Seoul Semiconductor Case: Damages Ruling Reversed

Federal Circuit Decision on Damages in Enplas v. Seoul Semiconductor

In a recent ruling, the Federal Circuit overturned a $4 million damages award to Seoul Semiconductor Co. (“Seoul”) in the case of Enplas Display Device Corp. v. Seoul Semiconductor Co., No. 2016-2599, 2018 (Fed. Cir. Nov. 19, 2018). The court held that the district court erred in denying Enplas Display Device Corp.’s (“Enplas”) motion for judgment as a matter of law (JMOL) on the grounds that the damages award lacked substantial evidence.

Background and Patents

The dispute revolved around two patents, USPN 6,473,554 (“the ‘554 patent”) and USPN 6,007,209 (“the ‘209 patent”), both related to backlight display panels for LED displays in electronic devices like computers and TVs. Enplas sought a declaratory judgment of invalidity and non-infringement, while Seoul counterclaimed for infringement and sought damages.

Jury Verdict and Damages Award

The jury found Enplas liable for infringement of both patents and awarded Seoul $4 million for the ‘554 patent and $70,000 for the ‘209 patent. Notably, the $4 million award covered all of Enplas’ products, even those not accused of infringement. Enplas raised objections both before and after the trial, challenging the admission of Seoul’s damages expert testimony.

Federal Circuit’s Decision

The Federal Circuit upheld the district court’s denial of JMOL on issues of anticipation and inducement. However, regarding Enplas’ JMOL on excessive damages, the Court reversed the district court’s decision.

Enplas argued that the damages award was excessive and lacked substantial evidence. The Federal Circuit agreed, noting that Seoul’s damages expert improperly included non-infringing devices in the calculation of royalties. The Court emphasized the district court’s error in allowing the expert to consider potentially infringing and non-accused products under a lump-sum royalty agreement.

Impact of the Decision

The Court’s decision to reverse the damages award for the ‘554 patent was based on the principle that patent damages should only compensate for infringement. The Court clarified that a reasonable royalty “cannot include activities that do not constitute patent infringement.” This ruling necessitates a reassessment of the damages for the ‘554 patent and calls for further proceedings.

Judge Newman’s Concurrence-in-part and Dissent-in-part

While Judge Newman concurred with the Court on issues of validity and inducement, she dissented on the damages decision. Judge Newman argued that the district court correctly denied JMOL on damages and criticized the majority’s departure from the actual licensing scenario the parties might have negotiated.