The district court previously granted summary judgment in favor of the plaintiff, Red Carpet Studio (“Red Carpet”), finding that Defendants Midwest Trading Group Inc. (“MTG”), Walgreen Company and CVS Pharmacy Inc. infringed the patent-in-suit. The parties agreed that two issues remained: (1) determining the relevant “article of manufacture,” and (2) calculating the “total profit” on that article of manufacture. Red Carpet argued that the district court should decide the second issue without a jury because it seeks disgorgement of profits, which Red Carpet maintained is an equitable remedy with no right to a jury trial.
As the district court explained, determining a damages award under 35 U.S.C. § 289 “involves two steps. First, identify the ‘article of manufacture’ to which the infringed design has been applied. Second, calculate the infringer’s total profit made on that article of manufacture.” Samsung Elecs. Co. v. Apple Inc., 137 S.Ct. 429, 434, 196 L.Ed. 2d 363 (2016). The district court acknowledged that “neither the Court nor the parties were able to find authority which directly resolves the question of whether a jury or a judge must make this determination,” but concluded that “there [is] sample support for the conclusion that a claim for damages under § 289 is one for equitable relief.”
The district court began by noting that “[i]t is well-settled that equitable relief includes monetary damages where required to afford complete relief.” Golden v. Kelsey-Hayes Co., 73 F.3d 648, 661 (6th Cir. 1996). The district court further explained:
In reviewing a jury award of disgorgement of profits for trade secret misappropriation under Texas law, the Federal Circuit in Texas Advanced Optoelectronic Solutions, Inc. v. Renesas Electronics. America, Inc., provided an exhaustive analysis of the Seventh Amendment right to a jury trial for the disgorgement remedy. 95 F.3d 1304, 1319-1325 (Fed. Cir. 2018). The court explained that part of this analysis included a determination of whether the claim, or a sufficient analogue, could have been brought in the English courts of law in 1791. Id. at 1319. The court determined that “for patent infringement, disgorgement of profits was not historically available at law.” Id. at 1324. Ultimately, the court reached the conclusion that there was no right to a jury decision on the trade secret claim, but did so based on the “appropriate analogues” of patent, copyright, or trademark infringement claims. Because the remedy of disgorgement of profits for those claims is equitable, not legal, the court vacated a jury award for disgorgement of profits and remanded for a determination of the remedy by the trial court. Id. at 1325. Accord Osborn v. Griffin, 865 F.3d 417, 462 (6th Cir. 2017) (discussing generally the law of equitable remedies and stating “our understanding that an action seeking disgorgement of profits is equitable in nature is confirmed by the historical treatment of that remedy prior to the enactment of the Seventh Amendment.”).
The district court also analogized to trademark cases, specifying that “when addressing the remedy of disgorgement of profits for trademark infringement cases, courts have repeatedly held that disgorgement of profits is an equitable remedy that provides no right to jury trial. See, e.g., Ferrari S.P.A. Esercizio Fabriche Automobili E Corse v. Roberts, 944 F.2d 1235, 1248 (6th Cir. 1991) (holding the defendant does not have a right to jury trial for Lanham Act claims where the complaint “requested only equitable relief; an injunction and disgorgement of profits.”); JL Beverage Co., LLC v. Jim Beam Brands Co., 815 F. App’x 110, 112 (9th Cir. 2020) (concluding the district court did not err by striking the plaintiff’s demand for a jury trial for disgorgement of profits under the Lanham Act); Hard Candy, LLC v. Anastasia Beverly Hills, Inc., 921 F.3d 1343, 1359 (11th Cir. 2019) (explaining that “[w]e would also be remiss if we overlooked the [Supreme] Court’s repeated statements, albeit in dicta, that the disgorgement of wrongful gains is equitable;” and concluding that “an accounting and disgorgement of a defendant’s profits in a trademark infringement case is equitable in nature and does not carry with it a right to a jury trial.”); TrueNorth Companies, LC v. TruNorth Warranty Plans of N. Am., LLC, No. 17-CV-31-LTS-KEM, 2019 WL 8301690, at *9 (N.D. Iowa June 3, 2019) (“TrueNorth is not entitled to a jury trial on its Lanham Act claim for unfair competition seeking only equitable relief, it should not be allowed to make an untimely demand as to that claim.”); see also Fair Isaac Corp. v. Fed. Ins. Co., 408 F. Supp. 3d 1019, 1031 (D. Minn. 2019) (denying jury determination of remedy of disgorgement in copyright infringement case).
The Defendants also argued that even if the determination under § 289 is for the court and not a jury, the alternative to a jury trial is a bench trial. The district court disagreed and determined that a bench trial was not required:
While “the right to jury trial is a constitutional one . . . no similar requirement protects trials by the court.” Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959); see also Anhing Corp. v. Viet Phu, Inc., 671 F. App’x 956, 958 (9th Cir. 2016) (concluding that the district court did not err in denying request for a bench trial because plaintiff only sought the equitable relief of disgorgement of profits and an injunction). Therefore, the Court finds it is not required to conduct a bench trial as part of its determination of Plaintiff’s claim for damages under § 289. Moreover, Defendants have not identified any evidence which the Court would need to make its determination and is not already before the Court, and, therefore, an evidentiary hearing is not required.
Accordingly, the district court determined the award of profits based on the papers with no jury trial or evidentiary hearing.
Red Carpet Studios v. Midwest Trading Group, Inc., Case No. 1:12-cv-501 (S.D. Ohio March 2021)
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.