Polara Engineering Inc v. Campbell Company

Filing 494

ORDER by Magistrate Judge Douglas F. McCormick Re Posttrial Motions. (See document for details.) (nbo)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 SOUTHERN DIVISION 11 POLARA ENGINEERING, INC., Plaintiff, 12 v. 13 14 Case No. SA CV 13-00007-DFM ORDER RE: POSTTRIAL MOTIONS CAMPBELL COMPANY, Defendant. 15 16 17 This matter is before the Court on the parties’ posttrial motions. 18 19 Defendant Campbell Company (“Campbell”) moves for judgment as a matter 20 of law. Plaintiff Polara Engineering, Inc. (“Polara”) moves for a permanent 21 injunction, a judgment of willfulness and an award of treble damages, a finding 22 of exceptional circumstances and a corresponding award of attorney’s fees, and 23 an award of supplemental damages, prejudgment interest, and postjudgment 24 interest. 25 /// 26 /// 27 /// 28 /// 1 I. 2 BACKGROUND 3 Polara filed this patent-infringement suit against Campbell on January 2, 4 2013. Dkt. 1. Polara, a manufacturer of accessible pedestrian signal systems 5 and pedestrian push buttons, alleged that Campbell was infringing on Polara’s 6 United States Patent No. 7,145,476 (the “’476 Patent”). Id. at 2. The ’476 7 Patent, issued in December 2006, was for a “2-wire push button station control 8 system for a traffic light controlled intersection.” Id. at 3. Polara alleged that 9 Campbell, a manufacturer of traffic-industry products, had developed an 10 “Advisor Advanced Accessible Pedestrian Station,” or “AAPS,” that infringed 11 the ’476 Patent. Id. 12 13 Polara moved for summary judgment of infringement of Claims 1 through 4 of the ’476 Patent. Dkt. 87. Claim 1 recites: 14 A control system by which vibro-tactile messages are provided to 15 alert pedestrians when to cross a traffic light controlled 16 intersection, said control system comprising: 17 at least one push button station located at the traffic light 18 controlled intersection to be crossed by pedestrians, said 19 push button station including a push button head that is 20 depressed by the pedestrians and message generating means 21 adapted to cause said push button head to vibrate to provide 22 a tactile indication to a visually impaired pedestrian when to 23 cross the intersection; and 24 a control unit that is responsive to the depression of the push 25 button head of said push button station to transmit to the 26 push button station both power and digital data signals over 27 a single pair of wires by which to power and control the 28 operation of said message generating means. 2 1 Tr. Exh. 9 at 11.1 Claim 2 recites the control system described in Claim 1 and 2 further provides that “at least one push button station also includes a 3 microcontroller to receive the power and digital data signals from said control 4 unit, said microcontroller providing output signals to control the operation of 5 said message generating means.” Id. Claim 3, in turn, is dependent on Claim 6 2, and further requires that “said message generating means of said at least one 7 push button station includes a vibration driver connected to said 8 microcontroller to cause said push button head to vibrate and thereby provide 9 said tactile indication to the visually impaired pedestrian that it is safe to cross 10 the intersection.” Id. Claim 4 recites the control system described in Claim 2, 11 “wherein said message generating means of said at least one push button 12 station includes a sound chip in which prerecorded messages are stored and 13 from which an audible indication is provided to the visually impaired 14 pedestrian whether” it is safe to cross the intersection. Id. 15 The judge originally assigned to this case—United States District Judge 16 Cormac J. Carney—found that Campbell’s AAPS infringed Claims 1 through 17 4 of the ’476 Patent, and that Polara was thus entitled to partial summary 18 judgment on the issue of infringement as to those claims. Dkt. 155. With trial 19 remaining on damages, Polara’s willfulness claim, and Campbell’s invalidity 20 and unenforceability defenses, the parties consented to this Court’s 21 jurisdiction. Dkt. 383; see 28 U.S.C. § 636(c). 22 A jury trial began on June 21, 2016. See Dkt. 413. After seven days of 23 jury selection, testimony, and argument, the jury returned a special verdict on 24 June 30, 2016. See Dkt. 440. The jury found that Campbell had not shown that 25 Claims 1 through 4 of the ’476 Patent were invalid. Id. at 2-3. The jury also 26 27 28 “Tr. Exh.” refers to the parties’ trial exhibits, which are identified in the Amended List of Exhibits and Witnesses. Dkt. 474. 1 3 1 found that Polara had not proved that it was entitled to lost profits, but it 2 awarded damages of $412,926 based on a 15 percent royalty rate and total 3 sales of $2,752,842. Id. at 4. The jury found that Campbell had willfully 4 infringed the ’476 Patent. Id. Finally, the jury made an advisory finding that 5 Polara had not engaged in inequitable conduct before the Patent and 6 Trademark Office (“PTO”) that rendered the ’476 Patent unenforceable. Id. at 7 5. These motions followed. 8 9 II. 10 DISCUSSION 11 12 A. Campbell’s Motion for Judgment as a Matter of Law Campbell moves for judgment as a matter of law, arguing that: (1) the 13 ’476 Patent is invalid because it was in public use for more than one year 14 before a patent application was filed; (2) Claims 1 through 4 were obvious in 15 light of the prior art; (3) the ’476 Patent is invalid because it was described in 16 publications more than one year before Polara filed the patent application; and 17 (4) Campbell did not act willfully in infringing the ’476 Patent. Dkt. 450 at 1- 18 56, 66-82. 19 1. 20 Federal Rule of Civil Procedure 50 permits a court to grant judgment as Standard of Review 21 a matter of law “when the evidence permits only one reasonable conclusion 22 and the conclusion is contrary to that reached by the jury.” Ostad v. Or. Health 23 Scis. Univ., 327 F.3d 876, 881 (9th Cir. 2003). If substantial evidence supports 24 the jury’s verdict, the court should deny a motion for judgment as a matter of 25 law. Wallace v. City of San Diego, 479 F.3d 616, 624 (9th Cir. 2007) (as 26 amended); Callicrate v. Wadsworth Mfg., Inc., 427 F.3d 1361, 1366 (Fed. Cir. 27 2005). “Substantial evidence is such relevant evidence as reasonable minds 28 might accept as adequate to support a conclusion even if it is possible to draw 4 1 two inconsistent conclusions from the evidence.” Maynard v. City of San Jose, 2 37 F.3d 1396, 1404 (9th Cir. 1994) (as amended). A court “must view the 3 evidence in the light most favorable to the nonmoving party . . . and draw all 4 reasonable inferences in that party’s favor.” E.E.O.C. v. Go Daddy Software, 5 Inc., 581 F.3d 951, 961 (9th Cir. 2009) (citation omitted, alteration in original). 6 Neither a “mere scintilla” of evidence nor pure speculation is sufficient to 7 sustain a verdict for the prevailing party. See Lakeside-Scott v. Multnomah 8 Cty., 556 F.3d 797, 802-03 (9th Cir. 2009). And because a post-verdict Rule 9 50(b) motion is “a renewed motion,” it is “limited to the grounds asserted in 10 the pre-deliberation Rule 50(a) motion.” Go Daddy, 581 F.3d at 961. 11 2. 12 As an initial matter, Polara argues that “[b]ecause Campbell never raised Waiver 13 any arguments regarding patent invalidity in its pre-verdict Rule 50(a) motion, 14 Campbell has waived those arguments.” Dkt. 461 at 24. The Court disagrees. a. 15 16 Background After Campbell rested its case, Polara moved for judgment on 17 Campbell’s claim that the ’476 Patent was invalid because of Polara’s 18 inequitable conduct. 6 Tr. 123-26.2 Polara also moved for judgment on 19 Campbell’s “prior sale or offer for sale” (or “on-sale” bar), “experimental use,” 20 “prior use,” and anticipation and obviousness defenses. Id. at 127. Before 21 hearing argument from the parties on Polara’s motions, the Court stated: 22 I think it’s perfectly appropriate for me to, even just on the 23 basis of hearing those potential arguments, to tell you that I am 24 not going to -- you’ve made it at the appropriate time, so you’ve 25 reserved the ability to argue it after a jury verdict. 26 27 28 Citations to “Tr.” refer to the trial transcript and are preceded by the volume number and followed by the page number. 2 5 1 Id. The Court also indicated that it would defer ruling on the experimental use, 2 obviousness, and anticipation issues. Id. The Court did hear argument from 3 Campbell regarding the on-sale bar issue. See id. at 130-33. Campbell subsequently indicated that it wanted to “bring a motion 4 5 pursuant to Rule 50 concerning the claim of willfulness.” Id. at 135. After 6 hearing argument from Polara, id. at 137-39, the Court “den[ied] the Rule 50 7 motion with respect to the willfulness argument,” id. at 139. The Court also 8 ruled: 9 I find that there’s sufficient evidence of contested issues of 10 fact on experimental use and on the obviousness and anticipation 11 doctrines as related to the [prior art] devices to put those issue[s] to 12 the jury. I deny Rule 50 motions as to those. 13 I am also going to deny the Rule 50 motion as to the 14 inequitable conduct defense. I find that there are issues of fact both 15 with respect to the defendant’s conduct as well as the intent to 16 deceive or mislead sufficient to take the issue to the jury. . . . 17 Id. at 139-40. The Court subsequently granted Polara’s Rule 50 motion as to 18 the on-sale bar because “no reasonable jury could conclude that the evidence 19 has shown that the claimed invention was subject to a commercial offer for 20 sale on or before that date.” 7 Tr. 6. The Court also noted that Campbell was 21 left with two statutory bar arguments: that over a year before the patent 22 application was filed, the claimed invention was (1) described in a publication 23 and (2) used openly and non-experimentally. Id. 24 25 b. Relevant Law The same claims or issues on which judgment as a matter of law is 26 sought under Rule 50(b) must have been raised in a pre-verdict motion for 27 judgment under Rule 50(a). See Fed. R. Civ. P. 50(b), Adv. Comm. Notes 28 (1991 Amend.); see also Go Daddy, 581 F.3d at 961 (“Because it is a renewed 6 1 motion, a proper post-verdict Rule 50(b) motion is limited to the grounds 2 asserted in the pre-deliberation Rule 50(a) motion.”). The Ninth Circuit has 3 explained that this rule limitation serves two purposes. First, the rule 4 “preserves the sufficiency of the evidence as a question of law, allowing the 5 district court to review its initial denial of judgment as a matter of law instead 6 of forcing it to ‘engage in an impermissible reexamination of facts found by the 7 jury.’” Freund v. Nycomed Amersham, 347 F.3d 752, 761 (9th Cir. 2003) 8 (quoting Lifshitz v. Walter Drake & Sons, Inc., 806 F.2d 1426, 1428-29 (9th 9 Cir. 1986)). Second, it ensures that the court and the parties are put on notice 10 of “any alleged deficiencies in the evidence at a time when the opposing party 11 still has an opportunity to correct them.” Id. c. 12 13 Analysis “Although courts construe strictly the requirement that a motion be 14 made after a case-in-chief, they are generally more liberal about what suffices 15 as a motion for a directed verdict after the close of all the evidence.” Reeves v. 16 Teuscher, 881 F.2d 1495, 1498 (9th Cir. 1989). Thus, Rule 50(b) “may be 17 satisfied by an ambiguous or inartfully made motion for a directed verdict or 18 by an objection to an instruction for insufficient evidence to submit an issue to 19 the jury.” Id. In Reeves, for example, the Ninth Circuit found that the 20 defendants properly preserved a Rule 50(b) motion where the trial court 21 interrupted their argument and told them to renew their motion after the jury’s 22 verdict. Id. 23 Similarly here, the Court elected to “withhold argument” until after 24 Polara had stated the bases for its Rule 50(a) motion, and deferred argument as 25 to the experimental use and the obviousness and anticipation issues until after 26 the jury’s verdict. 6 Tr. 127. The Court did hear argument from both parties as 27 to the on-sale bar, see id. at 128, 130-33, but informed Campbell that it did not 28 “have to be heard now” regarding the inequitable-conduct issue and could 7 1 brief that issue post-verdict, see id. at 129-30. As such, the Court and the 2 parties understood the bases for any Rule 50(a) motion regarding patent 3 invalidity, and the Court did not hear oral argument from the parties on the 4 issues that it found were properly submitted to the jury. The Court therefore 5 finds that Campbell is not barred from challenging the jury’s invalidity findings 6 in a Rule 50(b) motion. 7 3. 8 The jury found that Campbell failed to prove that the ’476 Patent is 9 Public Use invalid because it was in public use for more than one year before Polara filed 10 the patent application. Campbell moves for judgment as a matter of law on this 11 invalidity theory. Dkt. 450 at 30-46. Because substantial evidence shows that 12 Polara’s early use was experimental use necessary to ensure that its invention 13 would work for its intended purpose, Campbell’s motion is denied. a. 14 15 Background Polara entered the accessible pedestrian signal (“APS”) system market 16 with an eight-wire system called the Navigator. 