United States Court of Appeals
for the Federal Circuit
__________________________
MICHAEL S. POWELL,
Plaintiff-Cross Appellant,
v.
THE HOME DEPOT U.S.A., INC.,
Defendant-Appellant.
__________________________
2010-1409, -1416
__________________________
Appeal from the United States District Court for the
Southern District of Florida in case no. 07-CV-80435,
Judge Daniel T.K. Hurley.
__________________________
Decided: November 14, 2011
__________________________
DONALD R. DUNNER, Finnegan, Henderson, Farabow,
Garrett & Dunner, LLP, of Washington, DC, argued for
plaintiff-cross appellant. With him on the brief were
KARA F. STOLL and JAMES F. SHERWOOD. Of counsel on
the brief was ALEXANDER D. BROWN, Tripp Scott, P.A., of
Fort Lauderdale, Florida.
GEORGE M. SIRILLA, Pillsbury Winthrop Shaw
Pittman, LLP, of McLean, Virginia, argued for defendant-
appellant. With him on the brief were BRYAN P. COLLINS,
JACK S. BARUFKA and SARAH R. GREENE. Of counsel on
POWELL v. HOME DEPOT 2
the brief were BART A. STARR and JONATHAN N. ZERGER, of
Shook, Hardy & Bacon, LLP, of Kansas City, Missouri;
and EDWARD A. MOSS and EILEEN TILGHMAN MOSS, of
Miami, Florida.
__________________________
Before LINN, DYK, and PROST, Circuit Judges.
Opinion for the court filed by Circuit Judge PROST. Opin-
ion concurring-in-part and dissenting-in-part filed by
Circuit Judge DYK.
PROST, Circuit Judge.
This is a patent infringement case involving radial
arm saw (or “radial saw”) guard safety technology. Mr.
Michael S. Powell brought suit against Home Depot,
alleging that it infringed his patent, U.S. Patent No.
7,044,039 (“’039 patent”), covering radial arm saw guards
that are installed in every Home Depot store location
throughout the United States. Following a fourteen-day
trial, the jury determined that Home Depot literally and
willfully infringed Mr. Powell’s patent. After the jury
trial, the district court held a bench trial on the issue of
unenforceability. It concluded that Mr. Powell had not
committed inequitable conduct and declined to hold the
patent unenforceable. Based on Home Depot’s willful
infringement, the district court awarded enhanced dam-
ages. Based on the district court’s finding of litigation
misconduct and vexatious and bad faith litigation, it also
awarded attorney fees.
On appeal, Home Depot challenges the district court’s
denial of its renewed motion for judgment as a matter of
law (“JMOL”) on the issues of infringement, willfulness,
and damages. It also challenges the district court’s claim
construction, inequitable conduct, and attorney fees
determinations.
3 POWELL v. HOME DEPOT
Mr. Powell conditionally cross appeals on the issue of
enhanced damages seeking additional enhanced damages
if, for example, the compensatory damage award were
reduced.
The jury’s verdict of willful infringement and damages
determination are supported by substantial evidence. We
affirm the district court, having detected no reversible
error in its denial of judgment as a matter of law in favor
of Home Depot on the issues of infringement, willfulness,
and damages. Further, we affirm the district court’s
conclusions as to claim construction, inequitable conduct,
and attorney fees.
BACKGROUND
Home Depot is one of the largest, most profitable
home improvement retailers in the United States. For
many years, Mr. Powell had a business relationship with
Home Depot as its point-of-contact for the installation and
repair of radial arm saws. Home Depot uses radial arm
saws in its stores to cut the raw lumber it sells down to a
smaller size, based on a customer’s preference.
In 2002 and 2003, Home Depot took note of an alarm-
ing trend. Its employees were suffering injuries including
lacerations and finger amputations caused while operat-
ing in-store radial arm saws to cut lumber for customers.
Top corporate officers, including the CEO, learned of the
employee injuries and directed Home Depot’s safety
personnel to either fix the radial saws to prevent injuries
or remove them from all stores.
Home Depot studied the repercussions of removing
the radial saws from its stores and ceasing to offer its
customers the option to have lumber cut into smaller
pieces. It concluded that the benefits of keeping the
radial saws outweighed the risks and chose to find a
POWELL v. HOME DEPOT 4
solution to employee injuries, rather than remove them
from its stores. Employee injury claims had already cost
the company nearly $800,000, but its competitors still
offered lumber cutting services and it feared the loss of its
customers that utilized the service at Home Depot.
Further, it risked losing the “considerable sales” in lum-
ber and other departments that sell goods related to
lumber purchases. J.A. 19000. Seeking a solution to the
problem, it turned to Mr. Powell.
Mr. Powell—recognizing that removal of radial arm
saws in Home Depot stores would hurt his business—set
out to develop a solution to employee injuries. In July
2004, he presented a saw guard prototype to Home Depot,
which then ordered eight production units for use and
testing in stores. By August 2004, those production saw
guard units were installed in Home Depot stores and Mr.
Powell filed an application for a patent on his saw guard
invention.
Unbeknownst to Mr. Powell at the time he installed
his invention for in-store testing, Home Depot contacted
another company, Industriaplex, to build and install saw
guards for its radial arm saws. Home Depot invited
Industriaplex to view Mr. Powell’s invention and asked it
to build nearly identical copies at a price less than the
$2,000 per saw guard it paid Mr. Powell for the in-store
testing units. Industriaplex agreed. Home Depot eventu-
ally ordered nearly 2,000 saw guards built by Industri-
aplex for approximately $1,295 per unit.
Mr. Powell continued to confer with Home Depot
through the end of 2004, but could not reach an agree-
ment to supply it with the saw guards at the price it
offered to pay—$1,200 per unit, including installation.
Mr. Powell’s ’039 patent issued on May 16, 2006, and he
sued Home Depot for infringement in May 2007.
5 POWELL v. HOME DEPOT
After a fourteen-day jury trial, the jury reached a
unanimous verdict that Home Depot willfully and literally
infringed the ’039 patent. It awarded $15 million in
damages. The district court enhanced damages by an
additional $3 million and also awarded attorney fees
totaling $2.8 million. When all the dust had settled, the
final judgment against Home Depot totaled
$23,950,889.13, including pre-judgment interest.
