Whitserve, LLC v. Computer Packages, Inc. ( 2012 )

United States Court of Appeals
for the Federal Circuit
__________________________
WHITSERVE, LLC,
Plaintiff/Counterclaim Defendant-Cross Appellant,
and
WESLEY W. WHITMYER, JR.,
Third Party Defendant-Cross Appellant,
v.
COMPUTER PACKAGES, INC.,
Defendant/Counterclaim Plaintiff-Appellant.
__________________________
2011-1206, -1261
__________________________
Appeals from the United States District Court for the
District of Connecticut in case no. 06-CV-1935, Judge
Alfred V. Covello.
___________________________
Decided: August 7, 2012
___________________________
GENE S. WINTER, St. Onge Steward Johnston &
Reens, LLC, of Stamford, Connecticut, argued for plain-
tiff/counterclaim defendant-cross appellant and Third
party defendant-cross appellant. With him on the brief
were ERIN R. WOELKER, MICHAEL J. KOSMA, and STEPHEN
BALL.
WHITSERVE v. COMPUTER PACKAGES 2
JOHN A. KRAUSE, Fitzpatrick, Cella, Harper & Scinto
of New York, New York argued for defen-
dant/counterclaim plaintiff-appellant. With him on the
brief were DOUGLAS SHARROTT, MARC J. PENSABENE and
ROBERT J. CZARNECKI, JR. Of counsel was ROBERT H.
FISCHER.
__________________________
Before PROST, MAYER and O’MALLEY, Circuit Judges.
Opinion for the court filed by Circuit Judge O’Malley.
Dissenting opinion filed by Circuit Judge Mayer.
O’MALLEY, Circuit Judge.
This patent case, presenting myriad issues, includes
an appeal from a jury’s finding of willful infringement of
four patents, a cross-appeal of the trial court’s denial of
various post-trial motions, and a separate cross-appeal of
a denial of sanctions and attorneys’ fees. On the appeal,
we affirm the jury’s finding of infringement, affirm the
jury’s finding of no anticipation of most, but not all,
claims, and we vacate the jury’s damages award and
remand for a new trial on damages. On the cross-appeal,
we remand for a proper determination of the post-trial
motions at issue. As to the separate cross-appeal, we
affirm the denial of fees and sanctions.
BACKGROUND
This case is between WhitServe, LLC (“WhitServe”), a
company owned by Wesley Whitmyer, Jr., and Computer
Packages, Inc. (“CPi”). Mr. Whitmyer is WhitServe’s sole
principal and employee, and is both an inventor and a
practicing patent attorney. CPi is in the business of
helping other businesses pay their patent maintenance
fees on time. WhitServe sued CPi, alleging that CPi’s
systems infringe four of its patents, all of which list
3 WHITSERVE v. COMPUTER PACKAGES
Whitmyer as their inventor and have been assigned to
WhitServe.
The patents at issue are U.S. Patent No. 6,981,007(the ’007 Patent), entitled “Onsite Backup for Internet-
Based Data Processing,” and the “’468 Family” of patents:
U.S. Patent No. 5,895,468 (the ’468 Patent), entitled
“System Automating Delivery of Professional Services”;
U.S. Patent No. 6,182,078 (the ’078 Patent), entitled
“System for Delivering Professional Services Over the
Internet”; and U.S. Patent No. 6,049,801 (the ’801 Pat-
ent), entitled “Web Site Providing Professional Services.”
The ’468 Family is directed to automating the delivery of
professional services while the ’007 Patent covers technol-
ogy for backing up client data. At trial, WhitServe as-
serted that CPi’s products—Desktop EARS, TERMS, CPi
OnLine, Hosted EARS, and Hosted PMS—infringe Whit-
Serve’s four patents. EARS and TERMS are computer
software programs operated by a CPi customer, such as a
law firm, to generate and send reminders to its clients of
upcoming patent or trademark annuity or maintenance
fee deadlines. CPi OnLine, Hosted EARS, and Hosted
PMS serve the same purpose, but the CPi software and
annuity database are “hosted” on CPi’s servers, rather
than stored on the client’s computers.
CPi answered WhitServe’s complaint with affirmative
defenses and a counterclaim against WhitServe seeking a
declaratory judgment of non-infringement, invalidity and
unenforceability. CPi also named Whitmyer as a “coun-
terclaim defendant,” asserting that he is the alter ego of
WHITSERVE v. COMPUTER PACKAGES 4
WhitServe, that he is the true owner of the asserted
patents, and that he personally engaged in inequitable
conduct in the prosecution of those patents. 1
The primary factual dispute at trial concerned how
CPi’s products operated, and whether they fell within the
’468 Family claims’ definition of “automatic.” There was
also a dispute over whether the ’007 Patent was antici-
pated by the prior art. The jury found that CPi failed to
prove any claims invalid, that CPi’s systems infringed the
four patents, that CPi’s infringement was willful, and that
WhitServe was entitled to $8,378,145 in damages. 2
After trial, the trial court denied all of WhitServe’s
requested post-trial relief. First, the court denied Whit-
Serve’s request for a permanent injunction on the merits,
and did not address a request for a compulsory license.
WhitServe’s requests for enhanced damages and attor-
neys’ fees, prejudgment interest, prejudgment remedy,
and disclosure were then dismissed as “moot” in light of
the trial court’s order entering judgment, in which it
stated that “[t]he court concludes that the . . . jury verdict
. . . is fair, just, and reasonable and adequately addresses
all legal and equitable considerations.” WhitServe’s
motion for post-trial accounting was denied as “moot”
without explanation. The district court later reconsidered
WhitServe’s “mooted” motions and this time denied them
1 Because Whitmyer was not a plaintiff to the origi-
nal action, he was later realigned as a third-party defen-
dant, though it is unclear when that occurred and
whether it was done by court order or stipulation.
2 Willfulness has not been appealed. See Oral Arg.
at 36:47-37:00, available at http://www.cafc.uscourts.gov/
oral-argument-recordings/2011-1206/all (“The only reason
we didn’t appeal it is because there are so many issues in
the case already.”).
5 WHITSERVE v. COMPUTER PACKAGES
on the merits after stating that the “damages awarded in
favor of the plaintiff . . . constitute complete compensation
with respect to this matter.” The court entered judgment
in favor of Whitmyer on the third party complaint “consis-
tent with the jury’s verdict,” but denied a motion by
Whitmyer seeking fees and sanctions from CPi for the
assertion of that claim. The court explained its denial of
Whitmyer’s motion by stating that he had “failed to set
forth facts warranting such relief.” The court also denied
as “moot” a series of motions CPi filed seeking judgment
as a matter of law (JMOL) and/or a new trial, again on
the grounds that the jury verdict was “fair, just and
reasonable.”
CPi appealed and WhitServe and Whitmyer each
cross-appealed. We have jurisdiction under
28 U.S.C. § 1295(a)(1).
CPi claims that the trial court erred in denying its
post-trial motions for JMOL and/or a new trial. It argues
that (1) its products do not infringe the ’468 Family
because they do not work “automatically”; (2) the ’007
Patent is anticipated by the prior art; and (3) the damages
award should be reduced or vacated for a new trial. 3
WhitServe cross-appeals on grounds that it should have
been granted a permanent injunction or compulsory
license against CPi and that it was entitled to prejudg-
ment interest, enhanced damages, attorneys’ fees, and a
post-trial accounting. Whitmyer cross-appeals requesting
his fees and expenses.
3 CPi’s claim that the patents are unenforceable
and its request for a “correction of ownership” are not at
issue in this appeal.
WHITSERVE v. COMPUTER PACKAGES 6
DISCUSSION
I. CPi’s Appeal
We first address CPi’s arguments on appeal. As
noted, we affirm the trial court’s denial of JMOL on
infringement because substantial evidence supports the
jury’s verdict. We also affirm the denial of JMOL on
anticipation on most claims, but reverse-in-part because
we find that substantial evidence does not support the
jury’s finding that Claim 10 of the ’007 Patent is not
anticipated. We remand for a new trial on damages
because the jury’s damages verdict is unsupported by the
record and the trial court abused its discretion when it
failed to order a new damages trial.
This court reviews denial of post-trial motions under
regional circuit law, the Second Circuit in this case. See
Revolution Eyewear, Inc. v. Aspex Eyewear, Inc.,
563 F.3d 1358, 1370 (Fed. Cir. 2009). The Second Circuit
reviews a denial of JMOL de novo. AMW Materials Test-
ing, Inc. v. Town of Babylon, 584 F.3d 436, 456 (2d Cir.
2009). Similar to the frequently applied substantial
evidence standard,
a district court may set aside the [jury’s] verdict
pursuant to Rule 50 only where there is “such a
complete absence of evidence supporting the ver-
dict that the jury’s findings could only have been
the result of sheer surmise and conjecture, or
there is such an overwhelming amount of evidence
in favor of the movant that reasonable and fair
minded men could not arrive at a verdict against
him.”
Id. (quoting Cross v. N.Y.C. Transit Auth., 417 F.3d 241,
248 (2d Cir. 2005)). The Second Circuit considers the
evidence in the light most favorable to the non-moving
7 WHITSERVE v. COMPUTER PACKAGES
party and gives that party the benefit of all reasonable
inferences that the jury might have drawn in the non-
movant’s favor. Caceres v. Port Auth., 631 F.3d 620, 622
(2d Cir. 2011).
A. Infringement
Claim 1 of ’468 Patent is representative of the claims
in the ’468 Patent Family. It recites:
A device for automatically delivering professional
services to a client comprising:
a computer;
a database containing a plurality of client remind-
ers, each of the client reminders comprising a
date field having a value attributed thereto;
software executing on said computer for automati-
cally querying said database by the values at-
tributed to each client reminder date field to
retrieve a client reminder;
software executing on said computer for automati-
cally generating a client response form based
on the retrieved client reminder;
a communication link between said computer and
the Internet;
software executing on said computer for automati-
cally transmitting the client response form to
the client through said communication link;
and,
software executing on said computer for automati-
cally receiving a reply to the response form
from the client through said communication
link.
’468 Patent col. 6 l. 56 to col. 7 l. 8 (emphases added).
WHITSERVE v. COMPUTER PACKAGES 8
The district court interpreted “automatic” in the claims
as:
a process that, once initiated, is performed by a
machine without the need for manually perform-
ing that process, that is, without the need for hu-
man intervention. A machine may still perform
the claimed process automatically, even though a
human might manually initiate or interrupt the
process.
In reaching the conclusion that the term “automatic”
as used in claim 1 does not exclude all possible human
intervention, the trial court relied on our decision in
CollegeNet, Inc. v. ApplyYourself, Inc., 418 F.3d 1225,
1235 (Fed. Cir. 2005), where we explained that dishwash-
ers and autopilots could still be automatic even though
they must be started by a human, or their operation may
be interrupted by a human. As we did in CollegeNet, the
trial court focused on the use of the term “comprising” in
the claim to find that unrecited elements of manual,
human actions were not excluded from its scope. See id.
at 1235 (stating that, “[w]hile claim 1 does not expressly
provide for human intervention, the use of ‘comprising’
suggests that additional, unrecited elements are not
excluded. Such elements could include human actions to
expressly initiate the automatic [querying, generating,
transmitting, or receiving], or to interrupt such func-
tions.”). The trial court then explained why it believed
this construction of automatic was supported both by the
patent’s specification and by its prosecution history.
