United States District Court, E.D. Virginia, Norfolk Division
OPINION & ORDER
COKE MORGAN, JR. SENIOR UNITED STATES DISTRICT JUDGE.
matter came before the Court pursuant to Plaintiff Cobalt
Boats, LLC's ("Cobalt's") five (5)
post-trial motions: (1) Motion to Amend Judgment to Include
Supplemental Damages, Doc. 358 ("Motion for Supplemental
Damages"); (2) Motion for Prejudgment Interest,
Post-judgment Interest, and Damages for Continuing
Infringement, Doc. 364 ("Motion for Interest and a
Continuing Royalty"); (3) Motion for Enhanced Damages
Pursuant to 35 U.S.C. § 284, Doc. 370 ("Motion for
Enhanced Damages"); (4) Motion for Attorneys' Fees,
Doc. 368; and (5) Motion for a Permanent Injunction Against
Defendant Brunswick Corporation ("Brunswick"), Doc.
366 ("Motion for a Permanent Injunction"), On
August 10, 2017, the Court heard arguments on these Motions.
For the reasons stated herein, the Court GRANTS the Motion
for Supplemental Damages: GRANTS prejudgment interest at the
prime rate, compounded quarterly, from November 19, 2015
through June 23, 2017; GRANTS post-judgment interest in
accordance with 28 U.S.C. § 1961(a); GRANTS a separate
judgment for $257, 500 which grants a royalty of $2, 500 per
unit for the one hundred and three (103) infringing boats
after the jury verdict; GRANTS enhanced damages of a factor
of 1.5 times compensatory damages; GRANTS the Motion for
Attorneys' Fees: and GRANTS the Motion for a Permanent
Court held an eight (8) day trial in this matter between June
12, 2017 and June 21, 2017. See Docs. 317-337. The jury
returned a verdict that Brunswick literally infringed claim 4
of U.S. Patent No. 8, 375, 880 ("the '880
patent"), infringed claims 4 and 5 of the '880
patent under the doctrine of equivalents, and willfully
infringed both of those claims. The jury calculated the
reasonable royalty per unit as $2, 500, with an award of $2,
690, 000. Id. The Court entered judgment on June 23,
2017. Doc. 347.
timely filed its post-trial Motions on July 21, 2017. Docs.
358, 364, 366, 368, 370. The Parties filed a Joint Motion for
Extension of Time to extend the deadline for responses and
replies on the Motion for a Permanent Injunction. Doc. 377.
The Court GRANTED the Motion and extended the deadlines until
August 11, 2017 for a response and August 21, 2017 for a
reply. Doc. 379. Brunswick responded to the other four (4)
Motions on August 4, 2017. Docs. 380-83. Cobalt replied on
August 10, 2017. Docs. 385-89. Brunswick responded to the
Motion for a Permanent Injunction on August 11, 2017. Doc.
394. Cobalt replied in support of the Motion for a Permanent
Injunction on August 21, 2017. Doc. 401. The Court ORDERED
further necessary information from Brunswick on August 31,
2017. Doc. 406. Brunswick responded with an affidavit on
September 29, 2017. Doc. 408.
Rule of Civil Procedure 59(e) allows the Court "to alter
or amend a judgment" if a motion is filed within
twenty-eight (28) days after entry. Fed.R.Civ.P. 59(e).
Federal Rule of Civil Procedure 54(d)(2) requires a party
seeking attorney's fees to file a motion no later than
fourteen (14) days after the entry of judgment, unless a
statute or court order provides otherwise. Fed.R.Civ.P.
Motion for Supplemental Damages
sought in this Motion to add two hundred and sixty (260)
boats to the final judgment as the agreed number of boats
with infringing swim steps that Brunswick sold from January
1, 2017 through June 23, 2017. Doc. 359 at 4. Brunswick
reserved its opposition to the judgment in general but
otherwise did not oppose this Motion. Doc. 380 at 1.
Accordingly, the Court GRANTS the Motion for Supplemental
Damages and added two hundred and sixty (260) boats to the
final judgment, resulting in a final judgment of one thousand
three hundred thirty six (1336) boats with infringing swim
steps and $3, 340, 000 in compensatory damages when applying
the jury's $2, 500 royalty rate.
