Static Control Components Inc. v. Lexmark Int'l Inc.

• Citation: 749 F.Supp.2d 542
• Decision Date: 28 October 2010
• Docket Number: Civil Action Nos. 5:02–571, 5:04–84.
• Parties: STATIC CONTROL COMPONENTS, INC., Plaintiff/Counterclaim Defendant,v.LEXMARK INTERNATIONAL, INC., Defendant/Counterclaim Plaintiff.
• Court: U.S. District Court — Eastern District of Kentucky

749 F.Supp.2d 542

STATIC CONTROL COMPONENTS, INC., Plaintiff/Counterclaim Defendant,

v.LEXMARK INTERNATIONAL, INC., Defendant/Counterclaim Plaintiff.

Civil Action Nos. 5:02–571, 5:04–84.

United States District Court,E.D. Kentucky,Central Division,Lexington.

Oct. 28, 2010.

Binal J. Patel, Christopher J. Renk, Jason S. Shull, Timothy C. Meece, Banner & Witcoff, LTD., Chicago, IL, Charles E. Shivel, Jr., Hanly A. Ingram, Steven Brian Loy, Stoll Keenon Ogden, PLLC, William L. Montague, Jr., Dinsmore & Shohl LLP, Lexington, KY, David A. Shirlen, John F. Morrow, Jr., Mark N. Poovey, Womble, Carlyle, Sandridge & Rice PLLC, Winston–Salem, NC, Joseph M. Potenza, Banner & Witcoff, LTD., Washington, DC, for Defendant/Counterclaim Plaintiff.Ann M. Brose, John R. Fuisz, Melise R. Blakeslee, Stefan M. Meisner, William H. Barrett, McDermott, Will & Emery, LLP, Seth D. Greenstein, Constantine Cannon, PC, Washington, DC, Matthew F. Weil, McDermott, Will & Emery, Irvine, CA, Mickey T. Webster, W. Craig Robertson, III, Wyatt, Tarrant & Combs LLP, Lexington, KY, Steven L. Snyder, William H. Hollander, Wyatt, Tarrant & Combs, LLP, Louisville, KY, for Plaintiff/Counterclaim Defendant.

MEMORANDUM OPINION & ORDER

GREGORY F. VAN TATENHOVE, District Judge.

This matter is before the Court on Lexmark International, Inc.'s Motion for New Trial [R. 1458] pursuant to Federal Rule of Civil Procedure 59. Lexmark seeks a new trial on three grounds: (1) the jury's verdict in Part I of the Special verdict form was against the weight of the evidence; (2) it was prejudiced before and during trial by various rulings of the Court; and (3) certain jury instructions were erroneous and prejudicial to Lexmark. [ Id.] For the reasons set forth below, Lexmark's motion will be denied.

I.

The facts of this case have often been repeated. Here, a brief summary of the facts most relevant to this opinion:

Lexmark International, Inc. (“Lexmark”), is a large producer of printers and toner cartridges for those printers. Static Control Components, Inc. (“Static Control”), is “a leading supplier to toner cartridge manufacturers.” [R. 172 at 16, Case No. 5:02–571.] The remanufacturers take used toner cartridges, refurbish them, refill the toner, and resell the cartridges to end-user consumers. Static Control sells to the remanufacturers parts and supplies for reworking the used toner cartridges, including replacement parts, toner, and microchips. [R. 1.]

This litigation began eight years ago when Lexmark filed suit against Static Control.¹ [5:02–571, R.1.] The primary, though not only, theory on which Lexmark alleged direct patent infringement and inducement of patent infringement against Static Control was predicated on Lexmark's employment of single-use restrictions on the majority of toner cartridges at issue. These “restricted” cartridges have been commonly referred to as “Prebate Cartridges” because Lexmark ran what it at one time called its “Prebate Program.” [R. 594 at 3 n. 4.] In that program, Lexmark's customers could buy printer cartridges at an up-front discount in exchange for their agreement to use the cartridges only once and then return the empty cartridges to Lexmark. Lexmark continued to offer “regular” toner cartridges for those customers who chose not to purchase Prebate cartridges with their terms. [R. 2 at 8.] Therefore, “Prebate” is temporally the reverse of a rebate.

After a six-week trial of this complex case in May and June of 2007, the jury found that Lexmark had not proved by a preponderance of the evidence that Static Control's customers, other than Wazana Brothers International, Inc., NER Data Products, Inc., and Pendl Companies, Inc.,² directly infringed one or more of Lexmark's patents. [R. 1366 at 1.] Because direct infringement is a predicate to a finding of inducement of infringement, this verdict meant Static Control could not be liable for inducement as to these customers. [ See id. at 2.] Additionally, the Jury found that Lexmark had not proved that Static Control induced Wazana Brothers, NER, and Pendl to infringe Lexmark's patents. [ Id. at 3.]