CPi does not challenge the trial court’s claim con-
struction on appeal. 4 Instead, CPi argues that, even
4 While CPi alluded to the possibility that the trial
court’s claim construction was contrary to the patent’s
specification and prosecution history at times in its
9 WHITSERVE v. COMPUTER PACKAGES
allowing for the presence of some manual intervention in
the elements of the claims, its products do not infringe
because they require a type of manual intervention not
contemplated by or consistent with the asserted claims.
CPi contends that, while all of the asserted claims of the
’468 Family require “software executing on said computer
for automatically querying said database by values at-
tributed to each client reminder date field to retrieve a
client reminder,” “the accused products all require, at
minimum, the manual entry of a due date range during
the execution of the querying process.” Appellant’s Br. 30
(original emphasis deleted). 5 Essentially, CPi argues
that, because a person using their products must manu-
ally choose a due date range to be queried, and, in its
view, choosing the date range occurs during the querying
process, there is no infringement because that manual
action neither initiates nor interrupts the querying proc-
ess. WhitServe counters that this argument is illogical
opening brief, it did not raise the issue in the “Statement
of the Issues,” cited no legal support for its claim con-
struction “arguments,” and did not even recite the stan-
dard of review for claim construction. It has, accordingly,
waived the ability to argue for an alternative claim con-
struction. See Kao Corp. v. Unilever U.S., Inc., 441 F.3d
963, 973 n.4 (Fed. Cir. 2006) (stating that failure to set
forth substantive discussion of claim construction in the
statement of the issues presented, summary of the argu-
ment, and argument itself, constitutes waiver of any
alternative claim construction). This finding renders
moot WhitServe’s motion, filed after CPi’s opening brief,
asking that we prohibit CPi from later requesting de novo
review of the court’s claim constructions.
5 In a footnote, CPi raises another reason why it be-
lieves the ’801 Patent is not infringed. Appellant’s Br. 32
n.4. This argument is waived. SmithKline Beecham v.
Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 2006)
(“[A]rguments raised in footnotes are not preserved.”).
WHITSERVE v. COMPUTER PACKAGES 10
because the “querying process does not start until the
user enter[s] a date range and starts the process.” Cross-
Appellant’s Br. 59. We agree with WhitServe. We find
that there is substantial evidence to support the jury’s
implicit finding that choosing a due date range is separate
from CPi’s automated querying process and that all other
manual operations required by CPi’s products are outside
the automated tasks required by the claims.
Dr. Sayward was WhitServe’s expert on the fields of
computer science, docketing systems, database manage-
ment, and Internet and network applications. He testi-
fied that in analyzing CPi’s products for infringement, he
spent “hundreds of hours” looking at the products’ source
code and user manuals, and experimenting with test
accounts. Dr. Sayward explained, element by element,
how, for example, CPi’s Hosted EARS product worked and
infringed claim 1 of the ’468 Patent. Regarding the
“automatically querying” element, he explained that, after
“enter[ing] a date range,” the user “press[es] the search
button.” “After pressing the search button what happens
under the scene is that the database of client reminders
are searched and then a display is produced which shows
the results of that search.” “So after the law firm enters
the information and clicks the search button, Hosted
EARS automatically queries at that time.” Thus, Dr.
Sayward testified that “entering a date range” happens
before the querying begins in Hosted EARS and the
querying process itself (checking the database entries
against a desired date range) happens automatically. Dr.
Sayward testified similarly about Desktop EARS/TERMS,
and CPi Online.
When CPi’s counsel cross-examined Dr. Sayward, he
asked whether the querying process could start before due
dates were manually entered by the user. Dr. Sayward
rejected that proposition and stated that entering the date
11 WHITSERVE v. COMPUTER PACKAGES
range can not be part of the querying process because
prior to entering the date range “you haven’t formed a
proper question.” To be a query, “you need a date range,
so that you know what you’re searching for.” The jury
was entitled to credit this explanation and reject CPi’s
theory that querying involves choosing the date range to
be searched.
CPi’s argument that their products require “date en-
try” and other manual steps does not negate the fact that,
when the evidence is viewed in the light most favorable to
WhitServe, there was substantial evidence to support a
finding to the contrary. Thus, we affirm the trial court’s
denial of CPi’s motion for JMOL of noninfringement.6
B. Anticipation
The jury found that two of CPi’s products, Hosted
EARS and Hosted PMS, infringed all 15 claims of the ’007
Patent. It also found that CPi’s Desktop Ears product
infringed claim 10 of the ’007 Patent. CPi concedes that it
infringes the ’007 Patent, if valid, but argues that the ’007
Patent is invalid under 35 U.S.C. § 102 as anticipated by
U.S. Patent No. 5,903,881 (“the Schrader Patent”). We
conclude that claim 10 of the ’007 Patent is invalid as
anticipated, but that substantial evidence supports the
jury’s finding of no anticipation as to the other claims.
“[A] claim is anticipated if each and every limitation is
found either expressly or inherently in a single prior art
6 From this evidence, the jury reasonably also could
have concluded that CPi’s products infringed under the
doctrine of equivalents. The jury was instructed that they
could find infringement under the doctrine, but CPi
appealed only on the basis that its products do not liter-
ally infringe. There is, accordingly, more than one basis
upon which to conclude that substantial evidence sup-
ports the jury’s infringement verdict.
WHITSERVE v. COMPUTER PACKAGES 12
reference.” Celeritas Techs., Ltd. v. Rockwell Int’l Corp.,
150 F.3d 1354, 1361 (Fed. Cir. 1998). The “elements must
be arranged or combined in the same way as in the
claim,” but “the reference need not satisfy an ipsissimis
verbis test.” In re Gleave, 560 F.3d 1331, 1334 (Fed. Cir.
2009) (internal citations and quotation marks omitted).
Also, the reference must “enable one of ordinary skill in
the art to make the invention without undue experimen-
tation.” Impax Labs., Inc. v. Aventis Pharm. Inc.,
545 F.3d 1312, 1314 (Fed. Cir. 2008). Patents are pre-
sumed to be valid and invalidity must be proven by clear
and convincing evidence. Microsoft Corp. v. i4i Ltd.
P’ship, 131 S. Ct. 2238, 2242 (2011). Anticipation is a
question of fact reviewed for substantial evidence when
tried to a jury. Orion IP, LLC v. Hyundai Motor Am.,
605 F.3d 967, 974 (Fed. Cir. 2010). Because the jury
found that the patents were not invalid, under the Second
Circuit’s JMOL standard, we review the evidence to see if
there is such an “overwhelming amount of evidence in
favor of [CPi] that reasonable and fair minded men could
not arrive at a verdict against [it].” AMW, 584 F.3d at
456. This is a high burden.
The ’007 Patent is entitled “Onsite Backup from
Internet-Based Data Processing.” It recognizes that many
companies have moved their data processing systems
from their private networks to the Internet and now allow
their customers to access and manipulate their data via a
web interface. ’007 Patent col. 1 ll. 21-24. The object of
the ’007 Patent is to allow clients to backup to their own
computer a copy of their Internet-based data, which, from
the specification, appears to be data resulting from out-
sourced data-processing that is stored on a central com-
puter separated from the client’s network by the Internet.
Id. col. 1 ll. 21-24, col. 2 ll. 6-24. This objective is the
opposite of traditional backup systems, which allow the
13 WHITSERVE v. COMPUTER PACKAGES
client to copy data from their own computer onto an
external computer or server. Id. col. 1 ll. 49-56. In addi-
tion to saving a copy of the Internet-based data, depend-
ent claims 3, 6, and 9 go on to claim “software executing
on said central computer for retrieving said data backup.”
Id. col. 3 ll. 48-50, col. 4 ll. 12-15, col. 4 ll. 49-51. Essen-
tially, those claims recite the central computer’s ability to
restore any lost data by retrieving it from the client’s
personal computer.
CPi focused its anticipation case on claim 10. It re-
cites:
A system for local storage of data through the
Internet comprising:
a central computer connected to the Internet;
a client computer connected to the Internet;
at least one storage having a plurality of client
data records, said at least one storage acces-
sible by said central computer, each client
data record having an identifier that relates
the client data record to a client;
a client data request, sent from said client com-
puter via the Internet to said central com-
puter; and
client data corresponding to said client data re-
quest, sent from said central computer via the
Internet to said client computer and saved on
said client computer.
Id. col. 4 ll. 52-64 (emphases added).
The Court construed “client data” to mean “a complete
or partial backup or copy of data records corresponding to
a particular client.” It interpreted “data request” to mean
“a data backup request.” Neither party appeals these
WHITSERVE v. COMPUTER PACKAGES 14
claim constructions. Thus, claim 10 requires: a client and
central computer, each connected to the Internet; backups
or copies of data records corresponding to a particular
client that are identifiable by client and accessible by the
central computer; a data backup request sent by the client
computer to the central computer; and a complete or
partial backup or copy of data records corresponding to
that client sent from the central computer to the client
computer where they are then saved. Basically, it allows
clients to access and copy their own files or files associ-
ated with them from across the Internet. On its face,
claim 10 (as well as claims 11-15, which depend from
claim 10) does not recite Internet-based data, which is
differentiated from general client data by the fact that it
must be accessible and modifiable by the client’s act of
processing the data over the Internet. See ’007 Patent col.
1 ll. 21-24, col. 2 ll. 6-24.
The Schrader Patent is the only piece of prior art
upon which CPi relied for its anticipation defense. It
discloses an electronic checkbook system that reconciles
pending financial transactions against cleared transac-
tions. 7 Among other things, it claims: a computer-based
system that allows the user to send transactions from his
computer to a financial institution’s computer system for
processing; a display showing an account balance of all
cleared transactions; a display showing an account bal-
ance of both cleared and uncleared transactions; the
ability to receive from the financial institution a list of
transactions cleared since the last time they were
checked; and then updating the two account balances.
Schrader Patent col. 19 l. 48 to col. 20 l. 25. In the section
of the specification entitled “Update Statement,” it ex-
7 The Schrader Patent is sold under the trademark
Quicken®.
15 WHITSERVE v. COMPUTER PACKAGES
plains that, once a user requests an update, the “personal
finance application connects to the financial institution
computer system” over the Internet. Id. col. 16 l. 63 to
col. 17 l. 5. Then the software “creates a request file that
includes a request for all cleared transactions since the
date of the last update” that is sent to the financial insti-
tution. Id. col. 17 ll. 6-9, ll. 15-19. In response, the finan-
cial institution’s computer system “creates a response file
that contains the set of transactions that have been
cleared” since the last update. Id. col. 17 ll. 22-25. The
response file is then sent back to the application and
processed, which includes “extracting each of the cleared
transactions from the response file and storing them.” Id.col. 17 ll. 26-38.
