Tinnus Enters., LLC v. Telebrands Corp.

• Decision Date: 15 March 2019
• Docket Number: CIVIL ACTION NO. 6:16-CV-00033-RWS
• Parties: TINNUS ENTERPRISES, LLC, Zuru Ltd., Plaintiffs, v. TELEBRANDS CORPORATION, Bulbhead.com, LLC, Defendants.
• Court: U.S. District Court — Eastern District of Texas

369 F.Supp.3d 704

TINNUS ENTERPRISES, LLC, Zuru Ltd., Plaintiffs,

v.TELEBRANDS CORPORATION, Bulbhead.com, LLC, Defendants.

CIVIL ACTION NO. 6:16-CV-00033-RWS

United States District Court, E.D. Texas, Tyler Division.

Signed March 15, 2019

Filed March 27, 2019

Brian Matthew Koide, Dunlap Bennett & Ludwig PLLC, Vienna, VA, Cortland Christopher Putbrese, Kevin Thomas Streit, Dunlap, Bennett & Ludwig, PLLC, Richmond, VA, Dana Mark Campbell, Kelly James Kubasta, Ferguson, Braswell, Fraser, Kubasta PC, Plano, TX, David Ludwig, Ellis L. Bennett, Eric Lorenz Olavson, Thomas Mansfield Dunlap, W. Calvin Smith, Dunlap Bennett & Ludwig PLLC, Leesburg, VA, Debra Elaine Gunter, Eric Hugh Findlay, Findlay Craft PC, Tyler, TX, Erick Scott Robinson, Dunlap Bennett & Ludwig PLLC, Houston, TX, Jeffrey D. Ahdoot, Dunlap Bennett and Ludwig, Washington, DC, Noah Fontanez, Dunlap, Bennett & Ludwig, PLLC, Tulsa, OK, Robert P. Greenspoon, Flachsbart & Greenspoon, Chicago, IL, for Plaintiffs.

Morgan Chu, Andreas M. Petasis, Grace Enders Chuchla, Molly Russell, Richard Marc Birnholz, Irell & Manella, Los Angeles, CA, Amy L. Neuhardt, David M. Underhill, Eric John Maurer, Harold William Bloom, III, Pro Hac Vice, Jonathan M. Shaw, Joseph Caleb Alm, Stacey Kamya Grigsby, Pro Hac Vice, Boies, Schiller & Flexner LLP, Washington, DC, David Boies, Boies Schiller Flexner LLP, Gregory Phillip Love, Love Law Firm PC, Henderson, TX, Lance Lee, Attorney at Law, Texarkana, TX, Laura A. Alos, Robert Thomas Maldonado, Tonia Sayour, Vishal J. Parikh, Cooper & Dunham, New York, NY, for Defendants.

ROBERT W. SCHROEDER III, UNITED STATES DISTRICT JUDGE

(LEAD CASE)

REDACTED MEMORANDUM OPINION AND ORDER

Before the Court are the parties' motions for post-trial relief. Having considered the parties' written submissions and the arguments at the April 18, 2018 hearing, the Court rules as follows:

• Plaintiffs' Motion for Enhanced Damages under 35 U.S.C. § 284 (Docket No. 578) is GRANTED ;

• Plaintiffs' Motion for Apportionment of Damages as to Retailer Defendants (Docket No. 579) is DENIED ;

• Plaintiffs' Motion for a Permanent Injunction (Docket No. 580) is GRANTED ;

• Plaintiffs' Motion for Prejudgment and Post-judgment Interest (Docket No. 581) is GRANTED ;

• Defendants' Renewed Motions for Judgment as a Matter of Law and for a New Trial (Docket No. 582) are GRANTED-IN-PART and DENIED-IN-PART ;

• Defendants' Renewed Supplemental Motion for Judgment as a Matter of Law or Alternatively a New Trial (Docket No. 702) is DENIED ; and

• Plaintiffs' Motion to Declare These Consolidated Cases as Exceptional and for Attorneys' Fees (Docket No. 583) is GRANTED .

BACKGROUND

This case concerns a group of water balloon patents assigned to Tinnus Enterprises and invented by Tinnus's founder, Mr. Malone. Plaintiffs Tinnus Enterprises, LLC and Zuru Ltd. ("Plaintiffs") and Defendants Telebrands Corporation ("Telebrands") and Bulbhead.com, LLC ("Bulbhead") are direct competitors in the water balloon market. The parties' products fill multiple water balloons simultaneously; exemplary pictures of the products at issue are shown below:

(Plaintiffs' Bunch O Balloons) (Telebrands' Balloon Bonanza) (Telebrands' Battle Balloons)

This dispute led to multiple cases before this Court. Plaintiffs filed their first complaint on June 9, 2015, alleging that Telebrands' Balloon Bonanza product infringes U.S. Patent No. 9,051,066 ("the '066 Patent"). Case No. 6:15-cv-551 ("Tinnus I "), Docket No. 1. Defendants then filed an ultimately unsuccessful petition for post-grant review ("PGR") of the '066 patent. Case No. 6:15-cv-551, Docket No. 334.

In the early stages of Tinnus I , the Court granted a preliminary injunction, which enjoined the sale of Telebrands' Balloon Bonanza products. SeeCase No. 6:15-cv-551, Docket Nos. 66, 84, 91).¹ During the pendency of the injunction, Plaintiffs sued Telebrands and Bulbhead in this action. See Amended Complaint, Docket No. 265. Here, Plaintiffs allege that Defendants' Battle Balloons product (a redesign of Balloon Bonanza) infringes claims 1–3 of U.S. Patent No. 9,315,282 ("the '282 Patent") and claim 1 of U.S. Patent No. 9,242,749 ("the '749 Patent") (collectively "the patents-in-suit").

