Olaplex, Inc. v. L'Oréal USA, Inc., 2020-1382
| Decision Date | 06 May 2021 |
| Docket Number | 2020-1382,2020-1690,2020-1689,2020-1422 |
| Parties | OLAPLEX, INC., Plaintiff-Cross-Appellant v. L'ORÉAL USA, INC., L'ORÉAL USA PRODUCTS, INC., L'ORÉAL USA S/D, INC., REDKEN 5TH AVENUE NYC, L.L.C., Defendants-Appellants |
| Court | U.S. Court of Appeals — Federal Circuit |
NOTE: This disposition is nonprecedential.
Appeals from the United States District Court for the District of Delaware in No. 1:17-cv-00014-JFB-SRF, Senior Judge Joseph F. Bataillon.
SANFORD IAN WEISBURST, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, argued for plaintiff-cross-appellant. Also represented by JOSEPH M. PAUNOVICH, Los Angeles, CA.
STEPHEN BLAKE KINNAIRD, Paul Hastings LLP, Washington, DC, argued for defendants-appellants. Also represented by NAVEEN MODI, JOSEPH PALYS, IGOR VICTOR TIMOFEYEV, DANIEL ZEILBERGER; KATHERINE FRENCK MURRAY, Browne George Ross O'Brien Annaguey & Ellis LLP, Los Angeles, CA.
Before DYK, REYNA, and TARANTO, Circuit Judges.
This appeal is from a judgment in favor of plaintiffs Liqwd, Inc. and Olaplex LLC against L'Oréal USA, Inc., L'Oréal USA Products, Inc., L'Oréal USA S/D, Inc., and Redken 5th Avenue NYC, LLC (collectively, L'Oréal). The causes of action at issue are for (1) infringement of claims 1 and 10 of U.S. Patent No. 9,498,419 and claims 1, 4, 11-16, 19, 20, and 30 of U.S. Patent No. 9,668,954, and (2) misappropriation of several trade secrets and breach of a non-disclosure agreement. A determination of patent infringement was made by the district court on summary judgment, and a jury then found for plaintiffs on patent-validity issues and on the two non-patent causes of action and awarded damages. L'Oréal appeals on various grounds from the liability and damages determinations. Plaintiffs (Olaplex, a term that also includes Olaplex, Inc., substituted by this opinion) cross-appeal regarding the amount of damages.
With respect to the patent-infringement component of the case, prior decisions of this court and of the Patent Trial and Appeal Board leave little in dispute here. Our court has addressed aspects of the patent dispute between these parties on multiple occasions. See Olaplex, Inc. v. L'Oréal USA, Inc., Nos. 2019-2280 & 2019-2292, 2021 WL 831031 (Fed. Cir. Mar. 4, 2021) (Injunction Appeal) ( that summary judgment of infringement in this case was error and vacating permanent injunction); L'Oréal USA, Inc. v. Olaplex, Inc., Nos. 2019-2410 & 2020-1014, 2021 WL 280493 (Fed. Cir. Jan. 28, 2021) ('954 Appeal) (affirming Board's rejection of patentability challenge to claims 14-16 of the '954 patent and Board's determination of unpatentability of all other claims of the '954 patent asserted in this case); Liqwd, Inc. v. L'Oréal USA, Inc., 720 F. App'x 623 (Fed. Cir. 2018) (); Liqwd, Inc. v. L'Oréal USA, Inc., 941 F.3d 1133 (Fed. Cir. 2019) ('419 Appeal) (appeal involving Board review of the '419 patent, affirming in part and remanding for reconsideration of unpatentability of the relevant claims of the '419 patent); Order at 2, Liqwd, Inc. v. L'Oréal USA, Inc., No. 19-2280, ECF No. 15 (Fed. Cir. Aug. 21, 2019) (partial stay of now-vacated permanent injunction). Moreover, on remand from the '419 Appeal, the Board held the relevant claims of the '419 patent unpatentable, L'Oréal USA, Inc. v. Liqwd, Inc., No. PGR2017-00012, Paper 119 (P.T.A.B. Dec. 9, 2020), and Olaplex eventually dropped its appeal from that ruling, see Order, Olaplex, Inc. v. L'Oréal USA, Inc., No. 2021-1512, ECF No. 11 (Fed. Cir. Feb. 8, 2021). The unpatentability rulings reduce the surviving patent claims asserted here to the '954 patent's claims 14-16. In addition, the Injunction Appeal ruling reversed the district court's grant of summary judgment of infringement in this case, holding that there were triable issues of fact. Those rulings substantially narrow what remains disputed about the patent component of this case.
We reverse in part, affirm in part, vacate in part, dismiss in part, and remand. in particular, we reverse the judgment of liability for trade-secret misappropriation and breach of contract, and we vacate the infringement judgment and remand for a trial on patent infringement and damages limited to claims 14-16 of the conditional cross-appeal as moot given our rejection of non-patent liability.
After the district court granted summary judgment of infringement, the parties presented their case to a jury starting on August 5, 2019. Olaplex presented evidence to support its trade-secret and breach-of-contract claims and evidence on damages for those claims and for patent infringement. L'Oréal asserted, as relevant here, an affirmative defense of invalidity of claims 14-16 of the '954 patent based on the nonobviousness and written-description requirements of 35 U.S.C. §§ 103 and 112.
