay of the litigation pending the PGR outcome, which the court granted.

The Board instituted review of all claims. Initially, it found that neither party had requested express construction of any terms and adopted Intirion’s interpretation that “level of smoke” and “amount of smoke” meant “merely detecting smoke,” based on Intirion’s representations in the district court. In its final written decision (FWD), the Board acknowledged the district court’s indefiniteness findings but ultimately adopted the plain and ordinary meaning of the terms, concluding that a person of ordinary skill in the art could determine appropriate thresholds using known methods. Expert testimony persuaded the Board that defining the terms by their function was sufficiently definite under patent law.

After the Board upheld the claims, the district court found that College Products was estopped under 35 U.S.C. §325(e)(2) from asserting any invalidity grounds (including indefiniteness and obviousness) that were or reasonably could have been raised during the PGR. The district court explained that the AIA established a streamlined system allowing third parties to challenge the patentability of issued claims before the Board as a quicker and more cost-effective alternative to litigation. This structure is specifically designed to prevent challengers from getting multiple bites at the apple by raising the same or similar arguments in subsequent court proceedings.

College Products argued that estoppel should not apply because it filed its motion for partial summary judgment before the Board issued its FWD. The district court rejected this argument, explaining that the statutory language provides no exception based on timing and imposes a clear bar once the Board has issued a FWD. The district court also found that College Products’ position was inconsistent with applicable case law and noted that it failed to cite any contrary authority.

The district court further explained that it had intentionally deferred ruling on College Products’ motion for partial summary judgment of invalidity pending the outcome of the PGR proceedings. Once the PTAB issued its FWDs, College Products was estopped from further challenging the validity of the patents, including through its pending summary judgment motion, because it could have raised any such indefiniteness arguments during the PGR process.

Practice note: Unlike inter partes review (IPR), during PGR a petitioner can challenge patentability on grounds [...]

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Prevailing party: Dismissal with prejudice will do it

by | Sep 18, 2025 |

The US Court of Appeals for the Federal Circuit found that a district court erred in denying fees and costs to the prevailing party (here, the defendant), but upheld the district court’s denial of Rule 11 sanctions. Future Link Sys., LLC v. Realtek Semiconductor Corp., Case Nos. 23-1056; -1057 (Fed. Cir. Sept. 9, 2025) (Stoll, Reyna, Bryson, JJ.)

Future Link sued Realtek for patent infringement in the Western District of Texas. Realtek challenged service and personal jurisdiction and subsequently moved for Rule 11 sanctions. During discovery, Future Link produced a licensing agreement with a third party, under which the third party had agreed to pay a lump sum if Future Link sued Realtek. Shortly afterward, Future Link entered into a separate licensing agreement with Realtek covering the accused products and voluntarily dismissed the case.

Realtek moved for attorneys’ fees under 35 U.S.C. § 285 and costs under Rule 54(d)(1), and asserted that Future Link had filed objectively baseless lawsuits. The district court denied Realtek’s motions for fees and sanctions, did not address the motion for costs, and converted Future Link’s voluntary dismissal to a dismissal with prejudice.

Fees and costs

To seek fees and costs, a party must qualify as “the prevailing party.” In reviewing the district court’s decision on fees and costs, the Federal Circuit addressed Realtek’s prevailing party status under both § 285 and Rule 54(d).

Applying de novo review, the Federal Circuit concluded that Realtek was the prevailing party, despite the voluntary dismissal, because the district court had converted that dismissal to one with prejudice. The Federal Circuit emphasized that prevailing party analysis turns on whether there has been a material alteration of the legal relationship between the parties. Citing its own precedent, the Court explained that a dismissal with prejudice constitutes such a change because it bars the plaintiff from reasserting the same claims against the same products.
The Court explained that a favorable ruling on the merits is not required. A defendant that successfully avoids liability, such as through dismissal with prejudice, can still be deemed the prevailing party.

Since the dismissal with prejudice prevented Future Link from reasserting its patent claims against the accused products, Realtek was the prevailing party. The Federal Circuit vacated the district court’s denial of attorneys’ fees under § 285 and remanded the issue for consideration of whether the case was exceptional and fees were warranted. It likewise remanded the Rule 54(d) costs issue for initial determination.