2 Tr. 22-27.3 Because many 17 intersections did not have the wiring necessary to support an eight-wire device, 18 installation was difficult and labor-intensive. Id. at 26-27. Leslie Beckwith, a 19 design engineer for Polara, testified that he and another Polara engineer, 20 Randy Cruz, began discussing a two-wire version of the Navigator in late 2000 21 or early 2001. 3 Tr. 80-81. John McGaffey, Polara’s president and owner, 22 testified that it took Polara “about three years” to develop a two-wire APS 23 system. 2 Tr. 32. They “did considerable testing in the lab,” 3 Tr. 80, and in 24 Polara’s “parking lot in the back,” 2 Tr. 35-36, to make sure the first prototype 25 worked. Because the first device was “a little bit cobbled together,” Polara then 26 Confusingly, the parties (and the marketplace) refers to these systems generally as “APS” systems while Campbell’s infringing product is branded the “AAPS.” 27 28 3 8 1 designed something “with a little more permanent construction” that could be 2 installed on the street. 3 Tr. 80. McGaffey also testified that the device needed 3 to be “tested on live intersections—and not just one intersection, it need[ed] to 4 be tested on multiple because every intersection . . . has different equipment, 5 different challenges and problems that it has to overcome.” 2 Tr. 36. 6 In January 2002, McGaffey instructed Polara’s office manager to send a 7 letter to Mark Miller, the traffic engineer for the City of Fullerton, requesting 8 permission to install a prototype system at the intersection of Gilbert Street and 9 Commonwealth Avenue. Id. at 37-38; 3 Tr. 60-63; Tr. Exh. 193. The letter 10 explained that the identified intersection was close to Polara’s plant, which 11 would allow for daily monitoring “during the test phase.” Tr. Exh. 193. Polara 12 also represented that it “would take full responsibility for installing, 13 maintaining and deinstalling the equipment.” Id. 14 After the prototype system was installed at the Gilbert and 15 Commonwealth intersection, Polara noticed that “it wasn’t functioning 16 correctly,” 2 Tr. 41, because the communication between the control unit and 17 push-button station was “not reliable,” 3 Tr. 81. Polara used an oscilloscope to 18 measure the data signal and learned that “a lot of electrical noise” was 19 affecting the signal; Polara uninstalled the system that same day. Id. at 82; see 20 2 Tr. 41-42. Beckwith and Cruz revised the device’s transmitting and receiving 21 circuitry to make it “much more resistant to external sources of interference.” 3 22 Tr. 83-84. The process took “a few months” because they conducted “a variety 23 of experiments in the lab” before they were satisfied that the device could “be 24 used on the street.” Id. at 84. Polara then installed the revised system at the 25 same intersection. Id. at 84-85; 2 Tr. 42. Polara monitored the device on a 26 daily basis—initially twice a day—to see if “it was performing as it was 27 supposed to.” 2 Tr. 42-43; see also 3 Tr. 85-86. At “some point,” Polara 28 became satisfied that the device was performing as it should. 2 Tr. 43. 9 1 Polara next installed the same product at the intersection of Nutwood 2 Avenue and State College Boulevard in Fullerton. Id. at 44; 3 Tr. 86-87. Polara 3 selected this intersection because it was larger than the one at Gilbert and 4 Commonwealth and “had a much higher pedestrian traffic flow, which meant 5 the buttons would get pushed on a much higher volume.” 2 Tr. 44; see also 3 6 Tr. 87. Right after installation, Polara observed a shortcoming in the way the 7 digital-data signal was being communicated. 3 Tr. 87-88. Polara modified the 8 circuitry inside the prototype to adjust the sensitivity of the receiving circuit. 9 Id. at 88-89. Polara was able to make this modification without uninstalling the 10 system, id. at 89, and McGaffey characterized it as a “minor adjustment,” 2 11 Tr. 45. Polara’s employees visited the intersection several times to test the 12 system’s performance, sometimes using an oscilloscope or other device. 3 Tr. 13 89-90. The prototype remained at Nutwood and State College from fall of 2002 14 to fall of 2003, and Polara “continued to monitor it and consider it a test 15 intersection.” 5 Tr. 181-82. 16 Polara also “felt that it was imperative” to test the device in a “wet 17 environment” because “water can cause all kinds of problems with electronic 18 equipment.” 2 Tr. 46. The City of Burnaby, Canada, which “got a lot of rain” 19 and snow, was “willing to test a system.” Id. at 46-47. McGaffey testified that 20 the weather was “a very, very significant factor” in choosing to test the device 21 in Canada. Id. at 47. Likewise, Beckwith testified that testing in a wet and cold 22 environment “was very important.” 3 Tr. 91. The City of Burnaby arranged for 23 Cobra Electric to install and monitor the test system. 2 Tr. 47. Because Polara 24 did not have control over all of the equipment, it had both entities sign a 25 confidentiality agreement. Id. at 47-49; Tr. Exh. 205. 26 After Polara became satisfied that the two-wire APS system was working 27 “even in the harsher conditions of Canada,” it decided to announce the release 28 of the product at an industry conference in August 2003. 2 Tr. 49. Polara 10 1 began selling its two-wire Navigator in late September 2003. Id. at 49-51; see 2 Tr. Exh. 203. b. 3 4 Relevant Law Under 35 U.S.C. § 102(b), a patent is invalid if “the invention was . . . in 5 public use or on sale in this country [] more than one year prior to the date of 6 the application for patent in the United States.” 35 U.S.C. § 102(b).4 The 7 public use bar applies if the invention is “ready for patenting” and in “public 8 use.” Invitrogen Corp. v. Biocrest Mfg., L.P., 424 F.3d 1374, 1379 (Fed. Cir. 9 2005). Evidence of experimental use, even if public, may mean that the bar 10 does not apply. EZ Dock v. Schafer Sys., Inc., 276 F.3d 1347, 1351 (Fed. Cir. 11 2002); see also Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 64 (1998) (“[A]n 12 inventor who seeks to perfect his discovery may conduct extensive testing 13 without losing his right to obtain a patent for his invention—even if such 14 testing occurs in the public eye. The law has long recognized the distinction 15 between inventions put to experimental use and products sold 16 commercially.”). 17 A use is experimental if it is designed to “(1) test claimed features of the 18 invention or (2) to determine whether an invention will work well for its 19 intended purpose.” Clock Spring, L.P. v. Wrapmaster, Inc., 560 F.3d 1317, 20 1327 (Fed. Cir. 2009). The Federal Circuit has outlined certain objective 21 factors that may be instructive when determining experimental use, including: 22 (1) the need for public testing; (2) the inventor’s amount of control over the 23 24 25 26 27 28 Section 102(b) was amended by the Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29, § 3(b)(1), 125 Stat. 284, 285-86 (2011). Because the application for the ’476 Patent was filed on August 5, 2004, the pre-AIA version of the statute applies in this case. See Merck & Cie v. Watson Labs., Inc., 822 F.3d 1347, 1348 n.1 (Fed. Cir. 2016) (citing In re Giannelli, 739 F.3d 1375, 1376 n.1 (Fed. Cir. 2014), cert. denied, No. 16-493, 2017 WL 69719 (U.S. Jan. 9, 2017)). 4 11 1 experiment; (3) the nature of the invention; (4) the length of the test period; (5) 2 whether payment was made; (6) whether there was a secrecy obligation; (7) 3 whether records of the experiment were kept; (8) who conducted the 4 experiment; (9) the degree of commercial exploitation during testing; (10) 5 whether the invention reasonably required evaluation under actual conditions 6 of use; (11) whether testing was systematically performed; (12) whether the 7 inventor continually monitored the invention during testing; and (13) the 8 nature of contacts made with potential customers. Id. at 1327. c. 9 10 Analysis Polara filed its initial application on August 5, 2004. 3 Tr. 12. The Court 11 therefore looks at public use of the ’476 Patent before August 5, 2003. 12 According to Campbell, the two-wire device embodying the ’476 Patent was in 13 public use as of early 2002, when it was installed at the intersection of Gilbert 14 and Commonwealth. Campbell reasons that by that time, the invention had 15 been reduced to practice because a prototype had operated successfully in 16 Polara’s parking lot. See Dkt. 450 at 32-34; Dkt. 481 at 5-9. 17 Campbell does not deserve judgment as a matter of law on the public-use 18 bar. At Campbell’s request, see 6 Tr. 7, the jury was instructed on the 13 19 factors identified by the Federal Circuit in Clock Spring, see 7 Tr. 70. Polara 20 produced substantial evidence to support a jury finding in its favor on these 21 factors. 22 The jury heard testimony on the nature of the invention and the need for 23 public testing and evaluation under actual conditions of use. Even though the 24 prototype worked in Polara’s parking lot, Polara needed to test the device on 25 live intersections because it was “a life safety device,” and “the last thing” 26 Polara wanted was “to put a device on an intersection that’s not been 27 thoroughly vetted and potentially have a blind person get the wrong message 28 and walk out in front of the cars and get hit.” 2 Tr. 36. The jury also heard that 12 1 an APS system must be capable of enduring different weather conditions, 2 volumes of pedestrian traffic, and electrical-noise interference. See 2 Tr. 43-45; 3 3 Tr. 91. Polara introduced testimony that most intersections have 4 underground wiring. See 2 Tr. 28-30, 207. The ’476 Patent specification 5 expressly contemplates use at actual “traffic light controlled intersection[s]” 6 and the use of “existing pairs of underground wires over which power and data 7 signals are transmitted.” Tr. Exh. 9 at 1, 7. The summary states that the “pairs 8 of wires . . . are, in the preferred embodiment, the existing underground wires 9 that were previously installed for the purpose of connecting the . . . push 10 11 buttons to a traffic light control cabinet.” Id. at 7. Polara presented evidence on other Clock Spring factors. Fullerton did 12 not pay for the installations at its intersections; indeed, Polara removed the 13 device at the end of the test period. See 2 Tr. 39; 5 Tr. 181-82; see also Tr. Exh. 14 193. Polara retained control over the device; Fullerton merely opened the 15 traffic cabinet so that Polara could install it. 2 Tr. 49. Polara engaged in little if 16 any commercial exploitation of its new two-wire device during the testing 17 period, instead waiting until the completion of testing in Canada to unveil the 18 device at an August 2003 trade show. 2 Tr. 49, 95.5 19 Campbell points out that Polara produced no records reflecting its 20 testing, did not have confidentiality agreements with Fullerton employees, and 21 made no modifications to the device after the early stages of testing at the first 22 Fullerton intersection. While this evidence may have been inconsistent with 23 experimental use, it was the jury’s job to weigh the factors and make a 24 determination. Polara presented substantial evidence of experimental use, and 25 the Court cannot second-guess the jury’s determination under Rule 50. 26 27 28 Because the public-use bar is expressly limited by statute to use in this country, the Canada testing itself was not relevant to the jury’s determination. 5 13 1 Campbell also contends that Polara’s testing was for commercial 2 development, not experimental use, pointing to Polara’s testing of how the 3 device operated through underground wires, under harsh weather conditions, 4 in large or busy intersections, within range of other electrical devices, and in 5 areas where other conduits are run. Dkt. 481 at 13. The Court disagrees. 6 Polara’s testing the durability of the digital-data signal related to the 7 invention’s claimed features. “Experimentation evidence includes ‘tests needed 8 to convince [the inventor] that the invention is capable of performing its 9 intended purpose in its intended environment.’” EZ Dock, 276 F.3d at 1352 10 (alteration in original) (quoting Gould Inc. v. United States, 579 F.2d 571, 583 11 (Ct. Cl. 1978)); see also Manville Sales Corp. v. Paramount Sys., Inc., 917 12 F.2d 544, 551 (Fed. Cir. 1990) (“When durability in an outdoor environment is 13 inherent to the purpose of an invention, then further testing to determine the 14 invention’s ability to serve that purpose will not subject the invention to a 15 [public use] bar.”). In EZ Dock, for example, two inventors designed a floating 16 dock made of polyethylene and installed one for a customer in a location that 17 experienced “heavier boat traffic and more turbulent water flow.” 276 F.3d at 18 1349. One of the inventors testified that the purpose of the sale was to see how 19 the dock would hold up under more turbulent water conditions. Id. at 1353. 