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Joyal Products, Inc. v. Johnson Electric North America

February 26, 2009

JOYAL PRODUCTS, INC., PLAINTIFF,
v.
JOHNSON ELECTRIC NORTH AMERICA, INC. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Pisano, District Judge

OPINION

Plaintiff, Joyal Products, Inc. ("Joyal" or "Plaintiff") filed this patent infringement action against Johnson Electric North America Inc., Johnson Electric Consulting, Inc., and Johnson Electric Manufacturory, Ltd. ("Johnson" or "Defendants") alleging that Johnson infringed on Joyal's patent, United States Patent No. 5,111,015 (the "'015 patent"), titled "Apparatus and Method for Fusing Wire." This patent relates to a particular method for making electrical connections in the production of a class of machines known as dynamoelectric machines, which includes electric motors and generators. Joyal alleged that Johnson infringed on the '015 patent by importing and selling in the United States armatures that were manufactured using the patented process.

A few weeks before trial, which took place in October 2008, Johnson consented to the entry of judgment of willful infringement of the '015 patent. Shortly thereafter, the Court granted summary judgment in favor of Plaintiff on Johnson's invalidity defenses and counterclaim. As a result, the only matter remaining for trial was the issue of damages. After a four-day trial in October 2008, a jury awarded damages in the amount of $4,598,184 to Plaintiff.

Presently before the Court are several post trial motions. Johnson has moved for judgment as a matter of law or, in the alternative, a new trial. Joyal has moved for (1) an award of enhanced damages pursuant to 35 U.S.C. § 284, (2) attorneys fees pursuant to 35 U.S.C. § 285; (3) pre-judgment interest; (4) a permanent injunction to 35 U.S.C. § 283; (5) an order setting an ongoing royalty rate; (6) an accounting; and (7) an award of its expert witness fees. For the reasons below, Johnson's motion is denied, and Joyal's motions are granted with the exception of its motion for expert witness fees, which is denied.

I. Defendants' Motion

1. Johnson's Motion for Judgment as a Matter of Law

Johnson moves under Federal Rule of Civil Procedure 50 for judgment as a matter of law on the issue of patent invalidity, arguing that claims 1-6, 8 and 16 of the '015 patent are invalid as anticipated under 25 U.S.C. § 102 and are invalid as obvious under 35 U.S.C. § 103. In support of its motion, Johnson first asserts that it is entitled to judgment as a matter of law "for the same reasons set forth in its Motion and Cross-Motion for summary judgment." Johnson further asserts that, in any event, it should not have been precluded from presenting its invalidity case to the jury even though it did not have an expert on this issue.*fn1 In response, Joyal argues that Johnson's motion is procedurally baseless and is nothing more than an improper attempt to seek reconsideration of the Court's summary judgment rulings on patent validity.

Under Rule 50, a District Court may grant judgment as a matter of law if a "party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue." Fed. R. Civ. P. 50(a)(1). If the court denies a motion for judgment as a matter of law during trial, the motion may be renewed within ten days of entry of judgment in the case. Fed. R. Civ. P. 50(b).

At trial, in the context of a Rule 50 motion, Johnson raised an issue regarding "the summary judgment of patent invalidity," arguing that the issue of validity should have been submitted to the jury. Trial Transcript at 675:7-8, attached as Exhibit B to the Declaration of Michael Pospis ("Pospis Decl."). However, the issue of validity was not the subject of evidence at trial, the parties were not fully heard on the issue of validity and the jury's verdict did not address the issue. The Court denied the motion and, recognizing the inapplicability of Rule 50, stated that "[t]here was a summary judgment entered on the defense of invalidity. To the extent there is an application to reconsider that, it's denied." Trial Transcript at 675:19-21. Johnson's current motion -- namely, its renewed Rule 50 motion -- is similarly procedurally inappropriate, and appears to be little more than an attempt once again to argue the issues raised (and ruled upon) in the motions for summary judgment. Johnson's Rule 50 motion, therefore, denied. Further, to the extent that Johnson's motion can be considered yet another request for reconsideration of this Court's summary judgment rulings, that request is denied as well.

