The Software IP Report

E.D. Texas Awards Enhanced Damages for Willful Infringement

By Charles Bieneman

Categories: Patent Infringement, Software Patents, The Software IP Report

Listing an infringed patent in two contracts, and the apparent awareness of a Citrix executive of the patent, was enough to justify a finding of willfulness and enhanced damages against Citrix.  SSL Services, LLC v. Citrix Systems, Inc., No. 2:08-cv-158-JRG (E.D. Tex. Sept. 17, 2012).  Before the jury was charged, the court had issued a finding of defendant Citrix’s objective recklessness based on plaintiff SSL’s presentation of “evidence that Citrix acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.”  The jury then found that Citrix was a willful infringer.  After weighing the factors applicable to enhanced damages under 35 U.S.C. § 284, the court enhanced the jury’s award of $10 million to $15 million.

The court weighed various factors as follows:

Copying — SSL attempted to argue that circumstantial evidence demonstrated that Citrix had copied its technology, e.g., Citrix knew of SSL’s patent.  However, the record demonstrated that SSL had developed its technology independently.  Therefore, this factor did not weigh in the enhanced damages analysis.

Investigation and Good Faith Belief of No Liability — although Citrix argued that only one executive knew of the patent, the record showed that Citrix, not the executive, was party to the two contracts listing the patent.  Citrix learned of SSL’s patents in 2000-2002, and, despite not acquiring the infringing products until 2004, had, according to the court, ample opportunity to investigate whether it infringed the patent.  However, Citrix made no investigation until 2009, when the patent was added to the case.  Further, the court was not persuaded by the fact that the patent stood rejected in re-examination proceedings by the United States Patent and Trademark Office.  The USPTO has a lower standard for invalidity, and the court did not think that the cited references invalidated the patent under any standard.

Close case — Citrix argued “that this was a close case because it presented a compelling case of non-infringement and invalidity of the ‘011 patent.”  However, after a weeklong trial, the jury deliberated for only three hours before returning its verdict.  Although the jury found for Citrix on another patent, that did not make this a close case with respect to the patent that the jury found was willfully infringed.

Length of Ongoing Infringement — Citrix’s infringement of the patent for over eight years supported enhanced damages.

Defendants’ Size and Financial Condition — Citrix’s 2011 revenues of $2.2 billion, and net income of over $450 million, also supported enhanced damages.

In summary, the court thought that, while trebling the damages was not appropriate, some enhancement was.

Editorial comment:  one has to wonder how aware Citrix really was of a patent that was listed in contracts’ schedules (and that did not read on any Citrix technology when the contracts were executed).  And even if Citrix’s executive was aware of the patent, was that mere awareness enough to make Citrix’s infringement willful?  Moreover, it seems somewhat incredible that the USPTO’s rejection of the patent claims on the same prior art on which Citrix based its invalidity argument was not enough to make this a close case.  Evidence of a detailed investigation of noninfringement and invalidity before the patent was added to the suit certainly would have helped Citrix, as would, perhaps, opinions of counsel regarding noninfringement and invalidity.