CPi’s expert, Dr. Alexander, testified about claim 10
and stated that, in Schrader, the users “retriev[e] from
the financial institution these records, just as the ’007
Patent requires downloading to a client.” He also stated
that the download is “to your business or personal com-
puter from the bank’s computer.” “[T]he banks maintain
the database with your checkbook record” and “these are
records that are specific to you.” “So there’s a request. In
the case of the Quicken Schrader prior art, you’re at a
personal computer, at your business or at home, and you
request the downloading of records that essentially are
unposted records that the bank has processed.” Then,
according to Dr. Alexander, the “the bank giv[es] you the
response file, which is the records that are specific to you,
based on your client ID, your account number.” “And
these records are saved on your computer in the case of
Quicken, the Schrader patent, they are saved on your
computer, and/or business computer.” His testimony
tracks all of claim 10’s elements. CPi argues that, there-
fore, the Schrader Patent, which describes a computer
downloading files specific to the user from a central
WHITSERVE v. COMPUTER PACKAGES 16
computer, contains all of the limitations claimed in the
’007 Patent.
WhitServe argues that Schrader is missing certain
elements claimed in the ’007 Patent. WhitServe states
that “Dr. Sayward testified at trial that Schrader was
missing additional key claim elements: (1) a central
computer for transmitting client data to a client computer
(required by all claims 1-15); (2) Internet-based data
(required by claims 1-9); and (3) data conversion (required
by claims 7-9 and 12-15).” We conclude that claim 10 of
the ’007 Patent is anticipated by the Schrader Patent
despite these asserted differences. First, Schrader clearly
discloses a central computer in the form of the financial
institution’s computer. Additionally, claim 10 recites
neither Internet-based data nor data conversion. In fact,
the only rebutting testimony offered by WhitServe specifi-
cally regarding claim 10 was its expert’s conclusory testi-
mony that claim 10’s limitations “aren’t taught by
Schrader.”
In its brief, WhitServe argues that Schrader does not
anticipate claim 10: “Schrader does not relate to a system
for backing up client data” because “the Schrader request
file is not a request for a data backup of existing data, but
rather is a request for new data relating to cleared trans-
actions since the client was last online.” Cross-
Appellant’s Br. 70 (emphases added). Such “arguments of
counsel cannot take the place of evidence lacking in the
record.” Estee Lauder Inc. v. L’Oreal, S.A., 129 F.3d 588,
595 (Fed. Cir. 1997) (internal citations and quotation
marks omitted). Moreover, claim 10 does not distinguish
between data that is “existing” or “new,” and instead
recites only “client data,” which was defined as “a com-
plete or partial backup or copy of data records correspond-
ing to a particular client.” Data corresponding to a user’s
cleared financial transactions clearly satisfies the defini-
17 WHITSERVE v. COMPUTER PACKAGES
tion of a “copy of data records corresponding to a particu-
lar client.”
WhitServe points to no other elements that distin-
guish claim 10 from the Schrader Patent and does not
argue that the Schrader Patent is not enabling. See
Amgen Inc. v. Hoechst Marion Roussel, Inc.,
314 F.3d 1313, 1355 (Fed. Cir. 2003) (explaining that
there is “a [rebuttable] presumption . . . that both the
claimed and unclaimed disclosures in a prior art patent
are enabled.”). Thus, in this case, even viewing the evi-
dence in a light most favorable to WhitServe, no reason-
able juror could have found that claim 10 was not
anticipated by the Schrader Patent. Therefore, the trial
court’s denial of CPi’s motion for JMOL regarding claim
10 is reversed because claim 10 is anticipated by the
Schrader Patent. Contrary to CPi’s arguments, however,
the fact that claim 10 is invalid does not cause all of the
other claims of the ’007 Patent to fail.
We do not invalidate the rest of the claims because
they contain additional elements that CPi has not estab-
lished were either anticipated or obvious. The law states:
Each claim of a patent (whether in independent,
dependent, or multiple dependent form) shall be
presumed valid independently of the validity of
other claims; dependent or multiple dependent
claims shall be presumed valid even though de-
pendent upon an invalid claim . . . . The burden of
establishing invalidity of a patent or any claim
thereof shall rest on the party asserting invalid-
ity.
35 U.S.C. § 282. “Typically, testimony concerning antici-
pation must be testimony from one skilled in the art and
must identify each claim element, state the witnesses’
interpretation of the claim element, and explain in detail
WHITSERVE v. COMPUTER PACKAGES 18
how each claim element is disclosed in the prior art
reference.” Schumer v. Lab. Computer Sys., Inc.,
308 F.3d 1304, 1315 (Fed. Cir. 2002) (emphasis added).
In Koito Manufacturing Co. v. Turn-Key-Tech, LLC,
381 F.3d 1142, 1151 (Fed. Cir. 2004), the defendant
entered another patent into evidence as anticipatory prior
art, “but otherwise failed to provide any testimony or
other evidence that would demonstrate to the jury how
that reference met the limitations of the claims . . . .”
Instead, the defendant’s expert testified about four prior
art patents simultaneously and stated:
All these prior art patents provide for products
and ways of making products with thick and thin
sections. The gate locations are shown, and they
all have inherently crossing flows in sections of
the product, sometimes substantial sections of
these products, such that they all would have a
cross-laminated section as Turn Key is applying
that term to the accused lenses.
Id. at 1152. We held that such “[g]eneral and conclusory
testimony . . . does not suffice as substantial evidence of
invalidity.” Id. Because general and conclusory testi-
mony is not enough to be even substantial evidence in
support of a verdict, it is certainly not enough to require
us to overturn a jury’s finding of no invalidity.
In this case, CPi’s expert, Dr. Alexander, explained
what part of the Schrader Patent anticipated each ele-
ment in claim 10. When asked if encryption and data
format conversion were well known at the time the ’007
Patent was filed, he answered affirmatively. CPi’s attor-
ney then asked, “Do you have an opinion on the validity of
Claims 1, 2, 3, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of the ’007
19 WHITSERVE v. COMPUTER PACKAGES
Patent?” 8 Dr. Alexander replied, “Yes, they’re all invalid
because of prior art.” Finally, CPi’s attorney asked, “And
are all the elements of those claims disclosed in the
Schrader patent?” Dr. Alexander stated, “Yes, they are.”
We find this generalized exchange, which failed to articu-
late how the Schrader Patent anticipated the other
claims’ specific elements, to be a far cry from the “over-
whelming amount of evidence” needed to require us to
overturn the jury’s verdict. See Id.There are several additional elements contained in
the other claims, moreover, which a reasonable jury could
find absent from the Schrader Patent. For example,
dependent claims 3, 6, and 9 require that there be “soft-
ware executing on said central computer for retrieving
said data backup.” The Schrader Patent has not been
shown to allow the financial institution to retrieve the
data previously sent to the user. Also, claims 1-9 require
Internet-based data, 9 which is not clearly disclosed by the
8 It is unclear why Dr. Alexander did not mention
claims 4 through 6, but it would not change the result if
he had.
9 For example, claim 1 of the ’007 Patent recites:
A system for onsite backup of internet-based data
comprising:
a central computer;
a client computer;
a communications link between said central com-
puter and the Internet;
a communications link between said client com-
puter and the Internet;
at least one database containing a plurality of
data records accessible by said central com-
puter, each data record containing a client
identification number;
software executing on said central computer for
receiving a data backup request from said cli-
ent computer;
WHITSERVE v. COMPUTER PACKAGES 20
Schrader Patent. While CPi argues that WhitServe’s
expert conceded that Schrader disclosed Internet-based
data, what he actually said was that the “client computer
get[s] the data from the financial institution computer
system ‘over a network.’” A jury reasonably could have
concluded that the fact that data is transferred over the
Internet does not automatically make it “Internet-based
data” because, as disclosed in the ’007 Patent, that ele-
ment requires the ability to modify centrally stored data
from across the Internet, rather than simply sending it
across the Internet. 10
CPi also states that the ’007 patent is rendered obvi-
ous by the Schrader patent. However, “an obviousness
determination . . . is based on underlying factual inquiries
including: (1) the scope and content of the prior art; (2)
the level of ordinary skill in the art; (3) the differences
between the claimed invention and the prior art; and (4)
objective evidence of nonobviousness.” Eli Lilly & Co. v.
software executing on said central computer for
transmitting said data backup to said client
computer for onsite backup of internet-based
data on said client computer.
’007 Patent col. 3 ll. 30-44 (emphases added).
10 The ’007 Patent describes an Internet-based data
processing system in which a “client computer executes
software 20, residing on the data processing system 15, for
displaying, updating, and deleting data 12 stored on the
central data processing system 15.” ’007 Patent col. 2 ll.
50-53 (emphases added). WhitServe’s expert accurately
described Internet-based data as “[i]f you have data that
you constructed and you send it to a central computer for
further processing, Internet based data is that data that
you created yourself, plus the data that gets created as a
consequence of doing that processing on a server com-
puter.” He also agreed that a good definition is: “infor-
mation that could be created on an application on the
other side of the Internet from a client computer[.]”
21 WHITSERVE v. COMPUTER PACKAGES
Teva Pharm. USA, Inc., 619 F.3d 1329, 1336 (Fed. Cir.
2010). Other than the cursory statement that data
conversion and encryption were “well known” at the time
of patenting by CPi’s expert, CPi has not pointed to facts
necessary for us to conclude that no reasonable jury could
have found the rest of the ’007 Patent’s claims to be
nonobvious. Therefore, while we conclude that claim 10 of
the ’007 Patent is invalid as anticipated, we find that
substantial evidence supports the jury’s verdict of no
invalidity as to the remaining ’007 Patent’s claims.
C. Damages
CPi appeals the trial court’s denial of its post-trial
motions for JMOL or a new trial on damages on the
grounds that the jury’s $8,378,145 damages award is not
supported by substantial evidence and is, in fact, against
the clear weight of the evidence. “When reviewing dam-
ages in patent cases, we apply regional circuit law to
procedural issues and Federal Circuit law to substantive
and procedural issues pertaining to patent law.” Word-
Tech Sys., Inc. v. Integrated Network Solutions, Inc.,
609 F.3d 1308, 1318 (Fed. Cir. 2010) (internal citations
and quotation marks omitted). In the Second Circuit, “a
district court may grant a new trial pursuant to [Federal
Rules of Civil Procedure] Rule 59 even when there is
evidence to support the jury’s verdict, so long as the court
‘determines that, in its independent judgment, the jury
has reached a seriously erroneous result or its verdict is a
miscarriage of justice.’” AMW, 584 F.3d at 456 (quoting
Nimely v. City of New York, 414 F.3d 381, 392 (2d Cir.
2005)). Denial of a motion for a new trial is reviewed for
abuse of discretion. Id. “The standard for ordering a new
trial is therefore somewhat less stern than that for enter-
ing judgment as a matter of law, but our review of a
district court’s disposition of a Rule motion is more defer-
ential.” Id. “A district court abuses its discretion when
WHITSERVE v. COMPUTER PACKAGES 22
its decision is based on clearly erroneous findings of fact,
is based on erroneous interpretations of the law, or is
clearly unreasonable, arbitrary or fanciful.” Cybor Corp.
v. FAS Techs., Inc., 138 F.3d 1448, 1460 (Fed. Cir. 1998)
(en banc).
