Muniauction, Inc. v. Thomson Corp.
| Decision Date | 31 July 2007 |
| Docket Number | Civil Action No. 01-1003. |
| Citation | 502 F.Supp.2d 477 |
| Parties | MUNIAUCTION, INC., Plaintiff, v. THOMSON CORP. and i-Deal, LLC, Defendants. |
| Court | U.S. District Court — Western District of Pennsylvania |
David J. Mahalek, Douglas M. Hall, John C. Janka, Paul K. Vickrey, Raymond P. Niro, Sally Wiggins, Niro, Scavone, Haller & Niro, Chicago, IL, John E. Hall, Eckert, Seamans, Cherin & Mellott, Pittsburgh, PA, for Plaintiff.
Anthony Herman, Richard L. Rainey, Covington & Burling LLP, Washington, DC, Cathy Bissoon, Cohen & Grigsby, PC, Pittsburgh, PA, for Defendants.
This is an action in patent infringement. On October 5, 2006, a jury found that defendants willfully infringed plaintiff's patent and awarded plaintiff more than $38 million in lost profit damages. In doing so, the jury rejected defendants' contention that the asserted patent claims were obvious, and therefore, invalid.
Following trial, the court met with counsel, which included new counsel for defendants, and encouraged the parties to resolve their dispute. To that end, the court referred the case to retired United States District Judge Donald E. Ziegler, Jr. for mediation, and stayed all further proceedings. We lifted the stay and. set forth a briefing schedule for post-trial motions after attempts at compromise failed. All submissions have been received under that schedule, and the court is prepared to rule on the outstanding motions.
Pending before the court are the following:
(1) Plaintiff's Motion for a Permanent Injunction [doc. no. 322];
(2) Plaintiff's Motion to Tax Prejudgment Interest [doc. no. 327];
(3) Plaintiff's Motion for Enhanced Damages [doc. no. 332];
(4) Defendants' Motion for Judgment as a Matter of Law or for a New Trial [doc. no. 344]; and
(5) Defendants' Motion for a Hearing [doc. no. 382].
In addition, both parties have sought leave to file supplemental memoranda of law addressing the Supreme Court's recent decision in KSR Int'l Co. Teleflex Inc., ___ U.S. ___, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007) [doc. nos. 384 and 386].
The parties are familiar with the relevant facts. Previous opinions of this court contain detailed factual and technological summaries [see doc. nos. 114, 125, and 216]. Simply put, plaintiff owns a patent for auctioning municipal bonds using a web browser (the '099 Patent). Plaintiff accuses defendants of infringing this patent by operating a competing Internet-based municipal bond auction system.
Defendants have asked the court to hold a hearing on the majority of the outstanding post-trial motions. Plaintiff opposes that request. The court does not require oral argument on any of these motions. The issues are aptly presented in the parties' extensive briefs. Oral argument would not assist the court in issuing its rulings. Therefore, we deny defendants' motion for a hearing [doc. no. 382].
Plaintiff seeks a permanent injunction enjoining defendants' continued infringement of the '099 Patent. Defendants claim that plaintiff has not established that it is entitled to such relief under the appropriate legal standards. We conclude that plaintiff has satisfied the requirements of the four-factor test, and is entitled to injunctive relief. Therefore, we grant plaintiff's motion for a permanent injunction [doc. no. 322].
Recently, the Supreme Court rejected the Court of Appeals for the Federal Circuit's "general rule" that permanent injunctive relief should be automatically granted in patent cases upon a finding of infringement. eBay Inc. v. MercExchange, L.L.C., ___ U.S. ___, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). Instead, the Supreme Court reiterated that a district court must determine, in accordance with traditional equitable considerations, whether permanent injunctive relief is appropriate based on the particular facts and circumstances of the case before it. Id. at 1839-41. In doing so, a district court must not categorically grant, nor categorically deny, injunctive relief in patent cases. Id.