Rule 11 sanctions

The Federal Circuit affirmed the district court’s denial of Rule 11 sanctions. Realtek had argued that Future Link’s prefiling investigation was inadequate and that the lawsuit was improperly motivated by a third-party payment arrangement, making that arrangement the but-for cause of the lawsuit.

The Federal Circuit rejected both arguments. First, it found that Future Link’s pre-suit investigation met Rule 11 standards: Future Link obtained and analyzed three accused products, prepared claim charts comparing asserted patent claims to the accused products, and investigated relevant optional features that it reasonably believed [...]

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Claim construction misstep undoes injunction

by | Aug 14, 2025 |

The US Court of Appeals for the Federal Circuit vacated and remanded a preliminary injunction (PI), finding that the district court improperly construed a claim term based on references cited in a provisional application but omitted from the asserted patents. FMC Corp. v. Sharda USA, LLC, Case No. 224-2335 (Fed. Cir. Aug. 21, 2025) (Moore, Chen, Barnett, JJ.)

FMC owns two patents claiming priority to a provisional application concerning insecticides and miticides compositions. The patents specifically cover formulations comprising bifenthrin and a cyano-pyrethroid. Sharda currently markets an insecticide product known as Winner, which contains both bifenthrin and a cyano-pyrethroid.

FMC sued Sharda for patent infringement on its two patents and sought a temporary restraining order (TRO) and a PI. The district court denied both motions but issued a claim construction for the term “composition.” Instead of applying the term’s plain and ordinary meaning, the district court interpreted “composition” narrowly to mean “stable compositions, rather than the well-known unstable compositions that produce ineffective results as discussed throughout the prosecution history.” In reaching this construction, the district court relied on statements made in the provisional application and disclosures found in a separate, non-asserted FMC patent that claimed priority to the same provisional application. However, these disclosures were absent from the asserted patents themselves, appearing only in the provisional application and the non-asserted patent.

FMC renewed its motion for a TRO, which the district court granted and later converted into a PI. In issuing the PI, the district court again relied on its narrow construction of the term “composition” as a key point in rejecting Sharda’s invalidity defenses. Sharda appealed.

Sharda argued that the district court erred in both its construction of “composition” and its determination that Sharda failed to raise a substantial question regarding the patents’ validity. The Federal Circuit first addressed Sharda’s challenge to the district court’s construction of the term “composition,” which had been limited to stable compositions based on disclosures in the provisional application and a non-asserted patent. The Court acknowledged that while the provisional application contained multiple references to “stability,” all such references were deliberately removed from the common specification of the two asserted patents. As a result, the specifications of the asserted patents did not simply carry forward the language of the provisional application but instead reflected a substantive evolution.

Citing its 2024 decision in DDR Holdings, LLC v. Priceline.com LLC, the Federal Circuit emphasized that such omissions are legally significant. The Court concluded that a person of ordinary skill in the art, considering the deliberate removal of all references to stability, would not interpret the term “composition” as limited to stable formulations. Because FMC chose to revise the asserted patents’ written descriptions to exclude any mention of stability, the district court erred in importing a stability limitation from the provisional application and non-asserted patent into the claims. Accordingly, the Federal Circuit held that the district court improperly grafted a “stability” requirement onto the term “composition.”

The Federal Circuit also found fault with the district court’s [...]

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Collateral estoppel remains inapplicable to unchallenged IPR claims

by | Aug 14, 2025 |

Returning to its decision in Kroy IP, the US Court of Appeals for the Federal Circuit denied a petition for panel rehearing and rehearing en banc, leaving undisturbed its prior opinion that collateral estoppel does not apply to the assertion of claims from a patent, even when other patentably indistinct claims from that patent have been found unpatentable in inter partes review (IPR) proceedings before the Patent Trial & Appeal Board. Kroy IP Holdings, LLC v. Groupon, Inc., Case No. 23-1359 (Fed. Cir. Aug. 1, 2025) (per curiam) (Moore, J., concurring) (Dyk, J., dissenting).

