## Facts

- Paice LLC owned patents covering hybrid electric vehicle drive trains that combine torque from an internal combustion engine and an electric motor, including U.S. Patent No. 5,343,970.
- The ’970 patent described a system using a controllable torque transfer unit with microprocessor-controlled locking devices to combine torque sources.
- Toyota sold hybrid vehicles using a planetary gear-based configuration rather than the specific torque transfer unit structure described in the ’970 patent.
- Paice sued Toyota for infringement of multiple patent claims, alleging both literal infringement and infringement under the doctrine of equivalents, and sought a permanent injunction or, alternatively, an ongoing royalty.
- A jury found Toyota infringed claims 11 and 39 of the ’970 patent under the doctrine of equivalents, found no literal infringement of those claims, and found no infringement of asserted claims of two other Paice patents.
- The district court denied a permanent injunction and instead ordered an ongoing royalty of $25 per infringing vehicle for the life of the ’970 patent, without explaining how it selected that rate.
- Toyota appealed the doctrine-of-equivalents infringement finding and the ongoing royalty; Paice cross-appealed the no-literal-infringement rulings and argued it was entitled to a jury determination of any ongoing royalty rate.

## Issues

1. Whether substantial evidence supported the jury’s finding of infringement under the doctrine of equivalents for claims 11 and 39 of the ’970 patent.
2. Whether the district court correctly entered judgment of no literal infringement for the asserted claims of the ’970, ’672, and ’088 patents.
3. Whether a district court may impose an ongoing royalty in lieu of a permanent injunction, and whether the $25-per-vehicle rate was adequately supported and explained.
4. Whether the patentee has a right to a jury trial to set the amount of an ongoing royalty imposed after denial of injunctive relief.

## Decision

- Affirmed the jury’s verdict that Toyota infringed claims 11 and 39 of the ’970 patent under the doctrine of equivalents.
- Affirmed the judgment of no literal infringement for the challenged claims of the ’970, ’672, and ’088 patents.
- Held that a district court has equitable authority to award an ongoing royalty in lieu of an injunction.
- Vacated the $25-per-vehicle ongoing royalty order and remanded because the district court did not explain the basis for the rate and did not develop a sufficient record to permit appellate review.
- Rejected the claim of an automatic right to a jury determination of the future royalty rate, leaving the matter to the district court’s equitable discretion and appropriate procedures on remand.

## Legal Principles

- Doctrine of equivalents infringement may be found where the accused system performs substantially the same function, in substantially the same way, to achieve substantially the same result, and the verdict will be upheld if supported by substantial evidence.
- Prosecution history or party statements bar equivalents only when they constitute binding admissions or otherwise clearly limit claim scope; absent such a limitation, a patentee may rely on the doctrine of equivalents.
- After denial of a permanent injunction, a court may award an ongoing royalty as equitable relief to govern continued post-judgment use of the patented invention.
- An ongoing royalty rate must be supported by evidence and accompanied by a reasoned explanation sufficient for meaningful appellate review; rate-setting cannot be left unexplained.
- Setting an ongoing royalty imposed as a substitute for injunctive relief is not subject to an automatic Seventh Amendment jury requirement; the district court may determine procedure (including hearings and evidentiary development).

## Conclusion

The Federal Circuit sustained the jury’s doctrine-of-equivalents infringement finding and the no-literal-infringement rulings, but required that any ongoing royalty imposed in place of an injunction be set through an evidentiary process and justified with articulated reasoning, while holding that the patentee lacked an automatic right to have a jury set the future royalty rate.


Paice LLC v. Toyota Motor Corp., 504 F.3d 1293 (Fed. Cir. 2007)