Opinion of Counsel Could Save $4 Million

Attorney’s confusion about technical jargon should not have negated reliance on the substance of the opinion

The Federal Circuit reversed a district court’s decision to treble a $2 million damages award in favor of Sunoco against U.S. Venture, Inc. and U.S. Oil Co., Inc. (collectively, “Venture”).

To rebut a contention that Venture willfully infringed Sunoco’s patents for blending and distributing gasoline, Venture revealed that it had relied on an opinion of counsel from attorney John Manion. The noninfringement opinion relied on the fact that Venture’s system inserted an intermediate tank between a blending unit and a rack (i.e., the location where gasoline is dispensed to trucks).

At trial, Mr. Manion was subject to cross-examination regarding his opinion. A key reason the district court discounted Mr. Manion’s opinion was its view that Mr. Manion did not know the blended gasoline in Venture’s system could still flow immediately from the intermediate tank to the rack where it would be dispensed, stating “[a]t trial, Manion testified that he was unaware of Venture’s design for the blend to flow immediately from a tank to a truck rack” and that Mr. Manion “had never heard of the type of tank that Venture used between the blending instrument and rack.” Based on that view of Mr. Manion’s cross-examination, the district court concluded that the opinion letter “does not show that Venture had a good-faith belief that it was not infringing the patents.”

The Federal Circuit found that the district court’s finding was erroneous. It felt that Mr. Manion was merely confused by an unfamiliar term—“online rack tank”—that Sunoco’s attorney was using and that Mr. Manion did understand how Venture’s product operated, citing to testimony where he explained “[a]s an engineer, I realized that there was product flowing in to the tank and there’s product flowing out of the tank, and it’s conceivable that that could be happening simultaneously” and “again, the proposed system was blending to a tank; and as we talked about before, you know, it’s very common for you to be filling a tank and emptying a tank at the same time. There’s nothing that says you can’t drain a tank while you’re filling a tank. . . . So, it’s very normal to be filling and dispensing at the same time.”

The case will now be sent back to the district court judge to reweigh the decision to enhance damages and to decide other issues (including reevaluation of the on-sale bar after reversing the district court on the issue of the “experimental-use negation,” with a discussion showing the narrow nature of reliance on experimental-use to negate a sale).

This case demonstrates how a well-reasoned and well-supported opinion of counsel can negate award of enhanced damages in a patent case. Absent Mr. Manion’s opinion weighing against enhancement, other enhancement factors could have tipped in Sunoco’s favor.