20 The Federal Circuit held that a reasonable jury could find that the sale of the 21 dock was for experimental rather than commercial development because 22 “floating docks, by their nature, must endure all kinds of water conditions, 23 including choppy water created by weather and boating.” Id. Here, the 24 evidence supported the jury’s finding that an APS system must work in a 25 variety of conditions, such as inclement weather, various pedestrian volumes, 26 and environments with different levels of electrical noise. 27 28 In sum, substantial evidence supports the jury’s rejection of Campbell’s public-use defense because Polara showed that installing the device in 14 1 Fullerton was an experimental use. Campbell’s motion for judgment as a 2 matter of law on public use is therefore denied. 3 4. 4 The jury found that Campbell failed to prove that Claims 1 through 4 Obviousness 5 were either anticipated or obvious. Campbell now renews its motion for 6 judgment as a matter of law that Claims 1 through 4 were obvious in light of 7 the prior art, including United States Patent No. 4,851,836 (“Wilkinson”). 8 Dkt. 450 at 54-60. Because the jury relied on substantial evidence to reach its 9 conclusion on the factual issues underlying obviousness, and because the jury’s 10 ultimate conclusion was correct as a matter of law, the Court denies 11 Campbell’s motion. 12 a. Relevant Law 13 A patent is obvious and therefore invalid “if the differences between the 14 subject matter sought to be patented and the prior art are such that the subject 15 matter as a whole would have been obvious at the time the invention was 16 made to a person having ordinary skill in the art to which said subject matter 17 pertains.” 35 U.S.C. § 103. 18 Obviousness is a question of law based on underlying factual findings. 19 Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1356-57 (Fed. 20 Cir. 2012). The Court must presume that the jury resolved the underlying 21 factual disputes in Polara’s favor and leave those presumed findings 22 undisturbed if they are supported by substantial evidence. Id. The Court then 23 examines the jury’s ultimate legal conclusion de novo to see whether it is 24 correct in light of the jury’s presumed factual findings. Id. at 1357. 25 The underlying factual findings are: (1) the scope and content of the 26 prior art; (2) the differences between the claims and the prior art; (3) the level 27 of ordinary skill in the art; and (4) any relevant secondary considerations, such 28 as commercial success, long felt but unsolved needs, and failure of others. KSR 15 1 Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007). The Court must consider 2 all four of these factors before reaching a conclusion. Kinetic, 688 F.3d at 3 1360. At all times, the burden is on Campbell to establish by clear and 4 convincing evidence that the patent is obvious. Id. 5 6 b. Background Neither party requested that the jury answer any special interrogatories. 7 The obviousness portion of the verdict form asked whether Campbell had 8 proven, by clear and convincing evidence, that any of Claims 1 through 4 were 9 invalid due to obviousness. See Dkt. 440 at 2. As to each claim, the jury 10 answered no. Id. 11 At trial, the dispositive issue regarding invalidity was whether an 12 alternating power signal like the signal disclosed in Wilkinson was a digital- 13 data signal. Like the ’476 Patent, Wilkinson disclosed a two-wire device. Tr. 14 Exh. 106 at 4 (“[O]nly two wires are needed to power and control the 15 system.”). Wilkinson used an alternating power signal in which the power- 16 supply unit provided a half-wave voltage signal during the DON’T WALK 17 mode and a full-wave voltage signal during the WALK mode. Id. Testimony 18 established that two other pedestrian crosswalk devices, the Campbell 19 Enlightened and Tassimco devices, operated similarly. 6 Tr. 36-41. Campbell’s 20 expert Dr. Christopher Jones testified that the full-wave/half-wave signal 21 identified in Wilkinson and these other devices was a digital-data signal. Id. 22 Polara introduced evidence showing that Wilkinson, Campbell 23 Enlightened, and Tassimco did not send digital data. Beckwith, the inventor of 24 the ’476 Patent, testified that these devices did not transmit digital data over 25 power like the Polara Navigator two-wire device. 3 Tr. 93-96. McGaffey 26 testified that these devices could turn a light on or off only by manipulating 27 voltage. 3 Tr. 20-21. They could not accomplish the other functions enabled by 28 the ’476 Patent. Id. at 23-25; see 2 Tr. 64-68. 16 1 Polara’s expert Dr. Ian Harris distinguished Wilkinson and, by 2 extension, the Campbell Enlightened and Tassimco devices. Dr. Harris 3 testified that the Campbell Enlightened sends only power and no data. 6 Tr. 4 81-82 (“The Enlightened doesn’t send digital data signals by any normal 5 conventional understanding of digital data signals.”). He noted that the 6 Enlightened device did not have a microcontroller to interpret a digital-data 7 signal. Id. at 82-83. He similarly observed that the Tassimco device and the 8 device described in Wilkinson transmitted only power. Id. at 87-88 (“Q. So in 9 all three—the Wilkinson, Enlightened, and Tassimco—all that’s being sent is 10 11 power? A. Yes.”). On cross-examination, Dr. Harris maintained that “send[ing] digital 12 signals and power together over two wires was not obvious at that time.” Id. at 13 118. He continued to distinguish Wilkinson, noting that Wilkinson did not 14 disclose encoding a digital signal on top of the power supply. Id. (“Wilkinson 15 sent power or not. It didn’t send digital data.”). Dr. Harris also rejected Dr. 16 Jones’s contention that Wilkinson’s manipulation of the power signal 17 constituted data. Id. (“Nobody would call that digital data. That’s power.”). 18 19 c. Analysis The jury’s finding of nonobviousness indicates that it credited Polara’s 20 contention that the differences between the prior art asserted by Campbell and 21 the ’476 Patent were significant, and that the prior art did not disclose various 22 elements of Claims 1 through 4. In light of the jury’s validity finding, the Court 23 must infer that the jury found Dr. Harris to be credible and persuasive when 24 testifying that Wilkinson’s power signal was not digital data. “[W]hether the 25 prior art discloses the limitations of a particular claim is a question of fact to be 26 determined by the jury.” Kinetic, 688 F.3d at 1363. Polara presented ample 27 evidence that Wilkinson and the other prior art did not disclose the digital- 28 data-over-power limitation of Claims 1 through 4. The Court must defer to the 17 1 2 jury’s factual finding. Id. at 1356-57. Campbell argues that a person of ordinary skill in the art would have 3 combined Wilkinson’s use of two wires with the use of digital data over power 4 and thus that Claims 1 through 4 are an obvious combination of familiar 5 elements. But Campbell offered no evidence at trial to support this argument. 6 Nor did it define “a person of ordinary skill in the art.” It did not ask its expert, 7 Dr. Jones, whether such a person would have been motivated to combine 8 Wilkinson with digital data over power to achieve the advancement offered by 9 the Navigator two-wire device. “[P]ossibility and ease do not automatically 10 translate to motivation.” Golden Bridge Tech., Inc. v. Apple, Inc., No. 12- 11 04882, 2015 WL 2064525, at *9 (N.D. Cal. May 1, 2015). And it offered no 12 evidence to rebut or contradict Dr. Harris’s testimony that “[t]o encode the 13 digital signal on top of the power was a complicated thing.” 6 Tr. 118. 14 The Court understands that the idea of transmitting digital data over a 15 power line was not new at the time of the ’476 Patent. But “a patent composed 16 of several elements is not proved obvious merely by demonstrating that each of 17 its elements was, independently, known in the prior art.” KSR, 550 U.S. at 18 418. “[I]nventions in most, if not all, instances rely upon building blocks long 19 since uncovered, and claimed discoveries almost of necessity will be 20 combinations of what, in some sense, is already known.” Id. at 418-19. Put 21 differently, “[a]n invention may be a combination of old elements disclosed in 22 multiple prior art references.” Plantronics, Inc. v. Aliph, Inc., 724 F.3d 1343, 23 1354 (Fed. Cir. 2015) (citing Cross Med. Prods, Inc. v. Medtronic Sofamor 24 Danek, Inc., 424 F.3d 1293, 1321 (Fed. Cir. 2005)). Because the prior-art 25 references did not disclose using digital data over power to transmit digital 26 data from the control unit to the various message generating means, the ’476 27 Patent did more than just combine known elements. 28 Finally, the jury was instructed to consider secondary considerations 18 1 indicating nonobviousness, including whether the products covered by the 2 invention were commercially successful due to the claimed invention’s merits, 3 whether a long-felt but unsolved need was resolved by the claimed invention, 4 and whether others copied the claimed invention. 7 Tr. 74-75. Substantial evidence supports the jury’s finding in Polara’s favor on 5 6 these issues. Polara introduced evidence that its two-wire Navigator device 7 resolved a long-felt but unsolved need for a two-wire device with the features 8 of its eight-wire Navigator system such as a locate tone, audible messages, and 9 a vibrating button. 2 Tr. 22-27. Many of Polara’s potential customers resisted 10 installing an eight-wire device because their existing intersections had only two 11 wires, meaning that wiring had to be added at considerable expense. Id. at 26- 12 29. Polara worked for almost three years to develop a device that would use 13 the two existing wires and not require additional wiring. Id. at 28, 32. Polara also introduced evidence showing that its two-wire Navigator 14 15 device enjoyed substantial commercial success because the claimed invention, 16 i.e., the use of digital data over power, enabled them to offer the functionality 17 of an eight-wire system with only two wires. Polara’s customers were “very 18 happy to see” the two-wire device and “preferred it over the eight-wire.” Id. at 19 52. Finally, Polara introduced evidence suggesting that Campbell introduced 20 its infringing two-wire accessible pedestrian system to compete with Polara’s 21 Navigator two-wire device. Id. at 70-71; 3 Tr. 28-29, 118, 120-22. This motion is not a vehicle for the Court to second-guess the jury’s 22 23 assessment of the evidence. The jury’s finding of nonobviousness was 24 supported by substantial evidence and the jury did not misapply the relevant 25 law to the facts. Therefore, Campbell has not carried its burden of overcoming 26 the presumption of validity, and its motion for judgment as a matter of law on 27 obviousness must be denied. 28 /// 19 1 5. 2 The jury found that Campbell failed to prove that the ’476 Patent is 3 invalid because it was described in three publications more than one year 4 before the patent application was filed. Campbell asks the Court to overturn 5 the jury’s verdict. Dkt. 450 at 54-57. The Court declines to do so because the 6 evidence showed that the three publications did not disclose each and every 7 element of the ’476 Patent. 8 a. 9 Prior Publication Background At trial, Campbell introduced a March 2003 survey conducted by the 10 United States Access Board. 5 Tr. 150-51; Tr. Exh. 331. The survey included 11 Polara’s original eight-wire Navigator and stated that the 12 [m]anufacturer is developing a model that operates with only two 13 wires to the pushbutton and is programmable after installation by a 14 traffic engineer using a handheld PDA type device. The new 15 model will have the capability to alternate signal sounds, to 16 countdown pedestrian clearance interval and present a signal at 17 the far end of the crosswalk only. It is expected to be available by 18 fall 2003. 19 Tr. Exh. 331 at CAMP024409-10; see 5 Tr. 150-52. An April 2003 report 20 includes an identical entry. 2 Tr. 196-98; Tr. Exh. 311 at 1, 29-31. McGaffey 21 testified that he had provided this entry’s information and had been talking to 22 authors of various industry publications about Polara’s development of a two- 23 wire APS system. See 2 Tr. 197-99. 24 Campbell also introduced a May 2003 report containing an entry on the 25 eight-wire Navigator. Id. at 200-03; Tr. Exh. 312 at 1, 233-34. The 26 “comments” section stated: 27 Manufacturer is developing a model that operates with only two 28 wires from the intersection traffic control cabinet to the pushbutton 20 1 and is programmable after installation by an engineer using a 2 handheld PDA type device. The new model will have the 3 capability to synchronize sounds, alternate sounds, mute all 4 sounds except the activated crosswalks, to verbally countdown 5 pedestrian clearance interval or present a signal at the far end of 6 the crosswalk only. 7 8 9 Tr. Exh. 312 at 234. b. Relevant Law A patent is invalidated as anticipated if “the invention was patented or 10 described in a printed publication” more than one year before the patent 11 application was filed. 