Two Federal Circuit Reversals, One Lesson: Words Matter – From Patent Prosecution to Hypothetical Copyright Negotiations

Two Federal Circuit decisions from this July share a common thread: courts won’t let hindsight or selective memory rewrite the record.
In 4DD Holdings, LLC v. US, No. 24-1996 (Fed. Cir. 2026), the court vacated a copyright damages award because the trial court used knowledge of a program’s later cancellation to unfairly weaken the copyright owner’s bargaining position – hindsight that wasn’t available at the time of negotiation.
In Ridge Corp. v. Kirk Natinoalease Co., No. 25-1254 (Fed. Cir. 2026), the court reversed a preliminary injunction (for the second time) because the patentee’s own prosecution-history arguments barred it from claiming infringement over a product with that same structure. Different doctrines, same lesson: the record as it actually existed controls.

4DD HOLDINGS, LLC v. US

The Department of Defense (“DOD”) and Veterans Affairs struggled to share healthcare records. To remedy this issue, the DOD formed the DMIX program and, through its contractor Systems Made Simple (SMS), licensed TETRA software from 4DD Holdings. During implementation, SMS made unauthorized software copies, exceeding license limits by hundreds of thousands. Ultimately, the government abandoned its efforts before TETRA was fully deployed.
4DD sued for copyright infringement, seeking over $5 billion in damages. The trial court instead awarded $12.7 million, based on a hypothetical license negotiation rather than 4DD’s actual license rates. The Federal Circuit approved the use of a hypothetical negotiation but vacated the damages award because the trial court misapplied the book-of-wisdom doctrine. The book of wisdom allows courts to consider later facts to reduce uncertainty, but not unforeseeable future events. The trial court wrongly used the later cancellation of the related program (unpredictable at the time) to reduce 4DD’s bargaining position. The court also found error in awarding $150,000 in punitive damages for Studio license (UI facing portion of the software) infringement, which are unavailable in suits against the government under § 1498(b) and Gaylord v. United States, 678 F.3d 1339, 1343 (Fed. Cir. 2012).
The court affirmed in part and vacated in part, upholding the use of hypothetical negotiation but sending the case back to recalculate damages without considering DMIX’s cancellation and to remove punitive damages.

RIDGE CORP. v. KIRK NATIONALEASE CO.

Cold Chain, LLC owns a patent on an insulated overhead door for refrigerated trucks. The door must have a thermoplastic membrane on one side, foam insulation on the other, and a single, fully flexible panel. Ridge became the exclusive licensee and sued Kirk NationaLease and others (collectively, “KNL”), alleging that their roll-up door infringed. The accused door uses a “sandwich” panel – foam between two membranes, grooved to allow bending. The district court granted a preliminary injunction, but the Federal Circuit vacated for lack of standing. Ridge fixed the standing problem by adding Cold Chain as a co-plaintiff, allowing the case to proceed. With the standing resolved, the district court again granted a preliminary injunction, to which KNL appeals for the second time.
The court addressed the merits and found substantial questions of non-infringement on three claim limitations:
  1. The accused door lacks uniform flexibility; it has rigid sections between grooves. Cold Chain previously distinguished its invention from designs with multiple rigid sections – similar to the accused product.
  2. The patent requires foam as an outer surface, but in the accused door, foam is sandwiched between membranes. Cold Chain used this same distinction during prosecution.
  3. The court construed “insulated overhead door” as requiring true suitability for cold storage, thereby creating another factual dispute regarding the accused product.
The injunction also failed for lack of irreparable harm. Ridge couldn’t link price erosion to defendants’ sales, having sold no competing doors. Its tortious interference and false marking claims lacked evidence of likely future harm.
The court reversed and remanded with costs to the defendants.

We will discuss these issues and cases in our SoCal IP Institute meeting on Monday, July 20, 2026.

Jonathan Gutierrez, an associate at SoCal IP, will lead the discussion.

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