Motion for Interest and a Continuing Royalty
sought prejudgment interest, post-judgment interest, and
damages for continued infringement after the entry of
judgment. Doc. 364. Cobalt sought prejudgment interest at the
prime rate, compounded quarterly; post-judgment interest at
the statutory rate; and a continuing royalty of $3, 125 for
any post-judgment infringing sales. Doc. 365 at 1. Brunswick
reserved its opposition to the judgment in general, agreed
that interest and continued damages are appropriate, and
raised three (3) disputes regarding Cobalt's precise
terms. Doc. 381 at 1-7.
Rate for Prejudgment Interest
first dispute between the Parties concerned the appropriate
interest rate for prejudgment interest. Cobalt sought the
prime rate of interest for sales between April 2014 and June
23, 2017. Doc. 365 at 4. Brunswick argued that Cobalt must
justify an award of the prime rate, has not provided any such
justification, and as a result, was only entitled to the
52-week Treasury bill rate. Doc. 381 at 1-2. It further
asserted that the 52-week Treasury bill rate "more
accurately reflects what the patentee would have earned on
any royalties." Id. at 3. Cobalt replied to
note that the Federal Circuit does not apply any test for
eligibility for the prime rate and that this District has
never followed the other districts that apply such a test.
Doc. 385 at 2-3. It defended its request for the prime rate
by quoting the rationale for such an award in this District:
"[the] prime rate best compensates a patentee for lost
revenues during the period of infringement because the prime
rate represents the cost of borrowing money, which is a
better measure of the harm suffered as a result of the loss
of the use of money over time." Morpho Detection.
Inc. v. Smiths Detection. Inc.. No. 2:11cv498, 2013 WL
5701522 at *1 (E.D. Va. Oct. 17, 2013).
rate of prejudgment interest and whether it should be
compounded or uncompounded are matters left largely to the
discretion of the district court." Bio-Rad
Laboratories. Inc. v. Nicolet Instrument Corp.. 807 F.2d
964, 969 (Fed. Cir. 1986) (citations omitted). The court must
exercise such discretion "to ensure that the patent
owner is placed in as good a position as he would have been
had the infringer entered into a reasonable royalty
agreement." Id. at 967 (quoting General
Motors Corp. v. Devex Corp.. 461 U.S. 648, 655-56
(1983)). Cobalt correctly observes that the Federal Circuit
does not require any test before a patentee may receive
pre-judgment interest at the prime rate, and this
District's opinion in Morpho Detection is
persuasive as to why this Court should award the prime rate
rather than following other districts that have created a
test for it. Thus, the Court GRANTS pre-judgment interest at
the prime rate. The Court also observed that an award of
interest for the entire infringement period would
overcompensate Cobalt because the infringing sales occurred
over time, not all at the beginning of the infringement
period. Because the Parties specified that April 2014 was the
start of infringement, the Court selects the middle of the
month, April 15, for a starting point, and calculates the
date halfway between April 15, 2014, and the judgment date of
June 23, 2017. Accordingly, the Court GRANTS prejudgment
interest calculated starting November 19, 2015 and ending on
June 23, 2017 in order to recognize that damages were diffuse
throughout the period.
also raised a conditional objection, arguing that prejudgment
interest is not appropriate if the Court awards enhanced
damages. Doc. 381 at 4. It contended that enhanced damages
would adequately compensate Cobalt and that any prejudgment
interest beyond that would be punitive. Id. Cobalt
observed in reply that this District has previously awarded
prejudgment interest limited to compensatory damages. Doc.
385 at 4 (citing NTP. Inc., 270 F.Supp.2d at
762-63). Because the Parties appear in agreement on the
typical practice, the Court GRANTS prejudgment interest
limited to the compensatory damages.
Frequency of Compounding for Prejudgment Interest
second dispute between the Parties concerned the frequency of
compounding of prejudgment interest. Cobalt sought interest
compounded quarterly, citing several examples of such an
award in this District. Doc. 365 at 3-4. Brunswick did not
dispute that compounding is appropriate, but it argued that
Cobalt must prove its entitlement to compounding that is
quarterly rather than annual. Doc. 381 at 3-4. Cobalt replies
to note that no authority in this District has ever required
some showing to obtain quarterly compounding. Doc. 385 at 3.
both Parties are arguing for a different default
frequency of compounding, neither offers much analysis
regarding why their preferred frequency is appropriate here.
It appears that courts in this District routinely grant
quarterly compounding in patent infringement cases. See,
e.g.. Morpho Detection. Inc.. 2013 WL 5701522,
at *1; I/P Engine. Inc. v. AOL Inc.. No. 2:11cv512,
2013 WL 3991472, at *4 (E.D. Va. Aug. 1, 2013);
ActiveVideo Networks. Inc. v. Verizon Commc'ns.