2. Johnson's Motion for a New Trial

Johnson alternatively argues that a new trial on damages is warranted because certain evidentiary rulings by the Court were allegedly erroneous and because an allegedly defective verdict sheet was submitted to the jury. Rule 59 of the Federal Rules of Civil Procedure provides, in relevant part: "The court may, on motion, grant a new trial on all or some of the issues -- and to any party -- after a jury trial ... for any reason for which a new trial has heretofore been granted in an action at law in federal court ..." Fed. R. Civ. P. 59(a)(1)(A). Rule 59(a) does not specify the grounds on which a court may grant a new trial, but rather leaves the decision to the discretion of the district court. See Blancha v. Raymark Indus., 972 F.2d 507, 512 (3d Cir.1992) ("The decision to grant or deny a new trial is confided almost entirely to the discretion of the district court.") (citing Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980)). Generally speaking, courts have granted new trials in cases where (1) there have been prejudicial errors of law; or (2) the verdict is against the weight of the evidence. Maylie v. Nat'l R.R. Passenger Corp., 791 F. Supp. 477, 480 (E.D. Pa.1992). Granting a new trial requires meeting a "high threshold," Grazier v. City of Philadelphia, 328 F.3d 120, 128 (3d Cir. 2003), and "[a]bsent a showing of substantial injustice or prejudicial error, a new trial is not warranted." Montgomery Cty. v. MicroVote Corp., 152 F. Supp. 2d 784, 795 (E.D. Pa. 2001).

Johnson first alleges that there were various errors of law with respect to certain rulings by the Court. When addressing this type of motion, a court "must determine: (1) whether an error was in fact made; and (2) whether the error was so prejudicial that a refusal to grant a new trial would be inconsistent with substantial justice." Bhaya v. Westinghouse Elec. Corp., 709 F. Supp. 600, 601 (E.D. Pa.1989). However, Defendant here makes little attempt to show how the alleged rulings were erroneous or to explain why the alleged errors were prejudicial. Rather, Johnson literally repeats the exact same arguments it raised the first time the Court ruled on the various issues. In fact, Plaintiff's entire argument in its moving brief consists of three sentences, the one of which merely incorporates by reference (1) its Motion in Limine to Exclude the Expert Testimony of Carl Degan; (2) its objections at trial to a certain evidentiary rulings; (3) its appeal of a decision by the Magistrate Judge; (4) and its objections in the Pre-trial Order and its Supplemental Objections. The other two sentences of Johnson's argument baldly allege that a motion for a new trial is warranted because "substantial errors occurred in the admission or rejection of evidence." The moving brief contains no further argument with respect to the evidentiary rulings and, as noted above, Johnson has not shown how it was prejudiced by any alleged error. As such, Johnson's argument fails.

Next, Johnson argues it is entitled to a new trial because the Court asked the jury in the verdict form to determine the reasonable royalty rate for past infringing sales as a percentage of sales revenue, rather than in cents per unit of infringing product. However, Johnson's own expert testified that a royalty for past damages could be expressed in either of these two terms.

Trial Tr. at 508. The expert also explained how converting a royalty expressed in cents per unit into a percentage was a matter of simple arithmetic. Trial Tr. at 508-11. Additionally, Johnson has made no attempt to explain the prejudice that could have resulted from the verdict form, and the Court finds none. Consequently, Johnson's motion for a new trial shall be denied.

II. Plaintiff's Motions

1. Enhanced Damages

Plaintiff seeks enhanced treble damages for Johnson's willful infringement of the '015 patent. Pursuant to 35 U.S.C. § 284, a district court has the discretion in patent infringement cases to "increase the damages up to three times the amount found or assessed" by the jury. Enhanced damages are punitive in nature and are based upon the conduct and culpability of the infringer. Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 (Fed. Cir. 1996). As such, the Federal Circuit has held that an award of enhanced damages requires a showing of willful infringement, a threshold showing clearly satisfied in this case by Johnson's own stipulation. See In re Seagate Technology, LLC, 497 F.3d 1360, 1368 (Fed. Cir. 2007) ("[W]e have held that an award of enhanced damages requires a showing of willful infringement."). Where "an infringer is guilty of conduct upon which enhanced damages may be based, the court next determines, exercising its sound discretion, whether, and to what extent, to increase the damages award given the totality of the circumstances." Jurgens, 80 F.3d at 1570.

In considering enhanced damages, "the paramount determination ... is the egregiousness of the defendant's conduct, based on all the facts and circumstances." Electro Scientific Industries, Inc. v. General Scanning Inc., 247 F.3d 1341, 1353 (Fed. Cir. 2001) (citing Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cir.1992)). The Federal Circuit has identified several factors -- referred to as the Read factors -- for courts to consider in making the determination regarding enhanced damages:

(1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed; (3) the infringer's behavior as a party to the litigation; (4) defendant's size and financial condition; (5) closeness of the case; (6) duration of defendant's misconduct; (7) remedial action by the defendant; (8) defendants motivation for harm; and (9) whether defendant attempted to conceal its misconduct.

Liquid Dynamics Corp. v. Vaughan Co., Inc., 449 F.3d 1209, 1225 (Fed. Cir. 2006) (internal quotations and alterations omitted) (quoting Read Corp., 970 F.2d at 826-27). Plaintiff argues that each of these factors weigh heavily in favor of trebling damages. Johnson, on the other hand, while arguing that three of the Read factors militate against enhanced damages, does not appear to dispute Plaintiff's position as to the remaining six factors. The Court will address each of the Read factors in turn.

i. Deliberate Copying

Plaintiff points out that there is no dispute that Johnson used machines made by Joyal to copy Joyal's patented fusing method without a license, and that it also made copies of Joyal's machines so it could replicate Joyal's patented method. Johnson admits this both in its answers to Joyal's interrogatories (see Exhibit 1 to the Declaration of Stephen Buckingham ("Buckingham Decl.") at 5) and by its silence in response to Plaintiff's arguments on this point. The Court finds that this factor weighs in favor of enhanced damages.

ii. Lack of Good Faith Belief

Plaintiff argues that the second Read factor is "conclusively established" against Defendant by Defendant's own admissions. Pl. Brief at 8. Plaintiff points to the following as evidence establishing this factor: (1) Johnson consented to entry of an Order of Judgment of Willful Infringement, which notes that Defendants "admitted that they have no good faith basis to dispute that each of them has at all material times infringed" on claims 1-6, 8 and 16 of the '015 patent; (2) in 1995, Johnson signed a temporary samples license with Joyal in which Johnson admitted that "[w]ithout a license from Joyal, Johnson would infringe the ['015 patent] if they import into the United States the sample and prototype electric motor armatures" made using Joyal's tang top fusing machine, Buckingham Decl. at Ex. 3; (3) despite this knowledge of Joyal's patent and potential infringement, prior to the lawsuit Johnson never obtained any opinion of legal counsel regarding the invalidity or non-infringement of the '015 patent; see id. at Ex. 1, Interrogatory No. 3; (4) prior to this lawsuit, Johnson never conducted any investigation of the validity or potential infringement of the '015 patent, see id., Interrogatory No. 4. Johnson does not respond to Plaintiff's argument regarding this factor nor does it dispute the factual assertions above. Simply put, Johnson does not dispute the allegations that Johnson never investigated or formed a good faith belief that the '015 patent was invalid or not infringed. The Court, therefore, finds that this factor weighs in favor of enhanced damages.

iii. Litigation Conduct

The third Read factor requires to the Court to look at the infringer's behavior through the course of the litigation. Joyal argues that Johnson's conduct throughout this litigation has been "uniformly egregious," and characterizes the conduct as "that of a huge corporation trying intentionally to drive up unnecessarily the litigation costs of a small plaintiff corporation." Plaintiff points to several instances in support of its assertion:

(1) Joyal sought to amend its complaint in May 2005. Defendant opposed what appeared to be a routine motion to amend with arguments that Magistrate Judge Arleo characterized as "frivolous." Buckingham Decl., Ex. 4 at 6-7. Defendant's counsel even admitted to Judge Arleo at oral argument, "in all candor, Your Honor . . . I didn't expect you not to allow the amendment, in all honesty." Id. at 6.

(2) In July 2005, Joyal was forced to seek the Court's intervention in order to obtain discovery as a result of an apparent lack of diligence on the part of Johnson in responding to Joyal's discovery requests. See id. at Ex. 5. An order compelling ...


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