Home Depot now appeals. We have jurisdiction pur-
suant to 28 U.S.C. § 1295(a)(1).
STANDARD OF REVIEW
JMOL is appropriate when “a reasonable jury would
not have a legally sufficient evidentiary basis to find for
the party on that issue.” Fed. R. Civ. P. 50(a)(1). This
court reviews the denial of a motion for JMOL under the
law of the regional circuit. Orion IP, LLC v. Hyundai
Motor Am., 605 F.3d 967, 973 (Fed. Cir. 2010). Under the
law of the Eleventh Circuit, we must “consider all the
evidence, and the inferences drawn therefrom, in the light
most favorable to the nonmoving party . . . [and] in this
light, [whether] there was any legally sufficient basis for a
reasonable jury to find in favor of the nonmoving party.”
Advanced Bodycare Solutions, LLC v. Thione Int’l, Inc.,
615 F.3d 1352, 1360 (11th Cir. 2010) (internal citations
and quotations marks omitted).
The proper construction of a patent’s claims is an is-
sue of Federal Circuit law, and we review a district court’s
claim construction de novo. Cybor Corp. v. FAS Techs.,
Inc., 138 F.3d 1448, 1454–55 (Fed. Cir. 1998) (en banc).
To ascertain the scope and meaning of the asserted
claims, we look to the words of the claims themselves, the
specification, the prosecution history, and any relevant
extrinsic evidence. Phillips v. AWH Corp., 415 F.3d 1303,
1315–17 (Fed. Cir. 2005) (en banc).
POWELL v. HOME DEPOT 6
“This court reviews a district court’s determination of
inequitable conduct under a two-tiered standard: we
review the underlying factual determinations of material-
ity and intent for clear error, and we review the ultimate
decision as to inequitable conduct for an abuse of discre-
tion.” Am. Calcar, Inc. v. Am. Honda Motor Co., 651 F.3d
1318, 1334 (Fed. Cir. 2011).
Willfulness is a question of fact, and our review on
appeal is “limited to asking whether [the jury’s] verdict is
supported by substantial evidence.” i4i Ltd. P’ship v.
Microsoft Corp., 598 F.3d 831, 859 (Fed. Cir. 2010).
This court reviews “the jury’s determination of the
amount of damages, an issue of fact, for substantial
evidence.” Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d
1301, 1310 (Fed. Cir. 2009). We review an award of
enhanced damages for abuse of discretion. See SRI Int’l,
Inc. v. Advanced Tech. Labs., Inc., 127 F.3d 1462, 1469
(Fed. Cir. 1997). A district court’s finding that a case is
“exceptional” within the meaning of 35 U.S.C. § 285 is
reviewed for clear error. Forest Labs., Inc. v. Abbott
Labs., 339 F.3d 1324, 1328 (Fed. Cir. 2003). If a case is
determined to be exceptional, we review the district
court’s decision to award attorney fees for abuse of discre-
tion. Id.
DISCUSSION
This appeal raises several issues: claim construction,
infringement, willfulness, inequitable conduct, damages,
enhanced damages, and attorney fees. We address each
issue in turn.
A. Claim Construction
As part of its challenge of the district court’s denial of
JMOL of noninfringement, Home Depot disagrees with
that court’s claim construction of two terms, “dust collec-
7 POWELL v. HOME DEPOT
tion structure” and “table top.” These terms appear in
independent claims 1 and 4. Claim 1 is reproduced below.
1. In combination with a radial arm saw assem-
bly comprising a table having a top and a rip fence
projecting upward therefrom, a vertical column
extending upwardly near the rear of the top, a ra-
dial arm extending horizontally from the top of
the column, a rotary power saw suspended below
the radial arm by a carriage adapted for travel
along the length of radial arm, the saw including
a rotating blade, a protective blade shroud, and a
handle, the improvement comprising: a work sur-
face mounted to the table top; at least one push
handle in slidable engagement with said work
surface for movement toward and away from said
rip fence; a cutting box disposed on top of the
work surface, said cutting box defining an interior
bounded by a top in spaced relation with said
work surface, opposing side walls, and front and
rear walls; at least one of said side walls defining
an opening therein with brush bristles disposed in
said opening to allow a work piece to be at least
partially inserted within said cutting box through
said opening; said cutting box top defining an
elongate slotted aperture for receiving the lower
portion of the saw blade as the blade travels dur-
ing the sawing process; and said cutting box inte-
rior in fluid communication with dust collection
structure for collecting sawdust.
’039 patent col.7 ll.8–33 (emphases added). Each of these
claim construction and infringement issues are discussed
below.
POWELL v. HOME DEPOT 8
1. “Dust Collection Structure”
a. Claim Construction
While the district court initially construed “dust col-
lection structure” as a means-plus-function element under
35 U.S.C. § 112, ¶ 6, it thereafter changed its view and
issued a new construction replacing the earlier construc-
tion from its admittedly erroneous claim construction
order. J.A. 10239-40. On appeal, Home Depot challenges
the new claim construction, arguing that the district
court’s initial construction was correct because it had
overcome the presumption that applies against means-
plus-function treatment when the claim does not use the
term “means.” According to Home Depot, that presump-
tion was overcome because the claim term fails to recite
sufficiently definite structure. Thus, it argues that the
district court improperly changed the construction of
“dust collection structure” when it redefined the term as
being “comprised of two components: (1) a repository that
temporarily collects and contains sawdust and wood chips
generated during the cutting process, and (2) at least one
opening or port to allow the extraction of sawdust and
wood chips by the vacuum system.” Home Depot chal-
lenges the adopted claim construction only to the extent
that it alleges that the original claim construction was
proper.
Mr. Powell responds, asserting that the district court
was correct to change its initial claim construction. He
argues that in the absence of the word “means,” there is a
strong presumption against construing “dust collection
structure” as a means-plus-function element. Further, he
asserts that the full limitation, in context, recites a struc-
tural requirement that the dust collection structure be in
fluid communication with the cutting box interior. See
’039 patent col.7 ll.32–33, col.8 ll.26–27 (“said cutting box
9 POWELL v. HOME DEPOT
interior in fluid communication with dust collection
structure for collecting sawdust”). This, he contends,
recites sufficiently definite structure because the claim
requires that the “dust collection structure” and the
“cutting box” be coupled together to allow air and sawdust
to flow to the “dust collection structure” when the saw
blade is in motion.