35 U.S.C. § 102(b). To be anticipatory, the prior art 12 reference must “explicitly or inherently” disclose each and every element of the 13 claimed invention. In re Gleave, 560 F.3d 1331, 1334 (Fed. Cir. 2009). An 14 anticipatory prior art reference must also enable “one of skill in the art to 15 practice an embodiment of the claimed invention without undue 16 experimentation.” Am. Calcar, Inc. v. Am. Honda Motor Co., 651 F.3d 1318, 17 1341 (Fed. Cir. 2011); see also In re Donohue, 766 F.2d 531, 533 (Fed. Cir. 18 1985) (“Such possession is effected if one of ordinary skill in the art could have 19 combined the publication’s description of the invention with his own 20 knowledge to make the claimed invention.”). Finally, the party asserting 21 invalidity must prove anticipation by clear and convincing evidence. Orion IP, 22 LLC v. Hyundai Motor Am., 605 F.3d 967, 975 (Fed. Cir. 2010). 23 24 c. Analysis The March and April 2003 publications stated that Polara “is developing 25 a model that operates with only two wires to the pushbutton and is 26 programmable after installation by a traffic engineer using a handheld PDA 27 type device.” Tr. Exh. 331 at CAMP024409-10; Tr. Exh. 311 at 31. Similarly, 28 the May 2003 publication stated that Polara “is developing a model that 21 1 operates with only two wires from the intersection traffic control cabinet to the 2 pushbutton and is programmable after installation by an engineer using a 3 handheld PDA type device.” Tr. Exh. 312 at 234. These publications also 4 contained pictures and diagrams of, and specifications and installation 5 instructions for, Polara’s original eight-wire Navigator. Id. at 233-34; Tr. Exh. 6 311 at 29-31; Tr. Exh. 331 at CAMP024408-10. 7 Campbell argues that the original Navigator and the invention claimed 8 in the ’476 Patent are virtually identical with the only “alleged innovation” 9 being “communication between a control unit and pushbutton over a single 10 pair of wires.” See Dkt. 450 at 54. According to Campbell, the information on 11 the Navigator coupled with the statements about the two-wire model in 12 development discloses every element of Claims 1 through 4. See id. at 54-57. 13 Campbell does not dispute that the three publications at issue do not disclose 14 transmitting both power and digital-data signals over two wires. Instead, 15 Campbell argues that this limitation is inherent in each publication, because 16 “communication of digital signals over a single pair of wires was ‘obvious’ to 17 one skilled in the art.” Id. at 57. 18 This argument fails. As previously discussed, Polara presented 19 substantial evidence that using digital data over power to transmit digital data 20 from the control unit to the push buttons was nonobvious. As such, substantial 21 evidence supports a finding that the March, April, and May 2003 publications 22 did not disclose all the limitations of Claims 1 through 4. See RCA Corp. v. 23 Applied Digital Data Sys., Inc., 730 F.2d 1440, 1446 (Fed. Cir. 1984) (holding 24 that dependent claim “cannot be anticipated” where the independent claim “is 25 not anticipated”). 26 The jury’s obviousness verdict also supports a finding that the 27 publications were not enabling. Campbell offered little evidence that would 28 demonstrate how each of the three industry publications enabled one of 22 1 ordinary skill in the art to practice the claimed invention. Campbell questioned 2 McGaffey about whether “people with ordinary skill in the art” reading the 3 May 2003 entry on the Navigator would understand that the two-wire device 4 would have a push button station, control system, and control unit. See 3 Tr. 5 30, 33-34. However, other than the examples of “Mr. Beckwith or these traffic 6 engineers, somebody who knew what these devices were about, somebody 7 who would actually read those documents,” id. at 33-34, Campbell did not 8 seek to define what constitutes a person of ordinary skill in the art. Nor did 9 Campbell discuss the March, April, and May 2003 publications with Dr. Jones 10 or Dr. Harris. “Typically, testimony concerning anticipation must be testimony from 11 12 one skilled in the art and must identify each claim element, state the witnesses’ 13 interpretation of the claim element, and explain in detail how each claim 14 element is disclosed in the prior art reference.” Koito Mfg. Co. v. Turn-Key- 15 Tech, LLC, 381 F.3d 1142, 1151-52 (Fed. Cir. 2004) (quoting Schumer v. Lab. 16 Computer Sys., Inc., 308 F.3d 1304, 1315 (Fed. Cir. 2002)). Dr. Jones’s 17 general testimony regarding other prior art was far from substantial evidence of 18 how the 2003 publications disclosed each claim. See Schumer, 308 F.3d at 19 1316 (finding that declaration setting forth purported programmer of software 20 driver’s “understanding of the operation and steps performed by the [] driver” 21 and description of “what he considered to be known to one of ordinary skill 22 prior to [patentee’s] invention” was not clear and convincing evidence that 23 driver disclosed “each and every limitation” of claim). The jury therefore had 24 substantial evidence from which to conclude that Campbell had not met its 25 burden of showing, by clear and convincing evidence, that the 2003 26 publications anticipated the ’476 Patent. Accordingly, the motion for judgment 27 as a matter of law as to prior publication is denied. 28 /// 23 1 6. 2 A week before trial began, the Supreme Court decided Halo Electronics, 3 Inc. v. Pulse Electronics, Inc., --- U.S. ---, 136 S. Ct. 1923 (2016), and changed 4 the framework for awarding enhanced damages. Before Halo, a patentee 5 seeking enhanced damages first needed to show by clear and convincing 6 evidence that the infringer acted despite an objectively high likelihood that its 7 actions infringed a valid patent. Id. at 1930 (citing In re Seagate Technology, 8 LLC, 497 F.3d 1360, 1371 (2007) (en banc)). This objective prong tended not 9 to be met where an accused infringer had a reasonable defense to infringement. Willfulness 10 See Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., 682 F.3d 11 1003, 1005-06 (Fed. Cir. 2012). Second, the patentee had to show that the risk 12 of infringement was either known or so obvious that it should have been 13 known to the accused infringer. Seagate, 497 F.3d at 1371. 14 Halo criticized the objective recklessness requirement, reasoning that it 15 “excludes from discretionary punishment many of the most culpable 16 offenders,” and faulted the requirement for “making dispositive the ability of 17 the infringer to muster a reasonable (even though unsuccessful) defense at the 18 infringement trial.” 136 S. Ct. at 1932, 1932-33. Halo explained that an 19 infringer’s subjective bad faith alone could support an enhanced damages 20 award. Id. at 1933. Moreover, Halo made clear that it is the infringer’s state of 21 mind at the time of the challenged conduct that matters, without regard to any 22 later reasonable defense at trial. Id. 23 In this case, the jury was instructed that it must find by a preponderance 24 of the evidence that Campbell’s infringement of the ’476 Patent was egregious 25 measured against Campbell’s knowledge at the time of the infringement. 7 Tr. 26 93. The jury was also told that “egregious conduct” could be described as 27 “willful, wanton, malicious, bad faith, deliberate, consciously wrongful, 28 flagrant, or characteristic of a pirate.” Id. The jury was then instructed that it 24 1 must consider the totality of the circumstances when determining whether 2 Campbell acted egregiously, including whether Campbell intentionally copied 3 Polara’s technology covered by the ’476 Patent, whether Campbell made a 4 good-faith effort to avoid infringing the patent, whether Campbell reasonably 5 believed it had a defense to infringement at the time it engaged in the 6 infringing conduct, or whether Campbell relied on a legal opinion that was 7 well supported and believable. Id. at 94-95. 8 9 Campbell’s motion for judgment as a matter of law raises two primary arguments with respect to the jury’s willfulness finding. First, Campbell argues 10 that the jury’s verdict was tainted by the Court’s instructions and counsel’s 11 remarks about Judge Carney’s infringement ruling. Dkt. 450 at 66-68. Second, 12 Campbell argues that the evidence does not support the jury’s finding of 13 willfulness. Id. at 68-80. Neither argument is persuasive. 14 15 a. The Court’s Instructions and Polara’s Arguments In its initial instructions, the Court told the jury about Judge Carney’s 16 infringement finding but warned the jurors that Judge Carney’s infringement 17 determination should have “absolutely no impact” on its deliberations: 18 In proceedings before trial it was determined that certain 19 pedestrian crosswalk signal systems products made and distributed 20 by Campbell and known as the Campbell AAPS products 21 infringed the ’476 patent. It was not determined, however, whether 22 the ’476 patent is valid or whether it is enforceable or whether any 23 infringement by Campbell was willful or what damages, if any, 24 Polara is entitled to. 25 All of these will be questions for you to decide, and the 26 determination that the Campbell AAPS products infringed the 27 ’476 patent should have absolutely no impact on how you decide 28 the questions that you are asked to decide; nor does my 25 1 determination on any question presented to me mean that I have 2 any opinion on any of the questions that are for you to decide. 3 1 Tr. 10-11. The Court reiterated these instructions during final instructions: 4 In proceedings before trial it was determined that certain 5 pedestrian crosswalk signal systems products made and distributed 6 by Campbell infringed claims 1, 2, 3, and 4 of the ’476 patent. It 7 was not determined, however, whether the ’476 patent is valid or 8 whether it is enforceable or whether any infringement by Campbell 9 was willful or what damages, if any, Polara is entitled to. All of 10 these questions are questions for you to decide, and the prior 11 determination must not have any impact on how you decide the 12 questions you are asked to decide. 13 7 Tr. 52-53. Later in its final instructions, the Court clarified that Campbell’s 14 infringement could be considered as part of its discussion on damages and 15 willfulness. Id. at 57-58. 16 This clarification was discussed shortly before the final instructions were 17 given. Polara’s counsel argued that the instructions were unclear about 18 whether the jury could consider, as part of its willfulness determination, 19 Campbell’s continued sales of its AAPS device after Judge Carney’s 20 infringement ruling. Id. at 18-20. The Court agreed, then discussed with 21 counsel how to modify the language to address Polara’s concern yet make 22 clear that the jury could not consider the infringement ruling for purposes of its 23 other determinations. Id. at 20. At the conclusion of this colloquy, Campbell 24 did not object to the Court’s proposed language. Id.6 25 26 27 28 6 The full discussion follows: THE COURT: All right. I’m inclined to agree [with Polara]. I’m going to stop the sentence: All of 26 1 Judge Carney’s finding that Campbell infringed the ’476 Patent was 2 submitted to the jury as a stipulated fact. 3 Tr. 12. The Court told the jury that 3 “the Court has determined that Campbell’s accused product, the AAPS, 4 directly infringes claims 1 through 4 of U.S. patent number 7,145,476. That’s 5 the Beckwith ’476 patent.” Id. Later, Polara’s counsel asked Philip Tate, 6 these questions are for you to decide, period. 7 MR. TATE: Your Honor, for the record, if I 8 may. 9 THE COURT: Yes, you may. 10 MR. TATE: It’s certainly a proper instruction with regard to the [inequitable conduct defense], and it is an improper [sic] instruction with regard to validity. So— 11 12 13 THE COURT: You want me to give—you want me to phrase it that way: The determination that Campbell’s products infringed the ’476 patent should have no impact on how you decide the questions of invalidity and unenforceability? 14 15 16 17 18 MR. TATE: Yes. 19 THE COURT: I can do that. 20 MR. DILGER: I think it then would need to read: But may be considered as part of your decision on willfulness. 21 22 23 THE COURT: And damages, I think. 24 MR. DILGER: And damages, yes. 25 THE COURT: Mr. Tate, any comment on that? 26 27 28 MR. TATE: No, Your Honor. 7 Tr. 20. 27 1 2 3 Campbell’s owner and president, about Judge Carney’s infringement ruling: Q. Now, you did get at least one other opinion on your device, however; didn’t you? 4 A. I personally do not recall getting an additional opinion. 5 Q. You got one in this litigation. 6 A. Yes. 7 Q. A federal judge in this building said that your device 8 9 infringes. Id. at 166. The Court sustained Campbell’s objection to this question and 10 refused Polara’s request for a sidebar. Id. at 167. Polara then asked Tate 11 whether he “continue[d] to sell [Campbell’s AAPS] device to this day.” Id. 12 Tate answered, “I do.” Id. 13 Later, in closing argument, Polara told the jury it should consider 14 Campbell’s conduct after Judge Carney’s infringement ruling as evidence of 15 Campbell’s willfulness: 16 [W]e know exactly how Campbell responds when they do in fact 17 know that they have an infringing device. How do we know that? 18 Because they did get another opinion. They got an opinion from a 19 federal judge in this building two years ago. 20 What did he tell them? He told them: Campbell, your 21 product infringes the ’476 patent. That’s what he said. What did 22 Campbell do? What did they do? They did what they had been 23 doing for the previous four years. They continued to make and 24 they continued to sell the infringing product. 