On August 12, 2019, the jury returned a verdict for plaintiffs. On the trade-secret claim, the jury found that, "on May 19, 2015, [Olaplex] possessed specific, identifiable Trade Secret(s)," that L'Oréal "misappropriated Olaplex's trade secret information," causing damages in the amount of $22,265,000, and that L'Oréal's misappropriation was "willful or malicious." J.A. 37623-24. On Olaplex's breach-of-contract claim, which Olaplex recognizes to be indistinguishable from its trade-secret claim at this point, the jury found that L'Oréal breached the "May 2015 Non-Disclosure Agreement[]," causing damages in the amount of $22,265,000. J.A. 37625. On L'Oréal's affirmative defense of patent invalidity, the jury found, as relevant here, that L'Oréal did not prove invalidity of claims 14-16 of the '954 patent. J.A. 37625. On patent damages, the jury awarded damages of $24,960,00 against L'Oréal for infringing the '954 patent. J.A. 37627. The jury also found that Olaplex proved that L'Oréal's patent infringement was willful. J.A. 37627.
On August 20, 2019, the district court issued a "Memorandum and Judgment," adjusting the jury's damages award to avoid inconsistencies and to prevent double recovery. J.A. 37682-86. Specifically, the district court reduced the non-patent damages to reflect its view of when such damages had to end given when the protected information became publicly available. J.A. 37683-85. It also set an amount for exemplary damages and approved an award of attorney's fees and costs. J.A. 37683-85. The total damages amount entered was $49,920,000, not including attorney's fees, court costs, or interest on the damages award. J.A. 37686 & n.1.
L'Oréal then renewed its motion for judgment as a matter of law (JMOL) and moved for a new trial. Olaplex, for its part, sought prejudgment interest on the damages award and attorney's fees, among other things. On December 16, 2019, the district court issued a memorandum and order resolving the parties' post-trial motions. See Liqwd, Inc. v. L'Oréal USA, Inc., No. 1:17-cv-00014, 2019 WL 6840353 (D. Del. Dec. 16, 2019) (December 2019 Decision). The district court denied L'Oréal's JMOL and new-trial motions. Id. at *5, *8-9, *14-15. The court granted Olaplex's motion for prejudgment interest on the damages award but denied it as to attorney's fees. Id. at *2-8, *10-14.
On January 15, 2020, L'Oréal timely filed a notice of appeal "in an abundance of caution" and "as a protective measure to ensure appellate jurisdiction." J.A. 42236. Two weeks later, Olaplex timely filed a notice of cross-appeal. On March 24, 2020, the district court entered final judgment on a separate document. J.A. 22-24. The court ordered L'Oréal to pay $66,167,843, which included attorney's fees, costs, and prejudgment interest, and to pay post-judgment interest "at the statutory interest rate pursuant to 28 U.S.C. § 1961 in the amount of $2,813.49 per day beginning the day this Final Judgment is entered and ending the day upon which Defendants fully satisfy this Final Judgement." J.A. 23-24.
Soon after, L'Oréal timely filed another notice of appeal, and Olaplex in turn timely filed another notice of cross-appeal. We have jurisdiction under 28 U.S.C. § 1295(a)(1).
Plaintiffs Liqwd and Olaplex LLC move to substitute Olaplex, Inc. for themselves under Federal Rule of Appellate Procedure 43, which "provides the procedural vehicle for a substitution of a new party for an existing one when authorized by law, whether the basis for substitution is a party's death (Fed. R. App. P. 43(a)) or another reason (Fed. R. App. P. 43(b))." '954 Appeal, 2021 WL 280493, at *4. We approved this substitution based on the transfer of interest from plaintiffs to Olaplex, Inc. in the '954 Appeal and in the Injunction Appeal. See '954 Appeal, 2021 WL 280493, at *4; Injunction Appeal, 2021 WL 831031, at *3. We grant the motion here as well.
In its opening brief, L'Oréal argued that we should vacate the district court's judgment and remand for dismissal because, L'Oréal asserted, the judgment was entered after plaintiffs had transferred their interests to Olaplex, Inc., in January 2020 and without substitution of Olaplex, Inc. Appellant Opening Br. at 3-4. At oral argument, L'Oréal seems to have agreed that this argument does not survive our rulings in the '954 Appeal and the Injunction Appeal. See Oral Arg. at 1:00-1:19. Regardless, we reject the argument.
The transfer occurred after the district court's December 2019 order. That order, entered on the docket sheet, resolved all issues on the merits and left only ministerial calculations, so it was a final decision. See Republic Nat. Gas Co. v. Oklahoma, 334 U.S. 62, 68 (1948) (); Meade Instruments Corp. v. Reddwarf Starware, LLC, No. 1999-1517, 2000 WL 987268, at *3 (Fed. Cir. June 23, 2000); U.S. S.E.C. v. Carrillo, 325 F.3d 1268, 1272 (11th Cir. 2003) (per curiam); Goodwin v. United States, 67 F.3d 149, 151 ...
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