We agree with Mr. Powell and conclude that the claim
term “dust collection structure” is not subject to construc-
tion as a means-plus-function element under 35 U.S.C.
§ 112, ¶ 6. Here, the claim language at issue recites
sufficiently definite structure. The claim term requires,
in the context of the entire limitation, that the cutting box
interior and the dust collection structure be in fluid
communication with each other. See ’039 patent col.7
ll.32–33, col.8 ll.26–27. This requirement indicates inter-
connectedness between the cutting box interior and the
dust collection structure, wherein the physical character-
istics of the dust collection structure allow dust to pass
from the cutting box and be collected by the dust collec-
tion structure.
The patent’s written description further confirms that
the presumption against means-plus-function treatment
is not rebutted. The written description depicts compo-
nent parts of the dust collection structure, including a
cutting box, dust collection outlet ports, and a dust collec-
tion tray. ’039 patent figs. 2–4. The details of how this
structure functions to collect dust are also disclosed,
including that the “[c]utting box 130 . . . functions to
contain the sawdust and wood chips generated as the
blade cuts through the wood” and is “adapted for connec-
tion to an external dust collection system.” ’039 patent
col.5 ll.35–40.
POWELL v. HOME DEPOT 10
Additionally, the written description identifies several
prior art patents that disclose various types of dust collec-
tion structures. ’039 patent col.2 ll.9–23. (“U.S. Pat. No.
3,322,169 . . . discloses a dust collector . . . including a
rectangular shroud having an inlet and a tapered tube
extending rearwardly therefrom . . . . U.S. Pat. No.
3,401,724 . . . discloses a dust collector . . . comprising
generally funnel-shaped hood positioned at the rear of the
work table. . . . U.S. Pat. No. 4,144,781 . . . discloses a
dust collector . . . including a generally funnel-shaped flat-
bottomed shroud . . . .”). This disclosure indicates that the
term “dust collection structure” is used by persons of skill
in the pertinent art to designate structure and “has a
reasonably well understood meaning in the art.” Green-
burg v. Ethicon Endo-Surgery, Inc., 91 F.3d 1580, 1583
(Fed. Cir. 1996). Though Home Depot argues that we
cannot consider these patents because they were never
before the district court on this issue, the patents are not
only cited, but also discussed in detail in the “Background
of the Invention” section of the written description. Our
cases establish that “prior art cited in a patent or cited in
the prosecution history of the patent constitutes intrinsic
evidence.” Kumar v. Ovonic Battery Co., 351 F.3d 1364,
1368 (Fed. Cir. 2003) (citing Tate Access Floors, Inc. v.
Interface Architectural Res., Inc., 279 F.3d 1357, 1371–72
n.4 (Fed. Cir. 2002); Vitronics Corp. v. Conceptronic, Inc.,
90 F.3d 1576, 1582 (Fed. Cir. 1996)).
In sum, the claim language, the disclosure in the writ-
ten description, and the meaning to persons of ordinary
skill indicate that Home Depot has failed to rebut the
presumption that the claimed “dust collection structure”
is not a means-plus-function limitation.
11 POWELL v. HOME DEPOT
b. Infringement
The jury found that Home Depot’s saw guard literally
infringes claims 1 and 4 of the ’039 patent, which require
a “cutting box interior in fluid communication with dust
collection structure for collecting sawdust.” ’039 patent
col.7 ll.32–33. The district court denied Home Depot’s
motion for JMOL of noninfringement. Home Depot chal-
lenges the jury’s infringement verdict and district court’s
denial of JMOL in its favor, asserting that even under the
court’s claim construction for “dust collection structure,” it
does not infringe. It argues that the terms “cutting box”
and “dust collection structure” are distinct terms and can
only be infringed by a device that has separate structures
corresponding to the distinct claim elements. Citing
Becton, Dickinson & Co. v. Tyco Healthcare Group, 616
F.3d 1249 (Fed. Cir. 2010), Home Depot contends that
when a claim lists elements separately, the accused device
cannot infringe if it does not also contain separate ele-
ments corresponding to the claimed elements. It asserts
that Mr. Powell’s infringement theory improperly divided
the cutting box of the accused device to have a front half
that allegedly meets the “cutting box” limitation and a
rear half that allegedly meets the “dust collection struc-
ture.” This division of the accused device’s cutting box
cannot meet the claim’s requirement of having a separate
“cutting box” and “dust collection structure,” Home Depot
contends.
Mr. Powell responds, arguing that the jury’s in-
fringement verdict is supported by substantial evidence
because even Home Depot’s expert agreed that the rear
portion of the cutting box on the accused product serves to
collect sawdust and woodchips and has at least one port to
allow for extraction of the sawdust and wood chips.
POWELL v. HOME DEPOT 12
We agree. Becton is not to the contrary. There, the
claim language did not “suggest that the hinged arm and
the spring means [could] be the same structure.” Becton,
616 F.3d at 1254. Further, “[t]he specification . . . con-
firm[ed] that the spring means [was] a separate element
from the hinged arm.” Id. Thus, based on the intrinsic
record, the terms “hinged arm” and “spring means” were
construed to require separate structures—a requirement
which carried through to the infringement analysis. Id.
Here, the disclosure in the specification cuts against
Home Depot’s argument that the “cutting box” and “dust
collection structure” must be separate components for
purposes of the infringement analysis. The specification
discloses that the “[c]utting box . . . defines an internal
chamber wherein the rotating saw blade meets the work
piece during the cutting process and functions to contain
the sawdust and wood chips generated as the blade cuts
through the wood.” ’039 patent col.5 ll.35–38. Thus, the
specification teaches that the cutting box may also func-
tion as a “dust collection structure” to collect sawdust and
wood chips generated during the wood cutting process. It
does not suggest that the claim terms require separate
structures. See Retractable Techs., Inc. v. Becton, Dickin-
son & Co., 653 F.3d 1296, 1303 (Fed. Cir. 2011) (“The
claims and the specifications indicate that the ‘needle
holder’ and ‘retainer member’ need not be separately
molded pieces.”); see also NTP, Inc. v. Research in Motion,
Ltd., 418 F.3d 1282, 1310 (Fed. Cir. 2005) (noting that the
asserted claim language did not support a limitation
requiring that the claimed “RF receiver” and “destination
processor” be separate and distinct). Nor are we con-
vinced that the claim language “in fluid communication”
requires that “cutting box” and “dust collection structure”
be wholly separate structures.