25 If that’s not recklessness, what is? At that point they didn’t 26 even—it wasn’t even a mystery. They were told it infringes, and 27 they said: We don’t care. We’re barrelling forward. And that’s 28 what they’ve done. 28 1 Ladies and gentlemen, that is willfulness, about as good as it 2 gets. So we have infringement of a valid patent, and that 3 infringement is willful. 4 5 7 Tr. 124. Campbell’s argument that the Court’s instructions tainted the jury is 6 misplaced. Campbell chose to continue sales of its two-wire device after Judge 7 Carney’s ruling. This was among the “totality of the circumstances” that was 8 appropriately considered by the jury to assess the egregiousness of Campbell’s 9 conduct. See Avocent Huntsville Corp. v. ClearCube Tech., Inc., No. 03- 10 02875, 2006 WL 2109503, at *27 (N.D. Ala. July 28, 2006) (finding that 11 defendant’s continued sale of accused products after court granted plaintiff’s 12 motion for partial summary judgment on infringement “may fall under the 13 rubric of the ‘totality of the circumstances’ test, tending to show [defendant’s] 14 infringement was (and continues to be) willful”); see also Applied Med. 15 Resources Corp. v. U.S. Surgical Corp., 353 F. Supp. 2d 1075, 1079 (C.D. Cal. 16 2004) (finding that jury drew a reasonable inference of willful behavior from 17 infringer’s continued sale of infringing device after summary judgment ruling 18 of infringement). 19 Campbell also points to its invalidity and unenforceability defenses, 20 arguing that those defenses gave it “reasonable grounds” to continue selling a 21 two-wire device. Dkt. 450 at 67. But the Court’s instructions enabled Campbell 22 to continue to argue these defenses to the jury, both before and after Judge 23 Carney’s infringement ruling. See 7 Tr. 94 (instructing jury that it should 24 consider “whether Campbell reasonably believed that it had a substantial 25 defense to infringement and reasonably believed that the defense would be 26 successful if litigated” when determining whether Campbell acted egregiously). 27 The jury simply rejected these defenses. 28 Nor is the Court persuaded that Polara’s questioning of Tate and 29 1 argument about Campbell’s continued sales after Judge Carney’s infringement 2 ruling was “improper and prejudicial.” As the excerpt above reflects, the Court 3 sustained an objection to Polara’s questioning about Campbell’s continued sale 4 of an infringing product and allowed Polara to elicit only that Campbell’s sales 5 of an infringing product continued after Judge Carney’s summary judgment 6 ruling. And Polara’s closing argument was just that—argument based on facts 7 the jury heard during trial, facts that included Judge Carney’s infringement 8 ruling and Campbell’s decision to continue selling its product after that ruling. 9 Moreover, nothing prevented Campbell from vigorously and steadfastly 10 maintaining that it reasonably believed that it had a defense to Polara’s charges 11 of infringement. As Polara points out, Campbell did just that, arguing that 12 Tate believed that Campbell’s products did not infringe and that the ’476 13 Patent was invalid. See 7 Tr. 166-67. 14 Campbell also argues that the special verdict form should have required 15 the jury to consider its willfulness throughout the period of alleged 16 infringement. Dkt. 450 at 67. Campbell’s revised special verdict form 17 contained an interrogatory that would have asked the jury to specify the time 18 period during which Campbell’s infringement was egregious. See Dkt. 414 at 19 9. On the morning of final argument and jury instructions, the Court provided 20 counsel with a draft special verdict form for their review and comment. 7 Tr. 5 21 (“I will hand out for you a draft special verdict form. You may take a quick 22 look at it. If you have any concerns about it, I want to hear those.”). A short 23 while later, each side raised their respective concerns about the Court’s verdict 24 form. Id. at 38-43. Campbell did not raise any concerns about the omission of 25 its proposed interrogatory about the time period. By failing to raise its concerns 26 and explain to the Court why omitting an interrogatory about the specific time 27 period would lead to legal error, Campbell has waived its objection. See 28 United States v. Parsons Corp., 1 F.3d 944, 945 (9th Cir. 1993) (holding that 30 1 counsel waived objection to verdict form because although it was clear that 2 counsel preferred a different form, counsel “did not tell the court that it would 3 be committing an error of law or an abuse of discretion if it did not adopt 4 [counsel’s] approach”).7 5 Moreover, any contention that evidence of Campbell’s willfulness was 6 limited to after Campbell received Judge Carney’s infringement ruling is 7 misplaced. As detailed below, the jury heard evidence that Campbell’s 8 egregious conduct began much earlier, when it decided to go ahead with a two- 9 wire AAPS despite knowledge of the ’476 Patent. It is simply not the case that 10 evidence of Campbell’s willfulness was limited to its decision to continue sales 11 of its infringing product after Judge Carney’s ruling. As a result, any error in 12 omitting Campbell’s proposed interrogatory was harmless. b. 13 The Jury’s Finding of Willfulness 14 As an initial matter, the parties dispute whether the jury’s finding is 15 dispositive of the issue of willfulness. Campbell argues that the jury’s finding is 16 only advisory. Dkt. 450 at 68 (“[T]he Jury’s tainted rendering is advisory only 17 and, of course, the Court now reviews the evidence.”). Polara argues that the 18 jury’s willfulness finding is not advisory but may only be overturned if the 19 evidence, construed in the light most favorable to Polara, permits only a 20 conclusion contrary to the jury’s verdict. Dkt. 461 at 8. 21 22 23 24 25 26 27 28 Ninth Circuit law applies to this issue. See Bose Corp. v. JBL, Inc., 274 F.3d 1354, 1360 (Fed. Cir. 2001) (“We apply regional circuit law to procedural questions that are not themselves substantive patent law issues so long as they do not: (1) pertain to patent law; (2) bear an essential relationship to matters committed to our exclusive control by statute; or (3) clearly implicate the jurisprudential responsibilities of this court in a field within its exclusive jurisdiction.” (citations omitted)); see also Lazare Kaplan Int’l, Inc. v. Photoscribe Techs., Inc., 628 F.3d 1359, 1372 (Fed. Cir. 2010) (applying Second Circuit law to determine whether a litigant objected to jury instruction in manner set forth in Fed. R. Civ. P. 51). 7 31 1 Polara is correct. After Halo, the Federal Circuit has reiterated that “the 2 factual components of the willfulness question should be resolved by the jury.” 3 WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016); see 4 Greatbatch Ltd. v. AVX Corp., No. 13-723, 2016 WL 7217625, at *2 (D. Del. 5 Dec. 13, 2016). The jury’s finding that Campbell was subjectively willful 6 establishes the predicate of willful misconduct; thus the inquiry moves to the 7 stage at which the district court exercises its discretion. See Innovention Toys, 8 LLC v. MGA Entm’t, Inc., --- F. App’x ---, 2016 WL 4151240, at *2 (Fed. Cir. 9 Aug. 5, 2016); see also Dominion Res. Inc. v. Alstom Grid, Inc., No. 15-224, 10 11 2016 WL 5674713, at *19 (E.D. Pa. Oct. 3, 2016). Considering the totality of the circumstances, the jury had substantial 12 evidence on which to conclude that Campbell’s conduct was willful by a 13 preponderance of the evidence. Tate testified that Campbell developed its 14 AAPS in response to Polara’s two-wire system. 3 Tr. 121. He acknowledged 15 that Campbell did not have the technology to compete with Polara’s two-wire 16 Navigator when it was introduced. Id. at 123. He also stated that Campbell 17 “needed” a product that would compete with Polara’s two-wire Navigator. Id. 18 at 121. The jury could have relied on those statements to conclude that 19 Campbell intentionally copied Polara’s two-wire device. 20 Tate also provided evidence from which the jury could have concluded 21 that Campbell was aware of a significant risk that Campbell’s AAPS would 22 infringe the ’476 Patent. Tate testified that he discussed the ’476 Patent with 23 Dr. Richard Wall of the University of Idaho and that they considered using a 24 three-wire device because it would be “cleaner.” Id. at 142-43. In an email 25 exchange, Dr. Wall told Tate that there were similarities between Campbell’s 26 proposed AAPS and the ’476 Patent. Id. at 140-41; Tr. Exh. 10. Dr. Wall 27 shared with Tate the advice of Mike Jones, a University of Idaho patent 28 lawyer; Tate also testified that he spoke directly with Jones. 3 Tr. 144, 151. 32 1 Tate admitted that Jones did not give Campbell’s proposed AAPS a “clean bill 2 of health” in May 2008. Id. at 146. To the contrary, Jones identified “potential 3 problems” and “uncertainty.” Id. at 146-47; see Tr. Exh. 316 at 2. 4 Tate also received an opinion from Bob Shaver, an intellectual property 5 attorney. 3 Tr. 131. Shaver shared with Tate an analysis of prior art prepared 6 by Joe Lindsey, who apparently worked with Shaver. Id. at 155-56; Tr. Exh. 7 317. Tate admitted that this was the only written communication he received 8 from any lawyer about the ’476 Patent. 3 Tr. 155-56. Lindsey’s analysis began 9 with the following preamble: 10 All but one claim in the [’476] patent limit to the 2-wire 11 configuration as previously discussed. Claim 11 does not have this 12 limitation. 13 Not including claim 11, as long as the system does not 14 contain 2-wire outputs ports interfacing with the push button 15 stations, any system you make is not covered by this patent. 16 Tr. Exh. 317 at 1. Lindsey proceeded to discuss Claim 11 at some length and 17 ultimately asked Tate for more information about the prior art as it existed in 18 2004 before concluding, “[w]e will need to establish this to provide a viable 19 argument to the validity of claim 11 of this patent.” Id. at 2. 20 One fair reading of Lindsey’s analysis—the one urged by Polara—is that 21 he assumed that Campbell did not intend to adopt a two-wire device. See 3 Tr. 22 157; 7 Tr. 121-22. The Court must assume that the jury adopted this view of 23 Lindsey’s analysis; if it did so, then Lindsey’s analysis offers little support for 24 an argument that Campbell acted in good faith or had a reasonable belief that 25 Polara’s ’476 Patent would be invalidated. 26 Polara argues that the opinions Campbell received were incompetent 27 because they neither considered the AAPS nor contained a detailed analysis of 28 validity or infringement. Dkt. 461 at 11. To the contrary, according to Polara, 33 1 the evidence suggests that Campbell was repeatedly warned that it should 2 avoid its two-wire design. Id. The Court agrees. The jury could have also concluded that there was sparse evidence 3 4 showing that Campbell took any remedial action. It appears from the 5 testimony and exhibits that Campbell rejected Dr. Wall’s suggestion to design 6 around the ’476 Patent by using a three-wire design for reasons never 7 articulated at trial. The jury could have easily concluded that Campbell’s 8 decision emanated from the fact that its customers, like Polara’s, wanted a 9 product that could be installed using intersections’ existing two-wire 10 infrastructure. Likewise, as noted above, the jury heard that Campbell 11 continued to sell an infringing product even after Judge Carney’s infringement 12 ruling. 13 In sum, substantial evidence adequately supports the jury’s finding that 14 Campbell acted willfully when it decided to go ahead with its two-wire device 15 despite knowledge of the ’476 Patent. Taken together, the evidence of its 16 knowledge of the ’476 Patent, the evidence indicating that its lawyers had 17 concerns about the ’476 Patent, the inadequacy of evidence demonstrating that 18 Campbell reasonably believed the ’476 Patent was invalid, and Campbell’s 19 failure to take remedial measures supported the jury’s conclusion that the 20 totality of the circumstances demonstrated egregious conduct. Campbell’s 21 motion for judgment as a matter of law on this finding is denied. 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 34 1 2 B. Campbell’s Inequitable Conduct Defense8 Campbell’s inequitable conduct defense is based on Polara’s alleged 3 failure to disclose material prior art references to the PTO—namely, 4 Wilkinson, the Campbell Enlightened device, and the Tassimco device. Dkt. 5 450 at 57-66.9 Specifically, Campbell argues that those references would have 6 shown the PTO that transmitting power and data signals over a single pair of 7 wires was obvious. Id. at 61-64. Polara counters that the Tassimco and 8 Enlightened devices were “indistinguishable” from Wilkinson, which was 9 directly considered by the patent examiner. Dkt 461 at 52-54. Polara also 10 contends that the jury’s rejection of Campbell’s invalidity defenses 11 “undermines significantly Campbell’s arguments regarding materiality.” Id. at 12 54. Finally, Polara asserts that Campbell has failed to present clear and 13 convincing evidence of intent to deceive the PTO. Id. at 56-57. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Campbell argues in its motion for judgment as a matter of law that Polara’s inequitable conduct makes the ’476 Patent unenforceable. See Dkt. 450 at 57-66. Because the jury’s finding of no inequitable conduct was advisory, see 6 Tr. 134, the Court construes Campbell’s argument as a request for entry of judgment on inequitable conduct. 8 The Court rejects Campbell’s attempt to broaden its inequitable conduct defense to include an allegation that Polara failed to disclose its alleged public use of the claimed invention to the patent examiner. As Polara correctly points out, such an allegation is not part of Campbell’s inequitable conduct defense. See Dkt. 199 at 8-14. In any event, as discussed in Section II.A.3, the jury found that Polara’s installation of the prototype system in Fullerton was not a public use as contemplated by 35 U.S.C. § 102(b), and the Court, having considered the record, agrees with the jury’s finding. See Trading Techs. Int’l, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1362 (Fed. Cir. 2010) (affirming district court’s finding that patentee was not required to disclose inventor’s confidential testing of custom software embodying claimed invention because reasonable examiner “would not have regarded such experimental use as material”). 9 35 1 1. 2 Federal Rule of Civil Procedure 52(a) requires district courts to make Legal Standard 3 findings of fact in any action “tried on the facts without a jury or with an 4 advisory jury.” Fed. R. Civ. P. 52(a)(1). The court must also “find the facts 5 specially and state its conclusions of law separately.” Id. The district court’s 6 findings must “be explicit enough to give the appellate court a clear 7 understanding of the basis of the trial court’s decision, and to enable it to 8 determine the ground on which the trial court reached its decision.” Zivkovic 9 v. S. California Edison Co., 302 F.3d 1080, 1090 (9th Cir. 2002) (quoting 10 Alpha Distrib. Co. of California v. Jack Daniel Distillery, 454 F.2d 442, 453 11 (9th Cir. 1972)). However, the court “is not required to base its findings on 12 each and every fact presented at trial.” Simeonoff v. Hiner, 249 F.3d 883, 891 13 (9th Cir. 2001). Finally, the court must resolve conflicting testimony on 14 relevant issues. Zivkovic, 302 F.3d at 1090. 15 2. 16 The Court, having heard live testimony and duly considered the Findings of Fact 17 evidence presented at trial, the parties’ briefing and the contentions and 18 arguments of counsel, makes the following findings of fact.10 a. 19 20 Background on Prior Art On February 29, 2000, Polara’s Arizona distributor, Phoenix Highway, 21 faxed Polara a specification sheet for Campbell’s Enlightened device and asked 22 if Polara made a similar product. 2 Tr. 155-59, 172-73; Tr. Exh. 184-A. 23 McGaffey kept the document in a file in his desk, which contained brochures 24 and other information from trade shows about competitor’s products. 2 Tr. 68- 25 69, 153-54; Tr. Exh. 184. The specification sheet states that the wiring 26 Any finding of fact that constitutes a conclusion of law is hereby adopted as a conclusion of law, and any conclusion of law that constitutes a finding of fact is hereby adopted as a finding of fact. 27 28 10 36 1 schematic for the Enlightened device “is to be used in conjunction with the 2 Tassimco PIU 500 unit.” Tr. Exh. 184-A at 2; 2 Tr. 159. McGaffey testified that he first learned of the Tassimco PIU500 when 3 4 Tassimco approached Polara about making its Bulldog button compatible with 5 the PIU500. 2 Tr. 159, 177-78. McGaffey could not recall whether this 6 occurred before or after he received the fax from Phoenix Highway. Id. at 159- 7 60. 8 On March 7, 2000, McGaffey called Tassimco’s Conrad Di Pietro to ask 9 to look at Tassimco’s interface module for illuminated push buttons. 2 Tr. 174- 10 76. On March 8, 2000, Di Pietro sent McGaffey a fax attaching a product 11 description and schematic of the light kit for the push button. Id.; Tr. Exh. 186. 12 McGaffey gave this information to his engineers. 2 Tr. 177. McGaffey testified 13 that Van Cruz “had already been thinking about or started to sketch out the 14 Navigator [two]-wire device” in early 2000—before McGaffey contacted Di 15 Pietro about the PIU500. Id. at 194. 16 In 2002, Polara received U.S. Patent No. 6,340,936 (the “’936 Patent”) 17 for its eight-wire Navigator. Id. at 144-46; Tr. Exh. 105. Wilkinson appears on 18 the face of the ’936 Patent. 2 Tr. 146-147; Tr. Exh. 105 at 1. McGaffey testified 19 that it was “certainly possible” that he reviewed Wilkinson around the time the 20 ’936 Patent was issued. 2 Tr. 147. He testified that it was his regular practice to 21 provide copies of the cited references to the inventors and ask them to review 22 the references but he could not remember if he had done so. Id. at 149-50. 23 Beckwith testified that he “probably” reviewed Wilkinson after the ’936 Patent 24 was issued. 3 Tr. 100-01. 25 b. Patent Prosecution – Amendments 26 Moreland Fischer was Polara’s attorney who prosecuted the application 27 that resulted in the issuance of the ’476 Patent. See 2 Tr. 54-55; Tr. Exh. 109 at 28 32-33. McGaffey testified that he and Beckwith first met with Fischer in early 37 1 2003. 2 Tr. 203-04. McGaffey estimated that he met with Fischer around 3 or 4 2 times. Id. Fischer reported directly to McGaffey for “all important decisions” 3 regarding the patent application. 2 Tr. 204. Fischer testified that he has “an 4 ongoing duty from the time the application is filed, throughout the end of the 5 prosecution, to cite any relevant prior art that comes to [his] attention to the 6 Patent Office for its consideration.” 4 Tr. 37. He also testified that it is his 7 standard practice to tell clients to tell him “everything [they] know that’s 8 relevant to the claimed invention.” Id. at 38. 9 Fischer testified that the patent statutes and rules do not require 10 inventors to complete a patent search. 4 Tr. 91. McGaffey testified that, based 11 on Fischer’s advice, he believed it was reasonable to forgo spending the $5,000 12 it would cost for a patent search. 2 Tr. 205. 13 The application for the ’476 Patent was filed on August 5, 2004. 3 Tr. 12; 14 Tr. Exh. 109. Fischer testified that he did not file an information disclosure 15 statement to notify the PTO of prior art while prosecuting the ’476 Patent. 4 16 Tr. 36-37. 17 On May 30, 2006, the patent examiner rejected Claims 1, 2, 4, and 5. Tr. 18 Exh. 112 at 1. Among other things, the examiner found that, in light of United 19 States Patent No. 5,241,307 (“Bidault”) and No. 3,886,496 (“Spilo”), “[i]t 20 would have been obvious to one of ordinary skill in the art, at the time the 21 invention was made to disclose digital data signals control operation of a 22 message generating means so that a single device . . . processes large amounts 23 of data quickly and efficiently . . . as opposed to an analog controller.” Tr. 24 Exh. 112 at 2-3. The patent examiner also identified Wilkinson as “prior art 25 made of record and not relied upon [that] is considered pertinent to applicant’s 26 disclosure.” Id. at 5. 27 28 On August 14, 2006, Fischer sent some remarks and an amendment to the USPTO. 4 Tr. 43-46, 53-56; Tr. Exh. 113. Fischer amended Claim 1, as 38 1 follows: 2 A control system by which accessible signal vibro-tactile messages 3 are provided to pedestrians regarding the status of vehicular traffic 4 at alert pedestrians when to cross a traffic light controlled 5 intersection, said control system comprising: 6 at least one push button station located at the traffic light 7 controlled intersection to be crossed by pedestrians, said 8 push button station including a push button head that is 9 depressed by the pedestrians and message generating means 10 by which to provide at least one accessible message to advise 11 adapted to cause said push button head to vibrate to provide 12 a tactile indication to a visually impaired pedestrian when 13 vehicular traffic through the intersection has been halted; 14 and to cross the intersection; and 15 a control unit that is responsive to the depression of the push 16 button head of said push button station to transmit to the 17 push button station both power and digital data signals over 18 a single line pair of wires by which to power and control the 19 operation of said message generating means. 20 4 Tr. 57-58; Tr. Exh. 113 at 4. Fischer testified that he added “detail to narrow 21 the scope” of Claim 1 “in an effort to call out the inventive concept which was 22 different than the prior art that the Patent Office had cited against the claim.” 4 23 Tr. 100-01. Fischer also added a new independent claim, Claim 21, which 24 “restate[s] the invention in different terms.” Id. at 60-61.11 25 26 27 28 11 Claim 21 recites: A control system by which messages are provided to alert pedestrians when to cross a traffic light controlled intersection, 39 1 The ’476 Patent was issued on December 5, 2006. 3 Tr. 12; Tr. Exh. 9. 2 Polara owns the ’476 Patent by assignment executed in July 2004. 3 Tr. 12; Tr. 3 Exh. 145-B. 4 5 c. The Parties’ Understanding of the Prior Art McGaffey testified that he understood that two-wire devices existed 6 before Polara’s two-wire Navigator. 3 Tr. 23. He also understood Campbell’s 7 Enlightened device to be a “simple button that would turn a light on through 8 the manipulation of voltage” like an elevator button. Id. at 20-21. It was not 9 his understanding that the two-wire Navigator was the first product to 10 accomplish one function with two wires. Id. at 23-24. McGaffey testified that 11 he was not trying to hide from the patent examiner that Campbell and 12 Tassimco had products that accomplished one function with two wires. Id. at. 13 24. Rather, he believed Polara’s device was different because it “utiliz[ed] 14 digital data over power to accomplish the functions, the four established 15 functions, plus the many more that would be capable through that kind of 16 17 said control system comprising: 18 at least one push button station located at the traffic light controlled intersection to be crossed by pedestrians, said push button station including a push button head that is depressed by the pedestrians and a message generator by which to provide at least one message to advise the pedestrians when to cross the intersection; and 19 20 21 22 23 24 25 26 27 28 a control unit responsive to the depression of the push button head of said push button station to transmit to the push button station power and digital data signals over a single pair of wires by which to power and control the operation of said message generator, one of said pair of wires carrying both of said power and digital data signals and the second of said pair of wires connected to ground. Tr. Exh. 113 at 10. 40 1 technology.” Id. at 23. When McGaffey was asked for his understanding of 2 what he believed was different about Polara’s two-wire APS device at the time 3 the patent application was filed, he responded, “That it was able to accomplish 4 through digital data over power what none of the other devices out there at the 5 time could do.” Id. at 25. 6 Beckwith testified that the central control unit and push button station in 7 Polara’s two-wire APS system both include microprocessors that communicate 8 with each other over two wires using digital-data signals. 3 Tr. 93-94. He 9 testified that he was not aware of any product that operated in that fashion at 10 the time the application for the ’476 Patent was filed and prosecuted. Id. at 94. 11 Beckwith also testified that the Tassimco and Enlightened devices do not 12 operate using digital-data-over-power signals between two microprocessors. Id. 13 at 95. Beckwith testified that Wilkinson did not transmit digital data, “[n]ot in 14 the normal meaning of the word digital.” Id. at 101-03. 15 At trial, Campbell’s expert, Dr. Jones, testified that Claim 1 of the ’476 16 Patent was anticipated by Wilkinson. 6 Tr. 46. Dr. Jones also testified that 17 Claim 21 of the ’476 Patent was anticipated by Wilkinson, the Campbell 18 Enlightened device, and the Tassimco device. Id. at 46-47. 19 3. 20 “Inequitable conduct is an equitable defense to patent infringement that, Conclusions of Law 21 if proved, bars enforcement of a patent.” Therasense, Inc. v. Becton, Dickinson 22 & Co., 649 F.3d 1276, 1285 (Fed. Cir. 2011). “It is only applied where the 23 patentee has unfairly obtained an unwarranted patent through misconduct.” 