Inc.. No. 2:10cv248, 2011 WL 4899922, at *6 (E.D. Va.
Oct. 14, 2011). Brunswick's authority to the contrary
only demonstrates that other districts default to
annual compounding in patent infringement cases. See Doc. 381
at 3-4 (citing Kaneka Corporation v. SKC Kolon PI.
Inc.. No. Ilcv3397, 2016 WL 4150756, at *28 (CD. Cal.
2016), among others). Given the sparse analysis on either
side of this issue, there is little reason to depart from
this District's apparent general practice. Thus, the
Court GRANTS pre-judgment interest compounding quarterly.
Royalty for Continuing Damages
third and final dispute between the Parties on this Motion
concerned the appropriate royalty for continuing damages.
Cobalt sought a royalty for any post-judgment sales,
acknowledging that entry of an injunction may curtail much of
the need for such a royalty. Doc. 365 at 5. Specifically, it
requested $3, 125 per unit, which is halfway between the
jury's royalty in this case and Cobalt's requested
royalty. Id., at 5. It cites Amando v. Microsoft
Corp.. 517 F.3d 1353, 1361-62 & n.2 (Fed. Cir. 2008)
for the proposition that a reasonable royalty is higher after
a judgment of infringement. Id. at 6. Brunswick
responded to note that Amando does not
require a higher royalty for post-judgment
infringement and to assert that its possibility of winning on
appeal balances out any advantage from the judgment in what
constitutes a reasonable royalty. Doc. 381 at 4-5. It
asserted that a royalty no higher than the jury's royalty
would be appropriate. Id. at 5-6. Cobalt contended
in reply that the reasonable royalty should be higher than
the jury's award at a minimum, and it continues to insist
that a higher royalty is appropriate, especially since
Brunswick is a willful infringer. Doc. 385 at 4-6.
Court FOUND at the hearing that the jury's royalty
adequately compensates Cobalt for any post-judgment sales and
GRANTS a continuing royalty of $2, 500. After the briefing on
this Motion, Brunswick's final calculation was that it
produced one thousand four hundred and thirty nine (1439)
boats with infringing swim steps before it ceased production.
See Doc. 408. This represents an increase of one hundred and
three (103) boats with infringing swim steps over the final
judgment number. Accordingly, Cobalt's final amount of
continuing royalties is $257, 500 for the one hundred and
three (103) additional boats with infringing swim steps.
Court GRANTS the Motion for Interest and a Continuing Royalty
with prejudgment interest at the prime rate, compounded
quarterly, for compensatory damages from November
19, 2015 through June 23, 2017, post-judgment interest in
accordance with 28 U.S.C. § 1961(a), and a continuing
royalty of $2, 500 on the post-judgment infringing products
for a total of $257, 500. The Court will enter separate
judgment for the $257, 500, with post-judgment interest at
the statutory rate. Since the date of these additional sales
was not established as significantly before the judgment
date, the Court is not awarding prejudgment interest on these
Motion for Enhanced Damages
finding of willful infringement, "the court may increase
the damages up to three times the amount found or
assessed." 35 U.S.C. § 284 (2017). Enhanced damages
are in the court's discretion, and "courts should
continue to take into account the particular circumstances of
each case in deciding whether to award damages, and in what
amount." Halo Elecs.. Inc. v. Pulse Elecs.,
Inc.. 136 S.Ct. 1923, 1933 (2016). "When deciding
how much to award in enhanced damages, district courts often
apply the non-exclusive factors articulated in Read Corp.
v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992),
abrogated in part on other grounds by Markman v. Westview
Instruments. Inc.. 517 U.S. 370 (1996)."
Georgetown Rail Equip. Co. v. Holland L.P.. No.
16-2297, ___ F.3d ___, 2017 WL 3499240, at *10 (Fed. Cir.
Aug. 1, 2017) (citing i4i Ltd. P'ship v. Microsoft
Corp.. 598 F.3d 831, 858-59 (Fed. Cir. 2010);
Innovention Toys. LLC v. MGA Entm't. Inc.. 667
Fed.Appx. 992, 993 (Fed. Cir. 2016)).
examining the Read factors, the Parties discuss a
preliminary argument about whether the jury's finding is
"advisory." See Doc. 382 at 5-6. Brunswick cobbles
together a few unreported trademark cases labeling jury
findings of willfulness as advisory and invites this Court to
use the same terminology in this patent case because the
Court is not obligated to grant enhanced damages in a patent
case. See id. Cobalt protests that the Federal
Circuit has not approved of such a treatment of jury findings
in patent cases. Doc. 388 at 3-4. It also observes in its
opening brief that the Federal Circuit requires courts to
adequately explain their reasons for not granting
enhanced damages when a jury found willfulness. Doc. 371 at
16 (citing Jureens v. CBK. Ltd.. 80 F.3d 1566, 1570
(Fed. Cir. 1996)). The argument that the Court could simply
deny enhanced damages by labeling the verdict as advisory
seems to go beyond current authority. See Jureens.