13 POWELL v. HOME DEPOT
Turning back to the true infringement issue, under
the district court’s claim construction for “dust collection
structure,” the jury’s verdict is supported by substantial
evidence. The experts agreed that the rear of the cutting
box of the accused device was a place where sawdust and
wood chips generated by the cutting process could collect.
Further, they agreed that the rear portion of the cutting
box contained a port allowing for the extraction of saw-
dust and woodchips. Thus, according to the experts, the
two requirements of the district court’s claim construction
for “dust collecting structure” were embodied within the
accused product. The jury was entitled to rely on this
testimony in finding that Home Depot infringed the ’039
patent.
2. “Table Top”
a. Claim Construction
Like the term “dust collection structure,” the district
court changed its initial construction of the term “table
top.” From the bench, the court gave an oral charge,
construing the term “table top” to mean:
The word table is a well understood concept in
everyday parlance, in everyday language. The '039
patent uses it in this sense.
It refers to a structure often used as a piece of
furniture in a home or in a work setting. It is used
to carry out a function at some height above the
floor. Now, the height of the table will depend on
the function for which it is intended, and I've used
these examples, for example, under today's cus-
tom, a coffee table is often lower than a dining ta-
ble, while an altar table might be higher than a
dining table. So the height of the table really de-
pends on what it is going to be used for.
POWELL v. HOME DEPOT 14
The top surface of the table is raised above the
floor by one or more legs or a base or other sup-
porting structure. Normally, the top of the table
is a horizontal surface on which an intended func-
tion can be performed, for example, eating, writ-
ing or working or displaying objects.
A table top is usually solid, but it may contain
openings of various shapes and sizes to permit dif-
ferent functions. As one example, you will note the
tables in the courtroom that are being used by the
lawyers have a hole that has been cut in the top to
accommodate electrical cables. Now, the presence
of these holes does not diminish the fact that the
tables have tops, that is, there are horizontal sur-
faces on which functions are performed.
J.A. 12707–08.
Home Depot challenges the district court’s construc-
tion, arguing that it is erroneous because it fails to impose
an additional requirement that the “table top” function as
a horizontal work surface to support lumber while being
cut. Specifically, it submits that the correct construction
of “table top” is “the structural component of a radial arm
saw that has a flat top surface and is constructed to
provide continuous support for the workpiece during the
cutting operation.” Appellant’s Br. at 38–39. Mr. Powell
responds, asserting that a functional requirement is
unnecessary because the surrounding claim language
indicates that “a work surface [is] mounted to the table
top.” ’039 patent col.7 l.17. He contends that this claim
language already imposes a functional limitation requir-
ing that the table top support a work surface. Thus, he
argues that it is not the “table top” that supports the
lumber; it is the work surface that supports the lumber
while being cut.
15 POWELL v. HOME DEPOT
We agree with the district court’s construction of “ta-
ble top,” which does not impose an additional functional
limitation. Independent claims 1 and 4 require “a work
surface mounted to the table top” and “a planar top work
surface mounted on the table top,” respectively. ’039
patent col.7 l.17, col.8 l.9. Because this claim language
already indicates that the “table top” functions to support
the work surface, imposing the functional limitation that
Home Depot seeks was not required. Indeed, Home
Depot’s argument conflates the role of the claimed “table
top” and “work surface.” The work surface is mounted to
the table top and it is the work surface that supports the
workpiece, not the table top, as Home Depot argues.
The specification confirms the construed meaning of
the claim language. In describing the related art, the
specification indicates that “[a] typical radial arm saw
includes a work table having a horizontal flat top work
surface . . . . The material to be cut, such as a piece of
wood, is supported on the work surface.” ’039 patent col.1
ll.38–42. In describing the actual invention, the patent
discloses that “[s]afety top 100 includes a generally planar
work surface 102.” Id. at col.4 ll.23–24. Further, Fig. 3
shows that work surface 102 supports the workpiece
during the cutting process. In view of the consistent
disclosure in the claims and specification, the district
court’s construction of “table top” is correct.
POWELL v. HOME DEPOT 16
b. Infringement
The jury found that the “table top” limitation of
claims 1 and 4 was literally infringed and the district
court denied Home Depot’s motion for JMOL in its favor.
Its noninfringement argument regarding “table top” is
dependent on its claim construction argument for the
same term, which we have rejected. It does not alterna-
tively argue that the jury verdict is not supported by
substantial evidence under the claim construction
adopted by the district court.
It is undisputed that the assembly instructions for the
accused device require removal of the original work
surface and use of boards to create a structure used to
support a new work surface, including the complete safety
device assembly. Indeed, Mr. Powell’s expert testified
17 POWELL v. HOME DEPOT
that the accused product is modified to create a “table top”
through the use of mounting boards affixed to the struc-
ture of the radial saw after the work surface is removed.
Home Depot’s expert agreed that the mounting boards
support the work surface that is later mounted to the
existing radial saw assembly. Thus, the jury was entitled
to rely on this testimony in concluding that Home Depot
infringes the ’039 patent’s “table top” element under the
district court’s claim construction.
B. Inequitable Conduct
We next turn to Home Depot’s argument that—during
a bench trial following the jury verdict—the district court
erroneously determined that Mr. Powell did not commit
inequitable conduct. In contrast to most inequitable
conduct allegations, which involve the failure to disclose
prior art, this case involves the patentee’s failure to
update a Petition to Make Special.
While prosecuting the ’039 patent application, Mr.
