Increasing Patent Damage Awards with Pre-Judgment Interest
In VLSI Technology LLC v. Intel Corporation, the United States District Court for the Western District of Texas recently awarded pre-judgment and post-judgment interest on a jury’s damage award in a patent infringement case.
An issue examined by the court was whether the patentee was entitled to pre-judgment interest during periods in which the patentee did not own the patent. The defendant argued that since the patentee only acquired the patent rights in December 2018 and was not formed as an entity until 2016, pre-judgment interest from 2013 would be a windfall. The court dismissed this argument and indicated that the patentee “acquired the Asserted Patents and is therefore entitled to all the rights associated with patent ownership, including the rights to collect damages and interest from infringers.” The court then awarded pre-judgment interest beginning on the date of infringement (i.e., 2013) to the date of judgment.
In support of this holding, the court cited the Federal Circuit’s decision in Energy Transp. Grp., Inc. v. William Demant Holding A/S, 697 F.3d 1342, 1358 (Fed. Cir. 2012) stating that “award of pre-judgment interest is the rule, not the exception.” The court also noted that there was no exceptional circumstances such as an undue delay in filing the lawsuit that would warrant denying pre-judgment interest in this case.
Although not discussed in the decision, practitioners should be aware that in order for a patentee to be entitled to damages accrued before being assigned ownership of a patent, the assignment must contain language specifying the entitlement to prior damages. The below two cases detail important decisions in this regard.
The Federal Circuit in Minco, Inc. v. Combustion Eng’g, Inc. stated that infringement only harms “the owner of the patent at the time of the infringing acts” and “[t]hus, the conveyance of the patent does not normally include the right to recover for injury occurring to the prior owner.” 95 F.3d 1109, 1117 (Fed. Cir. 1996).
However, the Federal Circuit later clarified that a “party may sue for past infringement transpiring before it acquired legal title if a written assignment expressly grants the party a right to do so.” Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1367 (Fed. Cir. 2010) (ordering dismissal of case), citing Moore v. Marsh, 74 U.S. 515, 522 (1868).
Accordingly, an important practice tip to remember is that any party obtaining an ownership interest in a patent should make sure that the patent conveyance specifically gives the right to sue for past infringement occurring prior to the conveyance. We suspect that the patent conveyance at issue in VLSI Technology LLC v. Intel Corporation included this language and thus the patentee was able to increase the amount of pre-judgment interest awarded.