No Ongoing Royalty Allowed Where Plaintiff Failed to Request Ongoing Royalties Before Entry of Judgment

July 17, 2013

After the jury returned a verdict of $5 million, the district court denied the parties' post-judgment motions, including plaintiff's motion for attorney's fees, which was the only post-judgment motion filed by plaintiff. The district court then entered judgment on the jury verdict.

The defendants then appealed from the judgment and the Federal Circuit summarily affirmed on all grounds, denied rehearing, and did not remand any issues to the district court. The plaintiff then filed motions seeking prejudgment interest in the amount of $655,636 and royalties for ongoing willful infringement. Defendants asserted that the judgment had been paid in full and therefore the motions should be denied.

The district court began its analysis by reviewing the judgment. "Here, the Judgment provided that Defendants would pay $5,000,000 (with $3,000,000 of the sum to be apportioned to Simmons), 'with interest thereon at the legal rate as provided by law....' (DE 439). The Judgment provided for interest, but did not specify post-judgment or prejudgment interest. Therefore, the Court's determination of this issue turns on whether 'interest ... as provided by law' includes prejudgment interest. The Court finds that it does."

Accordingly, the district court awarded prejudgment interest.

The district court then turned to the issue of the ongoing royalty. The district court explained that "[it is undisputed that, since the jury verdict, Defendants have continued using the infringing machines to manufacture box spring mattress foundations. Plaintiff argues that this conduct constitutes ongoing willful infringement, and seeks ongoing royalties at a rate of $0.88 per wire grid manufactured by Defendants using the existing and any future infringing machines. Defendants argue that imposition of ongoing royalties is improper, as the jury's verdict is most consistent with a paid-up royalty, and the Court should deem it as such."

The district court then rejected defendants' argument that the jury verdict was a paid up royalty. "As an initial matter, the Court disagrees with Defendants that the jury verdict contemplated a paid-up royalty. Contrary to Defendants' assertion, the fact that the award amount fell closer to the "paid-up calculation" proposed by Defendants is unavailing. The language of the Verdict Form expressly states that the award was compensation for Defendants' use of the patented invention up to the date of the verdict. (See Verdict Form (filed January 24, 2012), DE 436.) Moreover, review of the court records, including the proposed and final Jury Instructions, show no indication that royalties for ongoing."

Nonetheless, the district court determined that an ongoing royalty was not appropriate given that plaintiff had failed to request an ongoing royalty prior to entry of the judgment. "Notwithstanding, the Court finds imposition of ongoing royalties unwarranted. As pointed out by Plaintiff, the Federal Circuit has endorsed the award of ongoing royalties in certain situations where an injunction is either inappropriate or stayed, and use of the patent continues. See ActiveVideo Networks, Inc. v. Verizon Comm's Inc., 694 F.3d 1312, 1343 (Fed. Cir. 2012); Paice LLC v. Toyota Motor Corp., 504 F.3d 1293 (Fed. Cir. 2007). However, in ActiveVideo, Paice, and the other cases on which Plaintiff relies, the courts imposed ongoing royalties as part of the final judgments, after consideration of the appropriateness of injunctive relief. Here, the Court was never asked to make any determination involving prospective use of the patent. Now, fifteen months after the Court issued a final judgment, and after the Federal Circuit decided Defendants' appeal, Plaintiff requests ongoing royalties. Plaintiff has failed to offer any precedent for awarding ongoing royalties after such a length in time from entry of final judgment, and without order of remand from the appellate court. As such, this request amounts to a Motion to Alter Judgment pursuant to Rule 59(e). The time for such a request has long since passed. Therefore, the Court finds imposition of ongoing royalties in the current case improper."


Imaginal Systematic LLC v. Leggett & Platt, Inc., Case No. CV 10-07416-RGK (SSx) (C.D. Cal. July 3, 2013)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.