In April of 2007, shortly before the trial, the Court found that Lexmark's Prebate Program avoided the exhaustion of patent rights normally associated with a patented article's first sale consistent with then-binding Federal Circuit precedent. See Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed.Cir.1992). [R. 1008.] Upon Static Control's Motion, however, the Court reversed this decision in March of 2009 in light of the Supreme Court's subsequent holding and statement of the law regarding patent exhaustion in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 128 S.Ct. 2109, 170 L.Ed.2d 996 (2008). [R. 1443.] Specifically, this Court held that because Lexmark's patent rights in its toner cartridges were exhausted by the authorized, unconditional sales of the cartridges to end users, Lexmark's attempt to impose single-use restrictions on the cartridges failed, and therefore Lexmark's Prebate terms were not enforceable under patent law. [ Id.] For the purposes of Lexmark's motion for a new trial, however, the Court will assume that the Prebate Program is valid and enforceable under patent law, as that was the law of the case during the trial. Further, both parties largely made their arguments on this assumption. [ See R. 1458 at 3 n. 3.]

II.

Under Federal Rule of Civil Procedure 59(a), “a new trial is warranted when a jury has reached a ‘seriously erroneous result’ as evidenced by: (1) the verdict being against the weight of the evidence; (2) the damages being excessive; or (3) the trial being unfair to the moving party in some fashion, i.e., the proceedings being influenced by prejudice or bias.” Holmes v. City of Massillon, Ohio, 78 F.3d 1041, 1045–46 (6th Cir.1996) (citations omitted). Only the first and third on this list are at issue in Lexmark's motion for a new trial.

“Generally, the grant or denial of a new trial is purely within the discretion of the trial court....” Logan v. Dayton Hudson Corp., 865 F.2d 789, 790 (6th Cir.1989) (citations omitted). In particular, where “a trial court has improperly admitted evidence and a substantial right of a party has been affected,” the court may order a new trial on part or all of the issues. Id. With respect to motions for new trials premised on the notion that the verdict was against the weight of the evidence, however, the Sixth Circuit has cautioned:

When no undesirable or pernicious element has occurred or been introduced into the trial and the trial judge nonetheless grants a new trial on the ground that the verdict was against the weight of the evidence, the trial judge in negating the jury's verdict has, to some extent at least, substituted his judgment of the facts and credibility of the witnesses for that of the jury. Such an action effects a denigration of the jury system and to the extent that new trials are granted the judge takes over, if he does not usurp, the prime function of the jury as the trier of the facts.

Holmes, 78 F.3d at 1047 (quoting Duncan v. Duncan, 377 F.2d 49, 54 (6th Cir.), cert. denied, 389 U.S. 913, 88 S.Ct. 239, 19 L.Ed.2d 260 (1967)). Accordingly, the Sixth Circuit “has determined that a jury's verdict should not be overturned as being against the weight of the evidence unless the verdict was unreasonable.” Id. (citing Duncan, 377 F.2d at 52).

III.

A.

Lexmark first argues that the jury's answers to Question Nos. 1, 2.1, 2.2, 3.1, 3.2, and 4 of Part I of the Special Verdict Form were against the weight of the evidence. These questions related to Lexmark's claims of direct infringement against Static Control's customers and inducement of infringement against Static Control. [ See R. 1366.] As noted previously, the jury's verdicts on these claims were unfavorable to Lexmark. [ See id.]

Lexmark raised a similar argument to the one advanced in its current motion before. During the trial, for example, Lexmark made a motion for judgment as a matter of law with respect to direct infringement and inducement of infringement. This motion was denied. [R. 1356.] After the trial, Lexmark renewed it motion for judgment as a matter of law on these issues. Again, that motion was denied. [R. 1430.]

As noted by Lexmark, the standards for reviewing a motion for judgment as a matter of law are different from the standards for reviewing a motion for a new trial. Namely, in reviewing a motion for judgment as a matter of law, the Court must view the evidence in a light most favorable to the party against whom it is made, and the motion should be granted “[o]nly when it is clear that reasonable people could come to but one conclusion from the evidence....” Hill v. McIntyre, 884 F.2d 271, 274 (6th Cir.1989) (citation omitted). Clearly, this is a more stringent standard than evaluating whether the verdict was against the weight of the evidence.

Although a different standard applies, the Court reaches the same result it reached in its disposition of Lexmark's renewed motion for judgment as a matter of law. In that opinion, the Court stated with respect to Lexmark's claims of direct infringement:

First, though not required to do so, Lexmark presented little direct evidence of infringement by these customers [other than Wazana Brothers, NER, and Pendl] generally, and specifically, by implication, little direct evidence of infringement of the '015 patent covering encoder wheels ³ and the '661 patent covering the wing-like guides on Lexmark's toner cartridges. Instead, Lexmark chose to build its case around direct evidence of infringement by Wazana, NER, and Pendl, three remanufacturers that, as previously stated, this Court held liable for direct infringement as a matter of law. Lexmark then asked the jury to infer direct infringement by the entire class. The Court finds that it was reasonable for the jury to decide that Lexmark had not proven its case for infringement by the entire class of Static...