Honeywell International, Inc. and Honeywell Intellectual Properties, Inc. (collectively, Honeywell) appeal from a final judgment of the U.S. Court of Federal Claims. The Court of Federal Claims held that the government infringed independent claim 2 of the patent-in-suit but that this claim is invalid. The Court of Federal Claims also held that Honeywell lacks standing on its claim for just compensation under the Invention Secrecy Act and that the first sale doctrine precludes Honeywell from recovering damages for one particular infringing system. For the reasons set forth below, we reverse and remand for a determination of damages.
The dispute in this case arises from Pro-Med Clinical Systems, LLC’s (“Pro-Med”) use of Pro-Med Maximus, paper templates designed to capture a physician-patient encounter, and the electronic version of that product developed by Pro-Med. Utopia Provider Systems, Inc. (“Utopia”) alleges that both products are derivatives of its paper templates, ED Maximus.1 Pursuant to an agreement in effect between October 1, 2001, and October 1, 2006 (the “License Agreement” or “Agreement”), Utopia licensed ED Maximus to Pro-Med and Pro-Med was obligated to pay Utopia royalties if any portion of ED Maximus was provided to an end user. In 2003, Utopia obtained a copyright for ED Maximus, effective as of October 29, 2001. Contending that Pro-Med committed unauthorized use of ED Maximus and failed to pay royalties that it owed Utopia, Utopia brought this action against Pro- Med alleging claims of copyright infringement, breach of fiduciary duties, andbreach of contract. The district court granted Pro-Med summary judgment on Utopia’s copyright infringement claim on the ground that ED Maximus was not copyrightable, and declined to exercise supplemental jurisdiction over Utopia’s breach of fiduciary duty and breach of contract claims that were based on state law, dismissing them without prejudice.
Utopia appeals, arguing that the district court erred in finding that it did not hold a valid copyright in ED Maximus and abused its discretion in declining to exercise supplemental jurisdiction over the state law claims. Pro-Med crossappeals the dismissal of some of Utopia’s breach of contract claims, contending that the district court should have found them preempted by federal copyright law. We affirm.
This case began in August of 1999 when Plaintiff SEB S.A. (“SEB”) sued defendants Montgomery Ward & Co., Inc. (“Montgomery Ward”), Global-Tech Appliances, Inc. (“Global-Tech”), and Pentalpha Enterprises, Ltd. (“Pentalpha”) for infringement of U.S. Patent No. 4,995,312 (the “’312 patent”). Almost seven years later, a jury found that Pentalpha had willfully infringed, and induced infringement of, claim 1 of the ’312 patent and awarded SEB $4.65 million in damages. Pentalpha filed post-trial motions on a number of grounds. The district court granted them in part, reducing the amount of damages by $2 million. SEB S.A. v. Montgomery Ward & Co., No. 99-9284, 2007 WL 3165783 (S.D.N.Y. Oct. 9, 2007) (“JMOL Opinion”). The district court awarded SEB enhanced damages and attorneys’ fees, but later vacated that award in light of this court’s decision in In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc). SEB S.A. v. Montgomery Ward & Co., No. 99-9284, 2008 WL 4540416 (S.D.N.Y. Oct. 1, 2008) (“Enhanced Damages Opinion”). On appeal, Pentalpha raises a host of issues that relate to the jury verdict and the district court’s post-trial rulings. SEB cross-appeals the district court’s enhanced damages ruling. Detecting no reversible error in the district court proceedings, this court affirms.
The United States District Court for the Southern District of New York ruled that U.S. Patent No. 6,295,075 (the ’075 patent), owned by ResQNet.com, Inc., is valid and is infringed by Lansa, Inc. The district court also ruled that ResQNet’s U.S. Patent No. 5,831,608 (the ’608 patent) is not infringed. The court awarded damages of $506,305 for past infringement based on a hypothetical royalty of 12.5%, plus prejudgment interest. The court denied ResQNet’s motion for a permanent injunction, and imposed a license, at a royalty of 12.5%, for future activity covered by the ’075 patent. The court assessed sanctions under Rule 11 against ResQNet and its counsel. We affirm the district court’s rulings on the issues of validity and infringement, and reverse the imposition of sanctions. On Lansa’s cross-appeal, we vacate the damages award and remand for redetermination of damages.