Powell filed a Petition to Make Special, seeking expedited
review on grounds that he was obligated to manufacture
and supply devices embodying the claims sought. See
MPEP 708.02 (8th ed. Rev. 8, July 2010). Mr. Powell
believed that—based on his ongoing negotiations and
long-term business relationship with Home Depot—he
was obligated to supply it with saw guards for radial arm
saws located in each Home Depot store. Before the Peti-
tion was granted, however, it became clear that Home
Depot would use Industriaplex to supply saw guards in
each of its stores. Nevertheless, Mr. Powell failed to
update his Petition to Make Special to indicate that he
was not obligated to build and supply devices embodying
the claims sought. Eventually, the U.S. Patent and
Trademark Office (“PTO”) granted the Petition and Mr.
Powell’s patent application received expedited review.
POWELL v. HOME DEPOT 18
Based on the evidence, the district court determined
that Mr. Powell—with intent to deceive—failed to inform
the PTO that he was no longer under an obligation to
manufacture. Further, his intentional omission was
deemed material. Ultimately, however, the district court
concluded that Home Depot failed to establish by clear
and convincing evidence that the ’039 patent was unen-
forceable based, in part, on the balance of equities.
During the pendency of this appeal, this court, sitting
en banc, tackled issues surrounding inequitable conduct
and raised the level of materiality required before a court
may render a patent unenforceable. Therasense, Inc. v.
Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011)
(en banc). Though the parties’ briefs focus on issues that
are no longer relevant under current law, Home Depot
maintained at oral argument that Mr. Powell’s conduct, in
failing to correct the Petition, constitutes inequitable
conduct under Therasense. (“They knew that the state-
ment in the Petition to Make Special was not accurate . . .
. He let it stand.”) Oral Argument at 8:25–9:55, available
at http://www.cafc.uscourts.gov/oral-argument-
recordings/2010-1409/all. Mr. Powell contends that his
conduct cannot constitute inequitable conduct under the
but-for materiality and affirmative egregious misconduct
standards outlined by Therasense. Id. at 21:00–23:15.
Where, as here, the patent applicant fails to update
the record to inform the PTO that the circumstances
which support a Petition to Make Special no longer ex-
ist—that conduct does not constitute inequitable conduct.
Therasense, 649 F.3d at 1290. That is so because Mr.
Powell’s conduct obviously fails the but-for materiality
standard and is not the type of unequivocal act, “such as
the filing of an unmistakably false affidavit,” that would
rise to the level of “affirmative egregious misconduct.” Id.
at 1292-93. Thus, based on the intervening change in
19 POWELL v. HOME DEPOT
law, we affirm the district court’s conclusion that “Home
Depot did not establish by clear and convincing evidence
that the ’039 [patent] is unenforceable due to inequitable
conduct.” J.A. 17.
C. Willful Infringement
The jury determined that Mr. Powell had proven by
clear and convincing evidence that Home Depot willfully
infringed the asserted claims of the ’039 patent. The
district court denied Home Depot’s motion for JMOL in its
favor. On appeal, it argues that it did not willfully in-
fringe because its actions did not satisfy the objective
prong of the willful infringement inquiry. For instance, it
argues that the district court’s denial of Mr. Powell’s
request for a preliminary injunction and the closeness of
the inequitable conduct case indicate that it did not act
despite an objectively high likelihood of infringement.
Mr. Powell responds with two points. First, he con-
tends that Home Depot’s only argument regarding the
objective reasonableness of its non-liability positions
concerns issues that were not presented to the jury.
Thus, he asserts that the jury’s verdict is supported by
substantial evidence based on the evidence that was
before it. Second, he contends that the question of willful
infringement, under the objective prong, is a question of
fact reserved only for the jury. Appellee’s Br. 63. He
faults Home Depot for never contending that it should
have been allowed to present evidence to the jury regard-
ing the district court’s initial claim construction and the
bench trial on inequitable conduct. Thus, the parties
disagree as to whether the jury is the sole decider of the
objective prong of the willful infringement inquiry and the
type of evidence that may be presented to the jury regard-
ing willful infringement. We address these disputes in
turn.
POWELL v. HOME DEPOT 20
Under In re Seagate Technology, LLC, 497 F.3d 1360
(Fed. Cir. 2007), a willful infringement determination
requires a two-pronged analysis entailing separate objec-
tive and subjective inquiries. As to the former, “a pat-
entee must show by clear and convincing evidence that
the infringer acted despite an objectively high likelihood
that its actions constituted infringement of a valid patent.
. . . The state of mind of the accused infringer is not
relevant to this objective inquiry.” Seagate, 497 F.3d at
1371. As to the latter, if the former is satisfied, “the
patentee must also demonstrate that this objectively-
defined risk (determined by the record developed in the
infringement proceeding) was either known or so obvious
that it should have been known to the accused infringer.”
Id.
Since Seagate, this court has required patentees to
prove the objective prong of the willful infringement
inquiry by clear and convincing evidence as a predicate to
the jury’s consideration of the subjective prong. See
Depuy Spine Inc. v. Medtronic Sofamor Danek, Inc., 567
F.3d 1314, 1335–37 (Fed. Cir. 2009) (declining to address
the subjective prong when the objective prong had not
been established); see also Uniloc USA, Inc. v. Microsoft
Corp., 632 F.3d 1292, 1311 (Fed. Cir. 2011). “[W]here an
accused infringer relies on a reasonable defense to a
charge of infringement,” the objective prong tends not to
be met. Spine Solutions, Inc. v. Medtronic Sofamor Danek
USA, Inc., 620 F.3d 1305, 1319 (Fed. Cir. 2010).
Under the objective prong, the answer to whether an
accused infringer’s reliance on a particular issue or de-
fense is reasonable is a question for the court when the
resolution of that particular issue or defense is a matter of
law. See Cohesive Tech., Inc. v. Waters Corp., 543 F.3d
1351, 1374 (Fed. Cir. 2008) (applying the clearly errone-
ous standard of review to the district court’s willful in-
21 POWELL v. HOME DEPOT
fringement determination under the objective prong based
on the closeness of the claim construction inquiry).
