Magema Technology LLC v. Phillips 66


Holding:  A general verdict in a trial including an erroneously submitted theory can only be upheld as harmless error if the court is totally satisfied or reasonably certain that the verdict was not based on the error.


Magema owns US Patent No. 10,308,884, which claims a low sulfur heavy marine fuel oil (HMFO) that is formed by hydroprocessing a high sulfur HMFO.  Magema’s patented fuel oil meets the standard for marine fuel oil set out by the International Organization for Standardization 8217:2017 (ISO 8217), by reducing the sulfur content of the fuel oil to under 0.50% sulfur by weight.  Magema marketed its technology to refineries, including Phillips, but no licensing agreement was reached.  Instead, Phillips publicly announced its own plans to formulate low-sulfur HMFO from high-sulfur HMFO.  Magema sued Phillips, alleging that Phillips’ processes infringed the ‘884 Patent.

The claims of the ‘884 Patent require a high sulfur heavy marine fuel oil that is compliant with ISO 8217 prior to hydroprocessing.  ISO 8217 requires that the flash point of an HMFO be at least 140 degrees Fahrenheit.  Therefore, to determine infringement of the ‘884 Patent, the flashpoint of Phillips’ HMFO needed to be tested prior to hydroprocessing.  Phillips provided Magema with flashpoint data from outside of the battery limits of the hydrotreater reactor at one of its plants, but Magema wanted flashpoint data from inside the battery limits, before the fuel reached the hydrotreater reactor. 

Magema moved to compel flashpoint data from that location, but Phillips argued that it would be too dangerous to produce flashpoint samples from inside the battery limits and suggested that Magema could use the Riazi formula to estimate flashpoint temperature.  Therefore, the judge denied the motion to compel based on the danger of providing the requested data.  However, at trial, Phillips argued that the ISO 8217 required actual testing rather than the use of the Riazi formula.  In response, Magema moved for a curative instruction to the jury to explain that actual testing was not available.  The district court denied Magema’s motion but warned Phillips not to argue that ISO 8217 required actual testing.

Despite the district court’s warning that Phillips could not mention that actual testing was required, at closing arguments, Phillips argued that the jury should find no infringement since Magema provided no actual test data.  The jury found no infringement and the general verdict form did not specify the basis for this finding.  Magema’s motion for a new trial was denied when the district court determined that Phillips’ discussion of actual test data was harmless error that did not affect the outcome of the trial since the jury could have found that Phillips’ HMFO did not meet other claim limitations.

An error is prejudicial rather than harmless if the error affects the outcome of the proceeding.  When a case goes to a jury on a general verdict, the failure of evidence or a legal mistake under one theory of the case generally requires a new trial since it is difficult to determine the theory on which the jury based its decision.  For this case, the Federal Circuit must be reasonably certain that the jury did not rely on Phillips’ actual testing arguments to come to its conclusion of no infringement. 

The Federal Circuit found that Phillips’ actual testing theory was improper and prejudicial.  Additionally, since there is no explanation of the jury’s reasoning for no infringement, it is possible that Phillips’ impermissible actual testing theory tainted the jury. Therefore, since the Federal Circuit could not be sure that the error of allowing Phillips to introduce this theory to the jury did not influence the verdict, the Federal Circuit reversed the district court’s denial of Magema’s motion for a new trial.

Full Opinion (PDF)

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