Transmatic, Inc. v. Gulton Industries, Inc.

• Decision Date: 29 April 1999
• Docket Number: No. 98-1385,98-1385
• Citation: 180 F.3d 1343,50 USPQ2d 1591
• Parties: TRANSMATIC, INC., Plaintiff-Appellee, v. GULTON INDUSTRIES, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

180 F.3d 1343

TRANSMATIC, INC., Plaintiff-Appellee, v. GULTON INDUSTRIES, INC., Defendant-Appellant.

No. 98-1385.

United States Court of Appeals Federal Circuit.

April 29, 1999.

Appealed from: U.S. District Court for the Eastern District of Michigan, Judge Gerald E. Rosen.

Richard W. Hoffmann, Reising, Ethington, Learman & McCulloch, PLLC, of Troy, Michigan, argued for plaintiff-appellee. With him on the brief were Andrew M. Grove and Jeanne-Marie Marshall.

Ira Jay Levy, Darby & Darby, P.C., of New York, New York, argued for defendant-appellant.

Before MICHEL, LOURIE, and GAJARSA, Circuit Judges.

Opinion for the court filed by Circuit Judge LOURIE. Dissenting opinion filed by Circuit Judge GAJARSA.

LOURIE, Circuit Judge.

In 1995, we vacated and remanded a decision on damages awarded by the United States District Court for the Eastern District of Michigan in a patent infringement case between Transmatic, Inc. and Gulton Industries, Inc. See Transmatic, Inc. v. Gulton Indus., Inc., 53 F.3d 1270 (Fed.Cir.1995). Gulton now appeals from the district court's remand Judgment and Order that Gulton pay Transmatic, inter alia, interest from the initial judgment date to the remand judgment date at the prejudgment rate. See Transmatic, Inc. v. Gulton Indus., Inc., No. 90-CV-70987-DT (E.D.Mich. Apr. 9, 1998). Because we conclude that, under Sixth Circuit precedent, interest from the district court's initial judgment date to the remand judgment date should have been awarded at the postjudgment interest rate, we vacate and remand.

BACKGROUND

In 1990, Transmatic filed suit against Gulton, asserting infringement of claim 1 of U.S. Patent 4,387,415. On cross-motions for summary judgment, the district court held that claim 1 was not proved to be invalid and was not literally infringed, but that factual issues existed regarding Transmatic's doctrine of equivalents and willful infringement claims and Gulton's inequitable conduct defense. See Transmatic Inc. v. Gulton Indus. Inc., 818 F.Supp. 1052, 27 USPQ2d 1561 (E.D.Mich.1993) (Transmatic I ). The district court impaneled an advisory jury to try these remaining issues. See Transmatic Inc. v. Gulton Indus. Inc., 849 F.Supp. 526, 529, 31 USPQ2d 1225, 1226-27 (E.D.Mich.1994) (Transmatic II ). The district court thereafter granted Gulton's motion for judgment as a matter of law on willful infringement. See id. The advisory jury found that the accused products infringed claim 1 under the doctrine of equivalents, that Transmatic did not engage in inequitable conduct, and that Gulton was liable for damages of approximately three million dollars in lost profits. See id. As required in all actions tried with an advisory jury (see Fed.R.Civ.P. 52(a)), the district court set forth factual findings and conclusions of law on the doctrine of equivalents issue and determined that the accused products infringed claim 1 under the doctrine. See Transmatic II, 849 F.Supp. at 530-32, 31 USPQ2d at 1227-29. The district court also set forth findings and conclusions of law on the willfulness and inequitable conduct issues when it denied both claims. See id. at 532-43, 849 F.Supp. 526, 31 USPQ2d at 1229-38. However, and most importantly for the history of this appeal, the district court failed to state any independent factual findings with regard to damages. Instead, the district court merely stated that it found the jury's damages verdict reasonable and supported by the evidence. See id. at 543, 31 USPQ2d at 1238-39.

On appeal, we (1) reversed the district court's summary judgment ruling of no literal infringement; (2) vacated its doctrine of equivalents finding as moot; (3) vacated and remanded its damage award; and (4) affirmed on the other issues raised. See Transmatic, Inc. v. Gulton Indus., Inc., 53 F.3d 1270, 35 USPQ2d 1035 (Fed.Cir.1995) (Transmatic III ). We vacated and remanded the damage award because the court's opinion failed to explain the award sufficiently to permit appellate review. See id. at 1275-76, 53 F.3d 1270, 35 USPQ2d at 1039-40. Specifically, we held that the district court failed to comply with the requirement of Federal Rule of Civil Procedure 52(a) that it "find the facts specifically" when it summarily rejected Gulton's challenge to Transmatic's lost profits claim. See id. We stated that we presumed that the district court considered and rejected Gulton's claim as either factually incorrect or unsupported by the evidence, but that the court's opinion did not indicate its basis for doing so. See id. at 1276, 53 F.3d 1270, 35 USPQ2d at 1040. We accordingly vacated the district court's damage award and remanded for the court to make the findings required by Rule 52(a) and to reconsider the amount of damages if appropriate. See id.