After CPi made its initial post-trial motions in this
case, the trial court issued an order upholding the verdict.
The only analysis it provided was that ‘“[t]he court con-
cludes that the $8,378,145.00 jury verdict entered on May
25, 2010, is fair, just, and reasonable and adequately
addresses all legal and equitable considerations.” It then
dismissed as moot all post trial motions, including CPi’s
motion regarding damages.
We have said that “[m]ost jury damages awards re-
viewed on appeal have been held to be supported by
substantial evidence.” Lucent Techs., Inc. v. Gateway,
Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009). “Nonetheless,
on post-trial JMOL motions, district court judges must
scrutinize the evidence carefully to ensure that the ‘sub-
stantial evidence’ standard is satisfied, while keeping in
mind that a reasonable royalty analysis ‘necessarily
involves an element of approximation and uncertainty.’”
Id. (quoting Unisplay, S.A. v. Am. Elec. Sign Co.,
69 F.3d 512, 517 (Fed. Cir. 1995)). The same rule requir-
ing the trial court to scrutinize the evidence applies to
motions for new trials. In this case, we believe that, had
the trial court scrutinized the damages evidence properly,
it would have concluded that the evidence did not support
the award. Because the jury’s verdict lacked evidentiary
support, we conclude that the trial court abused its dis-
cretion when it denied the motion for a new trial.
When a patent is infringed, the patentee is entitled to
“damages adequate to compensate for the infringement,
but in no event less than a reasonable royalty for the use
23 WHITSERVE v. COMPUTER PACKAGES
made of the invention by the infringer.” 35 U.S.C. § 284.
The patentee bears the burden of proving damages.
Lucent, 580 F.3d at 1324. “Two alternative categories of
infringement compensation are the patentee’s lost profits
and the reasonable royalty he would have received
through arms-length bargaining.” Id. If lost profits are
not at issue, the reasonable royalty is the floor for dam-
ages. Id. The jury’s verdict form does not indicate how
the award was calculated, whether it is a lump sum or
running royalty, or whether it includes damages in addi-
tion to a reasonable royalty. At trial, both parties based
their damage theories primarily on the 15 Georgia-Pacific
factors, see Georgia-Pacific Corp. v. U.S. Plywood Corp.,
318 F. Supp. 1116, 1120 (S.D.N.Y. 1970), 11 which are
11 We have stated that the factors include:
(1) royalties the patentee has received for licens-
ing the patent to others; (2) rates paid by the li-
censee for the use of comparable patents; (3) the
nature and scope of the license (exclusive or non-
exclusive, restricted or nonrestricted by territory
or product type); (4) any established policies or
marketing programs by the licensor to maintain
its patent monopoly by not licensing others to use
the invention or granting licenses under special
conditions to maintain the monopoly; (5) the
commercial relationship between the licensor and
licensee, such as whether they are competitors; (6)
the effect of selling the patented specialty in pro-
moting sales of other products of the licensee; (7)
the duration of the patent and license term; (8)
the established profitability of the product made
under the patent, including its commercial success
and current popularity; (9) the utility and advan-
tages of the patent property over old modes or de-
vices; (10) the nature of the patented invention
and the benefits to those who have used the in-
vention; (11) the extent to which the infringer has
used the invention and the value of that use; (12)
WHITSERVE v. COMPUTER PACKAGES 24
meant to provide a reasoned economic framework for a
“hypothetical negotiation, . . . [which] attempts to ascer-
tain the royalty upon which the parties would have
agreed had they successfully negotiated an agreement
just before infringement began.” Lucent, 580 F.3d at
1324.
CPi’s main arguments against the verdict concern the
testimony by WhitServe’s damages expert, Dr. Shapiro,
and the closing argument made by WhitServe’s counsel.
It argues that WhitServe improperly relied on a “busi-
ness-wide” damages theory that included non-infringing
revenue and caused the royalty base relied upon by the
jury to be inflated by several times. It also argues that
WhitServe’s damages expert’s testimony can not support
the verdict because the royalty rate upon which he based
his reasonable royalty calculation is merely speculative,
as is WhitServe’s “other damages” theory based on the
cost to develop CPi’s systems. Finally, it argues that
WhitServe’s closing arguments were prejudicial and
require a new trial because the trial court’s correcting
statements were insufficient to prevent the jury from
being tainted by WhitServe’s misstatements of law and
fact.
the portion of profit or of the selling price that
may be customary in that particular business to
allow for use of the invention or analogous inven-
tions; (13) the portion of the realizable profit that
should be credited to the invention as opposed to
its non-patented elements; (14) the opinion testi-
mony of qualified experts; and (15) the results of a
hypothetical negotiation between the licensor and
licensee.
i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 853 n.3
(Fed. Cir. 2010), aff’d, 131 S. Ct. 2238 (2011).
25 WHITSERVE v. COMPUTER PACKAGES
In response, WhitServe proffers two main theories in
support of the verdict. First, it argues that the lump sum
licenses it presented at trial along with the Georgia-
Pacific factors support Dr. Shapiro’s royalty rate of
16-19%, which, when applied to $42-43 million in infring-
ing revenue yields a royalty of about $8 million. Second,
it argues that the jury may have awarded a reasonable
royalty of about $3 million and then increased the dam-
ages award based on “other damages” it felt WhitServe
suffered. We find that neither theory supports the jury’s
verdict.
i. Reasonable Royalty
When a hypothetical negotiation would have yielded a
running royalty, the classic way to determine the reason-
able royalty amount is to multiply the royalty base, which
represents the revenue generated by the infringement, by
the royalty rate, which represents the percentage of
revenue owed to the patentee. See, e.g., Finjan, Inc. v.
Secure Computing Corp., 626 F.3d 1197, 1208 (Fed. Cir.
2010). In this case, CPi’s expert stated that there were
1,036,877 accused infringing transactions. WhitServe
adopted that number at trial and on appeal. Thus, the
royalty base is equivalent to the revenue generated by
those transactions, which equals 1,036,877 times the
average transaction fee charged by CPi for transactions
that infringe WhitServe’s patents. There was a factual
dispute over whether the average infringing service fee
charged by CPi was $15.69 or $41. WhitServe’s expert,
Dr. Shapiro, had based his original calculations on the
$15.69 figure provided by CPi. Dr. Shapiro changed his
opinion to incorporate the $41 figure on the eve of trial,
however. By multiplying $41 by a little more than
1 million infringing transactions, WhitServe argues the
infringing revenue base was $42-43 million.
WHITSERVE v. COMPUTER PACKAGES 26
CPi argues that number is far too high because Dr.
Shapiro came up with the number by dividing CPi’s gross
revenues by the total number of all transactions—
including non-infringing transactions. It argues that
including non-infringing transactions in the average fee
calculation makes the revenue base unsupported by the
evidence because it sweeps in non-infringing use, for
which CPi says it charges higher fees. CPi’s expert testi-
fied that the correct revenue base was about $18 million.
WhitServe argues that CPi stipulated to evidence sup-
porting the jury’s verdict in the form of its past financial
data and that Dr. Shapiro properly used that information
to determine that CPi’s average infringing service fee was
about $41. We find that the jury was entitled to find that
$41 accurately represented the average service fee
charged for infringing products.
In Finjan, the patentee’s expert calculated the in-
fringer’s profit margin on accused products by using
“company-wide, instead of product-specific, gross profits.”
626 F.3d at 1209. The expert “explained to the jury that
he found that the gross profit margin for the [accused]
products was similar to the company-wide margin (both
roughly 70%), so that ‘the [accused] products . . . have a
gross profit margin . . . that’s close.’” Id. at 1209-10. We
concluded that substantial evidence supported the award
based on that profit margin because the expert “provided
more than just a conclusory opinion, on which the jury
was entitled to rely.” Id. at 1210.
As in Finjan, we do not find reversible error in Dr.
Shapiro’s calculation of the average service fee because he
explained that, as CPi automated more and more transac-
tions, the average service fee remained the same over
time. See J.A. 15667-68 (explaining that “one would
expect a lower average service fee when the proportion of
electronic transactions increased”). Non-infringing use,
27 WHITSERVE v. COMPUTER PACKAGES
which commands a higher fee according to CPi, accounted
for 97% of all transactions in 2003 but dropped to 60% in
2009 as CPi moved away from manual transactions and
started conducting more automated transactions, using
computers and the Internet. Dr. Shapiro explained that
the average fee remained the same during that whole
period, however. J.A. 15667. Thus, the jury was free to
reason that the average fee would have decreased as the
allegedly cheaper infringing transactions progressively
made up a larger proportion of total transactions. Be-
cause that did not happen, it was reasonable to conclude
that the infringing transactions were not, in fact, cheaper
and that the average transaction fee is a fair approxima-
tion of the fee charged in the infringing transactions. See
Bluebonnet Sav. Bank, F.S.B. v. United States,
266 F.3d 1348, 1355 (Fed. Cir. 2001) (explaining that
damage calculations are not an exact science and “it is
enough if the evidence adduced is sufficient to enable a
court or jury to make a fair and reasonable approxima-
tion” (internal quotation marks and citations omitted)).
Although it would have been preferable to have bro-
ken the data down by specific transaction type, we do not
find that Dr. Shapiro’s reasoning on this point was im-
permissible speculation. Instead, “vigorous cross-
examination, presentation of contrary evidence, and
careful instruction on the burden of proof are the tradi-
tional and appropriate means of attacking shaky but
admissible evidence.” i4i Ltd. P’ship v. Microsoft Corp.,
598 F.3d 831, 856 (Fed. Cir. 2010) (citing Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 596 (1993)), aff’d,
131 S. Ct. 2238 (2011). Here, CPi cross-examined Dr.
Shapiro on the issue and presented contrary evidence. 12
12 CPi complains that Dr. Shapiro came up with his
higher average transaction fee the night before he testi-
fied and presented the trial court with a conclusory expert
WHITSERVE v. COMPUTER PACKAGES 28
The jury was entitled to believe that the average fee for
the infringing transactions was about $41. Thus, if there
was evidence to support the corresponding royalty rate
that would have yielded an $8.3 million verdict, we could
affirm.
We agree with CPi, however, that multiple errors in
Dr. Shapiro’s royalty rate calculation cause his ultimate
opinion regarding a reasonable royalty rate to be specula-
tive. Dr. Shapiro concluded that the royalty rate that
would have resulted from a hypothetical negotiation
report with no analysis and no citations to data. The trial
court excluded the report after CPi objected but allowed
Dr. Shapiro to testify as to his conclusion and permitted
WhitServe to publish a chart including the information to
the jury during closing. CPi states this information was
inadmissible, prejudicial, and requires a new trial. Upon
reviewing the trial transcript, it is unclear whether the
trial court’s ruling should have prohibited Dr. Shapiro
from testifying as to the higher amount. At one point, the
judge said that “whatever was furnished to [CPi] is going
to be excluded, and that includes the material that’s on
that slide, and it’s got to be excluded.” However, Dr.
