WBIP’s patents related to marine engines for use on houseboats that produced reduced amounts of carbon monoxide exhaust.  Elevated amounts of carbon monoxide in engine exhaust is particularly dangerous on houseboats where the exhaust is often close to where occupants are sleeping.  A jury held that the WBIP patents were infringed, were not obvious, and did not violate the written description requirement, and it awarded over $9 million in damages and found Kohler’s infringement to be willful.  The district court denied Kohler’s motion for a judgment as a matter of law, reduced the damages amount to over $3 million on remittitur, enhanced the damages amount by 50% for willful infringement, and awarded WBIP its attorneys’ fees, but denied WBIP’s request for a permanent injunction.  Both sides appealed.

The Federal Circuit affirmed the jury’s non-obviousness and written description verdicts, affirmed the jury’s willfulness finding and the court’s enhanced damages, but vacated and remanded on the denial of the permanent injunction.

First, with respect to obviousness, the court held that the jury’s verdict was supported by substantial evidence.  There was substantial evidence that one of ordinary skill in the art would not have been motivated to modify the teachings of the Phipps reference.  Specifically, Phipps was directed to a land engine and the skilled person would not have been motivated to modify a land engine to a marine engine. 

There was also substantial evidence of objective indicia of non-obviousness to support the jury’s verdict.  As to the objective indicia, the court emphasized that such evidence must be considered in every case and that the strength of each factor must be weighed in every case and must be weighted en route to the final determination.  The court then addressed the “nexus,” explaining that there is a presumption of nexus where the patentee shows that the asserted objective evidence is tied to a specific product and that the product is the invention disclosed and claimed in the patent.  While the presumption is rebuttable, it cannot be rebutted with argument alone—there must be evidence.  The court further explained that, contrary to Kohler’s arguments, it is the claimed invention as a whole that must be non-obvious, and therefore nexus is measured against the device as a whole, not just the elements that happen to be missing from the primary prior art reference.  Here, it is the claimed combination of elements that provides the low-carbon monoxide emissions benefit, and therefore substantial evidence supports the jury’s conclusion that a nexus exists between the evidence of the objective indicia of non-obviousness and the claimed invention.

The court then addressed the evidence of long-felt need, praise, skepticism, copying, and commercial success, and held that there was substantial evidence of each in record on which the jury could have based its verdict. 

Second, the court addressed the written description issue.  It held that, at trial, Kohler had not presented the argument that it makes now.  Thus, addressing only the arguments made at trial, the court held that the jury’s verdict is supported by substantial evidence. 

Third, the court addressed the willfulness issue.  It recognized that the jury’s verdict was based on the Seagate factors, which were in effect at the time, not the Halo standard that came into effect later.  Under Seagate, an infringer can avoid willfulness if it could show that it presented, at any time, an objectively reasonable defense.  But, after Halo, timing matters, and Kohler cannot insulate itself from enhanced damages by creating a defense after it had engaged in copying.  As to the issue of knowledge of the patent as a prerequisite to enhanced damages, the court held that there was substantial evidence that Kohler was aware of the patent prior to litigation as evidenced in its discovery responses, communications with WBIP, and WBIP’s marking of the patent number on its engines (coupled with the fact that these were the only two competitors in this market). 

Lastly, the court addressed the denial of WBIP’s request for a permanent injunction.  The district court had denied the injunction on the grounds that the public interest factor weighed against an injunction, because WBIP was a smaller producer of the low-carbon monoxide engines than Kohler and the failure to meet demand to meet demand if an injunction issues could deprive the public of life-saving products.  The district court had not explained how the public’s interest in upholding patent rights was outweighed by this concern, especially where WBIP had presented evidence that it had the manufacturing capacity to meet the industry’s needs.  Further, the court noted that Congress has expressly indicated that injunctions may be granted even in pharmaceutical cases involving life-saving drugs.  The court thus vacated the denial of the injunction and remanded to the district court for further findings.  

WBIP, LLC v. Kohler Co., Case Nos. 2015-1038, -1044 (July 19, 2016); Opinion by: Moore, joined by O’Malley and Chen; Appealed From: United States District Court for the District of Massachusetts, Gorton, J.  Read the full opinion here.

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