Kroy sued Groupon for patent infringement, and Groupon subsequently filed two IPR petitions. The Board ultimately found 21 of the asserted claims unpatentable. Kroy amended its complaint to remove those 21 claims and proceed only with claims that were not at issue in the IPR proceedings. Groupon moved to dismiss the complaint, arguing that Kroy was collaterally estopped from asserting the remaining claims because of the Board’s prior IPR rulings finding other patentably indistinct claims unpatentable. The district court agreed with Groupon, finding that the remaining asserted claims were not materially different from the unpatentable claims in terms of validity and granted the motion to dismiss with prejudice. Kroy appealed.

The Federal Circuit held that a Board determination finding certain patent claims unpatentable under the preponderance of the evidence standard did not collaterally estop Kroy from asserting other unreviewed claims of the same patent in district court litigation against Groupon. Groupon subsequently petitioned for panel rehearing and rehearing en banc, both of which the Federal Circuit denied per curiam.

Chief Judge Moore, joined by Judge Stoll, concurred in the decision. In her concurring opinion, Judge Moore explained that collateral estoppel does not apply where differing standards of proof exist (namely, the preponderance of evidence standard used by the Board versus the clear and convincing evidence standard applied in district courts) because this difference can materially affect a patent’s validity determination. She emphasized that collateral estoppel should apply consistently in patent cases and cautioned against deviating from the established collateral estoppel standards. Judge Moore also noted that policy concerns are mitigated by the ability to file a second IPR petition, because the Board is likely to grant review where a petition raises a substantially similar question of invalidity.

Judge Dyk, joined by Judge Hughes, dissented from the decision. The dissent advocated departing from the traditional burden-of-proof rule applicable in the collateral estoppel context to avoid duplicative litigation regarding patent validity. The dissent argued that the majority opinion conflicted with the Federal Circuit’s 2018 opinion in XY, LLC v. Trans Ova Genetics, which held that collateral estoppel extends between Board decisions and district court proceedings in pending or co-pending actions. According to the dissent, the majority’s approach permits repeated litigation of the validity of patent claims previously found unpatentable in IPR proceedings affirmed on appeal. The dissent expressed concern that applying collateral estoppel in this manner would enable patentees to evade the preclusive effect of adverse IPR [...]

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Case closed: Commission sanctions ruling isn’t an import decision

by | Jun 26, 2025 |

The US Court of Appeals for the Federal Circuit dismissed an appeal for lack of jurisdiction, finding that a denial of sanctions at the International Trade Commission was not a “final determination” under trade law because it did not affect the exclusion of imported goods. Realtek Semiconductor Corp. v. ITC and Future Link Systems, LLC, Case No. 23-1187 (Fed. Cir. June 18, 2025) (Reyna, Bryson, Stoll, JJ.)

In 2019, Future Link entered into a license agreement with MediaTek, Inc. (not a party to the present litigation), which included a provision for a lump-sum payment if Future Link filed a lawsuit against Realtek. Future Link subsequently initiated a patent infringement complaint against Realtek before the Commission. During the proceedings, Future Link settled with a third party and determined that the settlement resolved the underlying dispute, prompting it to notify Realtek and ultimately withdraw its complaint. Realtek moved for sanctions, citing the MediaTek agreement as improper, but the administrative law judge (ALJ), while expressing concern about the agreement’s lawfulness, found no evidence it influenced the complaint and denied sanctions. The Commission terminated the investigation after no petition for review of the ALJ’s termination order was filed. Realtek then petitioned the Commission to review the denial of sanctions, but the Commission declined, closing the sanctions proceeding. Realtek appealed to the Federal Circuit, not challenging the investigation’s termination but seeking an order requiring Future Link to pay a fine based on the alleged impropriety of its agreement with MediaTek.

