Powell v. The Home Depot USA.. Inc.
| Decision Date | 28 May 2010 |
| Docket Number | Case No. 07-80435-CIV. |
| Citation | 715 F.Supp.2d 1285 |
| Parties | Michael S. POWELL, Plaintiff, v. The HOME DEPOT U.S.A., INC., Defendant. |
| Court | U.S. District Court — Southern District of Florida |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
Peter Glen Herman, Alexander D. Brown, Tripp Scott, Catherine Fran Hoffman, Gregory Laurence Mayback, Scott Smiley, Mayback & Hoffman PA, Fort Lauderdale, FL, for Plaintiff.
B. Trent Webb, Bart Starr, Beth Ann Larigan, Shook Hardy & Bacon, Kansas City, MO, Edward A. Moss, Eileen Tilghman Moss, Heather Cohen Szkaradek, Shook Hardy & Bacon, Miami, FL, for Defendant.
OMNIBUS ORDER AND MEMORANDUM OPINION CONTAINING FINDINGS OF FACT AND CONCLUSIONS OF LAW
THIS CAUSE for patent infringement was tried before a jury, which found that Defendant The Home Depot U.S.A., Inc. (“Home Depot”) willfully infringed claims 1, 2, 4, and 5 of U.S. Patent No. 7,044,039 (the “'039 patent”). After the jury returned its verdict, the court held a bench trial, from February 24, 2010 to February 25, 2010, on the single issue of whether Plaintiff Michael S. Powell (“Powell”) engaged in inequitable conduct when he applied for the fees and prejudgment interest and to enhance damages based upon the jury's finding of willfulness.
Having reviewed the evidence admitted at the bench trial and hearing and considered the arguments of counsel, the court concludes that: (1) the '039 patent is not unenforceable due to inequitable conduct, and (2) an award of enhanced damages in the amount of $3 million, attorneys' fees in the amount of $2.8 million, and prejudgment interest in the amount of $3,150,889.13 is warranted. In accordance with Rule 52(a) of the Federal Rules of Civil Procedure, the court makes the following findings of fact and conclusions of law.
Powell is a principal of Boldstar Technical, LLC. 1 In July 2004, Home Depot approached Powell, with whom Home Depot had a longstanding business relationship, to discuss a serious safety problem: the radial arm saws used in its stores by employees to cut lumber for customers were unnecessarily dangerous, causing serious and permanent injuries to employees and resulting in significant liability. After learning about Home Depot's problem, Powell developed “Safe Hands,” a box-like apparatus designed to enhance the safety of the particular arm saws used by Home Depot. The apparatus had two principal benefits: first, it prevented the operator of the saw from touching the saw blade, thus preventing, and almost eliminating, the threat of injury from the blade; second, it captured runoff sawdust, the inhalation of which is potentially harmful. Powell filed a patent application for the invention, and on May 16, 2006, the United States Patent and Trademark Office (“PTO”) issued the ' 039 patent.
Powell presented Safe Hands to Home Depot, which agreed to purchase test units for eight of its stores and promised to purchase more if the product performed well. Safe Hands proved successful, but Home Depot and Powell were unable to agree on a bulk price for the device. Home Depot reached out to another company, Industriaplex, Inc. (“Industriaplex”), to develop a saw guard and purchased Industriaplex's device for all of its stores. 2 Powell filed this lawsuit on May 17, 2007, alleging that Home Depot willfully infringed claims 1, 2, 4, and 5 of the '039 patent, among other causes of action. Home Depot denied infringing the patent and asserted several counterclaims, including one for unenforceability due to inequitable conduct.
The jury trial in this matter began on February 1, 2010. After opening arguments, the court granted Powell's motion in limine to bifurcate Home Depot's inequitable conduct counterclaim for bench trial following the conclusion of the jury trial. On February 24, 2010, the jury found that Home Depot wilfully infringed Powell's patent and awarded Powell $15 million in damages in the form of a reasonable royalty. The court then held a two-day bench trial on Home Depot's assertion that the '039 patent is unenforceable due to inequitable conduct. On March 8, 2010, the court ruled that Home Depot failed to establish inequitable conduct by clear and convincing evidence and reserved jurisdiction to explicate its findings of fact and conclusion of law. After that ruling, the parties filed a series of post-trial motions, on which the court held a hearing.
