CAFC Affirms $42.5 Million Patent Infringement Verdict in Pre-Lit Christmas Tree Dispute

The U.S. Court of Appeals for the Federal Circuit (CAFC) on Tuesday issued a precedential decision in Willis Electric Co. v. Polygroup Ltd., affirming a jury verdict that found Polygroup liable for patent infringement. The CAFC upheld the U.S. District Court for the District of Minnesota’s decision to deny Polygroup’s post-trial motions for judgment as a matter of law (JMOL) on obviousness and for a new trial on damages. As a result, the ruling included an award of nearly $42.5 million in damages to Willis Electric Co., Ltd. Chief Judge Moore authored the opinion, joined by Judge Stark and District Judge Oetken.

On appeal, the dispute centered on U.S. Patent No. 8,454,186, owned by Willis, which relates to pre-lit artificial trees with decorative lighting. The patented technology, commercialized by Willis in its One Plug trees, allows the modular trunk portions of the tree to be mechanically and electrically connected simultaneously, regardless of their rotational orientation. This innovation eliminated the need for manually connecting separate electrical cords between tree sections. The appeal focused on claim 15 of the patent, which specifically requires the use of coaxial trunk connectors, a feature found in Polygroup’s infringing Quick Set trees.

Willis first filed a lawsuit against Polygroup for infringement in August 2015. The case involved a lengthy procedural history, including 16 inter partes review (IPR) petitions filed by Polygroup at the Patent Trial and Appeal Board (PTAB). After multiple appeals and remands that invalidated many of the patent’s other claims, Willis narrowed its case at the district court to assert only claim 15. A jury ultimately found that Polygroup infringed claim 15 and that the claim was not invalid, awarding Willis $42,494,772 in damages. Polygroup appealed the district court’s denial of its post-verdict motions.

Polygroup argued it was entitled to JMOL because claim 15 would have been obvious. The company contended that a person of ordinary skill in the art would have been motivated to combine a prior art product, the Loomis GKI Tree, with well-known coaxial barrel connectors. The CAFC, however, found that substantial evidence supported the jury’s presumed factual finding that a skilled artisan would not have been so motivated. Additionally, the court noted that Willis’s expert had testified that modifying the Loomis GKI Tree to use coaxial connectors would have required numerous complex steps and would have “completely go[ne] away from the [prior art’s] teachings.” The court emphasized that its role was not to reweigh the evidence presented to the jury, but to determine whether substantial evidence supported the verdict. Ultimately, the Federal Circuit affirmed the district court’s conclusion of nonobviousness.

Furthermore, Polygroup moved for a new trial, arguing that the opinions of Willis’s damages expert, Michele Riley, were “methodologically unsound” and should have been excluded under Federal Rule of Evidence 702 and Daubert. The jury’s award of approximately $4 per tree was based on Ms. Riley’s testimony, which had proposed a $5 per tree reasonable royalty, in contrast to Polygroup’s expert, who suggested a rate of $0.25–$0.35 per tree.

Polygroup’s primary challenge was that Ms. Riley failed to properly apportion the damages to the incremental value of claim 15 alone. This was challenged especially because the broader independent claim 10, from which claim 15 depends, had been found unpatentable in a prior IPR. The CAFC rejected this argument, explaining that the claim construction standard used in the IPR, the broadest reasonable interpretation, was different from the Phillips standard used by the district court. The district court had construed claim 10 to require a one-step simultaneous connection, a feature not required by the IPR construction. Therefore, the court reasoned, the IPR decision did not preclude Willis from recovering damages for that one-step functionality, which was enabled by the coaxial connectors of claim 15.

The court then discussed the district court’s gatekeeping role in admitting expert testimony, emphasizing that estimating a reasonable royalty “necessarily involves an element of approximation and uncertainty.” It affirmed that while the court must ensure an expert’s methodology is reliable, challenges to the expert’s factual basis or conclusions are matters of weight and credibility for the jury to decide. The CAFC found no abuse of discretion in the district court’s decision to admit Ms. Riley’s testimony, which was based on multiple methods, including an income-based apportionment, a market-based apportionment, and a Georgia-Pacific analysis.

The Federal Circuit addressed Polygroup’s specific criticisms of each of Ms. Riley’s methods, concluding that they were matters for cross-examination and did not render her analysis inadmissible. Under her income approach, Ms. Riley calculated a reasonable royalty range by analyzing profit premiums associated with Willis’ patented One Plug trees and Polygroup’s infringing Quick Set trees. Polygroup argued this approach was unreliable because it failed to properly account for other premium features on the trees. Additionally, the court found that Ms. Riley had provided reasonable explanations for her choices, such as averaging prices across product lines, and that her analysis was sufficiently tied to the facts of the case. The opinion stated that “the gatekeeping role of the court is satisfied, and the inquiry on the correctness of the methodology and of the results produced thereunder belongs to the factfinder.”

Ultimately, the CAFC found all of Polygroup’s arguments unpersuasive and affirmed the district court’s judgment, upholding the nearly $42.5 million verdict for Willis.