Shapiro was permitted to testify over objections. We
review the admission of evidence under the standard of
the law of the pertinent circuit, Micro Chemical, Inc. v.
Lextron, Inc., 317 F.3d 1387, 1390-91 (Fed. Cir. 2003),
which is abuse of discretion in this case. United States v.
Roberts, 660 F.3d 149, 157 (2d Cir. 2011). It is difficult to
tell if the trial court abused its discretion. Certainly, had
CPi had more warning about Dr. Shapiro’s proposed
testimony, it may have more effectively countered it. On
the other hand, the trial court was in the best position to
evaluate the threat of prejudice, if any, from the late
disclosure, and he chose to allow some aspects of it.
Ultimately, we do not decide whether the trial court’s
admission of this testimony was erroneous because we
have determined a new trial is warranted on other
grounds. If it is admitted again on remand, CPi will have
time to formulate its rebuttal.
29 WHITSERVE v. COMPUTER PACKAGES
between CPi and WhitServe was 16-19% of revenue. A
19% of revenue rate, if upheld, would support the jury’s
verdict because 19% of $42-43 million is roughly $8 mil-
lion. WhitServe attempts to justify this royalty rate with
several points of evidence.
First, it argues that the jury was presented with a
royalty rate as high as 31.8% during Dr. Shapiro’s testi-
mony. That rate was based on a proposed, but un-
accepted, license based on the greater of $5 or 7% per
transaction. Dr. Shapiro stated that $5 divided by CPi’s
asserted average service fee of $15.69 equals 31.8%. This
evidence can not support the jury’s verdict because it is
based on fiction and contradicts Dr. Shapiro’s other testi-
mony. Basically, Dr. Shapiro took WhitServe’s hypotheti-
cal value of $5 and applied it to a $15.69 value that he
had already opined was incorrect. We acknowledge that
proposed licenses may have some value for determining a
reasonable royalty in certain situations. Their eviden-
tiary value is limited, however, by, inter alia, the fact that
patentees could artificially inflate the royalty rate by
making outrageous offers. See Deere & Co. v. Int’l Har-
vester Co., 710 F.2d 1551, 1557 (Fed. Cir. 1983) (uphold-
ing district court’s decision to give little probative value to
an offer to license).
In this case, the proposed offer and 31.8% rate have
no probative value because Dr. Shapiro used the lower
$15.69 transaction fee amount to determine that $5
represents 31.8% of the fee. Such an assertion is directly
contrary to his argument in favor of a $41 transaction fee.
Dr. Shapiro can not have it both ways. He can not use
$41 to boost the royalty base and then use $15.69 to boost
the royalty rate. No reasonable juror could have credited
both values. The 31.8% value is therefore based on pure
conjecture and, like the 25% rule of thumb, is irrelevant.
See Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292,
WHITSERVE v. COMPUTER PACKAGES 30
1318 (Fed. Cir. 2011) (“Gemini’s starting point of a
25 percent royalty had no relation to the facts of the case,
and as such, was arbitrary, unreliable, and irrelevant.”)
Had he divided $5 by the higher $41 fee he urged, the
result would have been about 12%, significantly lower
than the roughly 19% upon which WhitServe argues the
verdict is based.
Next, WhitServe cites to the two lump sum royalties it
successfully negotiated with CPi competitors. WhitServe
argues that the 19% royalty rate is supported by the fact
that it secured two limited, lump-sum licenses, both
approximately in the $2-3 million range. WhitServe
states those licenses were limited and based on little to no
infringement, and, thus, justify an increased royalty rate.
CPi counters that parties must use comparable patent
licenses when determining reasonable royalty damages
and that these were not comparable to what WhitServe
sought at trial. In Lucent, we said that “[f]or a jury to use
a running-royalty agreement as a basis to award lump-
sum damages . . . some basis for comparison must exist in
the evidence presented to the jury.” 580 F.3d at 1330. In
that case, the running royalties did not constitute sub-
stantial evidence in support of the verdict because “the
jury had almost no testimony with which to recalculate in
a meaningful way the value of any of the running royalty
agreements to arrive at the lump-sum damages award.”
Id. The converse of that rule applies here because lump
sum payments similarly should not support running
royalty rates without testimony explaining how they
apply to the facts of the case.
In this case, Dr. Shapiro cited to the two lump sum
payments as evidence to support an increased royalty rate
under Georgia-Pacific, but did not offer any testimony to
explain how those payments could be converted to a
royalty rate. He is correct to state that those payments
31 WHITSERVE v. COMPUTER PACKAGES
support a “higher” rate, but he offered no explanation of
how much the rate should have been increased. 13 As in
Lucent, “we therefore can not understand how the jury
could have adequately evaluated the probative value of
those agreements.” 580 F.3d at 1328. Thus, to the extent
WhitServe argues the award is based on a running roy-
alty, the lump-sum agreements are not substantial evi-
dence in support of the jury’s verdict. Additionally, even
if the award is meant to be a lump sum, which it does not
appear to be, we note the jury’s verdict of $8.3 million was
over 3 times the average of the lump sum licenses pre-
sented. As in Lucent, where the award was a multiple of
the average license amounts presented, here, there is
“little evidentiary basis under Georgia-Pacific Factor 2 for
awarding roughly three to four times the average amount
in the lump-sum agreements in evidence.” 580 F.3d at
1332.
WhitServe also argues that the Georgia-Pacific factors
support the 19% rate. As the starting point of his analy-
sis, Dr. Shapiro used the now discarded rule of thumb
that assumes the patentee would get about 25% of the
infringer’s expected profit had they reached an agreement
before infringement began. 14 See Uniloc, 632 F.3d at
13 In contrast, CPi’s expert, Mr. Tate, explained how
he converted one of the lump-sum payments into what he
called an effective royalty rate of 1.3% by dividing the
license fee by the revenue generated by accused infringing
sales.
14 We do not reverse based on the 25% rule, which
we have held to be inadmissible under Daubert, because
we announced that new rule of evidence after trial. See
Landgraf v. USI Film Prods., 511 U.S. 244, 275 n.29
(1994) (assuming that “a new rule of evidence would not
require an appellate remand for a new trial”). Addition-
ally, neither party objected to its use at trial and the trial
court was under no obligation to exclude the use of the
WHITSERVE v. COMPUTER PACKAGES 32
1315 (“Evidence relying on the 25 percent rule of thumb is
. . . inadmissible under Daubert and the Federal Rules of
Evidence, because it fails to tie a reasonable royalty base
to the facts of the case at issue.”). He testified that,
starting at the 25% figure, it is appropriate to adjust the
rate up or down using the Georgia-Pacific factors. He did
not explain how much each factor affected the rate, 15
however, and he testified that almost all factors justified
an increase in the applicable rate, a few were neutral in
terms of their impact, and none justified a decreased rate.
This type of superficial recitation of the Georgia-Pacific
factors, followed by conclusory remarks, can not support
the jury’s verdict.
25% rule. See Lucent, 580 F.3d at 1325 (explaining that
when neither party objected to the evidence and the trial
judge had “no independent mandate to exclude” the
evidence we must accept that it was properly before the
jury). In fact, unlike in Uniloc, where Microsoft chal-
lenged its use, both parties used the 25% rule in this case.
See 632 F.3d at 1312. On remand, use of the 25% rule
should be revisited in light of Uniloc.
15 For example, we note the entire discussion of fac-
tors 9 and 13, which is representative of all of Dr.
Shapiro’s testimony, was:
Q: And here you have a slide showing the analy-
sis of the ninth and thirteenth factors, and if you
could please explain what those factors are about
and how you applied them in this case?
A: Yes. The ninth factor refers to the advantages
of a patented product over the old method. 13 re-
fers to the portion of the profit due to the inven-
tion. Basically there’s a whole host of CPi internal
documents that discuss the disadvantages of the
old paper-based process prior to 2002, and that
would also support a higher royalty rate.
33 WHITSERVE v. COMPUTER PACKAGES
We do not require that witnesses use any or all of the
Georgia-Pacific factors when testifying about damages in
patent cases. If they choose to use them, however, recit-
ing each factor and making a conclusory remark about its
impact on the damages calculation before moving on does
no more than tell the jury what factors a damages analy-
sis could take into consideration. See Lucent, 580 F.3d at
1329 (explaining that a “damages award cannot stand
solely on evidence which amounts to little more than a
recitation of royalty numbers” and jurors cannot rely on
“superficial testimony” with “no analysis”). Expert wit-
nesses should concentrate on fully analyzing the applica-
ble factors, not cursorily reciting all fifteen. And, while
mathematical precision is not required, some explanation
of both why and generally to what extent the particular
factor impacts the royalty calculation is needed. We
believe that Dr. Shapiro’s testimony and the arguments
premised thereon encouraged the jury to reach a purely
speculative judgment.
After his generalized discussion of the Georgia-Pacific
factors, Dr. Shapiro concluded his testimony by opining on
the results of a hypothetical negotiation between the
parties. He testified:
There’s two steps in a reasonable royalty calcula-
tion. One is to determine the royalty base, which
are the revenues upon which the royalty rate is
applied. The second step is the royalty rate itself.
And multiplying the royalty rate by the . . . roy-
alty base results in the reasonable royalty dam-
ages. And in this matter, what I used as a royalty
rate was 16 percent for any . . . revenues earned
prior to 2008 [and] a 19 percent royalty for any
revenues from 2008 up to the present.
WHITSERVE v. COMPUTER PACKAGES 34
Dr. Shapiro did not actually state the royalty base he
used or the final reasonable royalty amount he thought
was reasonable, but WhitServe’s attorney directed the
jury’s attention to a demonstrative:
Q: Thank you, Dr. Shapiro—oh, I’m sorry. Dr.
Shapiro, this is a chart that summarizes CPi’s
overall revenue and gross profits from the years
2005 to 2009, and do you believe that the damages
that you’ve associated with CPi are reasonable in
view of these numbers?
A: Yes.
After reviewing his testimony, we are left with the
unmistakable conclusion that the jury heard that Dr.
Shapiro started at 25% of profit and adjusted that rate
“up.” He then announced that the appropriate royalty
rate in this case is 16-19% of revenue. The record contains
no evidence regarding CPi’s expected profit margins that
would explain how Dr. Shapiro converted a percent of
profit royalty rate into one applied to a percent of reve-
nue. Without some guideposts, the task of determining a
reasonable royalty under 35 U.S.C. § 284 is impossible.
“The law does not require an expert to convey all his
knowledge to the jury . . . .” Lucent, 580 F.3d at 1329.
But we have also said that “superficial testimony” and the
simple recitation of royalty numbers that happen to be in
the ballpark of the jury’s award will not support the jury’s
award when no analysis is offered to the jury which would
allow them to evaluate the probative value of those num-
bers. See id.When asked during oral argument where in the re-
cord we could find an explanation for Dr. Shapiro’s shift
from a percentage of profits to a percentage of revenue,
WhitServe’s counsel responded that he could not recall
the number his own witness came up with but “the record
35 WHITSERVE v. COMPUTER PACKAGES
is complete with his analysis of what the profit margin is.”