Realtek argued that the Commission and the ALJ violated the Administrative Procedure Act (APA). In response, the Commission and Future Link not only defended the denial on the merits but also challenged the Federal Circuit’s jurisdiction and Realtek’s standing to appeal. The Court agreed that it lacked jurisdiction under 28 U.S.C. § 1295(a)(6), which only authorizes review of final determinations under specific subsections of Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337). Because the Commission’s denial of sanctions under subsection (h) does not constitute a “final determination” under § 1337(c), the Court declined to address standing or the merits of the sanctions issue.

The Federal Circuit emphasized that a “final determination” within the meaning of § 1295(a)(6) refers to decisions affecting the exclusion of imported articles, such as those made under subsections (d), (e), (f), or (g) of § 1337. Realtek argued that the Commission’s denial of its sanctions request qualified as a final merits decision, but the Court disagreed, citing long-standing precedent, including its 1986 decision in Viscofan, S.A. v. ITC, that limits appellate jurisdiction to exclusion-related rulings. Because the sanctions decision had no bearing on whether products were excluded from importation, the Court held that it lacked the authority to review and dismissed the appeal.



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Radio Silence Alone Doesn’t Prove Equitable Estoppel Defense

by | Jun 18, 2025 |

The US Court of Appeals for the Federal Circuit reversed a district court’s summary judgment grant based on an equitable estoppel defense, finding that the accused infringer failed to show that the patent owner’s silence or inaction influenced the decision to migrate to the accused system. Fraunhofer-Gesellschaft v. Sirius XM Radio Inc., Case No. 23-2267 (Fed. Cir. June 9, 2025) (Lourie, Dyk, Reyna, JJ.)

In 1998, Fraunhofer licensed patents related to satellite radio to WorldSpace International Network. This license was exclusive, with the right to sublicense. However, Fraunhofer also began a collaboration with XM Satellite Radio to develop satellite radio and required that XM obtain a sublicense from WorldSpace. XM ultimately launched a “high-band” satellite radio system. In 2008, XM joined Sirius Satellite Radio, to form Sirius XM (SXM). Sirius Satellite Radio had its own “low-band” system. The low- and high-band systems were incompatible, so SXM investigated which system it would use eventually, and it ultimately decided to shift toward the high-band system.

Meanwhile, WorldSpace filed for bankruptcy in 2008. In 2010, Fraunhofer, in its view, terminated its licensing agreement with WorldSpace. In 2011, XM formally merged with SXM. It is disputed whether SXM was licensed to the asserted patents after these events, but regardless, Fraunhofer remained silent until 2015, when it notified SXM that it believed that because its agreement with WorldSpace was supposedly terminated in 2010, the rights in the asserted patents had reverted to Fraunhofer, and thus SXM was not licensed and was infringing. Fraunhofer filed suit. However, the district court found that because of Fraunhofer’s silence, Fraunhofer was equitably estopped from bringing the patent infringement claims against SXM. Fraunhofer appealed.

The Federal Circuit reversed. There are three requirements for a successful equitable estoppel defense:

  • The patentee must engage in misleading conduct leading the accused infringer to reasonably infer that the patentee does not intend to assert its patent against the accused infringer.
  • The accused infringer must rely on that conduct.
  • As a result of that reliance, the accused infringer must be in a position such that it would be materially prejudiced if the patentee was allowed to proceed with its infringement action.

The Federal Circuit agreed with the district court that Fraunhofer’s refusal to raise the issue of potential infringement from 2010 until 2015, despite asserting that it reacquired the rights to the asserted patents in 2010, was misleading conduct. Fraunhofer knew that SXM’s product may have infringed the asserted patents and had previously required SXM to obtain a license to those patents. Fraunhofer also had built allegedly infringing features. Thus, it was reasonable for SXM to infer that Fraunhofer would not bring a claim against SXM.

However, the Federal Circuit disagreed with the district court on the issue of reliance. To show reliance, the Court explained that SXM must have established “that it at least considered Fraunhofer’s silence or inaction and that such consideration influenced its decision to migrate to the accused high-band system.” The evidence did not indisputably establish influence over SXM’s [...]