Should the court determine that the infringer’s reliance
on a defense was not objectively reckless, it cannot send
the question of willfulness to the jury, since proving the
objective prong is a predicate to consideration of the
subjective prong. See Depuy, 567 F.3d at 1335–37. When
the resolution of a particular issue or defense is a factual
matter, however, whether reliance on that issue or de-
fense was reasonable under the objective prong is prop-
erly considered by the jury. 1 Uniloc, 632 F.3d at 1311
(“Given this court’s conclusion that Uniloc failed to show
that a reasonable jury could find Microsoft’s conduct
objectively reckless on the [infringement] evidence pre-
sented, this court need not address the subjective prong of
Seagate.”). In circumstances, then, where separate issues
of fact and law are presented by an alleged infringer as
defenses to willful infringement, the objective reckless-
ness inquiry may require analysis by both the court and
the jury. For instance, in this case, certain components of
the case were before the jury, while others were not. The
court decided issues of claim construction and inequitable
conduct, neither of which was before the jury. Thus,
while the jury was in a position to consider how the
infringement case weighed in the objective prong analysis,
on other components—such as claim construction—the
objective prong question was properly considered by the
court. 2
1 The objective and subjective willfulness questions
should be sent to the jury only when the patentee proves
by clear and convincing evidence that the objective prong
of Seagate is met as to the legal issues that have been
decided by the court.
2 While the objective prong of the willful infringe-
ment inquiry must be met before the subjective prong is
addressed, Depuy Spine, 567 F.3d at 1335–37, we are
POWELL v. HOME DEPOT 22
Turning to the facts of this case, the denial of a pre-
liminary injunction and the question of unenforceability
are both issues of law. Thus, the district court properly
considered both issues in analyzing whether the patentee
proved the objective prong of the willful infringement
inquiry. We detect no error in the district court’s deter-
mination that the objective prong of the willful infringe-
ment inquiry was met despite the denial of the
preliminary injunction requested by Mr. Powell. The
court’s preliminary injunction denial was premised on a
claim construction determination that the court ulti-
mately abandoned or modified after the trial commenced.
Thus, we are not persuaded by the strength of Home
Depot’s non-liability positions based on the preliminary
injunction denial. Likewise, we reach the same conclu-
sion regarding the effect of Home Depot’s inequitable
conduct argument on the objective prong of the willful
infringement determination. After Therasense, Mr.
Powell’s conduct, in failing to update his Petition to Make
Special, is not but-for material or affirmative egregious
misconduct. Thus, we determine that the jury’s verdict is
supported by substantial evidence and affirm the district
court’s determination to deny judgment as a matter of law
cognizant that district courts have broad discretion to set
the order of trial. Thus, certain issues that affect resolu-
tion of the objective prong inquiry, such as unenforceabil-
ity, may be tried after the jury has considered the
subjective prong in the infringement proceeding. Gardco
Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1212–13
(Fed. Cir. 1987) (recognizing that the district court has
broad discretion under Fed. R. Civ. P. 42 to separate
issues for management of the trial). In those circum-
stances, it is proper for the district court to reconsider the
ultimate resolution of willful infringement upon a re-
newed motion for judgment as a matter of law. Fed. R.
Civ. P. 50(b).
23 POWELL v. HOME DEPOT
in favor of Home Depot on the issue of willful infringe-
ment.
D. Damages
This case presents an issue regarding a use-based
reasonable royalty. As sent to the jury, the question it
was required to answer was what amount “would [Mr.
Powell] have received from [Home Depot] for the right to
use his patented invention in the United States.” J.A.
409. The jury awarded $15 million, or approximately
$7,736 per unit, in damages as a reasonable royalty that
Mr. Powell would have received from Home Depot for the
right to use his invention in the United States for the
duration of the ’039 patent. J.A. 409. A party challenging
a jury’s verdict on damages “must show that the award is,
in view of all the evidence, either so outrageously high or
so outrageously low as to be unsupportable as an estima-
tion of a reasonable royalty.” Rite–Hite Corp. v. Kelley
Co., 56 F.3d 1538, 1554 (Fed. Cir. 1995) (en banc) (quoting
Lindemann Maschinenfabrik GmbH v. Am. Hoist &
Derrick Co., 895 F.2d 1403, 1406 (Fed. Cir. 1990)).
First, we address Home Depot’s argument that a rea-
sonable royalty cannot exceed lost profits. On this point,
we note that Mr. Powell’s citation to Golight, Inc. v. Wal-
Mart Stores, Inc. for the proposition that “[t]here is no
rule that a royalty be no higher than the infringer's net
profit margin” is not controlling. 355 F.3d 1327, 1338
(Fed. Cir. 2004). Here, the point made by Home Depot is
not that its net profit margin should set the upper bound
of the reasonable royalty calculation. That argument is
foreclosed by Golight. Rather, its argument is that Mr.
Powell cannot recover more than his expected profits from
selling saw guard units to Home Depot as a reasonable
royalty. We disagree with Home Depot for two reasons.
POWELL v. HOME DEPOT 24
The evidence presented to the jury indicates that had
Mr. Powell successfully negotiated a deal with Home
Depot in 2004—prior to receiving his patent—a conserva-
tive estimate of his expected profits from building and
installing saw guards in each of Home Depot’s stores was
$2,180 per unit. Here, however, the reasonable royalty
must be based on the “terms of a [hypothetical] licensing
agreement reached . . . between the patentee and the
infringer at the time infringement began.” Rite-Hite
Corp. v. Kelley Co., 56 F.3d 1538, 1554 (Fed. Cir. 1995) (en
banc); see also Riles v. Shell Exploration & Prod. Co., 298
F.3d 1302, 1313 (Fed. Cir. 2002) (“A reasonable royalty
determination for purposes of making a damages evalua-
tion must relate to the time infringement occurred, and
not be an after-the-fact assessment.”); Panduit Corp. v.
Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1158 (6th
Cir. 1978) (Markey, J., sitting by designation) (“The key
element in setting a reasonable royalty after determina-
tion of validity and infringement is the necessity for
return to the date when the infringement began.”). At the
time the infringement began, in May 2006, Home Depot
had the luxury of nearly two additional years after its
initial negotiation with Mr. Powell to observe the effec-
tiveness of the saw guard solution created by Industri-
aplex, which was based on his design. Thus, we are not
persuaded that Mr. Powell’s expected profit of $2,180 per
unit in 2004 is a reliable approximation of the upper limit
that the parties would have reached during a hypothetical
negotiation in May 2006.