Oral Arg. at 27:18-27:40. It may be, but we could not find
it. 16 CPi’s expert did testify to CPi’s profit margins,
asserting that the profit margin was 21.9% for all trans-
actions between 2002 and 2007 and 26.3% for infringing
transactions conducted between 2002 and 2010. If these
numbers are accurate, a 19% of revenue royalty repre-
sents between 86.75% and 72.24% of CPi’s profit. 17 Thus,
we must assume Dr. Shapiro started at 25% of profit and
somehow arrived at a royalty amount that accounted for
about three quarters of CPi’s profits. After reviewing
Dr. Shapiro’s bare-bones Georgia-Pacific analysis, these
amounts do not appear to be supported anywhere in the
evidence. Therefore, we do not believe the jurors would
have been able to determine whether such an amount is
“reasonable.” See Lucent, 580 F.3d at 1330 (explaining
that a past royalty amount of $2.00 per unit is “difficult, if
not impossible, to evaluate” without any testimony on the
price of the product). Thus, the royalty rate suggested by
Dr. Shapiro does not support the verdict because his
testimony is conclusory, speculative and, frankly, out of
line with economic reality.
16 Much of Dr. Shapiro’s testimony consists of his
references to demonstrative charts shown to the jury, but
without explanation or even recitation of the numbers
presented therein. It is possible that useful information
was on the charts, but they are not before us or even
referenced by WhitServe. Additionally, we are aware that
the trial judge excluded much of Dr. Shapiro’s damages
report. The record and briefs are silent on which charts
were excluded and which went to the jury. When parties
rely on demonstratives to present evidence or mathemati-
cal calculations to the jury, it is their burden to assure
that the record captures the substance of the data so
presented. We can not guess at what the jury saw.
17 19/21.9 = 86.75% and 19/26.3 = 72.24%.
WHITSERVE v. COMPUTER PACKAGES 36
WhitServe next argues that perhaps the jury awarded
a lower reasonable royalty and added in several million
dollars of “other damages.” We find that the “other dam-
ages” to which WhitServe refers have no relationship to
the harm caused by CPi and also can not support the
verdict.
ii. “Other Damages”
WhitServe first argues that, because CPi spent $5-10
million developing the infringing systems, $5-10 million
could be added to the award to help WhitServe “overcome
the competitive harm and market distortion caused by
CPi’s infringement.” Cross-Appellant’s Br. 45. While
CPi’s development costs might be relevant to a hypotheti-
cal licensing negotiation, there is no justification for an
award that adds those costs on top of a running royalty
based verdict. 35 U.S.C. § 284 requires that patentees be
compensated for the infringement, not that their entry
into the industry be fully financed. See 35 U.S.C. § 284.
WhitServe next mentions “sticky customers,” but points to
no evidence to quantify how inertia has harmed Whit-
Serve. Finally, WhitServe argues that the jury could have
awarded a reasonable royalty of an unknown amount and
added “other” damages in accordance with Maxwell v.
J. Baker, Inc., 86 F.3d 1098, 1108 (Fed. Cir. 1996), and
various district court cases that have upheld jury awards
made up of a reasonable royalty plus other damages. We
agree that the jury is entitled to award compensatory
damages in addition to a reasonable royalty because a
reasonable royalty is “merely the floor below which dam-
ages shall not fall.” Bandag, Inc. v. Gerrard Tire Co.,
704 F.2d 1578, 1583 (Fed. Cir. 1983). Patentees bear the
burden of proving such damages, however and, here,
there is no evidence to support a higher award.
37 WHITSERVE v. COMPUTER PACKAGES
In Maxwell, we upheld a jury award which expressly
included $.05 per pair of shoes plus other damages
amounting to about $.10 per pair, because it was sup-
ported by evidence of a $.10 per pair royalty. 86 F.3d at
1110 (“Thus, the jury did not arbitrarily increase the
award of damages. Instead, the jury’s verdict reflects the
actual damages sustained by Maxwell . . . .”). WhitServe
has not demonstrated lost sales, diminished royalty rates,
or other compensable damages. Therefore, any additional
damages would be speculative and the damages do not
fall “within the range encompassed by the record as a
whole.” Unisplay, 69 F.3d at 519.
We find that the jury’s damages award—whether
characterized as a reasonable royalty or “other dam-
ages”—must be the result of sheer surmise and conjec-
ture, “divorced from proof of economic harm linked to the
claimed invention and . . . inconsistent with sound dam-
ages jurisprudence” ResQNet.com, Inc. v Lansa, Inc.,
594 F.3d 860, 868 (Fed. Cir. 2010). We find, therefore,
that the trial court abused its discretion when it failed to
grant CPi a new trial on damages. See AMW, 584 F.3d at
456 (stating a new trial can be granted when the verdict
is seriously erroneous). We vacate the award and remand
for a new trial on damages. 18
18 CPi also urged a new trial because WhitServe
made an impermissible emotional plea to the jury during
closing arguments that was not sufficiently corrected by
the trial court. See Marcic v. Reinauer Transp. Cos., 397
F.3d 120, 124 (2d Cir. 2005) (“A party is generally entitled
to a new trial if the district court committed errors that
were a clear abuse of discretion that were clearly prejudi-
cial to the outcome of the trial.” (internal citations and
quotation marks omitted)). During closing, WhitServe
stated that “according to the law,” the jury could add
$5-10 million to the award as “compensation for the four
years of hell” resulting from the litigation. It is beyond
WHITSERVE v. COMPUTER PACKAGES 38
II. WhitServe’s Cross-Appeal
WhitServe has cross-appealed, asserting that the dis-
trict court improperly denied its requests for a permanent
injunction, compulsory license, prejudgment interest,
enhanced damages, attorneys’ fees, and a post-trial ac-
counting. As noted above, the trial court addressed each
motion only briefly. The trial court denied WhitServe’s
request for a permanent injunction in one page—stating
that, because WhitServe had failed to establish irrepara-
ble harm from ongoing infringement, no injunction should
issue. WhitServe’s motion for an accounting was denied
as moot without explanation. WhitServe’s other motions
were all originally denied as “moot” in light of the court’s
order finding that the jury award “adequately addressed
all equitable and legal considerations.” When WhitServe
sought reconsideration and argued that its motions were
not moot, the court denied the post-trial motions on the
merits. Again, the court premised its ruling solely on its
view that the “damages awarded in favor of the plaintiff
debate that juries may not award litigation costs or pun-
ish infringers. See Mahurkar v. C.R. Bard, Inc., 79 F.3d
1572, 1581 (Fed. Cir. 1996) (forbidding a “kicker” for
heavy litigation expenses on top of a reasonable royalty);
Pall Corp. v. Micron Separations, Inc., 66 F.3d 1211, 1223
(Fed. Cir. 1995) (“[T]he purpose of compensatory damages
is not to punish the infringer, but to make the patentee
whole.” (citing Aro Mfg. Co. v. Convertible Top Replace-
ment Co., 377 U.S. 476, 507 (1964))). Because there are
separate grounds for remand, we do not decide whether
the trial court’s correcting statements, which did not
clearly indicate that WhitServe was not entitled to “com-
pensation” for “four years of hell,” were sufficient to
prevent undue prejudice to CPi from this impermissible
argument. On remand, we trust that the trial court will
ensure such blatantly improper statements are not re-
peated.
39 WHITSERVE v. COMPUTER PACKAGES
on May 25, 2011 (sic) constituted complete compensation
with respect to this matter.” WhitServe LLC v. Computer
Packages, Inc., No. 06-CV-01935, slip op. at 1 (D. Conn.
May 5, 2011) (“WhitServe’s Motion for Reconsideration as
to Motions Denied as Moot”) (ECF No. 488).
The trial court’s treatment of the challenged post-trial
motions was inadequate. The trial court’s order denying
those motions is vacated and the motions are remanded
for consideration in light of governing legal principles and
consideration of the charge upon which the jury verdict in
favor of the plaintiff was premised.
A. Relief for Ongoing Infringement
WhitServe first cross-appeals the trial court’s refusal
to provide any relief for CPi’s ongoing infringement of its
patents. Specifically, WhitServe argues it was an abuse
of discretion for the trial court to deny its request for
either a permanent injunction or an ongoing royalty and
leave it uncompensated for future acts of infringement by
CPi except via resort to serial litigation. CPi responds
that the trial court properly refused to enjoin its in-
fringement because WhitServe failed to establish it would
suffer irreparable harm and that WhitServe was effec-
tively granted prospective relief in the form of a paid-up
license so no forward-looking relief was necessary.
There are several types of relief for ongoing infringe-
ment that a court can consider: (1) it can grant an injunc-
tion; (2) it can order the parties to attempt to negotiate
terms for future use of the invention; (3) it can grant an
ongoing royalty; or (4) it can exercise its discretion to
conclude that no forward-looking relief is appropriate in
the circumstances. See Telcordia Techs., Inc. v. Cisco
Sys., Inc., 612 F.3d 1365, 1379 (Fed. Cir. 2010) (“If the
district court determines that a permanent injunction is
not warranted, the district court may, and is encouraged,
WHITSERVE v. COMPUTER PACKAGES 40
to allow the parties to negotiate a license.”); Paice LLC v.
Toyota Motor Corp., 504 F.3d 1293, 1314-15 (Fed. Cir.
2007) (“[A]warding an ongoing royalty where ‘necessary’
to effectuate a remedy . . . does not justify the provision of
such relief as a matter of course whenever a permanent
injunction is not imposed.”).
All of these decisions are reviewed for abuse of discre-
tion. See, e.g., eBay Inc. v. MercExchange, L.L.C.,
547 U.S. 388, 391 (2006) (“The decision to grant or deny
permanent injunctive relief is an act of equitable discre-
tion by the district court, reviewable on appeal for abuse
of discretion.”); Telcordia, 612 F.3d at 1379 (“[T]he district
court did not abuse its discretion by directing the parties
to negotiate the terms of the appropriate royalty.”); Paice,
504 F.3d at 1315 (“[T]his court is unable to determine
whether the district court abused its discretion in setting
the ongoing royalty rate.”). Even under this highly defer-
ential standard of review, we find the trial court’s treat-
ment of the questions of prospective relief inadequate.
Accordingly, we remand for further consideration of
WhitServe’s alternative motions for a prospective remedy.
Preliminarily, we can not accept CPi’s suggestion that
a paid-up license was awarded. Although the jury heard
evidence of two lump-sum licenses WhitServe had previ-
ously granted, the parties limited their damages argu-
ments to past infringement rather than projected future
infringement. The jury was instructed to award “dam-
ages,” which by definition covers only past harm. The
jury’s verdict did not indicate that the award was meant
to cover future use of WhitServe’s patents, and the trial
court did not interpret the award as such. See Telcordia,
612 F.3d at 1377-78 (Fed. Cir. 2010) (explaining trial
courts have discretion to interpret verdict forms). We,
accordingly, decline to find that post-trial relief was
properly denied because a paid-up license was awarded.