The '282 Patent is entitled "System and Method for Filling Containers with Fluids." '282 Patent. The disclosure of the '282 Patent relates to fluid inflatable systems, specifically to a system and method for filling containers with fluids. '282 Patent at 1:22–24. Like the '282 Patent, the '749 Patent describes a system for simultaneously filling multiple water balloons. '749 Patent at 6:35–57.

In early 2016, Plaintiffs filed suit against Bed Bath & Beyond, Fry's Electronics, The Kroger Company, Sears Holding Corporation and Walgreen Co. ("Retailers"), again alleging infringement of the patents-in-suit. See Amended Complaint, Case No. 6:16-cv-34, Docket No. 5. Plaintiffs filed an emergency motion for a preliminary injunction in both cases as to the Battle Balloons products. Docket No. 19; Case No. 6:16-cv-34, Docket No. 26. The Court consolidated both actions, and issued an injunction against Defendant Telebrands. Docket No. 159.

However, the Retailers did not agree to be bound by the injunction against Telebrands. The Court held a hearing and ultimately issued an injunction against the Retailers. Docket Nos. 182, 211, 224. The Federal Circuit later affirmed the both injunctions. Tinnus Enterprises, LLC v. Telebrands Corp. , 708 Fed.Appx. 1019 (Fed. Cir. 2018).

The parties agreed to consolidate the two cases for jury trial, which took place in November 2017. Docket Nos. 468, 473, 546–556. At trial, Defendants stipulated to infringement of claims 1–3 of the '282 Patent, and the jury found that those claims were not invalid. Docket No. 543 at 3. As to the '749 Patent, the jury found that Defendants infringed claim 1 and the claim was not invalid. Id. at 2. The jury awarded Plaintiffs $ 10,250,000 in lost profits and $ 2,000,000 as a reasonable royalty. Id. at 4. The jury further awarded Plaintiffs $ 67,000 to compensate Plaintiffs for the Retailers' infringement. Id. at 5. Finally, the jury found that Telebrands and the Retailers' infringement was willful. Id. The parties now move the Court for post-trial relief.

I. Plaintiffs' Motion for Enhanced Damages under 35 U.S.C. § 284 (Docket No. 578)

In exceptional cases, "the court may increase the damages up to three times the amount found or assessed." 35 U.S.C. § 284. The decision to increase damages, and the amount of such increase, is within the court's discretion. See Halo Elecs., Inc. v. Pulse Elecs., Inc. , ––– U.S. ––––, 136 S.Ct. 1923, 1935–36, 195 L.Ed.2d 278 (2016). "As with any exercise of discretion, courts should continue to take into account the particular circumstances of each case in deciding whether to award damages, and in what amount." Id. at 1933. "When deciding how much to award in enhanced damages, district courts often apply the non-exclusive factors articulated in Read Corp. v. Portec, Inc. , 970 F.2d 816 (Fed. Cir. 1992), abrogated in part on other grounds by Markman v. Westview Instruments, Inc. , 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996)." Georgetown Rail Equip. Co. v. Holland L.P. , 867 F.3d 1229, 1244–45 (Fed. Cir. 2017).

Read sets forth nine non-exclusive factors: (1) whether the infringer deliberately copied the ideas of another; (2) whether the infringer 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) the 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. v. Portec, Inc. , 970 F.2d at 827 (Fed. Cir. 1992). An award need not rest on any particular factor, and not all relevant factors need to weigh in favor of an enhanced award. See SRI Int'l, Inc. v. Advanced Tech. Labs., Inc. , 127 F.3d 1462, 1469 (Fed. Cir. 1997). While the Read factors are helpful to the Court's exercise of its discretion, an analysis focused on "egregious infringement behavior" is the touchstone for enhancing damages rather, than a more rigid, mechanical assessment. See Finjan, Inc. v. Blue Coat Sys., Inc. , No. 13-cv-3999, 2016 WL 3880774, at *16 (N.D. Cal. July 18, 2016).

Plaintiffs argue that enhanced damages are appropriate in this case because Telebrands' infringement was particularly egregious. Plaintiffs cite communications among Telebrands employees that demonstrate an intent to deliberately copy Plaintiffs' patented "Bunch O Balloons" product. Docket No. 578 at 8. Plaintiffs assert that Defendants presented no evidence of any reasonable investigation that led to a good-faith belief that the patents-in-suit were not infringed or invalid. Id. at 10. Plaintiffs further argue that Defendants' litigation tactics were designed solely to delay resolution of the case, obstruct Plaintiffs' ability to prove its case, frustrate the Court by ignoring important orders and ultimately drive up litigation costs. Id. at 13. Specifically, Plaintiffs argue Defendants filed numerous dilatory motions, attempted to inject Post Grant Review ("PGR") proceedings into the trial after the Court ruled that information regarding those proceedings was excluded, repeatedly argued claim constructions that were previously rejected by the Court and engaged in inappropriate discovery practices that caused unnecessary delay and expense. Id.

Plaintiffs also argue that this was not a close case because Defendants presented no legitimate defense as to infringement or invalidity for either of the patents-in-suit. Id. at 17. Plaintiffs assert that the duration of Defendants' misconduct was significant and that Defendants' infringement began on the day the patents-in-suit issued and continued until they were enjoined....