On remand, the district court issued "Supplemental Findings Regarding Damages" in which it explained its initial damages award in full detail. See Transmatic, Inc. v. Gulton Indus., Inc., No. 90-CV-70987-DT (E.D.Mich. Jan. 23, 1998) (Transmatic IV ). Specifically, the district court explained why Transmatic's damages award should include forced price cuts but not foregone price increases; why certain expenses were fixed, not variable, and thus not compensable; why damages did not include certain fixture sales; and why prejudgment interest should be awarded at the prime lending rate minus ten percent, compounded monthly. See id. at 8-19. Because the district court's factual findings did not require it to recalculate the damages award, it did not modify its initial award. See id. at 20. The district court thereafter reentered judgment in favor of Transmatic in the amount of $3,023,773, which included prejudgment interest calculated to October 1993. It also awarded Transmatic $1,119,588 in prejudgment interest for the period from October 1993 to the date of the district court's remand judgment, and postjudgment interest at the rate prescribed in 28 U.S.C. § 1961 (1994) for the time thereafter. See Transmatic, Inc. v. Gulton Indus., Inc., 90-CV-70987-DT (E.D.Mich. Apr. 9, 1998) (Transmatic V ).

Gulton now appeals from the district court's decision to apply the prejudgment, rather than the postjudgment, interest rate from the date of the district court's initial judgment to the date of the remand judgment (hereinafter "the interim period"). It does not challenge the quantum of damages awarded or the pre- and postjudgment interest rates used by the district court. However, awarding prejudgment interest during the interim period resulted in a higher award to Transmatic because, during this period, the prejudgment interest rate awarded by the district court was several percentage points higher than the statutory postjudgment interest rate provided for under 28 U.S.C. § 1961. We have jurisdiction under 28 U.S.C. § 1295(a)(1) (1994).

DISCUSSION

Gulton contends that Transmatic should have been awarded postjudgment interest for the interim period. Gulton asserts that the determination of the dividing line between pre- and postjudgment interest is a procedural matter that requires us to follow Sixth Circuit law, in particular its interpretation of 28 U.S.C. § 1961(a), which states that postjudgment interest "shall be calculated from the date of the entry of the judgment." 28 U.S.C. § 1961(a) (1994). According to Gulton, the Sixth Circuit determines the judgment date for purposes of calculating interest awards by examining both the facts and circumstances of the case in light of the "equity of § 1961" under Bailey v. Chattem, 838 F.2d 149 (6th Cir.1988), and the time when damages were "meaningfully ascertained" under Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 827, 110 S.Ct. 1570, 108 L.Ed.2d 842 (1990). Gulton argues that Bailey 's "equity" test and Kaiser 's "meaningfully ascertained damages" test both require that postjudgment interest be awarded during the interim period. Gulton argues that, in this case, damages were "meaningfully ascertained" at the time of the initial judgment because this court vacated the damage award on procedural, not substantive, grounds, and the only difference between the district court's initial and remand damages awards is an adequate explanation of its award. Gulton also argues that since we affirmed the infringement judgment on appeal, terminating prejudgment interest and beginning postjudgment interest at the initial judgment date would be "equitable" because it accords with both § 1961(a)'s purpose of compensating prevailing parties for any delays between judgment and payment and 35 U.S.C. § 284's purpose of fully compensating the patent owner for infringement damages. See 35 U.S.C. § 284 (1994) ("Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, ... together with interest and costs as fixed by the court.").

Transmatic responds that the district court correctly applied the prejudgment interest rate during the interim period. Transmatic also raises a choice-of-law issue. Transmatic agrees that the dividing line between pre- and postjudgment interest is a § 1961 issue, but argues that we are not bound by Sixth Circuit law because the district court's authority to award prejudgment interest arises under § 284 of the patent statute, and that it is the policies of that provision which need to be considered. Transmatic notes that this should be an issue of Federal Circuit law for reasons of both patent jurisprudence and geographic uniformity. However, Transmatic does not point to any Federal Circuit case law, and only argues that we should follow a Ninth Circuit decision, American Telephone & Telegraph Co. v. United Computer Systems, 98 F.3d 1206 (9th Cir.1996), which involved both pre- and postjudgment interest awards, unlike the relevant Sixth Circuit cases which involved only postjudgment interest awards. Because the AT & T court held that the "equities" underlying § 1961(a) favor calculating interest "in a manner that more fully...