41 WHITSERVE v. COMPUTER PACKAGES
Cf. Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363,
1380-81 (Fed. Cir. 2008) (holding that injunctive relief
was unwarranted when the jury’s award already included
prospective relief).
As for the injunction, while the trial court stated that
WhitServe had failed to establish irreparable harm, it did
not explain why it reached that conclusion. For instance,
the trial court did not address WhitServe’s contention
that it was a direct competitor in the market via its
subsidiary, NetDocket, nor discuss whether monetary
damages were alternatively available and adequate to
address the forward-looking harm, if any, WhitServe
might suffer. From such a record, it is impossible to
conclude that the trial court properly exercised its discre-
tion to assess whether injunctive relief is appropriate.
While injunctive relief may very well not be appropriate
on these facts, we simply can not tell on this record. 19
The record regarding the trial court’s refusal to award
a compulsory license is even more sparse; the trial court
never even addressed it. While this may be because
WhitServe apparently first requested this relief in its
reply in support of its motion for permanent injunction,
the record, again, does not allow us to draw that conclu-
sion. In Paice, we explained that a trial court’s failure to
19 We note, moreover, that the trial court did not ad-
dress any of the other factors relevant to the equitable
analysis it generally is to employ when assessing the
propriety of injunction relief. See eBay, 547 U.S. 391(explaining that “a plaintiff seeking a permanent injunc-
tion must satisfy a four-factor test”). For instance, as
WhitServe argues, while there was considerable evidence
that CPi had substantial non-infringing products in its
portfolio, the trial court did not consider whether the
possible absence of harm to CPi might weigh in favor of
an injunction.
WHITSERVE v. COMPUTER PACKAGES 42
explain the basis for its ongoing royalty rate precludes
this court from reviewing the decision for an abuse of
discretion, and thus, that remand was appropriate so the
trial court could give some “indication as to why that rate
is appropriate.” See 504 F.3d at 1315 (trial court’s failure
to explain reasons for its decision regarding ongoing
royalty prevents meaningful appellate review). While a
trial court is not required to grant a compulsory license
even when an injunction is denied, the court must ade-
quately explain why it chooses to deny this alternative
relief when it does so.
We, therefore, vacate and remand this matter and di-
rect the trial court to address the propriety of prospective
relief and to explain any decision it makes with respect
thereto. Of course, this decision must be made in light of
both any new damages award and all relevant equitable
considerations.
B. Prejudgment Interest
WhitServe also cross-appeals the trial court’s denial of
its motion for prejudgment interest. “This court reviews a
district court’s denial of prejudgment interest for an abuse
of discretion.” Crystal Semiconductor Corp. v. TriTech
Microelectronics Int’l, Inc., 246 F.3d 1336, 1346 (Fed. Cir.
2001). As a rule, “prejudgment interest should be
awarded under [35 U.S.C. § 284] absent some justification
for withholding such an award.” Gen. Motors Corp. v.
Devex Corp., 461 U.S. 648, 657 (1983). An award of
prejudgment interest carries out Congress’s “overriding
purpose of affording patent owners complete compensa-
tion” since a patentee’s damages also include the “forgone
use of the money between the time of infringement and
the date of judgment.” Id. at 655-56.
When the trial court denied the request for prejudg-
ment interest, it stated that “an award of prejudgment
43 WHITSERVE v. COMPUTER PACKAGES
interest is not necessary as the jury’s $8,378,145.00
award is adequate to compensate for the defendant’s
infringement on the plaintiff’s patents.” District courts
are given broad discretion to interpret verdict forms. See
Telcordia, 612 F.3d at 1377-78. In this case, however, the
judge specifically instructed the jury that they may “not
award any interest on any damages.” The jury’s award
could not, accordingly, constitute compensation for inter-
est and the trial court abused its discretion in denying
prejudgment interest without further analysis or justifica-
tion. See Devex, 461 U.S. at 655 (explaining prejudgment
interest is “necessary to ensure that the patent owner is
placed in as good a position as he would have been in had
the infringer entered into a reasonable royalty agree-
ment”). The denial is vacated and remanded for a deter-
mination of whether prejudgment interest is warranted in
light of any new damages award and, if deemed not
warranted, for a full explanation as to why.
C. Enhanced Damages
WhitServe next cross-appeals the district court’s de-
nial of enhanced damages and attorneys’ fees despite the
jury’s finding of willful infringement. As with the other
motions we now consider, the district court denied as
“moot” WhitServe’s motion for enhanced damages, and, on
reconsideration, denied them on grounds that the verdict
constituted “complete compensation.” “The district court’s
decision on whether to enhance damages is reviewed for
abuse of discretion, that is, whether the decision was
based on clearly erroneous findings of fact, an incorrect
conclusion of law, or a clear error of judgment.” Spectra-
lytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1347 (Fed. Cir.
2011).
The decision whether to grant enhanced damages as
allowed under 35 U.S.C. § 284 requires a two-step proc-
WHITSERVE v. COMPUTER PACKAGES 44
ess. Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 (Fed. Cir.
1996). “First, the fact-finder must determine whether an
infringer is guilty of conduct upon which increased dam-
ages may be based. If so, the court then determines,
exercising its sound discretion, whether, and to what
extent, to increase the damages award given the totality
of the circumstances.” Id. “An act of willful infringement
satisfies th[e] culpability requirement and is, without
doubt, sufficient to meet the first requirement to increase
a compensatory damages award.” Id. (citing Read Corp.
v. Portec, Inc., 970 F.2d 816, 826-27 (Fed. Cir. 1992),
superseded on other grounds as recognized by Hoechst
Celanese Corp. v. BP Chems. Ltd., 78 F.3d 1575 (Fed. Cir.
1996)).
The jury found CPi’s infringement to be willful, and
CPi has not appealed that finding. “Upon a finding of
willful infringement, a trial court should provide reasons
for not increasing a damages award or for not finding a
case exceptional for the purpose of awarding attorneys
fees.” Id. at 1572. In this case, the only reason provided
for not increasing the award was that the jury’s verdict
constituted “complete compensation.” Enhanced dam-
ages, however, are punitive, not compensatory, and can be
awarded only in the judge’s discretion. Id. at 1570; Odet-
ics, Inc. v. Storage Tech. Corp., 185 F.3d 1259, 1274 (Fed.
Cir. 1999). Additionally, the judge explicitly told the jury
that they “may not add anything to the amount of dam-
ages to punish the accused infringer or to set an example.”
Thus, the jury’s verdict did not, and properly can not,
include enhanced damages. We find, therefore, that the
trial court abused its discretion in denying the motion for
enhanced damages without independent justification; we
remand the issue for a determination of whether en-
hanced damages are warranted and an explanation of the
grounds for that determination.
45 WHITSERVE v. COMPUTER PACKAGES
D. Attorneys’ Fees
WhitServe cross-appeals the trial court’s denial of its
attorneys’ fees. “The court in exceptional cases may
award reasonable attorney fees to the prevailing party.”
35 U.S.C. § 285. “Although an attorney fee award is not
mandatory when willful infringement has been found,
precedent establishes that the court should explain its
decision not to award attorney fees.” Spectralytics,
649 F.3d at 1349. As in Spectralytics,
the district court did not separately analyze the
attorney fee issue, but denied attorney fees in con-
junction with denial of enhanced damages. In-
deed, similar considerations may be relevant to
both enhanced damages and attorney fees. How-
ever, the situations in which § 284 and § 285 may
be invoked are not identical. For example, attor-
ney misconduct or other aggravation of the litiga-
tion process may weigh heavily with respect to
attorney fees, but not for enhancement of dam-
ages.
Id. (internal citations omitted). Therefore, the trial court
abused its discretion by failing to explain why attorneys’
fees were unwarranted and the issue is remanded for a
proper determination.
E. Post-Trial Accounting
Finally, WhitServe appeals the denial of a post-trial
accounting. “[W]hen damages are not found by a jury, the
court shall assess them.” 35 U.S.C. § 284 (emphasis
added). District courts have discretion to award damages
for periods of infringement not considered by the jury.
See Fresenius USA, Inc. v. Baxter Int’l, Inc.,
582 F.3d 1288, 1303 (Fed. Cir. 2009) (holding that “the
district court was within its discretion to impose a royalty
WHITSERVE v. COMPUTER PACKAGES 46
on [post-verdict sales not considered by the jury] in order
to fully compensate” the patentee); Finjan, 636 F.3d at
1212-13 (explaining that the trial court erred when it did
not award damages for the time between entry of judg-
ment and entry of an injunction because otherwise the
patentee would not be fully compensated); Ecolab, Inc. v.
FMC Corp., 569 F.3d 1335, 1353 n.5 (Fed. Cir. 2009),
modified in part by Ecolab, Inc. v. FMC Corp., 366 F.
App’x 154, 155 (Fed. Cir. 2009) (stating that an account-
ing should be ordered in order to adequately compensate
the plaintiff). WhitServe states that the jury’s verdict
“was based on financial data up to March 31, 2010, and
therefore does not include compensatory damages for
CPi’s infringement after this date.” CPi argues that the
jury’s award was a paid-up license and no accounting is
necessary.
“District courts have broad discretion to interpret an
ambiguous verdict form, because district courts witness
and participate directly in the jury trial process.” Telcor-
dia, 612 F.3d at 1378. Here, however, not only did the
trial court not exercise its discretion under Telcordia and
find that the jury award included a paid-up license for
post-verdict conduct, but we have already found that
nothing in the record would support such a conclusion.
Much like prejudgment interest, therefore, the trial court
abused its discretion when it failed to award, or explain
its reasons for denying, damages for the period between
the jury’s verdict and judgment. Accordingly, we vacate
and remand this ruling. While we would normally direct
an accounting of damages flowing from post-verdict and
pre-judgment infringement, our decision to vacate the
damages award and order a new trial would make such
an accounting premature. On remand, the trial court
47 WHITSERVE v. COMPUTER PACKAGES
shall give due consideration to any request for an account-
ing following a new damages verdict. 20
III. Whitmyer’s Cross-Appeal
In his separate cross-appeal, Whitmyer claims the
court erred in not awarding fees under 35 U.S.C. § 285 or
sanctions under Federal Rule of Civil Procedure 11. A
district court’s Rule 11 determination is reviewed for an
abuse of discretion. Antonious v. Spalding & Evenflo
Cos., Inc., 275 F.3d 1066, 1072 (Fed. Cir. 2002). A fee
award under 35 U.S.C. § 285 first requires a finding that
the case was exceptional. Forest Labs., Inc. v. Abbott
Labs., 339 F.3d 1324, 1327 (Fed. Cir. 2003). Whitmyer
asked for sanctions and fees against CPi because CPi
allegedly engaged in “vexatious” litigation. The trial
court denied the motion because Whitmyer “failed to set
forth facts warranting such relief.”