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New Rx for High Drug Prices? Senate Judiciary Committee Advances Six Bills With Heavy Dose of Options

by | Apr 17, 2025 | ,

The US Senate Judiciary Committee advanced to the full Senate six bills intended to reduce pharmaceutical prices and enhance market competitiveness. The package collectively targets several aspects of the pharmaceutical landscape, including pharmaceutical benefit manager (PBM) pricing practices, next-generation drug releases, patent portfolio assertions, and use of US Food and Drug Administration (FDA) regulatory mechanisms. Many of the bills’ proposals have been proposed before, but it is significant that the six bills were moved to the full Senate with bipartisan support.

The Affordable Prescriptions for Patients Act, if passed, would limit how many patents a reference product sponsor can assert in a Biologics Price Competition and Innovation Act (BPCIA) litigation against a biosimilar applicant, although such limits could be surpassed with court approval. A biologics license holder could assert up to 20 patents in a BPCIA case. Certain patents, such as method of treatment patents, would fall outside the limitation.

Against the backdrop of the Supreme Court’s 2013 holding in FTC v. Watson that certain “pay for delay” agreements are prohibited as anticompetitive, the Preserve Access to Affordable Generics and Biosimilars Act would add precision to the boundaries of permissible settlements in the pharmaceutical industry. The Federal Trade Commission (FTC) would have specific authority to institute a civil action to recover penalties, and certain presumptions would apply. For example, any agreement providing a generic or biosimilar applicant with “anything of value, including an exclusive license,” would be presumptively anticompetitive, with certain exceptions and exclusions. Terms that would remain permissible include a pre-expiration launch date, reasonable litigation expenses, and covenants not to sue for patent infringement.

Targeting the concern that branded small molecule and biologics drug manufacturers release new products with patent protection and withdraw or unfairly disincentivize older products to avoid generic competition, the Drug Competition Enhancement Act would deem the alleged practice of “product hopping” unfair competition subject to enforcement actions. The bill would define a hard switch as when a branded or biologics manufacturer discontinues or withdraws an application and introduces a follow-on product within a certain period relative to generic or biosimilar approval. It would define a soft switch as when the brand manufacturer took actions that “that unfairly disadvantage the listed drug or reference product relative to [a] follow-on product.” The bill would provide specific exclusions and justifications for branded manufacturer actions that would otherwise constitute a hard or soft switch.

Seeking to curb perceived abuses of the FDA citizen petition process, the Stop Significant and Time-Wasting Abuse Limiting Legitimate Innovation of New Generics (Stop STALLING) Act would grant the FTC the authority to bring a civil action against those filing “sham petitions” with the FDA, with penalties up to $50,000 per calendar day of review or the revenue earned by the seller of the branded product, whichever is greater. A petition could be classified as a sham based on its own objective unreasonableness, an intention to delay approval of a generic or biosimilar product, or as part of a series of covered petitions.

Based on [...]

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High Burden Dooms Intra-District Transfer Request

by | Apr 17, 2025 |

The US Court of Appeals for the Federal Circuit denied a mandamus petition requesting transfer from the Marshall division to the Sherman division within the US District Court for the Eastern District of Texas, finding that there was lack of clear error and no abuse of discretion in the district court’s decision to deny transfer. In re SAP America, Inc., Case No. 25-118 (Fed. Cir. Apr. 10, 2025) (Dyk, Prost, Chen, JJ.) (per curiam).

Valtrus Innovations and Key Patent Innovations (collectively, Valtrus) filed a patent infringement lawsuit against SAP. SAP moved for an intra-district transfer from the Marshall division, where the case was originally filed, to the Sherman division. In support of the motion, SAP cited the presence of SAP offices, relevant witness residences, and two SAP employees, all located in Sherman. Valtrus opposed the transfer, pointing out that co-pending litigation in Marshall involved the same asserted patents.

The district court denied SAP’s motion, even though the co-pending case had been closed. The district court also pointed out that most of SAP’s witnesses were out of state or international, making either Texas division equally inconvenient for those witnesses. SAP appealed.

The Federal Circuit reviewed the district court’s ruling under the stringent standards for mandamus relief, which are as follows:

  • There is no other adequate means to attain the desired relief.
  • There is a clear and indisputable right to relief.
  • The writ is appropriate under the circumstances.

