On February 1, 2019, the Federal Circuit issued its decision (available here) in Prism Technologies v. Sprint Spectrum. The case raises the question of what happens where: (i) a plaintiff obtains a jury verdict/judgment that is affirmed on appeal at the Federal Circuit and then (ii) the patent is invalidated in a subsequent appeal at the Federal Circuit in a different case.
Two possible outcomes seem possible—either (i) the defendant has to pay the amounts awarded in the judgment because the judgment was affirmed on appeal before the patent’s invalidation was affirmed on appeal; or (ii) the defendant doesn’t have to pay because, before the plaintiff could execute on the judgment, the plaintiff’s patent was invalidated on appeal.
In Prism, the Federal Circuit held that the district court didn’t abuse its discretion when it used the later invalidation ruling to set aside the earlier judgment.
The facts of Prism were as follows:
- Prism obtained a $30 million judgment against Sprint for infringement of two patents; the Federal Circuit affirmed the judgment in March 2017; and the Supreme Court denied Sprint’s cert. petition in November 2017.
- Before the Supreme Court denied Sprint’s cert. petition, the Federal Circuit invalidated the patents-at-issue under Section 101 in a different case (between Prism and T-Mobile).
- Less than a week after the T-Mobile invalidation decision, Sprint sought relief from the Sprint judgment under Federal Rule of Civil Procedure 60(b). Sprint premised its motion on collateral estoppel—i.e., Sprint argued that the T-Mobile invalidity ruling required the district court to set aside the Sprint judgment because the judgment’s execution had been stayed pending completion of appeals (which had not occurred because Sprint’s cert. petition was pending before the Supreme Court).
- The district court granted Sprint’s motion for relief from the judgment. Prism then appealed to the Federal Circuit.
The Federal Circuit concluded that “the district court properly set aside the judgment against Sprint”, writing:
The courts have long recognized a strong federal patent policy against enforcing an unexecuted judgment of patent liability at least where all of the following circumstances are present: the patent claims underlying that judgment have been held invalid by another decision having sufficient finality for this purpose; proceedings on direct review of the judgment have not yet been completed; and no agreement exists making portions of the judgment final.
This case is notable as its holding will presumably apply in those situations where the plaintiff’s patent is invalidated in a later-decided appeal from an IPR—e.g., where the plaintiff obtains a jury verdict and judgment awarding damages but the defendant successfully invalidates the patent in a later-decided appeal from an IPR.