On appeal, Whitmyer complains that CPi filed a de-
claratory judgment against him in his personal capacity
and deposed him 5 times for a total of 17 hours. CPi
states that Whitmyer was deposed in his personal capac-
ity as the sole principal of WhitServe and NetDocket and
as a member of the St. Onge law firm, which is Net-
Docket’s sole client and is representing Whitmyer in this
matter. CPi also argues that, because WhitServe’s only
assets are the patents, it was justified in counterclaiming
against him personally in order to pierce the corporate
veil and recover its fees. It also points out that Whitmyer
never filed, or withdrew, any motions that argued that
CPi failed to plead sufficient claims against Whitmyer,
and thereby conceded that CPi was not acting vexatiously.
20WhitServe asks the court to fix damages for the
period of time between March 31, 2010 and trial. This
request is moot in light of the remand for a new damages
trial.
WHITSERVE v. COMPUTER PACKAGES 48
While CPi’s claims against Whitmyer are certainly ques-
tionable, including its original designation of him as a
“counterclaim defendant,” after reviewing Whitmyer’s
motion for fees and sanctions, as well as his truncated
briefing on the issue, we decline to find an abuse of discre-
tion in the court’s denial of sanctions. We also find that
the court did not err in concluding that the case was not
exceptional. Therefore, the trial court’s denial of Whit-
myer’s request for fees and sanctions is affirmed.
SUMMARY
1) The jury verdict of infringement is affirmed with
regard to the valid claims.
2) The jury verdict finding the ’007 patent to be not
anticipated by the Schrader Patent is affirmed in
part. The jury’s verdict regarding claim 10 of the
’007 is reversed because that claim is invalid as
anticipated by the Schrader Patent.
3) The jury’s damages award is vacated and re-
manded for a new trial.
4) The trial court’s holdings regarding WhitServe’s
post-trial motions for a permanent injunction,
compulsory license, prejudgment interest, en-
hanced damages, attorneys’ fees, and a post-trial
accounting are vacated and remanded.
5) The trial court’s denial of Whitmyer’s request for
sanctions and fees is affirmed.
AFFIRMED-IN-PART, REVERSED-IN-PART,
VACATED-IN-PART, AND REMANDED.
COSTS
No costs.
United States Court of Appeals
for the Federal Circuit
__________________________
WHITSERVE, LLC,
Plaintiff/Counterclaim Defendant-Cross Appellant,
and
WESLEY W. WHITMYER, JR.,
Third Party Defendant-Cross Appellant
v.
COMPUTER PACKAGES, INC.,
Defendant/Counterclaim Plaintiff-Appellant.
__________________________
2011-1206, -1261
__________________________
Appeals from the United States District Court for the
District of Connecticut in case no. 06-CV-1935, Judge
Alfred V. Covello.
__________________________
Mayer, Circuit Judge, dissenting.
I respectfully dissent. There can be no infringement
of U.S. Patent Nos. 5,895,468, 6,049,801 and 6,182,078
(collectively the “WhitServe patents”) because they are
invalid. The WhitServe patents are “barred at the
threshold by [35 U.S.C.] § 101,” Diamond v. Diehr, 450
U.S. 175, 188 (1981), because they are directed to the
abstract idea that it is useful to provide people with
reminders of approaching due dates and deadlines. See
Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132
WHITSERVE v. COMPUTER PACKAGES 2
S. Ct. 1289, 1303 (2012) (explaining that section 101
performs a vital “screening function”); Bilski v. Kappos,
130 S. Ct. 3218, 3225 (2010) (noting that whether claims
are directed to statutory subject matter is a “threshold
test”).
I.
In Bilski, the Supreme Court rejected an application
because it did not “add” anything to the otherwise ab-
stract idea of minimizing economic risk. 130 S. Ct. at
3231. The claimed method failed to meet section 101’s
eligibility requirements because it simply described the
idea of hedging against economic risk and applied it using
“familiar statistical approaches” and “well-known random
analysis techniques.” Id. at 3224, 3231. In Mayo, like-
wise, process claims were invalidated under section 101
because they merely described a law of nature and ap-
plied it using “well-understood, routine, [and] conven-
tional” means. 132 S. Ct. at 1294.
A similar analysis applies here. Prior to the “inven-
tion” disclosed in the WhitServe patents, attorneys and
other professionals used manual docketing systems to
keep track of upcoming deadlines for their clients. See
U.S. Patent No. 5,895,468 col. 1 ll. 10-57. These manual
docketing systems were inefficient and time-consuming
because they required an attorney or other professional to
“examin[e] a calendar periodically to notice upcoming
deadlines,” and to “send [a client] multiple reminders if
necessary.” Id. col. 1 ll. 38-41. “Another disadvantage” of
these docketing systems was that they did “not employ
modern computer communications media, such as the
Internet.” Id. col. 1 ll. 54-56. The WhitServe patents
purport to solve these problems by disclosing the use of
general purpose computers and the Internet to keep track
of upcoming client deadlines and to generate client re-
3 WHITSERVE v. COMPUTER PACKAGES
minders that such deadlines are approaching. See id. col.
2 ll. 21-22 (explaining that the claimed system “automati-
cally prepares reminders . . . for client due dates”); see
also id. col. 2 ll. 24-25 (stating that the system “transmits
reminders” of client due dates “over the Internet”).
Because the WhitServe patents simply describe a ba-
sic and widely-understood concept—that it is useful to
provide people with reminders of important due dates and
deadlines—and then apply that concept using conven-
tional computer technology and the Internet, they fail to
meet section 101’s subject matter eligibility requirements.
“While running a particular process on a computer unde-
niably improves efficiency and accuracy, cloaking an
otherwise abstract idea in the guise of a computer-
implemented claim is insufficient to bring it within sec-
tion 101.” MySpace, Inc. v. Graphon Corp., 672 F.3d
1250, 1267 (Fed. Cir. 2012) (Mayer, J., dissenting) (foot-
note omitted); see Bancorp Servs., LLC v. Sunlife Assur-
ance Co., No. 2011-1467, 2012 WL 3037176 (Fed. Cir. July
26, 2012) (concluding that claims directed to a computer-
ized method of managing a stable value protected life
insurance policy fell outside section 101); Dealertrack, Inc.
v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012) (holding
that claims drawn to a method of applying for credit did
not satisfy section 101, notwithstanding the fact that they
contained a limitation requiring the invention to be
“computer aided”); Fort Props., Inc. v. Am. Master Lease
LLC, 671 F.3d 1317, 1323 (Fed. Cir. 2012) (concluding
that claims which recited “using a computer” in imple-
menting an otherwise abstract investment idea were
patent-ineligible); CyberSource Corp. v. Retail Decisions,
Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011) (emphasizing
“that the basic character of a process claim drawn to an
abstract idea is not changed by claiming only its perform-
ance by computers, or by claiming the process embodied
WHITSERVE v. COMPUTER PACKAGES 4
in program instructions on a computer readable me-
dium”).
“[L]imiting an abstract idea to one field of use or add-
ing token postsolution components [does] not make the
concept patentable.” Bilski, 130 S. Ct. at 3231. Accord-
ingly, the fact that the claimed system is arguably limited
to communications between attorneys and other profes-
sionals and their clients is insufficient to bring it within
the ambit of section 101. Likewise, the fact that the
WhitServe patents contain both method and apparatus
claims is insufficient to render them patent-eligible. See
Bancorp, 2012 WL 3037176, at *9 (“[T]he district court
correctly treated the asserted system and medium claims
as no different from the asserted method claims for patent
eligibility purposes.”); CLS Bank Int’l v. Alice Corp., No.
2011-1301, 2012 WL 2708400, at *11 (Fed. Cir. July 9,
2012) (“Because mere computer implementation cannot
render an otherwise abstract idea patent eligible, the
analysis . . . must consider whether the asserted claims
(method, system, and media) are substantively directed to
nothing more than a fundamental truth or disembodied
concept . . . .” (citations omitted)). When assessing
whether method or apparatus claims meet the require-
ments of section 101, patent eligibility does not “depend
simply on the draftsman’s art.” Parker v. Flook, 437 U.S.
584, 593 (1978).
Because the patent system is designed to promote
“the public disclosure of new and useful advances in
technology,” Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63
(1998), the section 101 analysis turns on whether the
claims disclose some new technology or “‘inventive con-
cept,’” Mayo, 132 S. Ct. at 1294, for applying an abstract
idea or law of nature. Section 101’s prerequisites cannot
be satisfied where, as here, a patentee simply describes a
well-known concept and applies it using conventional
5 WHITSERVE v. COMPUTER PACKAGES
computer technology and the Internet. See Mayo, 132 S.
Ct. at 1302 (concluding that a process for calibrating the
proper dosage of thiopurine drugs fell outside section 101
because it “add[ed] nothing of significance” to the applica-
tion of a law of nature).
II.
“[A] court may consider an issue antecedent to . . . and
ultimately dispositive of the dispute before it, even an
issue the parties fail to identify and brief.” See U.S. Nat’l
Bank v. Indep. Ins. Agents, 508 U.S. 439, 447 (1993)
(citations and internal quotation marks omitted). It is
appropriate to take up an issue not specifically raised by
the parties where there have been significant changes in
applicable law since the trial court’s decision. See Hormel
v. Helvering, 312 U.S. 552, 558 (1941); see also Kamen v.
Kemper Fin. Servs., Inc., 500 U.S. 90, 99 (1991) (“When an
issue or claim is properly before the court, the court is not
limited to the particular legal theories advanced by the
parties, but rather retains the independent power to
identify and apply the proper construction of governing
law.”).
When it was before the trial court, Computer Pack-
ages, Inc. (“CPi”) unsuccessfully sought to obtain a de-
claratory judgment that the WhitServe patents were
invalid under section 101. See Joint App’x 136, 142.
Although CPi did not include a discussion of section 101
when it filed its appeal briefs here, we can take it up
because the Supreme Court’s Mayo decision, which issued
after CPi’s briefs were filed, makes clear that the Whit-
Serve patents disclose no “‘inventive concept,’” 132 S. Ct.
at 1294, that would even arguably confer patent eligibil-
ity. See Forshey v. Principi, 284 F.3d 1335, 1356 (Fed.
Cir. 2002) (en banc) (“[D]ecision of an issue not decided or
raised below is permitted when there is a change in the
WHITSERVE v. COMPUTER PACKAGES 6
jurisprudence of the reviewing court or the Supreme
Court after consideration of the case by the lower court.”).
The majority errs in refusing to address the question of
whether the WhitServe patents meet section 101’s eligi-
bility requirements and in requiring CPi to return to the
trial court to relitigate the appropriate measure of dam-
ages for its alleged infringement of plainly invalid claims.
See Bradley v. Sch. Bd. of Richmond, 416 U.S. 696, 711
(1974) (“[A] court is to apply the law in effect at the time
it renders its decision, unless doing so would result in
manifest injustice or there is statutory direction or legis-
lative history to the contrary.”); Hormel, 312 U.S. at 557(“Rules of practice and procedure are devised to promote
the ends of justice, not to defeat them. A rigid and unde-
viating judicially declared practice under which courts of
review would invariably and under all circumstances
decline to consider all questions which had not previously
been specifically urged would be out of harmony with this
policy.”).