80 F.3d at 1566. This argument is moot since the Court agrees
with the jury's finding and FINDS that Brunswick's
infringement was willful based on five (5) factors:
Brunswick's denial of knowledge of the relevant patent in
its initial Answer, Brunswick's prior attempts at
designing a heavy step in order to avoid the patent,
Brunswick's failure to provide any dictionary or learned
treatise or authority beyond the testimony of its expert in
support of its position that its mechanism was not a lock,
Brunswick's transparently false explanations for its
design, and Brunswick's deceptive presentation of dealer
witness testimony upon the swim step's usefulness and
value. The court's finding renders this
advisory finding argument MOOT.
addition, Brunswick asserted in its briefs that the
jury's royalty adequately compensates Cobalt and that the
Court should decline enhanced damages on that basis. Doc. 382
at 29. It cited example cases where courts mentioned the
jury's high award as part of their reason for not
awarding enhanced damages. See id Cobalt observed in reply
that all of Brunswick's cited cases on this issue also
involved other reasons why the Court did not award enhanced
damages. Doc. 388 at 18. Brunswick's argument is not
persuasive because enhanced damages are warranted on the
facts of this case, as explained below.
deciding how to exercise its discretion, the Court can obtain
helpful guidance from considering the evidence under the nine
(9) Read factors. Those factors are:
1) whether the infringer deliberately copied the ideas or
design of another; (2) whether the infringer, when he knew of
the other's patent, investigated the patent and formed a
good faith belief that it was invalid or that it was not
infringed; (3) the infringer's behavior in the
litigation; (4) the infringer's size and financial
condition; (5) the closeness of the case; (6) the duration of
the misconduct; (7) the remedial action by the infringer; (8)
the infringer's motivation for harm; and (9) whether the
infringer attempted to conceal its misconduct.
Read. 970 F.2d at 826-27.
Factor One: Whether Brunswick Deliberately Copied
Cobalt's Ideas or Design
factor weighs in favor of enhanced damages. It appears from
the record that Brunswick examined the Cobalt patent and step
and tried to design something as close as possible, but the
evidence indicated that it either copied Cobalt's lock
idea intentionally or it redesigned its way back to a lock.
Both sides presented evidence for their respective views, and
the jury ultimately found Cobalt's evidence more
credible. The Court agrees that Brunswick willfully
infringed. At least one of Brunswick's explanations about
why they developed their particular hinge was not credible.
See Trial Tr. at 91:2-10 (offering the explanation at issue).
If a boat owner drives his boat over a rock, and he manages
to pass the entire boat over that rock, the
"safety" from a step that pops up when the rock
hits it will be of minimal use on his destroyed boat. That
explanation sounds like an ex post facto description
by Brunswick to avoid a copying charge rather than an actual
decision by a Brunswick engineer. Thus, in light of the
evidence and the finding of willful infringement, the Court
FINDS that Factor One favors enhanced damages.
Factor Two: Whether Brunswick Investigated Cobalt's
Patent and Formed a Good Faith Belief That It Was Invalid or
That It Was Not Infringed
factor weighs in favor of enhanced damages. Brunswick was not
willing to assert advice of counsel and waive associated
privilege, which means that there is no evidence in the
record of any opinion that would support a good faith belief
that they did not infringe. Despite lacking that evidence,
Brunswick has consistently maintained that its hinge
mechanism is not a lock, and it proffered expert testimony
that its belief was in good faith, but failed to adequately
support such testimony in response to Cobalt's more
persuasive evidence. Cobalt is also correct that other
evidence indicates that Brunswick designed its final hinge
mechanism in a short period of time and did not adequately
consider whether it infringed the '880 patent. See Doc.
371 at 21-22. The jury found and the Court concurs that
Cobalt's cited evidence is more persuasive on
willfulness. As a result, the Court FINDS that Factor Two
favors enhanced damages.
Factor Three: Brunswick's ...