Home Depot asserts that the 039 patent. Second, Home Depot argues that Powell intentionally made a false statement in a petition to make special, which prompted the PTO to improperly expedite review of his patent application.
1. In early 2004, Home Depot's Chief Executive Officer expressed concern about the safety of the radial arm saws employees used to cut wood for customers, and directed company executives to either make the saws safer or remove them from all stores.
2. On May 11, 2004, Powell met with Chad Phillips, a Home Depot procurement leader, who informed Powell about Home Depot's problem with radial arm saws and the CEO's directive. Mr. Phillips did not specifically ask Powell to address Home Depot's problem.
3. After the May 11, 2004 meeting, Powell began thinking about ways to make Home Depot's radial arm saws safer.
4. By May 14, 2004, Powell developed a promising safety device-a prototype saw guard designed to be used with the radial arm saws in Home Depot stores. He called the device “Safe Hands.”
5. Powell demonstrated Safe Hands to Mr. Phillips, who expressed interest in the device's promise, but explained that Home Depot had asked The Original Saw Company (“Original Saw”), the company from which Home Depot purchased radial arms saws, to develop a saw guard.
6. Mr. Phillips told Powell that Home Depot would consider both Powell's and Original Saw's devices, and would purchase the superior product.
7. Several weeks later, Home Depot asked Powell to demonstrate his invention to key Home Depot employees. The meeting was scheduled for July 1, 2004 at Home Depot's Product Line Review (PLR) facility in Atlanta, Georgia.
8. When Powell visited the PLR facility on July 1, 2004, he saw the prototype saw guard developed by Original Saw.
9. Powell testified that he remembered the Original Saw device as a yellow, L-shaped bent piece of metal, affixed to a radial arm saw, with open sides.
10. Allen Eden, Original Saw's Vice-President, testified that the Original Saw device was the result of an experiment, was ultimately abandoned, and was not circulated to the public.
11. When he later applied for the '039 patent, Powell disclosed numerous prior art references. Powell did not, however, disclose Original Saw's saw guard to the PTO.
12. Home Depot claims that Powell intentionally withheld reference to the Original Saw device and that a reasonable patent examiner would find such information important in assessing the novelty of the '039 patent.
13. On August 4, 2004, Home Depot purchased eight Safe Hands units from Powell to test the device's performance.
14. Home Depot indicated that it would purchase Safe Hands units for all of its stores if the eight test units performed well.
15. On August 31, 2004, Powell filed Patent Application No. 10/930,928 for the Safe Hands invention.
16. On September 13, 2004, Home Depot offered to purchase Safe Hands in bulk from Powell for $1,200 per unit. Powell did not accept the offer, because his per-unit cost of production exceeded $1,200. Home Depot advised that it might be willing to increase its offer.
17. Over the next couple weeks, Powell and Home Depot continued to discuss the purchase and sale of Safe Hands units. The parties, however, did not reach an agreement, and Powell never countered Home Depot's offer of $1,200.
18. On September 27, 2004, Powell emailed Mr. Phillips regarding the parties' negotiation. Mr. Phillips's reply email explained that negotiations were stalled.
19. After September 27, 2004, Powell suspected that Home Depot might take action that would infringe his patent, once issued.
20. On October 4, 2004, Powell sent Mr. Phillips an email, “in order to advise [him] of potential liability for patent infringement.” In the email, Powell generally explained the claims of the patent application, offered to supply a copy of the patent if Home Depot were to sign a non-disclosure agreement, and offered to have his attorney speak to Home Depot's legal department regarding “any patent infringement areas The Home Depot may be approaching.”
21. On October 6, 2004 and October 15, 2004, Powell sent followup emails to Mr. Phillips. Mr. Phillips did not respond.
22. On November 9, 2004, Mr. Phillips contacted Powell and requested an emergency meeting, which took place the following day. During the meeting, Mr. Phillips informed Powell that Home Depot was using a copy of Safe Hands in its Sandy Plains store.
23. On November 10, 2004, Powell's business partner visited the Sandy Plains store, where he saw what he believed to be a copy of Safe Hands.
24. On October 25, 2004, Powell submitted a Petition to Make Special (the “Petition”) to the PTO pursuant to Section 708.02(I) of the Manual of Patent Examining Procedure. The Petition asked the PTO to expedite review of Powell's patent application based upon “prospective manufacture.”
25. In support of the Petition, Powell submitted a sworn declaration. The declaration contained the following statements:
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