Minks v. Polaris Industries, Inc.

• Decision Date: 17 October 2008
• Docket Number: No. 2007-1491.,No. 2007-1490.,2007-1490.,2007-1491.
• Citation: 546 F.3d 1364
• Parties: Floyd M. MINKS, Plaintiff-Appellant, v. POLARIS INDUSTRIES, INC., Defendant-Cross Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

546 F.3d 1364

Floyd M. MINKS, Plaintiff-Appellant, v. POLARIS INDUSTRIES, INC., Defendant-Cross Appellant.

No. 2007-1490.

No. 2007-1491.

United States Court of Appeals, Federal Circuit.

October 17, 2008.

Christopher T. Hill, Scarborough, Hill & Rugh, of Orlando, Florida, argued for plaintiff-appellant. With him on the brief were Herbert L. Allen and Stephen H. Luther, Allen, Dyer, Doppelt, Milbrath & Gilchrist, of Orlando, FL.

Kenneth C. Bass, III, Sterne, Kessler, Goldstein & Fox P.L.L.C., of Washington, DC, argued for defendant-cross appellant. With him on the brief was Jon E. Wright. Of counsel on the brief was Joseph J. Jacobi, Kirkland & Ellis LLP, of Chicago, IL.

Before NEWMAN, PLAGER, and GAJARSA, Circuit Judges.

GAJARSA, Circuit Judge.

This is a patent infringement case. Floyd M. Minks ("Minks") appeals from a final judgment that Polaris Industries ("Polaris") willfully infringed claim 2 of U.S. Patent No. 4,664,080 ("the '080 patent").¹ After a jury trial, the district court reduced the jury's damages award from $1,294,620.91 to $55,809.60 (after doubling) and awarded attorney fees of $117,316.50, about half the requested amount. Minks appeals the reduction in damages, as well as the amount of attorney fees awarded. He also asserts on appeal that the jury instruction as to the date Polaris received actual notice of the alleged infringement was erroneous. Polaris cross-appeals from the district court's denial of its motion for judgment as a matter of law ("JMOL") on noninfringement and from the jury's finding of willfulness. Because the district court reduced the jury's compensatory damages award without offering Minks a new trial, and because the court's instruction on actual notice failed to apprise the jury of the proper legal standard, he is entitled to a new trial on damages. Conversely, we affirm the award of attorney fees, but we note that the trial judge may exercise his discretion to modify the award if it warrants further consideration on remand. Additionally, because the jury's finding of infringement is supported by substantial evidence, we affirm the district court's denial of Polaris' JMOL motion. We also affirm the jury's finding of willful infringement because Polaris has failed to establish plain error in the willfulness instruction to the jury.

BACKGROUND

The '080 patent is directed to an electronic governor system for internal combustion engines. '080 patent col.1 ll.5-8. In particular, the '080 patent teaches a circuit to limit the speed of an all-terrain vehicle ("ATV") when it is operated in the reverse direction—i.e., a reverse speed limiter. Id. at col.1 ll.11-39. The reverse speed limiter circuit of the '080 patent is activated by shifting the ATV into reverse gear so that the circuit senses the direct current ("DC") voltage used to illuminate a reverse indicator or back up illumination lamp on the ATV-point A of Figure 2. Id. at col.2 ll.36-44. If the engine is coupled to a permanent magnet type alternator, the alternating current ("AC") output will increase linearly with engine speed. Id. at col.2 ll.9-15. Accordingly, once activated, the circuit depicted in Figure 2 of the '080 patent senses the alternator's AC voltage output—point B of Figure 2—thereby sensing engine speed. Id. at col.2 l.67 to col.3 l.3. If the alternator's AC voltage output exceeds a predetermined limit, the

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

circuit emits a control signal to interrupt the ignition of the engine—point C of Figure 2. Id. at col.4 ll.16-23. Engine ignition is restored when the engine speed decreases to the point that the alternator's AC voltage output falls below the predetermined limit. Id. at col.4 II.20-23.

Claim 2 of '080 patent is the only asserted claim. It states:

A system for selectively inhibiting ignition above a preselected engine speed for an internal combustion engine, said system comprising:

(a) means for providing an electrical input which varies in a predetermined manner with engine speed;

(b) control means adapted to control the ignition of said engine, said control means including means for inhibiting ignition responsive to a control signal; and

(c) means for providing said control signal responsive to a direct current voltage input to thereby selectively inhibit ignition responsive to the speed of said engine.

'080 patent col.5 II.51-65. The parties agree both that claim 2 is a means-plus-function claim to be analyzed under 35 U.S.C. § 112 ¶ 6 and that Figure 2 is the only structure disclosed in the '080 patent that corresponds to claim 2.

