Wednesday, September 4, 2013

Defendant’s Strategy to Hasten Plaintiff’s Bankruptcy by Refusing to License Strongly Favors Enhanced Damages

Following a jury verdict of willful infringement, the court granted plaintiff's motion for enhanced damages. Defendant's knowledge of plaintiff's patents and motivation to infringe weighed strongly in favor of enhancement. "Despite having knowledge of [plaintiff's] patent protection, [defendant] has failed to present any evidence that it investigated the scope of [plaintiff's] asserted patents and formed a good-faith belief that the patents are invalid or not infringed. [Defendant's] clearly expressed interest in acquiring [plaintiff's] patents suggests, at a minimum, that [defendant] did not have substantial concerns that the asserted patents are invalid. . . . At around the same time that [plaintiff] and [defendant] began having discussions, [defendant] became concerned that its main competitor . . . was building up a patent portfolio in the area of coarse-grained array technology, such as [plaintiff's]. [The competitor] was building its portfolio by purchasing failed companies that had desirable patent portfolios. [Defendant] became concerned that it may miss out on the 'patent grab' in a developing area that could be the 'future of computation.' [Defendant] identified small, innovative companies with patents related to this area of technology. [Defendant] surmised that these companies would likely fail for commercial reasons unrelated to their merits of their technology, and that their failure may present an opportunity to acquire valuable patent rights. [Plaintiff] was one of the companies identified as a potential target, and [defendant] noted that it appeared that [plaintiff] had a strong portfolio. . . . [T]he evidence suggests that the real reason for [defendant's] decision to not license [plaintiff's] designs was that [defendant] already had its own superior implementation of [plaintiff's] patented technology, and was not worried that [plaintiff], a much smaller company, would pose much of a risk to [defendant]. . . . [Defendant] hoped that by not engaging with [plaintiff], that it would hasten [plaintiff's] descent into bankruptcy. . . . The foregoing evidence weighs strongly in favor of enhanced damages."

Pact XPP Technologies, AG v. Xilinx, Inc., et. al., 2-07-cv-00563 (TXED August 30, 2013, Order) (Payne, M.J.).

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