Next, it is settled law that an infringer’s net profit
margin is not the ceiling by which a reasonable royalty is
capped. Golight, 355 F.3d at 1338; see also State Indus.,
Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1580 (Fed. Cir.
1989) (“The determination of a reasonable royalty, how-
ever, is based not on the infringer’s profit margin, but on
25 POWELL v. HOME DEPOT
what a willing licensor and licensee would bargain for at
hypothetical negotiations on the date infringement
started.”). It is equally appropriate to impose that rule
when, as here, the infringer argues that the patentee’s
profit expectation must be a cap on the reasonable royalty
that the patentee may receive. While either the in-
fringer’s or the patentee’s profit expectation may be
considered in the overall reasonable royalty analysis,
Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp.
1116, 1120 (S.D.N.Y. 1970), neither is an absolute limit to
the amount of the reasonable royalty that may be
awarded upon a reasoned hypothetical negotiation analy-
sis under the Georgia-Pacific factors. See Stickle v.
Heublein, Inc., 716 F.2d 1550, 1563 (Fed. Cir. 1983)
(rejecting the accused infringer’s argument that the
reasonable royalty is capped by the sales price of the
patented product). Indeed, “damages to the patent holder
cannot simply be calculated in all cases by determining
‘the difference between his pecuniary condition after the
infringement, and what his condition would have been if
the infringement had not occurred.’” Id. at 1560–61
(quoting Yale Lock Mfg. Co. v. Sargent, 117 U.S. 536, 552
(1885)).
Turning next to the question of whether the jury’s
reasonable royalty calculation is supported by substantial
evidence, we note that each party presented several
damages theories. Home Depot based one of its theories
(discussed above) on the estimated profit per unit that
Mr. Powell would have received in 2004—a theory by
which we are not persuaded—and other theories which
derive from the $1,295 per unit price it agreed to pay
Industriaplex in 2004 for saw guards modeled after Mr.
Powell’s design.
Using the $1,295 per unit price it paid Industriaplex
for the infringing saw guards, Home Depot presented the
POWELL v. HOME DEPOT 26
jury with damages theories ranging from $38–$65 per
unit based on a 3–5% royalty of Industriaplex’s sales
price. On appeal, it further argues that even at a “grossly
high royalty rate of 50%,” of the $1,295 per unit price it
paid Industriaplex, Mr. Powell would recover less than
$1.3 million. Appellant’s Br. at 54–55. In addition,
during its closing argument to the jury, Home Depot went
so far as to suggest that Mr. Powell might have offered to
allow it to use his patented invention for free.
In contrast, Mr. Powell’s expert focused his damages
theory on a range bounded by $2,180 per unit in esti-
mated profit that he stood to receive from a deal negoti-
ated in 2004 up to approximately $8,500 per unit,
representing the amount that Home Depot spent at
seventy-one stores in late 2005 to replace radial saws that
were incompatible with Industriaplex’s saw guard design.
He testified as to reasons why the parties would have
negotiated a reasonable royalty that was higher than Mr.
Powell’s lost profits and why the parties would have
settled on a lump-sum royalty for use of the saw guard
invention over the life of the patent. He further presented
evidence to the jury regarding various inquiries under the
Georgia-Pacific factors that are relevant to determining
the reasonable royalty rate that Home Depot would have
paid to use his invention for the life of his patent. 3 Geor-
3 These factors include: (1) royalties the patentee
has received for licensing the patent to others; (2) rates
paid by the licensee for the use of comparable patents; (3)
the nature and scope of the license (exclusive or nonexclu-
sive, restricted or nonrestricted by territory or product
type); (4) any established policies or marketing programs
by the licensor to maintain its patent monopoly by not
licensing others to use the invention or granting licenses
under special conditions to maintain the monopoly; (5) the
commercial relationship between the licensor and licen-
see, such as whether they are competitors; (6) the effect of
27 POWELL v. HOME DEPOT
gia-Pacific, 318 F. Supp. at 1120. For instance, he noted
for the jury that Home Depot employees had suffered
numerous injuries before the saw guards were installed
with injury claims costing Home Depot upwards of
$1,000,000 per year. The jury heard that Home Depot
CEO, Mr. Robert Nardelli, informed his staff that em-
ployee accidents were not acceptable and the radial arm
saws must be fixed or removed. Rather than follow the
lead of a close competitor—Lowe’s—and remove radial
saws from their stores, Home Depot chose to pursue a
solution to employee injuries and maintain a competitive
advantage in its ability to provide customers with custom-
cut lumber. By installing saw guards, the jury learned
that not only would Home Depot maintain this competi-
tive advantage in the market for cut lumber, it could also
protect its profits from follow-on purchases of nails,
hinges, and other goods that are often purchased simul-
taneously with cut lumber. Finally, the jury learned of
the success that Industriaplex saw guards had achieved
in preventing employee injuries by December, 2005.
selling the patented specialty in promoting sales of other
products of the licensee; (7) the duration of the patent and
license term; (8) the established profitability of the prod-
uct made under the patent, including its commercial
success and current popularity; (9) the utility and advan-
tages of the patent property over old modes or devices;
(10) the nature of the patented invention and the benefits
to those who have used the invention; (11) the extent to
which the infringer has used the invention and the value
of that use; (12) the portion of profit or of the selling price
that may be customary in that particular business to
allow for use of the invention or analogous inventions;
(13) the portion of the realizable profit that should be
credited to the invention as opposed to its non-patented
elements; (14) the opinion testimony of qualified experts;
and (15) the results of a hypothetical negotiation between
the licensor and licensee. Georgia-Pacific, 318 F. Supp. at
1120.
POWELL v. HOME DEPOT 28
Through internal Industriaplex e-mails, the jury discov-
ered that not a single injury had been suffered from the
use of radial arm saws in Home Depot stores where the
saw guards were installed. In stores where the saw
guards were not installed, employees continued to be
injured when using the radial arm saws.
Based on the extensive evidence presented to the jury
by Mr. Powell regarding a reasonable royalty that Home
Depot would have been willing to pay for the ongoing use
of his invention, we are not convinced that the jury’s
damages award is unsupported by substantial evidence.