24 Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1344 (Fed. Cir. 25 2013). To prove inequitable conduct, the defendant “must show by clear and 26 convincing evidence that the patent applicant (1) misrepresented or omitted 27 information material to patentability, and (2) did so with specific intent to 28 mislead or deceive the PTO.” Id. (quoting In re Rosuvastatin Calcium Patent 41 1 2 Litig., 703 F.3d 511, 519 (Fed. Cir. 2012)). In Therasense, the Federal Circuit established a heightened standard for 3 proving inequitable conduct at the merits stage. In cases involving 4 nondisclosure of information, “the accused infringer must prove by clear and 5 convincing evidence that the applicant knew of the reference, knew that it was 6 material, and made a deliberate decision to withhold it.” Therasense, 649 F.3d 7 at 1290. Thus, the defendant must show “but-for materiality” and that the 8 intent to deceive is “the single most reasonable inference able to be drawn from 9 the evidence.” Id. at 1290-91. Prior art is but-for material if the PTO would not 10 have allowed a claim had it been aware of the undisclosed reference. Id. at 11 1291. Because the court must look to the standard used by the PTO to allow 12 claims during examination, “the court should apply the preponderance of the 13 evidence standard and give claims their broadest reasonable construction.” Id. 14 at 1291-92.12 15 Materiality. As a matter of law, a patentee does not commit inequitable 16 conduct by withholding a reference if the patent examiner in fact considered 17 the reference. Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 18 1565, 1582 (Fed. Cir. 1991), overruled on other grounds by Abbott Labs. v. 19 Sandoz, Inc., 566 F.3d 1282 (Fed. Cir. 2009). In other words, if the examiner 20 actually considers a reference it is irrelevant whether the patentee disclosed the 21 22 23 24 25 26 27 28 District courts and the PTO use different evidentiary standards and rules for claim construction. Therefore, “even if a district court does not invalidate a claim based on a deliberately withheld reference, the reference may be material if it would have blocked patent issuance under the PTO’s different evidentiary standards.” Therasense, 649 F.3d at 1292. As such, the jury’s verdict finding that Claims 1 through 4 of the ’476 Patent were not obvious does not weigh on the determination of materiality for inequitable conduct. See Am. Calcar, Inc. v. Am. Honda Motor Co., 768 F.3d 1185, 1189 (Fed. Cir. 2014). 12 42 1 reference or the examiner discovered the reference on her own. Id.; see also 37 2 C.F.R. § 1.56(a) (“The duty to disclose all information known to be material to 3 patentability is deemed to be satisfied if all information known to be material 4 to patentability of any claim issued in a patent was cited by the Office or 5 submitted to the Office . . . .”). Here, it is evident from the face of the ’476 6 Patent that Wilkinson was before the patent examiner during prosecution of 7 the patent. See Exh. 9 at 1. In fact, Judge Carney long ago determined that 8 Wilkinson could not form the basis of an inequitable conduct defense. See Dkt. 9 34 at 5. When dismissing Campbell’s original equitable conduct defense, Judge 10 Carney held that “[a]ny allegation that Polara withheld [Wilkinson] from the 11 PTO therefore cannot be the basis for an inequitable conduct defense.” Id. 12 (citing Scripps Clinic, 927 F.2d at 1582; 37 C.F.R. § 1.56(a)). 13 Additionally, a reference is not but-for material if it is cumulative of or 14 less relevant than information already before the PTO. Larson Mfg. Co. of S. 15 Dakota v. Aluminart Prod. Ltd., 559 F.3d 1317, 1327 (Fed. Cir. 2009). A 16 reference is cumulative if it “teaches no more than what a reasonable examiner 17 would consider to be taught by the prior art already before the PTO.” Regents 18 of the Univ. of California v. Eli Lilly & Co., 119 F.3d 1559, 1574-75 (Fed. Cir. 19 1997); see also Molins PLC v. Textron, Inc., 48 F.3d 1172, 1185 (Fed. Cir. 20 1995) (because withheld reference was “no more pertinent to” patent 21 application “than was claim 26 of the Lemelson ’770 patent, which was 22 already of record,” court’s finding that withheld reference was material “was 23 clearly erroneous”). 24 Here, by Campbell’s own admission, Wilkinson is a better and more 25 relevant reference than the Tassimco or Enlightened devices. Campbell has not 26 identified any evidence presented at trial showing that either of those devices 27 discloses a particularly important limitation not elsewhere disclosed or “a more 28 complete combination of relevant features.” Indeed, Campbell’s expert, Dr. 43 1 Jones, testified that Wilkinson and the Tassimco and Enlightened devices 2 anticipated Claim 21, but only Wilkinson anticipated Claim 1. See 6 Tr. 46-47; 3 see also Dkt. 450 at 61 (“As Wilkinson demonstrated, such systems could, of 4 course, control . . . not just sounds and a pilot light but a vibrating pushbutton 5 – an APS feature, as well.”). Thus, even if the patent examiner had possessed 6 the Tassimco and Enlightened devices and gave the ’476 Patent claims the 7 broadest reasonable construction, it is unlikely that the examiner would have 8 rejected the claims based on these references. 9 Intent to deceive. To prove intent based on nondisclosure to the PTO, the 10 accused infringer must show by clear and convincing evidence that “the 11 applicant made a deliberate decision to withhold a known material reference.” 12 Therasense, 649 F.3d at 1290 (quoting Molins, 48 F.3d at 1181). It is not 13 enough to show that a misrepresentation or omission amounted to negligence 14 or gross negligence under a “should have known” standard. Id. If there is no 15 direct evidence of deceptive intent, “a district court may infer intent from 16 indirect and circumstantial evidence.” Id. “However, to meet the clear and 17 convincing evidence standard, the specific intent to deceive must be ‘the single 18 most reasonable inference able to be drawn from the evidence.’” Id. (quoting 19 Star Sci., Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir. 20 2008)). Accordingly, “when there are multiple reasonable inferences that may 21 be drawn, intent to deceive cannot be found.” Id. at 1290-91 (Fed. Cir. 2011) 22 (citing Scanner Techs. Corp. v. ICOS Vision Sys. Corp. N.V., 528 F.3d 1365, 23 1376 (Fed. Cir. 2008)). 24 Here, the only evidence of deceptive intent Campbell identifies is the fact 25 of nondisclosure, which does not satisfy the intent to deceive element of 26 inequitable conduct. See M. Eagles Tool Warehouse, Inc. v. Fisher Tooling 27 Co., 439 F.3d 1335, 1341 (Fed. Cir. 2006). Moreover, Polara presented 28 evidence that McGaffey and Beckwith did not have the requisite intent because 44 1 they did not consider Wilkinson, the Tassimco PIU500, and Campbell 2 Enlightened device to be material. See Therasense, 649 F.3d at 1290 3 (explaining that “accused infringer must prove by clear and convincing 4 evidence that the applicant knew . . . that [the reference] was material”). 5 McGaffey testified that he was not trying to hide from the patent examiner that 6 Campbell and Tassimco had products that accomplished one function with 7 two wires. 3 Tr. 24. Rather, he believed Polara’s device was different because it 8 “utiliz[ed] digital data over power to accomplish the functions, the four 9 established functions, plus the many more that would be capable through that 10 kind of technology.” Id. at 23. When asked what he believed was different 11 about Polara’s two-wire APS system at the time the patent application was 12 filed, McGaffey responded “[t]hat it was able to accomplish through digital 13 data over power what none of the other devices out there at the time could 14 do.” Id. at 25. Similarly, Beckwith testified that at the time the patent 15 application was filed and prosecuted, he was not aware of any other product 16 that operated using digital-data-over-power signals over two wires. Id. at 94-95. 17 Beckwith also testified that Wilkinson did not transmit digital data “in the 18 normal meaning of the word digital.” Id. at 101-03. Based on the jury’s verdict 19 on obviousness and advisory verdict on inequitable conduct, the jury 20 apparently found McGaffey’s and Beckwith’s testimony credible. The Court 21 agrees with the jury’s credibility finding. The Court also finds that McGaffey’s 22 decision not to do a patent search—which presumably would have uncovered 23 Wilkinson—was reasonable based on Fischer’s advice. Under the 24 circumstances, intent to deceive is not the most reasonable inference to be 25 drawn from the evidentiary record. See Therasense, 649 F.3d at 1290. 26 Based on the record, the Court is not persuaded that it should disturb the 27 jury’s advisory verdict that Campbell has not presented clear and convincing 28 evidence that the ’476 Patent is unenforceable due to inequitable conduct. 45 1 2 3 C. Polara’s Motion for a Permanent Injunction Polara moves for a permanent injunction against Campbell’s continued sales of infringing products. Dkt. 453. 4 1. 5 There is no presumption in favor of an injunction in patent infringement Legal Standard 6 cases. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). Instead, 7 a plaintiff must show that the traditional equitable factors support a permanent 8 injunction: (1) the plaintiff has suffered irreparable harm; (2) “remedies 9 available at law are inadequate to compensate for that injury”; (3) “considering 10 the balance of hardships between the plaintiff and defendant, a remedy in 11 equity is warranted”; and (4) “the public interest would not be ‘disserved’ by a 12 permanent injunction.” i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 861 13 (Fed. Cir. 2010) (citing eBay, 547 U.S. at 391); see also Sealant Systems Int’l, 14 Inc. v. TEK Global S.R.L., No. 11-774, 2014 WL 1008183, at *5 (N.D. Cal. 15 Mar. 7, 2014). 16 2. 17 18 Polara’s Entitlement to an Injunction a. Irreparable Harm To establish irreparable harm, a patentee must show a causal nexus 19 between the alleged harm and the infringement. “This just means that there 20 must be proof that the infringement causes the harm.” Apple Inc. v. Samsung 21 Elecs. Co., 809 F.3d 633, 639 (Fed. Cir. 2015), cert. denied, 136 S. Ct. 2522 22 (2016). Polara argues that evidence that the infringing two-wire design drives 23 demand for the accused AAPS product establishes this causal nexus. Dkt. 453- 24 1 at 6-7. The Court agrees. As noted above, the evidence showed that 25 Campbell developed its two-wire AAPS to compete with Polara’s two-wire 26 Navigator. The evidence at trial also showed that developing a two-wire APS 27 system offered marked advantages, because many existing intersections had 28 only two wires. As Polara points out, a 2014 user’s manual for Campbell’s 46 1 AAPS “touts the infringing features as an advantage of the product.” Dkt. 453- 2 1 at 7 (citing Dkt. 453-11 at 6-8). A causal nexus has been established. 3 Moreover, the evidence showed that Polara and Campbell are direct 4 competitors in the marketplace of APS system suppliers. 2 Tr. 71-72. It also 5 appears that Polara and Campbell are the only two companies who supply 6 two-wire APS systems. See 2 Tr. 71-75. This evidence strongly favors an 7 injunction. See Douglas Dynamics, LLC v. Buyers Prod. Co., 717 F.3d 1336, 8 1345 (Fed. Cir. 2013) (“Where two companies are in competition against one 9 another, the patentee suffers the harm—often irreparable—of being forced to 10 compete against products that incorporate and infringe its own patented 11 inventions.”). 12 Additionally, the evidence showed that Polara is not willing to license 13 the ’476 Patent. See 2 Tr. 83-88. Polara’s unwillingness weighs in favor of 14 finding irreparable injury. See Presidio Components, Inc. v. Am. Tech. 15 Ceramics Corp., 702 F.3d 1351, 1363 (Fed. Cir. 2012) (“The district court 16 correctly found [patentee’s] unwillingness to license favored finding irreparable 17 injury.”). 18 Campbell argues that Polara has not shown any lost sales due to its 19 infringement. See Dkt. 463 at 12. But the evidence showed that Polara and 20 Campbell are the only two suppliers of two-wire APS systems in the 21 marketplace. See 2 Tr. 70-72. Polara also presented evidence that Campbell 22 had sold two-wire devices to former Polara customers in Nevada and 23 California. See id. at 74-77. This testimony, together with the undisputed 24 evidence that Polara and Campbell were direct competitors, established that 25 Polara has suffered irreparable harm from lost business opportunities due to 26 Campbell’s infringement. 27 28 Campbell also argues that Polara’s failure to seek preliminary injunctive relief demonstrates that it is not being irreparably harmed. Dkt. 463 at 13-14. 47 1 But a period of delay is only one circumstance that a district court may 2 consider when evaluating irreparable harm. See Hybritech Inc. v. Abbott 3 Labs., 849 F.2d 1446, 1457 (Fed. Cir. 1988); see also Apple, Inc. v. Samsung 4 Elecs. Co., 678 F.3d 1314, 1325 (Fed. Cir. 2012). And “a showing of delay 5 does not preclude, as a matter of law, a determination of irreparable harm.” 6 Hybritech, 849 F.2d at 1457. 