Under the Federal Circuit’s 2022 decision in In re Volkswagen, there must be “clear abuses of discretion that produce patently erroneous results.”

Under Volkswagen, a court must consider both private and public factors when deciding whether to transfer venue. The private factors are:

  • The relative ease of access to sources of proof.
  • The availability of a compulsory process to secure the attendance of witnesses.
  • The cost of attendance for willing witnesses.
  • All other practical issues that make trial of a case easy, expeditious, and inexpensive.

The public interest factors are:

  • The administrative difficulties flowing from court congestion.
  • The local interest in having localized issues decided at home.
  • The forum’s familiarity with the law that will govern the case.
  • The avoidance of unnecessary conflict of laws issues or in the application of foreign law.

The Federal Circuit found that the district court erred in assigning weight to the co-pending litigation in Marshall, which had been closed and had all defendants dismissed by the time the motion to transfer was resolved. The Court added that the district court improperly weighed the court congestion factor against transfer based solely on the case’s smooth progression to trial.

Despite these errors, the Federal Circuit concluded that SAP failed to demonstrate that the denial of transfer was erroneous. The district court had plausibly found the convenience of the two divisions comparable for most potential witnesses who resided outside of Texas, and that SAP had not sufficiently shown that its Sherman-based employees had relevant knowledge or would be trial witnesses. The Court therefore denied [...]

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When Is a Trade Secret Accessible? As Soon as It Can Be Reverse Engineered

by | Apr 10, 2025 |

Although the US Court of Appeals for the Federal Circuit upheld a damages award for trade secret misappropriation and breach of a confidentiality agreement, it found that the district court erred in its determination of when the trade secret became publicly accessible for the purpose of applying a reverse engineering defense. The Federal Circuit also vacated and remanded the prejudgment interest award, finding that interest should not accrue on future sales. ams-OSRAM USA Inc. v. Renesas Elect. America, Inc., Case No. 22-2185 (Fed. Cir. Apr. 4, 2025) (Taranto, Schall, Chen, JJ.)

In 2008 ams sued Renesas for patent infringement, trade secret misappropriation, and breach of contract for using information that ams revealed in confidence. In 2015 a jury found for ams, and the district court entered judgment for trade secret misappropriation damages, but not for breach of contract. The district court determined that the breach award was duplicative of the misappropriation award. On appeal, in 2018 the Federal Circuit affirmed Renesas’ liability for misappropriation on a more limited basis than had been presented to the jury. The Court vacated the misappropriation award and remanded, instructing that disgorgement of profits damages should be decided by the judge, not the jury.

On remand, ams argued that it was entitled to “re-elect its remedy” and narrowed to the misappropriation and contract claims, which required the case to be retried. The new jury also found in favor of ams. The district judge then determined the monetary award for trade secret misappropriation, consisting of disgorgement of profits for one product and exemplary damages of double that sum. On ams’s breach of contract claim, the jury awarded a reasonable royalty on sales of products, other than the one subject to disgorgement damages. ams was also awarded prejudgment interest on both its misappropriation and contract claims, and attorneys’ fees on its breach of contract claim. Both parties appealed.

Trade Secret Accessibility and Reverse Engineering

The district court ruled that ams’s trade secrets became accessible in January 2006 when Renesas successfully reverse engineered the trade secret embodied in ams’s product. The district court determined that the relevant inquiry for accessibility is what the misappropriator actually did rather than what the misappropriator or other parties could have done. Renesas argued that the trade secret first became accessible when it could have reverse engineered the trade secret in February 2005.

The Federal Circuit agreed with Renesas, explaining that the district court’s ruling was inconsistent with Texas law. Under Texas law, information that is generally known or readily available by independent investigation does not qualify as a trade secret. Citing Fifth Circuit precedent, the Federal Circuit emphasized that the public is free to discover and exploit trade secrets through reverse engineering of products in the public domain. The Court found that Renesas could have accessed ams’s trade secrets through proper and straightforward means by February 2005. While acknowledging that the trade secret may not have been immediately apparent through casual inspection, the Court pointed out that reverse engineering is a common [...]

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