His evidence included the amount that Home Depot was
willing to spend to replace radial saws that were incom-
patible with the Industriaplex saw guards as well as
evidence of cost savings that Home Depot could expect to
achieve by reducing claims from employee accidents while
using radial arm saws. “Reliance upon estimated cost
savings from use of the infringing product is a well settled
method of determining a reasonable royalty.” Hanson v.
Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1080–81 (Fed.
Cir. 1983). Further, we have held that when considering
the amount of a use-based reasonable royalty “adequate
to compensate for the infringement,” 35 U.S.C. § 284, a
jury may consider not only the benefit to the patentee in
licensing the technology, but also the value of the benefit
conferred to the infringer by use of the patented technol-
ogy. Monsanto Co. v. McFarling, 488 F.3d 973, 980 (Fed.
Cir. 2007) (“In determining the amount of a reasonable
royalty, it was proper for the jury to consider not only the
benefits of the licensing program to [the patentee], but
also the benefits that [the patentee’s] technology con-
ferred on [infringers].”). Thus, it was proper for the jury
to consider Mr. Powell’s evidence regarding Home Depot’s
desire to keep its radial arm saws to maintain a competi-
tive advantage over other home improvement stores that
29 POWELL v. HOME DEPOT
did not offer custom-cut lumber services and protect its
profits from sales of goods often sold in conjunction with
custom-cut lumber.
In contrast, Home Depot’s damages theories focused
on amounts based on negotiations that occurred in 2004,
well before infringement began, and on amounts based
upon what Home Depot paid Industrialplex, rather than
what it would have paid to Mr. Powell to use his inven-
tion. In view of the answer the jury was requested to
provide—the amount Home Depot would have paid to Mr.
Powell to use his invention—it was free to reject Home
Depot’s expert testimony. At base, the paucity of evidence
presented by Home Depot—much of which is irrelevant to
a hypothetical negotiation between Mr. Powell and Home
Depot taking place at the start of infringement—
represents “nothing more than what it might have pre-
ferred to pay, which is not the test for damages.” Golight,
355 F.3d at 1338 (citing Rite–Hite, 56 F.3d at 1555
(“Moreover, what an infringer would prefer to pay is not
the test for damages.”)).
Further, we are not persuaded by Home Depot’s ar-
gument that the jury’s award of $7,736 per unit was
unreasonable given the concession by Mr. Powell’s expert
that a reasonable royalty would be some amount less than
$7,000 per unit. That expert testified that the scope of
possible reasonable royalties was bounded by a range
from $2,180 per unit up to approximately $8,500 per unit.
He also testified that a $7,000 per unit royalty amounted
to roughly $1 per store, per day for Home Depot’s use of
Mr. Powell’s invention over the life of the patent. “The
jury was entitled to choose a damages award within the
amounts advocated by the opposing parties.” Spectra-
lytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1347 (Fed. Cir.
2011) (citing Fuji Photo Film Co. v. Jazz Photo Corp., 394
F.3d 1368, 1378 (Fed. Cir. 2005) (“[T]he jury is not bound
POWELL v. HOME DEPOT 30
to accept a rate proffered by one party’s expert but rather
may choose an intermediate royalty rate.”)). Its award is
not “so outrageously high . . . as to be unsupportable as an
estimation of a reasonable royalty,” Rite–Hite, 56 F.3d at
1554, and is “within the range encompassed by the record
as a whole.” Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d
512, 519 (Fed. Cir. 1995).
Having detected no reversible error, we affirm the dis-
trict court’s denial of JMOL in favor Home Depot on the
issue of damages.
E. Enhanced Damages
Following a thorough analysis under the Read factors,
the district court declined to treble the jury’s $15 million
damages award. It did, however, award Mr. Powell an
additional $3 million based on the “all the facts and
circumstances.” Read Corp. v. Portec, Inc., 970 F.2d 816,
826 (Fed. Cir. 1992). Mr. Powell’s conditional cross-
appeal requests a remand if the “totality of the circum-
stances” change. Upon reviewing the district court’s
findings and conclusions based on the record before us, we
detect no abuse of discretion in the enhanced damages
award. See i4i, 598 F.3d at 858–859. We do not view this
case as one which requires remand on the enhanced
damages issue.
F. Attorney Fees
The district court did not clearly err in its determina-
tion that this case is “exceptional” based on Home Depot’s
“litigation misconduct and vexatious and bad faith litiga-
tion.” J.A. 25. Mr. Powell remains the “prevailing party”
under 35 U.S.C. § 285 and we detect no abuse of discre-
tion in the district court’s award of fees. Therefore, we
affirm the court’s grant of attorney fees.
31 POWELL v. HOME DEPOT
CONCLUSION
The jury’s verdict that Home Depot willfully infringed
the ’039 patent and its decision to award $15 million in
damages is supported by substantial evidence. We affirm
the district court’s denial of judgment as a matter of law
in favor of Home Depot on the infringement, willfulness,
and damages issues. Likewise, we affirm the court’s
determinations regarding claim construction and inequi-
table conduct. Its decision finding this case exceptional
and the award of attorney fees is affirmed.
AFFIRMED
United States Court of Appeals
for the Federal Circuit
__________________________
MICHAEL S. POWELL,
Plaintiff-Cross Appellant,
v.
THE HOME DEPOT U.S.A., INC.,
Defendant-Appellant.
__________________________
2010-1409, -1416
__________________________
Appeals from the United States District Court for the
Southern District of Florida in case no. 07-CV-80435,
Judge Daniel T.K. Hurley.
__________________________
DYK, Circuit Judge, concurring-in-part and dissenting-in-
part.
Although I agree with the majority with respect to
claim construction, infringement, inequitable conduct,
damages, and the legal framework for willfulness, I would
find that Home Depot’s defense was not objectively unrea-
sonable, at least with respect to its proposed claim con-
struction of the term “table top.” I respectfully dissent
from the majority’s contrary holding. Because I would
hold that Mr. Powell did not prove the objective prong of
the willful infringement inquiry by clear and convincing
POWELL v. HOME DEPOT 2
evidence, I would set aside the willfulness finding and the
enhanced damages award. 1
1 The majority states that the district court’s adop-
tion of Home Depot’s construction in the preliminary
injunction stage does not show its objective reasonable-
ness. Maj. op. at 22. I agree, but this does not indicate
the construction is objectively unreasonable either.