Instead, the Supreme Court directed district courts to apply the well-established four-factor test to requests for injunctive relief in patent cases. Id. at 1839. Under that test, in order to be awarded injunctive relief, a plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Id. Upon application of those factors to the facts and circumstances of this case, we conclude that permanent injunctive relief is warranted.
Plaintiff has satisfied the first two requirements of the four part test. Plaintiff and defendants are direct competitors in a two-supplier market. If plaintiff cannot prevent its only competitor's continued infringement of its patent, the patent is of little value.
Moreover, the evidence at trial established, and the jury apparently found, that a sale to defendants is, by logical extension, a lost sale to plaintiff. Instead of buying plaintiffs patented system, customers are buying defendants' infringing system. Although this establishes monetary harm, in the form of lost profits, it harms plaintiff in other ways. The evidence at trial proved that plaintiff suffered permanent loss of market share as a result of defendants' infringing sales. This is a harm that cannot be compensated for solely with monetary damages, making equitable relief appropriate.
Apart from these damages, defendants' infringement has caused harm to plaintiffs patent rights. Even though we may not categorically enter an injunction solely because plaintiff's patent has been infringed, we may still consider this to be a relevant factor in our analysis under the four-factor test. The jury's finding that defendants have willfully infringed plaintiffs patent for six years supports our conclusion that plaintiff has suffered irreparable injury to its patent rights, for which there is no adequate remedy at law.
In addition, we find that plaintiff has suffered, and will continue to suffer, harm to its reputation for innovation as a result of defendants' infringement. There is no dispute that plaintiff was the first to conduct municipal bond auctions over the Internet. " Plaintiff received media attention for doing so. Defendants' infringement has usurped that attention, and, in turn, done harm to plaintiffs reputation as the leading innovator in this field. Recognition as the industry innovator is a tangible benefit afforded by a patent. Defendants have taken that benefit away from plaintiff. Such a harm is not compensable in damages, and is irreparable, making equitable relief appropriate.
We note that defendants apparently have every intention of continuing to offer their infringing system in the absence of an injunction. Therefore, continued harm to plaintiffs patent rights, and continuous damages, both monetary and non-monetary, are guaranteed. Finally, we reject defendants' argument that licensing activity negates any possibility of irreparable harm under the facts of this case. Defendants' argument is both factually, and legally, flawed. Factually, there was no evidence at trial of significant, relevant licensing activity. Legally, licensing activity, even were it to have been proven at trial, does not negate a finding that the patentee has suffered irreparable harm or that legal remedies are inadequate.
Considering all of these facts and circumstances, we find that plaintiff has satisfied the first two requirements of the fourfactor test. We next must consider factor three, the balance of hardships.
We find that the balance of hardships favors plaintiff. In opposing plaintiffs request for equitable relief, defendants claim that they would suffer hardship, in the form of disruption of service, and financial burdens, were an injunction to issue. However, defendants' own witnesses at trial contradicted these statements. Defendants contended at trial that there were several cost-effective, and easily implemented, alternatives to using the infringing New Parity system. One option was to return to the Old Parity system, which would cost virtually nothing, and cause little interruption in service.
Another option would cost around $25,000 and take three weeks to develop. Defendants did not portray themselves at trial as a small, struggling company, for which $25,000 was a significant investment. Although some disruption in service could occur during the three week development period, we note that defendants' customers could use many prior art methods of bid submission during that short time period. Therefore, defendants' claims that they would suffer hardship in the form of disruption of currently scheduled auctions and financial burdens were an injunction to issue ring hollow. Rather, we find that defendants would suffer little, if any, logistical and financial burden were an injunction to issue.
In comparison, without the injunction, plaintiff would suffer continued encroachment on its patent rights, loss of customers price erosion, harm to reputation, and diminished market share. These burdens to plaintiff are real. The jury assigned significant value to some of them through its $38.4 million verdict. Others are incapable of measurement in monetary terms. As such, the third factor, the balance of harms, weighs in favor of plaintiff.
Finally, we find that the fourth factor favors entering a permanent injunction. In this case, the public interest will not be disserved by entry of a permanent injunction. Although defendants now allege that...
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