Metso Minerals, Inc. v. Powerscreen Int'l Distribution Ltd.

• Decision Date: 08 December 2011
• Docket Number: No. 06–cv–1446 (ADS)(ETB).,06–cv–1446 (ADS)(ETB).
• Citation: 833 F.Supp.2d 333
• Parties: METSO MINERALS, INC., Plaintiff, v. POWERSCREEN INTERNATIONAL DISTRIBUTION LIMITED, now known as Terex GB Limited, Terex Corporation, Powerscreen New York, Inc. and Emerald Equipment Systems, Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

833 F.Supp.2d 333

METSO MINERALS, INC., Plaintiff,

v.POWERSCREEN INTERNATIONAL DISTRIBUTION LIMITED, now known as Terex GB Limited, Terex Corporation, Powerscreen New York, Inc. and Emerald Equipment Systems, Inc., Defendants.

No. 06–cv–1446 (ADS)(ETB).

United States District Court, E.D. New York.

Dec. 8, 2011.

Cozen O'Connor, by: Michael C. Stuart, Esq., Lisa Ferrari, Esq., of Counsel, New York, NY, for the Plaintiff.

Squire Sanders & Dempsey LLP, by: George B. Yankwitt, Esq., Mary Margaret Chang, Esq., Andrew H Fried, Esq., of Counsel, New York, NY, for all the Defendants.

Merchant & Gould, P.C., by: Jon Trembath, Esq., of Counsel, Denver, CO, for all the Defendants.

Clauss & Sabatini, PC, by: Ava R. Maynard, Esq., of Counsel, New York, NY, for the Defendant Terex Corporation.

Forchelli, Curto, Schwartz, Mineo, Carlino & Cohn, LLP, by: Andrew E. Curto, Esq., of Counsel, Mineola, NY, for the Defendant Powerscreen New York, Inc.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

The Defendants in this patent infringement case, Powerscreen International Distribution Limited (“Powerscreen”), Terex Corporation (“Terex”), Powerscreen New York, Inc. (“PSNY”), and Emerald Equipment Systems, Inc. (“Emerald”), and the Plaintiff Metso Minerals, Inc. (“Metso”), have filed a number of post-trial motions. The Court now addresses four of the Plaintiff's motions: (1) a motion for treble damages, pursuant to 35 U.S.C. § 284; (2) a motion for pre- and post-judgment interest; (3) a motion for an accounting for supplemental damages, pursuant to 35 U.S.C. § 284; and (4) a motion for attorneys' fees and costs, pursuant to 35 U.S.C. § 285.

I. BACKGROUND

For purposes of this Decision and Order, the Court will state only the background information that is relevant to the issue of damages.

On March 26, 2006, the Plaintiff Metso initiated the present case against the Defendants. In the Complaint, Metso requested an award of damages with prejudgment interest; an injunction; a finding of willful infringement and treble damages; attorneys' fees and costs; and “such other and further relief as this Court or a jury may deem just and proper.” (Docket Entry “DE” No. 1.) On March 29, 2010, in the Joint Pretrial Order, Metso specifically requested damages pursuant to 35 U.S.C. § 284, and stated that “this claim is exceptional, entitling Metso to its attorney fees under 35 U.S.C. § 285.” (DE No. 311.)

On October 8, 2010, shortly before the trial, Metso filed a “Statement Regarding Damages and Other Relief Sought” in accordance with this Court's individual rules, which bifurcated the requested damages award under 35 U.S.C. § 284. (DE No. 403.) In this statement, Metso specifically described the following categories of damages it was seeking: (1) monetary damages from the initial infringement through September 30, 2007; (2) trebling of monetary damages for willful infringement; (3) pre-judgment interest; (4) monetary damages for infringement after October 1, 2007; (5) post-judgment interest; (6) costs and expenses; (7) attorneys' fees. This was the first time that the Plaintiff divided its damages claim into infringement before and after October 1, 2007—the date that fact discovery had ended. The Defendants did not object to this specific aspect of Metso's claims for relief.

At the trial, Metso sought to demonstrate damages using a hypothetically negotiated royalty based on the factors outlined in Georgia–Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y.1970). The parties presented opposing damages experts. Catherine Lawton, Metso's expert, concluded that Metso was entitled to $15,874,098.80, computed from a royalty base of $158,740,988, at a 10% royalty rate on the sale of 1,271 units from 2000 through September 30, 2007. Christopher Vellturo, the Defendants' expert, estimated a total lump sum damages award of $431,000 from the same $158,740,988 royalty base with regard to the same infringing products. Thus, Vellturo opined that Metso was entitled to approximately .27% of the total infringing sales. In other words, his opinion was that “Metso would have accepted less than 1 percent of their revenues at a hypothetical negotiation.” (Trial Tr. at 4469:2–5.)