Minks, the inventor of the '080 patent, is an electrical engineer who designs electronic components for a variety of vehicle types including ATVs. Minks designs and patents the components, which are then manufactured and sold by Minks Engineering, Inc.,² the exclusive licensee of the '080 patent. Polaris is a manufacturer of ATVs that has been purchasing electrical components from Minks Engineering since about 1970. The reverse speed limiter of the '080 patent stems from one of Minks' designs for Polaris. In 1996, Polaris engaged Minks in discussions regarding the '080 patent and the ability to purchase reverse speed limiters from different manufacturers. At this point, Minks informed Polaris that reverse speed limiters based on engine speed and a DC input were covered by the '080 patent. During that same time period, Polaris began implementing a new speedometer in its ATVs that had an integrated reverse speed limiter, which Polaris described to Minks as sensing ground speed rather than engine speed. In 2000 or 2001, Polaris got a quote from a new vendor for a part that included a reverse speed limiter, but on September 24, 2001, Minks sent Polaris a letter confirming that the new vendor was refusing to build the quoted part because it would infringe the '080 patent. In 2002, Polaris and Minks exchanged additional communications regarding Polaris' continued interest in licensing the '080 patent. Also in 2002, Minks discovered that, contrary to Polaris' earlier representations, Polaris' new integrated reverse speed limiters did sense engine speed. Accordingly, Minks purchased a Polaris ATV, confirmed that it infringed the '080 patent, and sent Polaris a letter to this effect on November 23, 2004.

On December 22, 2005, Minks filed suit against Polaris, alleging that Polaris infringed apparatus claim 2 of the '080 patent. After a four-day trial, the jury found that Polaris received actual notice of alleged infringement on November 23, 2004, that Polaris willfully infringed claim 2 of the '080 patent, and that Minks was entitled to $1,294,620.91 in royalty damages. The district court subsequently granted Polaris' Motion for a Reduction in Damages or Remittitur Pursuant to Rule 59(e) and reduced the jury's damages award to $27,904.80. Minks v. Polaris Indus., Inc., No. 6:05-cv-1894 (M.D.Fla. May 22, 2007) (Damages Reduction Order). The court, however, reduced the damages award as a matter of law under Federal Rule of Civil Procedure 50 without offering Minks a new trial on damages. Id. at 12-13. Based on the jury's finding of willfulness, the court doubled this award to $55,809.60 in an amended judgment entered on May 23, 2007. The court also awarded attorney fees plus costs; however, in accordance with the reduction in damages, the court awarded $117,316.50 in fees and costs— approximately half of the amount requested. Final judgment was entered on June 14, 2007, and the court denied Minks' motion for reconsideration on June 29, 2007.

Minks filed a notice of appeal on July 25, 2007, challenging the district court's reduction of the damages award, the amount of attorney fees awarded, and the jury instruction on actual notice. On August 2, 2007, Polaris filed a notice of cross-appeal from the district court's denial of its JMOL motion on noninfringement. On September 17, 2007, shortly after this court issued its decision in In re Seagate Technology, LLC, 497 F.3d 1360 (Fed.Cir. 2007) (en banc), Polaris filed an Amended Notice of Cross-Appeal, appealing the enhancement of damages and grant of attorney fees on the grounds that the jury instruction on willfulness was plain error under Seagate. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1295(a).

DISCUSSION

"We review issues not unique to patent law according to the law of the regional circuit where appeals from the district court would normally lie." Tronzo v. Biomet, 236 F.3d 1342, 1346 (Fed.Cir. 2001) (Tronzo II).

I. DAMAGES

In this case, the jury awarded over one million dollars in compensatory royalty damages to Minks, but the trial court granted Polaris' Rule 50 motion for a reduction of damages and reduced this award to less than thirty thousand dollars without offering Minks the option of a new trial. The court noted that although "[t]he Seventh Amendment [ordinarily] requires that a plaintiff be given the option of a new trial in lieu of remitting a portion of the jury award[,] ... this mandate does not apply when the reduction in a damages award is necessitated by legal error." Damages Reduction Order at 24 (citing Johansen v. Combustion Eng'g, Inc., 170 F.3d 1320, 1329-30 (11th Cir.1999)). Applying this rule, the court reviewed Minks' evidence on damages and found legal error, concluding that "at most the legally competent evidence in the record supported a jury award based on a price per reverse speed limiter of $6.11, a reasonable royalty of 4 percent, and total infringing sales during the pertinent period of 116,270, for a total compensatory damage award of $27,904.80." Id. at 33. The issue before us on appeal is whether the Seventh Amendment required the district court to offer Minks the option of a new trial in lieu of accepting the reduced damages award.³

In the Eleventh Circuit, the district court's decision to reduce the jury's damages award without offering Minks a new trial is a matter of law...