Synopsys, Inc. v. Real Intent, Inc.

Background

After summary judgment and the parties’ agreed resolution of the patent claim, three issues remained for trial. Two concerned an alleged breach of contract involving Synopsys’s Design Vision product: whether copying certain software commands, options, and attributes was part of Real Intent’s breach, and the amount of any damages measured by Synopsys’s lost profits. The third concerned a separate alleged breach of contract involving Synopsys’s DesignWare library. That issue was the amount, if any, of restitution measured by research-and-development costs that Real Intent allegedly avoided.

The parties disputed whether the avoided R&D-cost issue should be decided by a jury or by the court. They used several labels for the requested remedy, including unjust enrichment, disgorgement, and restitution. The court treated the request broadly as restitution because Synopsys sought compensation measured by Real Intent’s alleged improper benefit, rather than by Synopsys’s loss.

Legal Standard

The Seventh Amendment preserves the right to a jury trial for issues historically treated as legal rather than equitable. The court therefore examined both the basis of Synopsys’s claim and the nature of the remedy sought.

Restitution can be legal or equitable. It is generally equitable when a plaintiff seeks specifically identified money or property that can be traced to property in the defendant’s possession. It is legal when the plaintiff seeks a money payment for a benefit received by the defendant, without claiming ownership of particular funds or property.

Analysis

The court concluded that Synopsys’s request for avoided R&D costs was legal in nature. First, the underlying claim was for breach of contract, which the court described as a traditionally legal claim. Second, the alleged avoided costs came from Real Intent’s own assets, over which Synopsys did not claim ownership. Synopsys sought payment for the benefit of saved R&D efforts, not particular funds or property.

The court also noted that Synopsys sought avoided costs, not profits, royalties, or fees that Real Intent allegedly received. Because money that Real Intent did not spend could not be traced to specific assets, the remedy did not seek particular property in Real Intent’s possession.

The court further explained that even if the remedy were equitable, the absence of a constitutional right to a jury trial would not necessarily prohibit a jury from deciding the issue. The federal policy favoring jury trials, the overlap between the evidence for the lost-profits and avoided-cost theories, and the fact-based nature of the avoided-cost question supported sending the issue to the jury.

Disposition

The court ordered that the question of avoided R&D costs be presented to the jury for a binding verdict. Because the court made that ruling, it did not address the parties’ alternative arguments about using an advisory jury.