After a seven week trial, at the charging conference, the Court rejected Metso's request to charge the jury to only consider damages up until October 2007, the close of fact discovery. Thus, the damages question on the Jury's verdict Form read as follows:

Please state the amount of monetary damages you award the Plaintiff Metso against the Defendants for the total amount of reasonable royalties for the use that the defendants have made of the Metso's '618 patent.

The jury awarded the Plaintiff Metso a verdict of 15.8 million. In addition, the jury found that the Defendants willfully infringed Metso's '618 patent.

The Court will now assess the Plaintiff's various pecuniary related motions.

II. MOTION FOR TREBLE DAMAGES

Consistent with Metso's Complaint (DE No. 1) and “Statement Regarding Damages and Other Relief Sought” (DE No. 403), Metso now requests an award of enhanced damages pursuant to 35 U.S.C. § 284.

Based on a review of the evidence in this case, the findings and conclusions made and set forth in this and separate contemporaneousOrders, and the totality of the circumstances, the Court concludes that a doubling of the damage award to Metso is appropriate in this case.

A. Relevant Law

Section 284 of the patent statute provides that damages may be enhanced up to three times the compensatory award. Such an enhancement is appropriate where “the infringer acted in wanton disregard of the patentee's patent rights, that is, where the infringement was willful.” Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed.Cir.1992); see Electro Med. Sys., S.A. v. Cooper Life Sciences, Inc., 34 F.3d 1048, 1056 (Fed.Cir.1994). However, “a finding of willful infringement does not mandate that damages be enhanced, much less mandate treble damages.” Read Corp., 970 F.2d at 826. Thus, the jury's finding that the Defendants willfully infringed various claims of the ' 618 patent is a necessary but not automatic basis for enhancing the damages award in this case.

As explained by the Federal Circuit,

the paramount determination in deciding to grant enhancement and the amount thereof is the egregiousness of the defendant's conduct based on all the facts and circumstances. The court must consider factors that render defendant's conduct more culpable, as well as factors that are mitigating or ameliorating.

Id. (citing cases); see i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 858–59 (Fed.Cir.2010).

To assist the trial court in determining whether to enhance a damages award, the Read court listed a number of factors that the court was to consider. These factors include: (1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed; (3) the infringer's behavior as a party to the litigation; (4) the defendant's size and financial condition; (5) closeness of the case; (6) the duration of the defendant's misconduct; (7) remedial action by the defendant; (8) the defendant's motivation for harm; and (9) whether the defendant attempted to conceal its misconduct. Read Corp., at 826–27;see also Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 183 (Fed.Cir.1994).

To enable appellate review, the district court “is obligated to explain the basis for the [enhanced] award, particularly where the maximum amount is imposed.” Read Corp., 970 F.2d at 828.

B. As to the Application of the Relevant Enhancement Factors

As an initial matter, the Court rejects the Defendants' argument that the Court may not enhance the Plaintiff's damages because the predicate finding of willful infringement is erroneous as a matter of law. As the Court addresses in a separate contemporaneous Order, the Defendants have not established that there were erroneous jury instructions in this regard or that or that there was insufficient evidence from which to conclude that Defendants willfully infringed the '618 patent.

Therefore, the Court now sets forth the reasons for doubling the award, paralleling the factors set forth in Read Corporation v. Portec Inc.

1. Whether There was Deliberate Copying and Whether the Defendants Had a Good Faith Belief of Patent Invalidity and/or Non–Infringement

First, the Court finds that the Defendants willfully and deliberately copied the '618 patent and did not form a well-supported good faith belief of non-infringement. The Defendants admitted at the trial that they were aware of Metso's '618 patent during the 1998 design of the Defendants' infringing mobile screeners. (Trial Tr. at 2706.) The Defendants now contend that they put forward compelling evidence that demonstrated that they conducted a reasonable investigation of the scope of the '618 patent; undertook to design around it; and believed it had successfully done so. However, even if their belief of non-infringement was subjectively in good faith, this is negated by the Court's finding that the Defendants evinced ostrich-like, head-in-the-sand behavior. See Video Views. Inc. v. Studio 21, Ltd., 925 F.2d 1010, 1021 (7th Cir.1991) (“[O]ne who undertakes a course of infringing conduct may neither sneer in the face of the copyright owner nor hide its head in the sand like an ostrich.”); National Business Forms & Printing, Inc. v. Ford Motor Co., No. 08 Civ.1906, 2009 WL 3570387, at *6 (S.D.Tex., Oct. 30, 2009) (an infringer “cannot be naive and be like ostriches and put their heads in the sand and ignore obvious facts” and then later claim entitlement to status as an “innocent infringer.”).

The Defendants' opinion of non-infringement at the initial stages of the development of their infringing screeners was based upon ...