7 In sum, considering the substantial evidence of direct competition in the 8 same market and the causal nexus between the infringement and the harm, the 9 Court finds that Polara has shown that it has suffered irreparable injury. b. 10 Adequacy of Legal Remedies Where there is no reason to believe that infringement or irreparable 11 12 harm arising therefrom will cease absent an injunction, money damages are 13 inadequate. See Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1155 14 (Fed. Cir. 2011). Here, there is no reason to believe that Campbell will 15 discontinue offering an infringing two-wire device absent an injunction. An 16 award of money damages for Campbell’s past infringement does not mean that 17 money damages are an adequate remedy for future infringement. See Kanga 18 Care LLC v. GoGreen Enters. LLC, No. 13-2770, 2014 WL 5889815, at *3 19 (D. Colo. Nov. 12, 2014) (holding that “any sales” of infringing product 20 “cause[s] damage to plaintiff's interests that cannot be adequately remedied by 21 a monetary award”); Honeywell Int’l, Inc. v. Universal Avionics Sys. Corp., 22 397 F. Supp. 2d 537, 546 (D. Del. 2005) (noting that “while a monetary award 23 is often an adequate remedy for past infringement, it does not follow that 24 money relief is a sufficient remedy against future infringement”). Because 25 money damages are inadequate, this factor weighs in favor of issuing an 26 injunction. 27 /// 28 /// 48 1 2 c. Balance of Hardships Absent an injunction, Polara faces substantial hardship because it must 3 compete with its own patented invention. See Robert Bosch, 659 F.3d at 1156 4 (holding that requiring patentee “to compete against its own patented 5 invention,” places “substantial hardship” on patentee and therefore “favors 6 entry of an injunction”). In response, Campbell argues that it will lose its 7 “toehold” in the marketplace if an injunction is issued, giving Polara the 8 opportunity to “force [it] out of the marketplace entirely.” Dkt. 463 at 20. But 9 the fact that Campbell might lose market share or suffer other harm if it cannot 10 sell an infringing product is not a basis for denying Polara injunctive relief. 11 Any hardship faced by Campbell is the result of its own actions and its 12 decision to enter the relevant market with an infringing device. See Coloplast 13 A/S v. Generic Med. Devices, Inc., No. 10-227, 2012 WL 3262756, at *2 14 (W.D. Wash. Aug. 9, 2012) (finding that balance of hardships favored entry of 15 injunction where defendant’s hardship was “result of its calculated business 16 risk to enter the relevant market with its devices”); see also Windsurfing Int’l, 17 Inc. v. AMF, Inc., 782 F.2d 995, 1003 n. 12 (Fed. Cir. 1986) (“One who elects 18 to build a business on a product found to infringe cannot be heard to complain 19 if an injunction against continuing infringement destroys the business so 20 elected.”). Moreover, Campbell itself asserts that it is developing “next 21 generation” products that are not infringing. Dkt. 463 at 20. Any non- 22 infringing products will not be affected by the Court’s injunction, diminishing 23 the force of this argument. 24 d. Public Interest 25 Finally, the public interest also weighs in favor of granting a permanent 26 injunction. The public has a strong interest in maintaining the integrity of the 27 patent system by enforcing a patent owner’s right to exclude. See Broadcom 28 Corp. v. Qualcomm Inc., 543 F.3d 683, 704 (Fed. Cir. 2008) (acknowledging 49 1 district court’s conclusion that “it is generally in the public interest to uphold 2 patent rights”); Smith & Nephew, Inc. v. Synthes, 466 F. Supp. 2d 978, 985 3 (W.D. Tenn. 2006) (“As a general matter, the public maintains an interest in 4 protecting the rights of patent holders, and injunctions serve that interest.”). 5 Without an injunction, there is every reason to believe that Campbell will 6 continue violating Polara’s right to exclude, undermining the policies that 7 underlie the patent laws. 8 3. 9 Having determined that entry of a permanent injunction is supported by Scope of the Injunction 10 the four eBay factors, the Court turns to the appropriate scope of the 11 injunction. The Court possesses “inherent discretion to fashion equitable 12 relief.” Robert Bosch, 659 F.3d at 1149. 13 Polara seeks entry of the following injunction: 14 IT IS FURTHER ORDERED that Campbell and its 15 subsidiaries and affiliated companies (collectively “the Campbell 16 [E]ntities”), as well as the Campbell [Entities’] successors, assigns, 17 officers, directors, distributors, agents, servants, employees, 18 representatives and attorneys, and those persons in active concert 19 or participation with them who receive notice of the order are 20 hereby immediately and permanently restrained and enjoined, 21 pursuant to 35 U.S.C. § 283 and Fed. R. Civ. P. 65(d), from 22 making, using, offering for sale or selling in the United States, or 23 importing into the United States, or causing to be made, used, 24 offered for sale, or sold in the United States, or imported into the 25 United States, any [Campbell Advisor Advanced Pedestrian 26 Station (“Infringing Product”)] or any products not more than 27 colorably different therefrom. 28 IT IS FURTHER ORDERED that [the Campbell Entities] 50 1 as well as the Campbell [Entities’] successors, assigns, officers, 2 directors, distributors, agents, servants, employees, representatives 3 and attorneys, and those persons in active concert or participation 4 with them who receive notice of the order are hereby immediately 5 and permanently restrained and enjoined, pursuant to 35 U.S.C. § 6 283 and Fed. R. Civ. P. 65(d), from maintaining, servicing, 7 repairing or otherwise providing technical support for any 8 Infringing Product sold prior to January 3, 2013. 9 IT IS FURTHER ORDERED that within 14 days of 10 issuance of this order, the Campbell Entities shall provide written 11 notice of this judgment and order, and the injunction ordered 12 herein, to: their officers, directors, distributors, customers, agents, 13 servants, representatives, attorneys, employees, subsidiaries and 14 affiliates, and those persons in active concert or participation with 15 them, as well as any entity to which Campbell has previously 16 directly or indirectly sold or offered for sale an Infringing Product. 17 The Campbell entities shall take whatever means are necessary or 18 appropriate to ensure that this order is properly complied with. 19 IT IS FURTHER ORDERED that within 14 days of 20 issuance of this order, the Campbell Entities shall provide written 21 notice of this judgment and order, and the injunction ordered 22 herein, to each purchaser, user, or customer to which Campbell 23 has previously directly or indirectly sold or offered for sale an 24 Infringing Product first sold prior to January 3, 2013, stating: 25 Each Campbell Advisor Advanced Pedestrian Station provided by 26 Campbell prior to January 3, 2013 is affected by a Permanent Injunction 27 entered by the United States District Court for the Central District of 28 California in [Case] No. SA CV 13-00007-DFM. A copy of this 51 1 Permanent Injunction is included with this notice. The Campbell Advisor 2 Advanced Pedestrian Station has been found to infringe U.S. Patent No[]. 3 7,145,476, which is assigned to Polara Engineering, Inc. Accordingly, 4 certain acts associated with the Campbell Advisor Advanced Pedestrian 5 Station are prohibited. 6 As result of this Permanent Injunction, Campbell and its 7 distributors, successors, assigns, officers, directors, agents, servants, 8 employees, representatives and attorneys, and those persons in active 9 concert or participation with them have been enjoined from maintaining, 10 servicing, repairing or otherwise providing technical support for any 11 Campbell Advisor Advanced Pedestrian Station sold prior to January 3, 12 2013, including the Campbell Advisor Advanced Pedestrian Stations 13 provided to you having the following part numbers: 14 [to be inserted by Campbell]. 15 IT IS FURTHER ORDERED that within 28 days of 16 issuance of this order, the Campbell Entities shall file with the 17 Court a list identifying each entity to which, as set forth above, the 18 Campbell Entities provided written notice of this judgment and 19 order, and the injunction ordered herein. 20 See Dkt. 453-12 at 1-3. 21 Polara’s proposed injunction is overbroad. As an initial matter, Polara 22 does not justify the relief it seeks with respect to Campbell’s past sales. It has 23 been awarded damages on those sales in the form of a reasonable royalty. This 24 award acts as an implied license on such sales. See King Instrument Corp. v. 25 Otari Corp., 814 F.2d 1560, 1564 (Fed. Cir. 1987); see also Itron, Inc. v. 26 Benghiat, No. 99-501, 2003 WL 22037710, at *14 (D. Minn. Aug. 29, 2003) 27 (“By paying the damages that it owes in full, [infringer] will receive an implied 28 license on its past infringing sales.”). The Court accordingly will not order that 52 1 Campbell be barred from “maintaining, servicing, repairing or otherwise 2 providing technical support” for any of its infringing products. The Court will, however, order Campbell to send notice to its customers 3 4 of the injunction issued by the Court. This notice requirement is necessary to 5 protect Polara’s rights in the ’476 Patent. See Braintree Labs., Inc. v. Nephro- 6 Tech, Inc., 81 F. Supp. 2d 1122, 1137 (D. Kan. 2000). The remaining issue is the language barring Campbell’s sale of devices 7 8 that infringe Claims 1 through 4 of the ’476 Patent. Polara defines “Infringing 9 Product” as Campbell’s AAPS. The Court agrees that Campbell’s AAPS 10 should be subject to injunctive relief to the extent that the device infringes 11 Claims 1 through 4 of the ’476 Patent. And there is the problem with Polara’s 12 language. A version of Campbell’s AAPS that does not rely on Polara’s data- 13 over-power feature to operate over two wires would not infringe the ’476 14 Patent. The injunction’s definition of Infringing Product must reflect that. The 15 Court will accordingly order Polara to submit revised proposed injunction 16 language that limits its definition of Infringing Product consistent with the 17 Court’s views herein. Within seven (7) days of Polara’s submission, Campbell 18 shall file any objections thereto. Related to the Court’s concern, Polara has also asked for authority to 19 20 inspect a working exemplar of Campbell’s new “wireless” AAPS, what 21 Campbell calls its “WiAAPS.” See Dkt. 489. Campbell objects to Polara’s 22 request. See Dkt. 490. Polara’s request for inspection is denied. Once an 23 appropriate injunction is in place, Polara may, to the extent it believes that 24 Campbell’s WiAAPS violates the injunction, seek to have Campbell held in 25 contempt. 26 /// 27 /// 28 /// 53 1 D. Polara’s Motion for a Judgment of Willfulness and an Award of 2 Enhanced Damages 3 Polara seeks enhanced damages in the form of trebling the jury’s 4 5 damages award to punish Campbell’s willful conduct. Dkt. 455. Courts have the discretion to award “damages up to three times the 6 amount found or assessed.” 35 U.S.C. § 284. Such enhanced damages are not 7 required by a finding of egregious misconduct. Halo, 136 S. Ct. at 1933. Courts 8 should “continue to take into account the particular circumstances of each 9 case,” reserving enhanced damages for “egregious cases typified by willful 10 11 misconduct.” Id. at 1933-34. Read Corp. v. Portec, Inc., 970 F.2d 816, 826-27 (Fed. Cir. 1992), 12 identified nine factors relevant to the egregious conduct inquiry: (1) whether 13 the infringer deliberately copied the ideas or design of another; (2) whether the 14 infringer, when he knew of the other’s patent protection, investigated the scope 15 of the patent and formed a good-faith belief that it was invalid or that it was 16 not infringed; (3) the infringer’s behavior as a party to the litigation; (4) the 17 infringer’s size and financial condition; (5) closeness of the case; (6) duration of 18 the infringer’s misconduct; (7) remedial action by the infringer; (8) the 19 infringer’s motivation for harm; and (9) whether the infringer attempted to 20 conceal its misconduct. After Halo, courts have continued to look to these 21 factors. See, e.g., Power Integrations, Inc. v. Fairchild Semiconductor Int’l, 22 Inc., No. 09-5235, 2017 WL 130236, at *4 (N.D. Cal. Jan. 13, 2017) (calling 23 the Read factors “useful guideposts”); Sociedad Espanola de Electromedicina 24 y Calidad, S.A. v. Blue Ridge X-Ray Co, Inc., No. 10-159, 2016 WL 7473422, 25 at *7 (W.D. N.C. Dec. 28, 2016) (calling the Read factors “helpful” but “not 26 dispositive”). 27 The Court analyzes the Read factors as follows: 28 Deliberate copying. Polara argues that Campbell deliberated copied its ’476 54 1 Patent when it made its AAPS a two-wire device. As noted above, the 2 evidence showed that Campbell was aware of Polara’s two-wire Navigator and 3 intended to develop a product with similar capabilities. See, e.g., 3 Tr. 121-22 4 (“[W]e needed to develop a product to compete with the two-wire system.”). 5 The evidence showed Campbell eschewed the suggestion that it implement a 6 three-wire solution. Although the evidence of deliberate copying may only be 7 circumstantial, it is nonetheless compelling. This factor favors an award of 8 enhanced damages. 9 Good faith belief of invalidity or noninfringement. Polara argues that 10 Campbell ignored warnings about the ’476 Patent and implemented a two-wire 11 design without a competent opinion that its design would not infringe or that 12 the ’476 Patent was invalid. The evidence supports Polara’s argument. Jones, 13 the University of Idaho lawyer, identified “problems” with the ’476 Patent and 14 did not give Campbell’s proposed AAPS a “clean bill of health.” