AUDREY B. COLLINS, Chief Judge.
After the jury trial and verdict in this case, the parties have filed several post-trial motions. The following motions are resolved by this Order: (1) Defendants and Counter-claimants Staples, Inc., and Staples The Office Superstore, LLC's ("Staples"') Motion for Judgment as a Matter of Law (Docket No. 487); (2) Plaintiffs and Counter-Defendants Accentra, Inc. and Worktools, Inc.'s ("Accentra's") Motion for Enhanced Damages and Attorney's Fees (Docket No. 492); (3) Accentra's Motion for Permanent Injunction (Docket No. 491); (4) Accentra's Motion for Accounting, Pre- and Post-Judgment Interest, and Costs (Docket No. 490); and (5) Accentra's a Motion for Order re Findings of Fact and Conclusions of Law for Inequitable Conduct (Docket No. 489).
Accentra alleged in this case that Staples willfully infringed three patents owned by Worktools and licensed by Accentra by selling several models of spring-powered staplers, namely, Staples' "Executive One-Touch" stapler (model "EX-5"), its "One-Touch" staplers (models "DX-1" and "CX-1"), and its "One-Touch" 60-sheet "High Capacity" stapler. The patents at issue are U.S. Patent No. 7,178,709 (filed Feb. 24, 2005) (the "'709 patent"); Patent No. 7,080,768 (filed Aug. 23, 2004) (the "'768 patent"); and Patent No. 7,290,692 (filed Jan. 4, 2007) (the "'692 Patent"). For its part, Staples claimed that it did not infringe any of the patents and, if it did infringe, the patents are invalid; Staples further claimed that the '709 patent is unenforceable due to Accentra's inequitable conduct before the Patent and Trademark Office ("PTO").
Following trial, the jury returned a verdict in Accentra's favor, finding that the accused staplers willfully infringed the asserted claims of Accentra's patents
The parties now request various types of post-trial relief, and the Court addresses each of those requests below.
Staples moves for judgment as a matter of law on several grounds. First, Staples argues that the asserted claims of the '709 are indefinite, rendering the patent invalid and requiring that the jury's verdict of willful infringement of that patent be set aside. Second, Staples claims that there was insufficient evidence offered at trial for a reasonable jury to conclude that any of the staplers at issue infringed any of the patents-in-suit. Third, Staples argues that insufficient evidence was offered to support the jury's reasonable royalty award. Finally, Staples argues that insufficient evidence was offered for a reasonable jury to find that Staples willfully infringed any of the patents.
As outlined below, the motion is GRANTED IN PART and DENIED IN PART. The Court concludes that the '709 patent is invalid as indefinite, so the jury's verdict of willful infringement of that patent and award of damages must be set aside, which renders moot Staples' alternative argument that insufficient evidence supported the jury's finding of willful infringement of the '709 patent. The Court finds, however, that substantial evidence supports the jury's finding of infringement of the '768 and '692 patents. The Court rejects Staples' contention that Accentra's expert's testimony on damages must be excluded, but concludes that the damage award must be reduced as a matter of law because the '709 patent is invalid as indefinite. Finally, the Court concludes that insufficient evidence was offered to support the jury's findings that Staples' infringement of the '768 and '692 patents was willful, so the jury's verdict on those issues must be set aside.
Once a party has moved pre-verdict for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a), Rule 50(b) permits the party to renew that motion following the jury verdict. If properly raised, a Rule 50(b) motion in a patent infringement case is governed by Ninth Circuit law. Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1328 (Fed.Cir. 2008). In the Ninth Circuit, "[a] jury's verdict must be upheld if it is supported by substantial evidence." Wallace v. City of San Diego, 479 F.3d 616, 624 (9th Cir. 2007). "`Substantial evidence is evidence adequate to support the jury's conclusion, even if it is also possible to draw a contrary conclusion from the same evidence.'" Id. The Court is not permitted to weigh the evidence offered at trial; it must simply "ask whether the plaintiff has presented sufficient evidence to support the jury's conclusion." Id. In doing so, the Court must "disregard all evidence favorable to the moving party that the jury is not required to believe" and "[t]he evidence must be viewed in the light most favorable to the nonmoving party, and all reasonable inferences must be drawn in favor of that party." Id. In the end, "[j]udgment as a matter of law may be granted only where,
Staples' claim that the '709 patent is indefinite arises in the unusual circumstance here of a post-trial motion for judgment as a matter of law, although Staples raised the same indefiniteness argument at the claim construction stage (Docket No. 58 at 14-23) and at summary judgment (Docket No. 155 at 31). Given this procedural posture, there is some concern that Accentra may be prejudiced by the Court addressing indefiniteness now, so the Court ordered the parties to file supplemental briefs on the issues of indefiniteness and prejudice. The Court concludes that no prejudice would arise from adjudicating indefiniteness following trial and that the '709 patent is, indeed, invalid as indefinite.
Indefiniteness is a "`legal conclusion that is drawn from the court's performance of its duty as the construer of patent claims,'" not a question for the jury. Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1347 (Fed.Cir. 2005). As a result, "`district courts may engage in a rolling claim construction, in which the court revisits and alters its interpretation of the claim terms as its understanding of the technology evolves.'" Pressure Prods. Med. Supplies, Inc. v. Greatbatch Ltd., 599 F.3d 1308, 1316 (Fed. Cir.2010). In Pressure Products, for example, the court approved the district court's further construction of claims during trial because the court, and not the jury, had the obligation to resolve disputes over claim construction, even though they arose during trial. Id. Moreover, trial testimony educated the court on the proper construction of the claims, and the patentee was not prejudiced because it had the opportunity to adjust to the claim construction during trial. Id. at 1315-16.
There is even less of a risk of prejudice to Accentra here than there was in Pressure Products. Unlike Pressure Products, where the court was concerned about prejudice from adopting a different claim construction, finding claims indefinite is not a matter of adopting a different construction in the midst (or after) trial to which the patentee needs to adjust, but a matter of concluding that no construction of the disputed claims is possible. If the risk of prejudice was not enough to prevent the court in Pressure Products from adopting a different construction during trial, then the risk of prejudice to Accentra in finding the claims indefinite is largely nonexistent.
Even if prejudice could arise in this circumstance, Accentra has not shown that it has. First, Staples has repeatedly raised the indefiniteness of the '709 patent, most recently in the parties' Pre-Trial Conference Order (Docket No. 411 at 9) and at the pre-trial conference (Cuomo Supp. Decl., Ex. 6 (Pre-Trial Conf. Tr.) at 10-13), so Accentra can claim no unfair surprise from Staples raising the issue again after trial. Second, Accentra was permitted to present its infringement case to a jury, so ruling now that the '709 patent is indefinite would simply reverse the parties' positions on appeal, and if the Federal Circuit reverses the Court's indefiniteness ruling, it can reinstate the jury's verdict as to the '709 patent. Indeed, Staples may have been more prejudiced than Accentra, as it was forced to trial to defend against claims of infringement of a patent that the Court now concludes is invalid as indefinite. Thus, there is no prejudice that would preclude addressing indefiniteness now.
The definiteness requirement appears in 35 U.S.C. § 112, ¶ 2: "The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention." "Because the claims perform the fundamental function of delineating the scope of the invention ... the purpose of the definiteness requirement is to ensure that the claims delineate the scope of the invention using language that adequately notifies the public of the patentee's right to exclude." Datamize, 417 F.3d at 1347. In the face of indefinite claims, "competitors cannot avoid infringement, defeating the public notice function of patent claims." Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244, 1249 (Fed.Cir.2008). Definiteness does not command "absolute clarity" in the claim terms, but only enough clarity that "those terms can be given any reasonable meaning," and "[o]nly claims `not amenable to construction' or `insolubly ambiguous' are indefinite." Datamize, 417 F.3d at 1347. A claim raising difficult issues "does not ipso facto result in a holding of indefiniteness"; "`[i]f the meaning of the claim is discernible, even though the task may be formidable and the conclusion may be one over which reasonable persons will disagree,'" it is not invalid as indefinite. Id.
An issued patent is subject to a presumption of validity in the face of a claim of indefiniteness, id., and an infringer must prove by clear and convincing evidence that "a skilled artisan could not discern the boundaries of the claim based on the claim language, the specification, and the prosecution history, as well as her knowledge of the relevant art area." Halliburton, 514 F.3d at 1249-50. In determining indefiniteness, general principles of claim construction apply; thus, the Court relies primarily on intrinsic evidence, such as the claim language itself, the patent specification, and the file history. Datamize, 417 F.3d at 1348. The Court may also consider extrinsic evidence, such as expert testimony, keeping in mind that "`what matters is for the court to attach the appropriate weight to be assigned to those sources in light of the statutes and policies that inform patent law.'" Id.
The issue here involves the claims in the '709 patent covering a "pressing area" "near" the front end of the handle that, in claims 24, 25, and 28, moves "about 0.9 to 1 inch" as the handle moves from the "rest position" to the "pre-release position," and in claim 27, moves "about double" the distance the striker moves from the "rest position" to the "pre-release position." (Cuomo Decl., Ex. 1 ('709 Patent) col. 18, ll. 15-18, 36-38, col. 19, ll. 5-10, col. 20, ll. 1-4.) In order to determine infringement, then, one must identify the pressing area according to the measurements in the claims to determine whether it travels the required distance and is "near" the front end of the handle.
At claim construction, Staples contended that there were at least two valid ways to measure the handle travel distance, either vertically on an axis perpendicular to the base, or point-to-point, and because there was no way for a person of ordinary skill to determine which measurement was warranted to identify the pressing area, the claim was indefinite. (Docket No. 58 at 18.)
The Court rejected Staples' indefiniteness argument and construed the term "pressing area" to call for both methods of measurement of handle travel. The Court further found that the method that produced the "smaller" pressing area was the method to be used to determine placement of the pressing area on the handle. Thus, the pressing area was construed as follows:
(Docket No. 87 at 29.) Despite the Court's attempt to construe the claims in the '709 patent to provide a workable way to measure the handle travel at the pressing area, it has become clear that the claims are "insolubly ambiguous" because there is no way to determine the proper method to measure the handle travel distance and no claim construction could provide that answer.
The inability to determine which method of measurement to use is critical to definiteness because the method used can determine whether the pressing area is "near" the front end of the handle and whether an accused stapler has a handle that moves the required distance at the pressing area. For example, Novak testified at his deposition that the pressing area on the EX-5 accused stapler created by using the point-to-point measurement method was not "near a front end of the handle," whereas the pressing area creating by using the vertical measurement method was. (Trial Tr. at 71-74 (Day 2 Afternoon).) Although he contradicted himself at trial when he testified that the pressing area on the EX-5 produced by both measurement methods was "near" the front end of the handle and the jury was entitled to disregard this impeachment in deciding the factual issues of anticipation, obviousness, and infringement, this still suggests that the method of measurement could very well determine whether a device is covered by the claims in the '709 patent.
Perhaps more important, the method of measurement proved outcome-determinative at summary judgment on the issue of invalidity. In moving for summary judgment, Staples argued that the prior art EasyShot stapler invalidated the '709 patent because it had a pressing area in a nearly identical place as the accused staplers, when comparing the EasyShot's point-to-point pressing area to the CX-1's point-to-point pressing area; the same was true with the vertical measurements. (Docket No. 155 at 29.)
There is nothing in the claims language or specification to suggest the proper method of measuring the handle travel distance.
Tellingly, Accentra points to no intrinsic evidence to suggest that one method of measurement is required over any others. Instead, Accentra now argues — for the first time — that the proper construction of the claims covering handle travel distance call for the point-to-point measurement, pointing first to a single comment by its expert Novak at trial that, despite admitting that there are two legitimate ways to measure handle travel, "[t]here may be a scientific basis that I personally would favor the point to point." (Trial Tr. at 70-71 (Day 2 Afternoon).) Accentra has now submitted an entirely new declaration from Novak in conjunction with its supplemental brief, in which Novak conceded that "there is no intrinsic or extrinsic evidence that would indicate to a person of ordinary skill in the art which of at least two possible methods of measurement is required to measure the handle travel distance, or that would support the construction
There are several reasons why Accentra's evolving interpretation of the '709 patent does not support a construction to render the claims definite. First, Novak's testimony at trial carries little weight at claim construction because Novak's own preference of the point-to-point method over the vertical method is not probative of how a person skilled in the art would have understood how to measure handle travel. See Symantec Corp. v. Computer Assocs. Int'l, Inc., 522 F.3d 1279, 1290-91 (Fed. Cir.2008) (finding expert testimony did not support limited claim construction of "computer" and "computer system" because "[t]hat testimony simply recites how each expert would construe the term `computer system' based on his own reading of the specification," and "[s]uch expert testimony, which does not identify the `accepted meaning in the field' to one skilled in the art, is unhelpful."); Sinorgchem Co., Shandong v. Int'l Trade Comm'n, 511 F.3d 1132, 1137 n. 3 (Fed.Cir.2007) (according "little or no weight" to expert testimony of meaning of term because the experts "did not identify any evidence that those skilled in the art would recognize [the disputed term], or any term used in the specification, has an accepted meaning in the field of chemistry."); see also Gen. Protecht Group, Inc. v. Int'l Trade Comm'n, 619 F.3d 1303, 1310-11 (Fed.Cir.2010) ("None of the experts identified a particular meaning in the art, and an expert's subjective understanding of a patent term is irrelevant." (citing Symantec and Sinorgchem)).
Second, Novak's new testimony must be disregarded because it is procedurally improper. Unsurprisingly, Staples vehemently objects to the Court considering this new evidence at this stage, and rightly so. (Docket No. 523.) As the Federal Circuit "has repeatedly explained, 'litigants waive their right to present new claim construction disputes if they are raised for the first time after trial.'" Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc., 628 F.3d 1359, 1376 (Fed.Cir. 2010) (citing Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 694 (Fed.Cir. 2008)). As noted above, Staples raised the indefiniteness of the handle travel limitation at the claim construction stage and Accentra did not urge the Court to construe the claims to require a particular method of measurement. Instead, Accentra defended against indefiniteness at the claim construction stage simply by arguing that no construction of any of the terms in the '709 patent was necessary (Docket No. 57 at 19, 22) and that Staples' expert's vertical and point-to-point measurements of the handle travel distance yielded differing results of the location of the pressing area that amounted only to a "rounding error," suggesting that the method of measurement made no difference to the claims (Docket No. 69 at 23). And adopting a new claim construction now would prejudice Staples, which had no opportunity to defend against Accentra's proposed construction at trial (or by cross-examining Novak on his new opinions). See Pressure Prods., 599 F.3d at 1315-16.
Third, even if Novak's new testimony is not procedurally improper, like his trial testimony, it lends little support to Accentra's claim that a person skilled in the art of stapler design would know to use only the point-to-point method to measure the handle travel distance as disclosed in the '709 patent. In his new declaration, Novak claimed that, "barring any instructions
Yet, Novak cited no actual evidence to support his opinions other than his own statements, which alone warrant little weight in the claim construction context. See Sinorgchem, 511 F.3d at 1137 n. 3. Indeed, even his interpretation of the specification indicated that the point-to-point measurement method would merely "best" reflect the desirable characteristic of storing energy in the power spring, not that this method was required, and the value of his own subjective view of the specification is minimal, given that he provided no evidence that a person skilled in the art would similarly view the specification as requiring the point-to-point method. See Symantec, 522 F.3d at 1290-91.
Moreover, Novak's opinions are subject to reasonable dispute, undermining the value of Novak's testimony as extrinsic evidence that the point-to-point measurement method is required by the claims and specification. In addition to objecting to Novak's new testimony, Staples offered rebuttal opinions from its expert Feeley that raise serious questions about the persuasive value of Novak's views.
Because no intrinsic or extrinsic evidence illuminates the outcome-determinative issue of which method of measurement should be used to measure the handle travel distance in order to locate the pressing area, the Court finds this case to be indistinguishable from Honeywell International, Inc. v. International Trade Commission, 341 F.3d 1332 (Fed.Cir.2003). In that case, the patent-in-suit covered a process for treating a particular type of yarn; the parties disputed the method by which to prepare yarn samples to measure the "melting point elevation" ("MPE"), a claimed feature of the invention that required the yarn to fall within a specified MPE range at some point during the process. Id. at 1334-35. There were four possible methods to prepare samples in order to test the melting point, and each method could cause the MPE to vary greatly; as a result, some of the testpreparation methods would have given rise to infringement, while others would not have. Id. at 1336.
The court invalidated the patent as indefinite, finding that "neither the claims, the written description, nor the prosecution history reference any of the four sample preparation methods that can be used to measure the MPE." Id. at 1339. The court identified three possible claim constructions: the "any one method" construction, which would have required that the MPE fall within the claimed values using any one test-preparation method; the "all methods" construction, which would have required that the MPE fall within the claimed values using all test-preparation methods; and the "ball method" construction, which would have required that the MPE fall within the claimed values using the "ball method" of test preparation, regardless of the results using the other methods. Id. The court found all the methods problematic: the "ball method" construction would have improperly imported limitations outside the bounds of the patent; the "any one method" construction would have produced some results that infringed and some that did not, so competitors would not have known whether they were practicing the invention; and the "all methods" construction would have rendered the invention inoperable. Id. at 1341-42. The court suggested that the "any one method" construction might have been permissible if the different methods produced "essentially identical results," but they did not. Id. at 1341.
As in Honeywell, there is nothing in the intrinsic and extrinsic evidence related to the '709 patent to indicate which of several possible measurement methods should be used. Allowing for any method of measurement suffers from the same problem identified in Honeywell: the method used (point-to-point or vertical) can dictate whether a competitor's stapler is practicing the invention with a pressing area that is "near" the front end of the handle and
Just before oral argument in this case, Accentra cited a recent Federal Circuit opinion in which the Federal Circuit distinguished Honeywell and found the claims at issue to be definite. See Wellman, Inc. v. Eastman Chem. Co., 642 F.3d 1355, 1368 (Fed.Cir.), reh'q and reh'q en banc denied (Aug. 11, 2011), petition for cert. filed (Nov. 9, 2011).
The Federal Circuit reversed, finding the claims were definite. Id. at 1366. With regard to moisture content, while there was no intrinsic evidence to indicate how to control the specific moisture conditions of the covered resin, there was published standard industry guidance on conditioning plastics for DSC and the patentee's expert explained that a person skilled in the art would have interpreted the claims at issue "in view of the internationally recognized" guidance. Id. at 1367-68. In light of this evidence, "nothing suggests that a person of skill in the art would fail to account for moisture or otherwise deviate from the standard conditions set forth in" the guidance. Id. at 1368.
Based on this factual record, the court distinguished Honeywell:
Id. (internal citations omitted). The court further found that the industry guidance would have indicated to a person skilled in the art how to test the resins to account for thermal history. Id.
Honeywell, and not Wellman, remains the controlling case here because Accentra has offered nothing close to the standard industry guidance in Wellman that a person skilled in the art would have used to interpret the claims at issue. The only extrinsic evidence to even suggest that a person might use the point-to-point method of measuring handle travel distance over other methods was the conclusory opinion of Accentra's expert, which was procedurally improper, uncorroborated, and subject to strenuous dispute. In the end, the instant case is no different from Honeywell, which, as recognized by Wellman, found the claims indefinite because multiple outcome-determinative sample preparation methods could have been used and there was no intrinsic or extrinsic evidence to indicate which one was proper.
Therefore, the Court GRANTS Staples' motion for judgment as a matter of law that the '709 patent is invalid and the jury's verdict of infringement and damages must be set aside as to that patent.
Staples also moves for judgment as a matter of law on the issue of infringement of all three of the patents-in-suit. Because the Court has found the '709 patent invalid as indefinite, Staples' challenge to the jury's infringement finding for that patent is moot and the Court addresses only Staples' arguments as to the other two patents. The Court concludes that substantial evidence supported the jury's verdict of infringement of those patents.
Staples challenges the sufficiency of the evidence of infringement of the '768 patent, which requires that "the base sidewalls surround the track pull in the closed stapler position." (Cuomo Decl., Ex. 13 ('768 Patent), col. 12, ll. 15-16.) At claim construction, the Court construed the term "surround" to mean "to enclose or confine so as to bar escape." (Docket No. 87 at 21.) Based on a dispute between the parties at summary judgment over whether the term "sidewalls" could include other features, the Court construed the term "sidewalls" to mean "vertical walls that are extending from the base, which can include additional structures or features." (Docket No. 219 at 14-15.)
Second, Staples argues that the connecting "bridge" structure in the accused staplers designed to confine the track pull is not itself a "sidewall." At its essence, this argument is little more than an objection to the Court's construction of the term "sidewalls," which allowed for additional structures or features. As the claim was construed, however, the jury's verdict of infringement was supported by substantial evidence. For example, Novak testified that each accused stapler model has features attached to the sidewalls (i.e., "little steps") that bar the track pull from escaping. (Trial Tr. at 71 (Day 2 Morning).) In the CX-1, DX-1, and High Capacity models, those structures are molded into a single piece of plastic that spans the entire bottom of the stapler, which Staples calls a "bridge." Staples' expert testified that this structure exists in part to "keep the sidewalls from splaying outwardly or from towing in during the manufacturing process." (Trial Tr. at 97 (Day 5 Afternoon).)
Novak testified that the "little steps" connected to the sidewalls fell within the '798 patent's claim limitations despite the presence of the additional connecting "bridge" because, as a "comprising" claim, an accused device could have additional features and still be infringing. (Trial Tr. at 71 (Day 2 Morning).) In his words, the continuous bar was "an extra feature that's beyond the sidewalls, beyond the structure that's part of the sidewall, that prevents [or] bars from escape of the track and track pull. We have this additional structure, but it doesn't affect my opinion." (Id.) On cross-examination, Novak admitted that he was not sure whether the entire "bridge" itself was a "sidewall," but indicated that it was adjoining the features extending from the sidewall that he considered part of the sidewalls:
(Trial Tr. at 49-51 (Day 2 Afternoon).)
Staples argues that Novak was attempting to improperly modify a "unitary structure" of the "bridge" at the bottom of the accused staplers to find infringement, which is not permitted. See, e.g., Telemac Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316, 1330 (Fed.Cir.2001) ("[T]hat a device is capable of being modified to operate in an infringing manner is not sufficient, by itself, to support a finding of infringement."). But that is not what Novak did. He opined that the addition of the complete bridging structure did not alter his opinion that the portions of the structure attached to the sidewalls met the claim limitations.
The jury was entitled to credit Novak's opinion that the complete "bridge" was merely an addition that did not defeat the "comprising" claim in the '768 patent. See Genentech, Inc. v. Chiron Corp., 112 F.3d 495, 501 (Fed.Cir.1997) ("`Comprising' is a term of art used in claim language which means that the named elements are essential, but other elements may be added and still form a construct within the scope of the claim."). Even Staples' expert Feeley's opinion of no infringement supports Novak's conclusion that the complete "bridge" was merely an additional feature that did not affect infringement. He explained that the complete bridge on the CX-1, DX-1, and High Capacity models served a purpose of preventing the sidewalls from splaying, whereas the EX-5 model did not have a complete "bridge" because it was a metal stapler and had "less of a need for controlling the towing out and towing in of the sidewalls during manufacturing, so it doesn't have a bridge running from one side to the other. So it only contains that portion which was necessary — two little shelves to prevent the latch from being unintentionally actuated." (Trial Tr. at 98 (Day 5 Afternoon) (emphasis added).) Thus, the complete bridge was unnecessary to "surround" the track pull as required by the '768 patent and the jury could have credited Novak's testimony that the bridge was simply an additional structure that did not affect infringement.
Finally, Staples contends that the projections in the EX-5 model (and the end portions of the "bridge" on the CX-1, DX-1, and High Capacity models) are not "sidewalls" or even "additional structures" as required by the '768 patent, relying entirely on its own expert's opinion on the issue. Of course, the Court must disregard Staples' evidence in ruling on a motion for judgment as a matter of law, since the jury was entitled to (and did) reject it. See Wallace, 479 F.3d at 624. As discussed, Novak testified that the structures on the accused staplers were sidewalls that fell within the claim language and therefore
Claims 6 and 7 of the '692 patent cover a safety mechanism in a spring-powered stapler. Independent claim 6 discloses in relevant part:
(Cuomo Decl., Ex. 12, col. 13, ll. 34-45.)
Independent claim 7 discloses in relevant part:
(Id., col. 14, ll. 12-18.)
At the claim construction stage, the Court found the term "locking means" to be a means-plus-function element pursuant to 35 U.S.C. § 112, ¶ 6 and construed the function as "locking or interfering with at least one of the power spring, striker, and handle to prevent or block at least one of the power spring, striker, and handle respectively from moving to complete a cycle." (Docket No. 87 at 16.) Based on the parties' general agreement, the Court construed the structure as:
(Id. at 17.) At trial, Accentra presented evidence and argued that the safety mechanisms in the accused staplers were equivalent under 35 U.S.C. § 112, ¶ 6. In finding the '692 patent infringed by each of the accused staplers, the jury must have agreed. Staples now moves to set aside that finding.
In order for an accused product to infringe pursuant to § 112, ¶ 6, it must be "equivalent," that is, it must "perform the identical function" as the patented invention and must "be otherwise insubstantially different with respect to structure." Kemco Sales, Inc. v. Control Papers Co., 208 F.3d 1352, 1364 (Fed.Cir.2000). Structures are equivalent under § 112, ¶ 6, then, "if they perform the identical function, in substantially the same way, with substantially the same result." Id.
Staples contends that Accentra's expert Gary Novak "never expressly compared the safety in the accused products to that
At trial, Novak testified that the structure of the safety mechanisms in the accused staplers (which did not materially vary among the different models) was substantially equivalent to the structures disclosed in Figures 1-10 and Figures 19 and 20 in the '692 patent. (Trial Tr. at 5, 14 (Day 2 Afternoon).) He drew these conclusions based upon his detailed explanation of the way in which the structure of the safeties in the accused staplers performed the function of "locking or interfering with at least one of the power spring, striker, and handle to prevent or block at least one of the power spring, striker, and handle respectively from moving to complete a cycle," which he opined was substantially similar to the way in which the structures disclosed in the '692 patent performed the identical function. For example, Novak presented an animated demonstrative as to the way the cam-driven lock bar structure disclosed in Figures 19 and 20 moved horizontally to perform the required function (Id. at 5-8 (Day 2 Afternoon)) and then used a similar animated demonstrative of the EX-5 stapler model to show how the camming structure of the accused staplers also moved in a substantially horizontal way, which was substantially the same as the structure disclosed in Figures 19 and 20 (Id. at 8-11). Novak also testified that the two-piece rigid structure in Figures 1-10 moves horizontally to perform the required function and opined that the structures of the safeties in the accused devices performed the same function in substantially the same way. (Id. at 12-14.) Although Novak did not explicitly compare the accused safeties to the structures in Figures 1-10, the jury had already been presented with his testimony on the structure of the accused safeties, so the jury had the evidence upon which to draw the conclusion that the structures were equivalent. The jury was entitled to rely on Novak's explanation of how the safeties in the '692 patent and the accused devices worked and rely upon his ultimate opinion of equivalence to conclude that the safeties in the accused devices were, in fact, equivalent.
For this reason, the two published cases cited by Staples are distinguishable because in both, the patentee lacked evidence on equivalence of the structures at issue. See Toro Co. v. Deere & Co., 355 F.3d 1313, 1324 (Fed.Cir.2004) (affirming summary judgment because patentee "fail[ed] to articulate the technical similarities" between the structures alleged to be equivalent, "or why the differences between the two systems are insubstantial, particularly with respect to the way the claimed function is performed." (emphasis in orig.)); Alpex Computer Corp. v. Nintendo Co., 102 F.3d 1214, 1222 (Fed.Cir. 1996) (rejecting equivalence because patentee's expert opined only on the similarity of function, not structure). Here, by contrast, Novak explained how the structures were similar by, for example, demonstrating that the structure in Figures 19 and 20 called for a cam action and horizontal movement, which was present in the EX-5 safety mechanism (and other accused stapler models). The evidence was sufficient to sustain the jury's finding of equivalence.
Staples argues that Novak's testimony was nevertheless insufficient because its expert Feeley testified that the safety mechanisms in the accused staplers were not equivalent. (Trial Tr. at 105-17 (Day
In any case, while Novak agreed on cross-examination that there were differences between pivoting and sliding generally and that a one-piece mechanism provides limitations that a two-piece mechanism does not (Trial Tr. at 33-34 (Day 4 Morning)), he testified that the key movement of the safety disclosed in Figures 19 and 20 was horizontal: "When the cam or lock bar is pushed up, the blocking surface moves horizontally." (Trial Tr. at 7 (Day 2 Afternoon).) This interpretation was confirmed by the '692 patent specification, which, rather than being limited to pivoting action, discloses that in Figures 19 and 20, the "[l]ock bar 280 is slidably and pivotably fitted to body 210 and undergoes a cam action," and "[i]n its cam action, lock bar 280 slides, jogs, and/or pivots along a path defined by guides 218 formed inside body 210." (Cuomo Decl., Ex. 12, col. 11, 11. 21-28 (emphasis added).) Novak also testified that the key movement for the structure disclosed in Figures 1-10 was horizontal, explaining that the structure converts vertical motion to horizontal motion. (Trial Tr. at 12-13 (Day 2 Afternoon); Trial Tr. at 33 (Day 4 Morning).) As for the two-piece mechanism, while Novak testified that it might have been different from a one-piece mechanism, he did not specifically testify that any difference was substantial (Trial Tr. at 33-34 (Day 4 Morning)), and, in any case, he testified that the structures in Figures 1-10 teach that a two-piece structure could be used and still be equivalent (Trial Tr. at 10, 12 (Day 5 Afternoon)).
Under § 112, ¶ 6, the issue of whether an accused structure is equivalent to the structure in a patent "is a question of fact." Utah Med. Prods., Inc. v. Graphic Controls Corp., 350 F.3d 1376, 1383 (Fed.Cir.2003). The jury was free to reject Feeley's testimony and credit Novak's testimony, which provided substantial evidence for the jury to find that the safeties in the accused staplers infringed the '692 patent pursuant to § 112, ¶ 6. Staples' motion with respect to the '692 patent is DENIED.
Staples moves to reduce the jury's total reasonable royalty award of $2.2 million for several reasons. First, Staples argues that only a reasonable royalty of $229,000 is supported by the evidence — which was the amount testified to by Staples' damages expert Christopher Barry — because Accentra's expert Glen Newman's testimony was unreliable under Daubert
The Court finds that Staples waived most of its objections to Newman's testimony and the objections not waived did not render his testimony inadmissible and insufficient to support a reasonable royalty rate of 10%. However, the jury's damages award exceeded even that rate, and it must be reduced to 10%, which is the highest reasonable royalty rate supported by the evidence at trial. Moreover, the jury's apportionment of damages was not supported by substantial evidence because Newman failed to apportion damages among the patents, which was necessary because the Court has found the '709 patent to be invalid and the High Capacity stapler was accused of infringing only the '769 and '692 patents. However, because Staples' damages expert apportioned the royalty rate among patents, albeit using a much lower rate than 10%, the Court can apportion the 10% royalty rate per patent, per product, and enter a damage award accordingly. Finally, because the reduction of the damages award is based on a legal defect in the evidence, not on the Court's reweighing of the evidence, no new trial is necessary.
Staples argues that the Court must ignore Newman's testimony in ruling on its Rule 50(b) motion because it is inadmissible under Daubert. See Weisgram v. Marley Co., 528 U.S. 440, 453, 120 S.Ct. 1011, 145 L.Ed.2d 958 (2000) (noting that inadmissible expert testimony cannot support a verdict because inadmissible evidence "contributes nothing to a `legally sufficient evidentiary basis'" under Rule 50(a)). Staples identifies several objections to support this contention: (1) Newman did not provide sufficient testimony on the Georgia-Pacific
In order to advance a post-verdict judgment as a matter of law under Rule 50(b), a party must comply with Rule 50(a), which strictly requires that the motion first be made after the close of all evidence, but before the verdict. Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020, 1029 (9th Cir.2003). The failure to timely raise an issue constitutes "a complete
Nothing in the record indicates that Staples raised grounds (1), (3), and (4) at any point before the jury returned its verdict. Before trial, Staples filed a motion in limine to exclude Newman's testimony, but that motion was limited to two alleged flaws in Newman's opinion of reasonable royalties: (1) Newman failed to tie his royalty calculation to the specific patented features of the accused staplers; and (2) Newman's testimony as to the High Capacity model was flawed because he applied the same royalty rate to it, even though that model was accused of infringing only the '768 and '692 patents. (Docket Nos. 239, 309.) After the close of Accentra's case, and again at the close of all testimony, Staples moved for judgment as a matter of law on damages, referring back to those two grounds raised in the motion in limine. (Trial Tr. at 129-30 (Day 5 Afternoon); Trial Tr. at 24 (Day 6 Morning).) At no point before the verdict did Staples challenge Newman's testimony based on the "25% Rule of Thumb," his lack of personal knowledge, or the sufficiency of Newman's testimony on the Georgia-Pacific factors.
Expert testimony on a reasonable royalty rate "must `carefully tie proof of damages to the claimed invention's footprint in the market place.'" Uniloc, 632 F.3d at 1317. On a post-verdict motion for judgment as a matter of law, the Court "must scrutinize the evidence carefully to ensure that the `substantial evidence' standard is satisfied, while keeping in mind that a reasonable royalty analysis `necessarily involves an element of approximation and uncertainty.'" Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir.2009).
Similarly, Newman testified (albeit summarily) to the link between the patented features collectively and demand for the accused staplers, which is only one of many factors in the Georgia Pacific analysis. (Trial Tr. at 49-50 (Day 5 Morning).) Staples contends that it has found nothing in the case law to endorse this approach, but it also has pointed to nothing in the case law to foreclose it when analyzing the patents' collective "footprint in the marketplace," especially in a reasonable royalty analysis, which attempts to reconstruct the hypothetical negotiations of the parties. See Uniloc, 632 F.3d at 1317. Absent specific guidance that this approach is improper when the circumstances of the case indicate that the parties could have approached negotiations in this way, the Court will not exclude Newman's testimony on this ground.
Staples contends that, at the very least, Newman's testimony must be excluded as to the High Capacity stapler because it was accused of infringing only two of the three patents-in-suit, yet he applied the same 10% reasonable royalty rate to that stapler as he applied to the CX-1, DX-1, and EX-5 models, which were accused of infringing all three patents. Although this argument undermines the legal sufficiency of the evidence supporting damages for the High Capacity stapler (discussed below), it is not a ground to exclude Newman's testimony entirely. As noted above, Newman testified that Worktools negotiated licenses based on each stapler sold, regardless of the number of patents involved. (Trial Tr. at 85 (Day 5 Morning).) Worktools' Chief Executive Officer Brad Goldstein confirmed that Worktools received the same royalty for Accentra's Paperpro products, whether the product was covered by one patent or ten patents. (Trial Tr. at 51 (Day 4 Morning).) While Staples urges that the use of the same royalty rate for the High Capacity stapler suggests that the '709 patent (not alleged to be infringed by that model) is valueless, the equally valid inference is that the patent's value is difficult to quantify, so Worktools and Accentra would customarily set a flat royalty rate regardless of the number
Staples contends that the $2.2 million award must be reduced because it was based on a royalty rate higher than even the highest reasonable royalty of 10%, which was the reasonable rate to which Newman testified. "A party challenging a jury's verdict on damages 'must show that the award is, in view of all the evidence, either so outrageously high or so outrageously low as to be unsupportable as an estimation of a reasonable royalty.'" Powell v. Home Depot U.S.A., Inc., 663 F.3d 1221, 1238 (Fed.Cir.2011). While "the jury is not bound to accept a [reasonably royalty] rate proffered by one party's expert but rather may choose an intermediate royalty rate," Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368, 1378 (Fed.Cir.2005), it must adopt a rate "within the range encompassed by the record as a whole," Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 519 (Fed.Cir.1995).
Here, the "range" of reasonable royalty rates supported by the record was 1.5% at the lower end, as Staples' expert Barry testified (Trial Tr. at 53-54 (Day 6 Morning)), and 10% at the higher end, as Accentra's expert Newman testified (Trial Tr. at 60-61 (Day 5 Morning)). The jury awarded $2.2 million in a reasonable royalty, based on $16.7 million in sales (id. at 59; Docket No. 472), which amounts to a reasonable royalty rate of over 13%. That rate was not supported by the evidence offered at trial.
The jury's verdict appears to be based upon a passing comment by Newman that Staples would make an extra $2.2 million in profit by infringing Accentra's patents:
(Trial Tr. at 79-80 (Day 5 Morning); see also id. at 82 (testifying that Staples would "look at the relationship as a whole, and if they see that they can make an extra $2.2 million, they'd be willing — and that's besides their normal profit that they make on these products. That's extra profit.").) However, Newman did not testify that the $2.2 million was based on a reasonable royalty rate of 13% reached during a hypothetical negotiation; indeed, he noted that only "some portion" of the $2.2 million should go to Accentra as a reasonable royalty, which was consistent with his view that the reasonable royalty rate was 10%, which would have resulted in damages at most of $1,678,613.
Thus, the most the jury could have awarded in royalty damages was
The Court must analyze the effect of invalidating the '709 patent on the jury's award of reasonable royalty damages, which is no easy task. It might seem like a straightforward exercise, given that the jury divided the total $2,205,192 verdict both by patent and by infringing model of stapler. (Docket No. 472.) While slightly more complicated by the fact that the Court had to reduce the total award to $1,678,613, the Court still needs only to determine the proportional allocation for each patent and each product and reduce it accordingly. Once that is done, subtracting the award for the '709 patent should yield an accurate damages award.
The problem with this approach, however, is that there must have been sufficient evidence to support the jury's apportionment in the first place, and there was not. The jury's aggregated reasonable royalty rate of 13% was apportioned as follows per patent and per product: 4.82% for each of the three patents in the CX-1, DX-1, and EX-5 models; and 4.33% for each of the '768 and '692 patents in the High Capacity model. There was no evidence presented at trial to support this allocation. First, as Staples argues and the Court discussed supra, Newman's testimony on the royalty rate assumed the three patents were infringed by the CX-1, DX-1, and EX-5 models, so he provided no allocation methodology. (Trial Tr. at 63-69 (Day 5 Morning).) Second, the High Capacity model was not accused of infringing the '709 patent, yet there was no evidence to support the jury's rate of 4.33% for the '768 and '692 patents embodied in that model, which was lower than the 4.82% rate for those same patents in the other models.
Staples argues that, in this circumstance, the jury's damages award must be thrown out entirely, and the proper starting point for any damages calculation in light of the invalidity of the '709 patent must be $229,000, based on Barry's testimony as to the reasonable royalty rate of 1.5%, which he apportioned per patent, per device. (Then that number would be further reduced to account for the invalidity of the '709 patent.) That approach cannot be correct because the Court cannot ignore Newman's testimony that 10% was a reasonable royalty rate overall. Barry testified that 1.5% was a reasonable royalty rate, far lower than Newman's 10% rate. (Trial Tr. at 69 (Day 6 Morning).) The jury must have at least credited Newman's testimony over Barry's, as it awarded damages that amounted to an actual royalty rate of 13%, above even Newman's rate. As explained above, Staples waived the challenge to Newman's royalty rate (as distinct from the amount of damages), so that part of Newman's testimony remains intact and the only remaining narrow issue is apportionment of the reasonable royalty per patent, per device.
Fortunately, the Court can rely on Barry's apportionment, even if not his reasonable royalty rate, since his apportionment was the only method offered in evidence. Barry testified that the reasonable royalty rate in this case should be 1.5%, which he allocated among the patents as follows:.6% for the '709 patent; .6% for the '768 patent; and .3% for the '692 patent. (Trial Tr. at 69 (Day 6 Morning).) Using that same allocation for Newman's 10% reasonable royalty rate, the allocation should be as follows: 4% for the '709 patent; 4% for the '768 patent; and 2% for the '692 patent. Eliminating the 4% royalty rate for the '709 patent, Accentra is left with a 4% reasonable royalty rate for the '768 patent and a 2% reasonable royalty rate for the '692 patent. The amount of damages supported by the evidence is thus based on those royalty rates, although the Court
Because the Court has to set aside the jury's damages calculation, Accentra asks that the Court grant a new trial on damages, while Staples requests that the Court simply reduce the damages to whatever is supported by the record (which, in their view, is $229,000, the amount proffered by Staples' expert Barry). Rule 50(b) permits the Court to order a new trial on an issue raised in a post-verdict motion for judgment as a matter of law, but the parties dispute whether a new trial is mandated in this case. Accentra argues that the Court must offer it the option of a new trial before reducing its damages; otherwise, Accentra's Seventh Amendment right to a jury trial would be violated. See, e.g., Hetzel v. Prince William Cty., 523 U.S. 208, 211, 118 S.Ct. 1210, 140 L.Ed.2d 336 (1998) (per curiam) (holding that, when a court imposes a remittitur of a jury's damages award, the court must offer the plaintiff the option of a new trial). Staples argues that a new trial need not be offered when the evidence is found to be legally deficient on a Rule 50 motion; in that circumstance, the Court can simply reduce the damage award without violating the Seventh Amendment. See, e.g., Cent. Office Tele., Inc. v. Am. Tele. & Tele. Co., 108 F.3d 981, 993 (9th Cir.1997) ("Rule 50 of the Federal Rules of Civil Procedure allows a court to set aside the verdict of the jury and enter judgment as a matter of law, and has been held to be constitutionally compatible with the Seventh Amendment."), rev'd on other grounds 524 U.S. 214, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998).
The Court agrees with Staples that no new trial is mandated here because the issues are legal and do not require the Court to reweigh the evidence to determine whether the award must be reduced. See, e.g., Tronzo v. Biomet, Inc., 236 F.3d 1342, 1350-52 (Fed.Cir.2001); Johansen v. Combustion Eng'g, Inc., 170 F.3d 1320, 1330-31 (11th Cir.1999). In Johansen, for example, the court drew a distinction between cases like Hetzel, which involved a pure remittitur under Rule 59 as an exercise of the court's discretion, and cases in which a reduction is made under Rule 50 because there is a legal infirmity (in that case, because the damages award may have exceeded constitutional due process standards). 170 F.3d at 1331-32. Likewise, the court in Tronzo followed Johansen to conclude that the district court's reduction of the damages award based on the lack of legally sufficient evidence was not a remittitur because it "did not reweigh any evidence, nor did it exercise its discretion in computing the damages award. Instead, the court awarded the maximum damages possible given the lack of competent evidence in the record." 236 F.3d at 1351.
Here, as in Johansen and Tronzo, Staples' challenge to the damages award comes via Rule 50 and the Court has not reweighed any evidence to reach the damages figures herein. Instead, the Court
From a practical perspective, no new trial is warranted because Accentra has not demonstrated that, if given a second chance to prove damages, it could offer new evidence to remedy the legal infirmities in its damages case. Accentra has pointed to no evidence it could have but did not present to the jury to support either the jury's 13% reasonable royalty rate or the jury's allocation of that rate per patent, per device, and the Court will not permit Accentra to conduct any further discovery to obtain that evidence at this stage. Accentra knew before trial that Staples objected to the absence of testimony from Newman on apportionment (Docket No. 239 (motion in limine to exclude Newman's testimony on that ground)), yet Newman still provided no testimony on that point. And, as Staples outlines, Accentra benefitted in various ways from that tactical decision not to present evidence of allocation. (Docket No. 534 at 7-8.) Reopening discovery now — after a jury trial — for Accentra to develop that evidence would manifestly prejudice Staples. The Court concludes that no new trial on damages is warranted in this circumstance.
Staples moves for judgment as a matter of law that there was insufficient evidence to support the jury's verdict that it willfully infringed the patents-in-suit. The issue of willful infringement with regard to the '709 patent is moot based on the Court's ruling that the patent is invalid. The Court agrees with Staples that insufficient evidence was offered to demonstrate willful infringement of the '768 and '692 patents and sets aside the jury's willfulness finding with regard to those two patents.
To establish willful infringement, the patentee must first "show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed.Cir.2007) (en banc). "The state of mind of the accused infringer is not relevant to this objective inquiry." Id. "If the accused infringer's position is susceptible to a reasonable conclusion of no infringement, the first prong of Seagate cannot be met." Uniloc, 632 F.3d at 1310. An accused infringer can defeat the first prong of Seagate by adopting a reasonable claim construction that would result in no infringement, even if that construction is ultimately found to be incorrect. See Cohesive Techs., Inc. v. Waters Corp., 543 F.3d 1351, 1374 (Fed. Cir.2008) ("Because `rigid' was susceptible to a reasonable construction under which Waters's products did not infringe, there was not an objectively high likelihood that Waters's actions constituted infringement."). Because claim construction is a matter of law for the Court, the question of whether the accused infringer's interpretation of the claims was objectively unreasonable
If the threshold objective prong of Seagate is met, "the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer." Seagate, 497 F.3d at 1371. This is a subjective inquiry. See Uniloc, 632 F.3d at 1310.
If the objective requirement of the willfulness inquiry is not met, however, then there can be no finding of willfulness and the Court or the jury need not consider the subjective prong. See Uniloc, 632 F.3d at 1311; DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1337 (Fed.Cir.2009). Because the Court concludes that Accentra failed to carry its burden on the objective prong of the Seagate test with regard to both the '768 and '692 patents, it need not address the subjective prong.
At trial, Staples presented testimony from its attorney Neil Ferraro, who provided Staples with the opinion that the accused staplers did not infringe the '768 patent. (See Trial Tr. at 37-64 (Day 5 Afternoon).) Ferraro testified that he informed Staples that he interpreted two limitations in the '768 patent in a way that demonstrated that the accused staplers did not infringe: (1) the accused staplers did not have automatically ejecting track assemblies; and (2) the accused staplers did not have sidewalls that completely surrounded the track pulls. (Trial Tr. at 43-47 (Day 5 Afternoon).)
With regard to the automatically ejecting track pull, claim 20 of the '768 patent covers a track pull that is "movable to extend rearward from the body in the open position of the stapler so that the track pull extends beyond the base sidewalls to be exposed outside the base sidewalls." (Cuomo Decl., Ex. 13 ('768 Patent) col. 12, ll. 20-24.) Ferraro explained that he interpreted this claim to require an automatically ejecting track pull because the '768 patent specification describes an automatically ejecting track pull as a feature of the covered invention. Because none of the accused staplers had that feature, but instead had "latch pins" that must be released in order to release the track pull, in his opinion, they could not infringe the '768 patent. (Trial Tr. at 44-45 (Day 5 Afternoon).)
Although the Court ultimately construed the term "movable" to allow but not require automatic ejection (Docket No. 87 at 23-24), Ferraro's opinion was a reasonable construction of the claims and Staples could have reasonably relied on it. The specification of the '768 patent explains that the claimed invention embodied an "improvement" of "an automatic opening mechanism for the staple-loading track," distinguishing it from the prior art, which required a three-step process for loading staples: "pivot the body up and around the base until the body is upside down, squeeze the arms of the track pull, and pull the track out." (Cuomo Decl., Ex. 13 ('768 Patent) col. 1, ll. 41-42, 50-54.) The specification further explains that the automatic feature of the claimed track pull "removes one full step in the staple loading process, and a portion of the next step." (Id., col. 2, ll. 44-45.) As a result, "[f]or the staple loading operation, the present invention provides an automatic track opening function." (Id. col. 2, ll. 32-33; see also id., col. 5, ll. 36-37 (explaining that Figure 4 of the patent "shows a typical prior art stapler without the automatic opening feature of the present invention.").)
Consistent with SciMed, Ferraro could have reasonably concluded that, despite the broad language of claim 20, the specification limited claim 20 to a stapler with an automatically ejecting track pull and excluded a stapler with only a manually ejecting track pull, given that the invention was described as having an automatically ejecting track pull as an advantage over the prior art. Thus, this construction could not have risen to clear and convincing evidence of an "objectively high likelihood" of infringement and the jury's contrary conclusion was not supported by substantial evidence.
With regard to the sidewalls that "surround" the track pull, claim 20 of the '768 patent contains the limitation that "the base sidewalls surround the track pull in the closed stapler position." (Cuomo Decl., Ex. 13 ('768 Patent), col. 12, ll. 15-16.) Ferraro testified that he construed the term "surround" to mean "hidden, and hidden means basically you can't see it," and since the sidewalls of the accused staplers exposed the track pull in the back, they could not infringe. (Trial Tr. at 44, 62-63 (Day 5 Afternoon).) This conclusion was apparently based on a comment in the specification that Figure 1, which is described as "one embodiment" of the invention "with track opening features shown in hidden view," shows "recess 127, rib 128, and track pull 60 are hidden inside sidewalls 23 of base 20 and indicated by dashed lines." (Cuomo Decl., Ex. 13 ('768 Patent), col. 3, ll. 32-33, col. 4, ll. 44-48.) Kenneth Zins, the Direct of Product Development in Staples' Brands Group, further testified that he and Ferraro interpreted "surround" to mean that
(Trial Tr. at 10 (Day 5 Afternoon).) At claim construction, the Court disagreed with Zins' and Ferraro's opinions and construed the term "surround" not to require
Once again, the construction adopted by Staples was reasonable in light of the specification of the '768 patent. Although the figures in the patent show a track pull that was not surrounded on all sides by the sidewalls so as to prevent all contact from the outside, the specification at one point describes the track pull as "hidden," which could have been reasonably construed to mean that the track pull is hidden from view or contact from the outside. Given the somewhat vague claim language of "surround," which required the Court to synthesize the claim language, the figures, and the dictionary definition of "surround" to reach the proper construction, it was not unreasonable for Staples to reach a contrary conclusion. Thus, for this separate reason, the jury's conclusion that there was clear and convincing evidence that Staples willfully infringed the '768 patent was not supported by substantial evidence and must be set aside.
As means-plus-function claims, the asserted claims for the '692 patent were subject to the jury's "intensely factual inquiry" of whether the structure of the safety mechanism in the accused staplers was "substantially equivalent" to the structures of the safety mechanism disclosed in the '692 patent. DePuy Spine, 567 F.3d at 1337. It was a close question in this case whether the accused safety designed by Staples was substantially equivalent to the structures of the claimed safety, and, as a result, there could not have been clear and convincing evidence of willful infringement. See id.; see also Uniloc, 632 F.3d at 1310-11.
To support the jury's finding of infringement, Accentra's expert took the unusual approach of comparing two different structures disclosed in the '692 patent to the accused safety to find equivalence. (Trial Tr. at 5-14 (Day 2 Afternoon).) In contrast, Staples' expert testified that the safety mechanisms in the accused staplers were not equivalent, explaining that the two pieces of the accused mechanism that slide in different directions were substantially different from the structures in the patent that disclose essentially one-piece structures that pivot. (Trial Tr. at 105-17 (Day 5 Afternoon).) The jury was free to credit Accentra's expert and find equivalence, but "[t]he mere fact that the jury ultimately found equivalence does not diminish the difficulty of their task, which must be viewed objectively." DePuy Spine, 567 F.3d at 1337.
The Court GRANTS Staples' motion for judgment as a matter of law that the '709
The Court DENIES Staples' motion with regard to infringement of the '768 and '692 patents.
The Court DENIES Staples' request to exclude Newman's testimony on damages, but GRANTS IN PART the motion for judgment as a matter of law on damages because insufficient evidence existed to support the jury's overall award or apportionment among patents and devices. The Court DENIES Accentra's request for a new trial on damages. The Court has provided the parties with the maximum proper allocation of the reasonable royalty rate for the '768 and '692 patents supported by the evidence. The parties are ORDERED to calculate the amount of the reasonable royalty and provide the damages award in the final judgment.
The Court GRANTS Staples' motion with regard to the jury's finding of willful infringement of the '768 and '692 patents and SETS ASIDE the jury's willfulness finding as to those patents.
Accentra has moved for enhanced damages based on the jury's finding of willful infringement of the three patents-in-suit. See 35 U.S.C. § 284. Because the Court has concluded that the '709 patent is invalid and the jury's verdict of willful infringement of the '768 and '692 patents was not supported by substantial evidence, Accentra is not entitled to enhanced damages and the Court DENIES Accentra's request. See Seagate, 497 F.3d at 1368 ("[A]n award of enhanced damages requires a showing of willful infringement."); see also DePuy Spine, 567 F.3d at 1317 (same).
"The court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. "Exceptional cases usually feature some material, inappropriate conduct related to the matter in litigation, such as willful infringement." Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 563 F.3d 1358, 1372 (Fed.Cir.2009). Awarding attorney's fees involves a two-step inquiry: (1) the Court must first determine "whether there is clear and convincing evidence that a case is exceptional"; and (2) if so, the Court "must then determine in its discretion whether an award of attorney fees is justified." Id. at 1372-73. A case may be exceptional for the purpose of awarding attorney's fees even absent willful infringement based on "[l]itigation misconduct and unprofessional behavior." Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1574 (Fed.Cir.1996).
On a single page of its motion, Accentra moves for attorney's fees, claiming that this case is indeed "exceptional," citing nothing but § 284 (enhanced damages) and § 285 (attorney's fees) as a legal basis and merely referring back to its arguments for enhanced damages as a factual basis. Accentra also provided no calculation of a reasonable fee award in the event the Court agrees that the case is exceptional, claiming simply that it would file an application if permitted by the Court. The motion is denied for several reasons.
First, the Court previously ordered the parties to file all post-trial motions by the previously set deadlines. (Docket No. 484.) Accentra's failure to adequately brief the separate entitlement to attorney's fees and provide a calculation within those deadlines constitute grounds to deny the motion. See Local Rule 7-12.
Third, Accentra heavily relies on the jury's finding of willful infringement of the '768 and '692 patents to argue that it is entitled to attorney's fees, but the Court has set aside the jury's findings of willful infringement of those patents, removing willfulness as a basis for a finding the case exceptional. While Accentra may also cite litigation misconduct to justify finding the case exceptional, see Sensonics, 81 F.3d at 1575, its only arguable evidence of litigation misconduct is (1) Staples' initial citation to 20 prior references related to the '692 patent; (2) alleged "frivolous" threats of Rule 11 sanctions; and (3) advertising infringing products in 2011 catalogs, which, as outlined below, Staples was not prohibited from doing. None of this evidence clearly and convincingly demonstrates litigation misconduct sufficient to render the case exceptional.
Following the verdict in its favor on infringement and validity, Accentra moved to permanently enjoin Staples
(Docket No. 491 (Proposed Order).)
Pursuant to 35 U.S.C. § 283, the Court "may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." As the Supreme Court has instructed:
eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). The decision to grant an injunction falls within the discretion of the district court. Id.
Staples has opposed Accentra's motion only on the ground that Accentra has failed to show irreparable harm, although it further argues that, if an injunction is granted, the language proposed by Accentra is too broad. Because Staples does not challenge Accentra's showing that its legal remedies are inadequate, the balance of hardships tips in its favor, and the public interest would not be disserved by an injunction, the Court assumes those elements are met. Nevertheless, the Court finds no irreparable harm here, which defeats Accentra's motion and obviates the Court's need to address Staples' challenge to the scope of the injunction.
Prior to eBay, the Federal Circuit had followed the categorical rule that irreparable harm was presumed upon a finding of infringement. Robert Bosch, LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1148 (Fed. Cir.2011). The Supreme Court in eBay, however, "jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief." Id. at 1149. Nevertheless, in determining whether irreparable harm exists, the Court may still consider "the fundamental nature of patents as property rights granting the owner the right to exclude." Id.
Accentra claims it will suffer irreparable harm if Staples is not prevented from further infringing Accentra's patents in part because in many patent cases "monetary damages alone are insufficient and will not make the patentee whole since they do not address the right to exclude." Honeywell Int'l, Inc. v. Universal Avionics Sys. Corp., 397 F.Supp.2d 537, 546-47 (D.Del.2005). Accentra argues that Staples has continued to infringe the patents-in-suit because the accused staplers appeared on two of Staples' catalogs published in 2011 — Staples Advantage 2011 Federal Government Catalog and Staples Advantage 2011 Full Line Catalog — which represent approximately 60% of Staples' catalog sales; Accentra was able to purchase the CX-1, EX-5, and High Capacity staplers at retail stores; and Accentra saw advertising for the accused staplers on a third-party website. (Robert Moses Decl. ¶¶ 5-9.) Accentra also contends that Staples is a "direct competitor" and, as a result of Staples' infringement, "Accentra lost market share, and that market share will never be recouped in the absence of an injunction preventing Staples from continuing infringement." (Mot. 4.) Accentra also complains that it cost more to litigate this case than the jury's (now set-aside) damages award, so the absence of an injunction would destroy the value of the patents-in-suit and encourage competitors to infringe the patents instead of paying royalties.
Staples responds by pointing out that it has stopped placing orders for infringing staplers and is merely selling through the units it had on hand for which it either has already paid a royalty or as to which it is willing to provide an accounting. Staples is also transitioning to a new technology that undisputedly does not infringe Accentra's patents. Further, Staples argues that no evidence supports Accentra's claims that it has suffered an impaired market share or price erosion due to infringement; in fact, according to Staples, the evidence shows the opposite: Staples and Accentra have different target customers, so Staples could not have eroded Accentra's market share by infringing, and Accentra was a successful company during the period of infringement.
Second, Staples has presented substantial evidence that it is moving away from Accentra's patented technology to staplers that do not use a power spring or a rear-loading track pull, which undisputedly would not infringe Accentra's patents. (D'Angelo Decl. ¶ 9.) Staples further attests that it does not intend to attempt to circumvent the jury's verdict by reworking the spring-powered designs. (Id. ¶ 10.) Thus, there appears to be very little risk that Staples will continue to order and sell infringing staplers.
Third, Accentra has not shown any actual impact on its market share. See Robert Bosch, 659 F.3d at 1154 (noting that the patentee bears the burden of showing lost market share, although it need not do so with direct evidence). Because Accentra sells to retailers like Office Depot and OfficeMax, whereas Staples is a retailer that sells directly to consumers, Staples' sales would presumably have little direct effect on Accentra. And even if there was some potential effect, there was little evidence that it actually occurred in this case. Staples sold 1.1 million units of the accused staplers during the pendency of this lawsuit (Trial Tr. at 54 (Day 5 Morning)), which could have had a great impact on Accentra's profits, yet the jury rejected Accentra's request for lost profits. Indeed, Accentra's Chief Financial Officer Robert Moses testified at trial that Accentra was successful, holding 82% of the market share for spring-powered staplers. (Trial Tr. at 66 (Day 4 Afternoon); see also Trial Tr. at 48 (Day 2 Morning) (stating that Accentra "continue[s] to keep growing the category as — as all the other category members continue to have declines").) There is nothing to substantiate Accentra's claim that its market share has been eroded by Staples' sales of infringing staplers.
Accentra moves for an accounting, pre-and post-judgment interest, and costs. Staples has agreed to provide an accounting for the 22,050 infringing units that were added to its inventory after the verdict and not included in the jury's damages award. Staples also does not oppose the request for post-judgment interest and does not oppose the request for costs, provided the costs awarded are based only on the issues on which Accentra prevailed. It opposes any award of prejudgment interest, but also provides a detailed calculation of interest, should prejudgment interest be awarded.
In light of the Court's other rulings, the Court cannot fix at this time the precise amount of interest, costs, or additional damages based on an accounting, and instead leaves the calculation to the parties to be included in a final judgment. The Court can rule on three issues now: the scope of the accounting required; the availability of pre-judgment interest and the method to calculate that interest; and the award of post-judgment interest. Thus, the motion is GRANTED, with the amounts to be fixed by the parties in the final judgment.
Staples has appropriately agreed to provide an accounting for infringing units it added to inventory after the jury's verdict (which were therefore not included in the jury's damages award). Based on Staples' evidence and representations, Staples added 22,050 units to its inventory between November 27, 2010 — the last date for which evidence of sales was offered at trial — and December 28, 2010 — the date Staples stopped placing orders for the infringing products. The Court ORDERS that an accounting be conducted for these units. See 35 U.S.C. § 284 (providing that the Court "shall award the claimant damages adequate to compensate for infringement"); Ecolab, Inc. v. FMC Corp., 569 F.3d 1335, 1353 n. 5 (Fed.Cir.2009) (approving of accounting "to calculate and award damages for post-verdict sales"), amended on other grounds, 366 Fed.Appx. 154 (Fed.Cir.2009) (unpublished).
Contrary to Accentra's suggestion, Accentra is not entitled to an accounting for the sales of infringing staplers that were in Staples' inventory before November 27, 2010, even if sold after that date, because the jury already accounted for royalties on those units. (O'Connor Decl., Ex. 4; Trial Tr. at 58 (Day 5 Morning).) Staples is
"In patent infringement cases, `prejudgment interest should be awarded under § 284 absent some justification for withholding such an award.'" Telcordia Techs., Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1378 (Fed.Cir.2010) (quoting Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 657, 103 S.Ct. 2058, 76 L.Ed.2d 211 (1983)); Crystal Semiconductor Corp. v. TriTech Microelects. Int'l, Inc., 246 F.3d 1336, 1361 (Fed.Cir.2001) ("In General Motors, the Supreme Court made prejudgment interest the rule, not the exception."). Staples offers no substantive reason why prejudgment interest should not be awarded in this case; Staples argues only that Accentra failed to cite legal authority to support this request. While the Court does not condone Accentra's failure to support its motion, it is not a justification to deny an award. See Crystal Semiconductor, 246 F.3d at 1361-62 (explaining that, "[a]ny justification for withholding the award, according to the Supreme Court, must have some relationship to the award of prejudgment interest itself," such as undue delay that caused interest to escalate).
In determining the applicable interest rate, the Court applies Ninth Circuit law. Transmatic, Inc. v. Gulton Indus., Inc., 180 F.3d 1343, 1348 (Fed.Cir.1999). In the Ninth Circuit, the applicable interest rate is set by 28 U.S.C. § 1961(a), unless "substantial evidence" is offered that a different rate should apply. W. Pac. Fisheries, Inc. v. SS President Grant, 730 F.2d 1280, 1289 (9th Cir.1984). Accentra urges the Court to adopt a 4.5% interest rate compounded monthly, based on its Chief Operating Officer Robert Moses's declaration that this is the rate applied to Accentra's borrowing of funds. (Robert Moses Decl. ¶ 16.) Other than this summary comment by Robert Moses, Accentra offers no evidence — let alone "substantial evidence" — to demonstrate that this rate is necessary to fully compensate Accentra for Staples' infringement. See Crystal Semiconductor, 246 F.3d at 1361 (explaining that prejudgment interest "serves to make the patentee whole because the patentee also lost the use of its money due to infringement"). To the contrary, Accentra's cost for borrowing money potentially accounted for many business risks beyond the instant case, so it bears little relationship to Accentra's full compensation for Staples' infringement. Absent substantial evidence to the contrary, the Court will apply the interest rate set by § 1961(a), compounded annually as provided by § 1961(b).
The Court accepts Staples' method of calculating prejudgment interest as set out in its opposition brief, although it will leave the actual calculations to the parties.
Staples does not oppose post-judgment interest, which is calculated pursuant to § 1961(a) and runs from the date of entry of judgment until the judgment is paid in full. Thus, the Court awards post-judgment interest, to be calculated after judgment is entered.
Accentra moves for the Court to adopt the jury's findings that Staples failed to prove by clear and convincing evidence that named inventor Joel Marks and prosecution attorney Paul Feng withheld material information from the PTO during the prosecution of the '709 patent with the intent to deceive the PTO. (Docket No. 472 at 4.) The Court adopts the jury's factual findings on these issues and thus, Staples' affirmative defense of inequitable conduct fails. Accentra's motion is GRANTED.
Following trial in this case, the Federal Circuit issued an en banc decision that clarified and reworked the standards for proving inequitable conduct. See Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed.Cir.2011) (en banc).
The court rejected the prior "sliding scale" approach, "where a weak showing of intent may be found sufficient based
As to materiality, the court adopted a "but-for" materiality test: "[w]hen an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art." Id. at 1291. "Hence, in assessing the materiality of a withheld reference, the court must determine whether the PTO would have allowed the claim if it had been aware of the undisclosed reference," which is determined by using the preponderance of evidence standard and by giving claims their broadest reasonable construction. Id. at 1291-92.
Finally, as before Therasense, if the accused infringer can carry its heavy threshold burden to show both materiality and intent to deceive, "the district court must weigh the equities to determine whether the applicant's conduct before the PTO warrants rendering the entire patent unenforceable." Id. at 1287.
There remains the issue of applying Therasense to this case, which was submitted to the jury under the pre-Therasense standard in order to obtain the jury's advisory findings on the threshold issues of materiality and intent. (Docket No. 460, Tentative Closing Instructions at 88-92.) In assessing the threshold showing of materiality and intent, the Court may consider the jury's advisory findings. See Hebert v. Lisle Corp., 99 F.3d 1109, 1114 (Fed.Cir.1996); see also Am. Calcar, Inc. v. Am. Honda Motor Co., 651 F.3d 1318, 1334 (Fed.Cir.2011). There is value to advisory jury findings on these issues, particularly in areas of jury expertise like the credibility of witnesses' denials of the intent to deceive the PTO, which Staples even recognized when it advocated that these issues be tried to the jury, rather than bifurcated into a court trial. (Docket No. 350 at 2 ("Staples believes that the issues of materiality and intent, which underlie inequitable conduct, are the types of issues that juries are particularly well suited to resolve and that it would make sense to submit these issues to the jury in this case."); Docket No. 353.) Cf. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ("`Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.'"). Nevertheless, the Court must itself make the findings of fact and conclusions of law on inequitable conduct. See Am. Calcar, 651 F.3d at 1334.
Although Therasense was decided after the jury issued its advisory findings, the jury's findings are still useful here because,
Staples claims that Marks and Feng committed inequitable conduct by failing to disclose to the PTO physical samples of two prior art staplers — the Black & Decker EasyShot stapler (the "EasyShot") and the Novus B7-A (the "Novus") — with an intent to deceive the PTO. This was true, according to Staples, even though Marks and Feng disclosed the packaging for the EasyShot and disclosed U.S. Patent No. 5,356,063 (the "Perez patent"), which was embodied by the Novus physical sample. Consistent with the jury's findings, the Court finds that Staples failed to show by clear and convincing evidence that Marks and Feng withheld this information from the PTO with the specific intent to deceive or that this information would have been "but-for" material to patentability of the '709 patent.
Both Marks and Feng testified unequivocally at trial that they did not withhold the physical samples of the Novus and EasyShot staplers with the intent to deceive the PTO. (Trial Tr. at 73-78 (Day 4 Morning) (Feng Testimony); Trial Tr. at 104-05 (Day 4 Morning) (Marks Testimony).) The jury implicitly credited their testimony on this point, and the Court accepts that finding. See Reeves, 530 U.S. at 150, 120 S.Ct. 2097. Their denials were also credible in light of the facts adduced at trial, which do not support the inference that they intended to deceive the PTO. For example, Marks and Feng obviously did not intend to conceal the existence of the EasyShot from the PTO — they disclosed its packaging. And they disclosed the packaging because they thought its detachable base and flexible sidewalls could be relevant to some of the claims in the '709 patent. (Trial Tr. at 76-77 (Day 4 Morning); id. at 94.) They did not believe, however, that the EasyShot was relevant to the claims directed to handle travel. So, while Marks admitted at trial that the handle travel distance for the EasyShot could not be measured from the packaging alone (id. at 127-28), he did not think the patent examiner would need to take that measurement (id. at 129-30).
As for the Novus stapler, both Marks and Feng testified that handle travel distance could be measured from the Perez patent disclosure — which the Novus stapler embodies — so they did not believe at the time that disclosure of the physical sample was necessary. (Id. at 90-92, 138-140.) Staples attacks their beliefs with evidence that, during the prosecution of an application that issued as U.S. Patent No. 7,748,589 (the "'589 patent'"), which was a continuation of the '709 patent with almost identical handle-travel limitations, Feng suggested that the examiner could not measure the handle travel distance from the Perez patent alone. The examiner had originally rejected claims 2 and 3 in the '589 patent application based in part on handle and striker travel dimensions apparently obtained from dimensionless drawings in the Perez patent. (Cuomo Decl., Ex. 13 (Tr. Ex. 709) at 123 (March 17, 2009 Office Action).) In response, Feng argued that this measurement was not accurate because "the Perez drawings are not drawn to scale and no dimensions are given" and the examiner's measurement should not have been based on "the
At trial, Feng explained that he did not believe one could infer dimensions from the Perez drawings by themselves, but he and Marks inferred dimensions from both the drawings and the specification. (Trial Tr. at 90 (Day 4 Morning).) When cross-examined, Feng claimed that the language he used in this brief before the PTO involving the '589 patent application was therefore "sloppy" and "loose" and that "if you read this entire brief, you'll see that it's pretty consistent that I was talking about the drawings that the examiner was looking at." (Trial Tr. at 91 (Day 4 Morning).) Indeed, the brief went on to explain how Marks was able to infer travel distances using other parts of the Perez patent. (Cuomo Decl., Ex. 13 at 164-65 (June 29, 2009 Pre-Appeal Brief).)
Under Therasense, these facts do not come close to clear and convincing evidence "requir[ing]" the "`the single most reasonable inference'" of an intent to deceive by withholding physical examples of either the EasyShot or Novus staplers. 649 F.3d at 1290.
The evidence at trial also does not compel an inference that the physical samples of the Novus and EasyShot staplers were "but-for" material to the claims in the '709 patent. Prosecuted by Feng and having Marks named as the inventor, the '589 patent had almost identical handle travel limitations as the '709 patent and was prosecuted before the same examiner who examined the '709 patent. (Trial Tr. at 81-84.) During the prosecution of that patent application, Marks and Feng disclosed the physical examples of the Novus and EasyShot staplers, yet the examiner based the rejections of the '589 patent application on the Perez patent and eventually allowed the '589 patent over the Perez patent, suggesting that the samples were cumulative and not material to the same claims in the '709 patent. (Id. at 84-84.) The jury was also presented with the physical samples of the Novus and EasyShot and found the '709 patent valid, undermining any claim that these references were material to the asserted claims in the '709 patent. Thus, the physical samples would not have been "but-for" material to the issuance of the '709 patent, had Marks and Feng submitted them during prosecution of that patent. Therasense, 649 F.3d at 1291.
Therefore, the Court GRANTS Accentra's motion to accept the jury's findings of no materiality or intent and GRANTS judgment to Accentra that the '709 patent is not unenforceable due to inequitable conduct.
The Court GRANTS IN PART and DENIES IN PART Staples' Motion for Judgment as a Matter of Law. (Docket No. 487.) The Court GRANTS judgment to Staples that the '709 patent is invalid as indefinite, and the jury's verdict of willful infringement of that patent and award of damages is SET ASIDE. The Court DENIES judgment to Staples on infringement of the '768 and '692 patents. The Court GRANTS IN PART Staples' motion with respect to damages, and has provided the parties with the proper allocation of the reasonable royalty rate for the '768 and '692 patents, to be calculated and included in a final judgment. The Court DENIES Accentra's request for a new trial on damages. The Court GRANTS judgment to Staples of no willful infringement of the '768 and '692 patents.
The Court DENIES Accentra's motion for enhanced damages and request for attorney's fees. (Docket No. 492.)
The Court GRANTS IN PART and DENIES IN PART WITHOUT PREJUDICE Accentra's motion for an accounting, pre- and post-judgment interest, and costs. (Docket No. 490.)
The Court GRANTS Accentra's motion to adopt the jury's findings of no intent and materiality sufficient to support a finding of inequitable conduct, and the Court GRANTS judgment to Accentra that the '709 patent is not unenforceable due to inequitable conduct.
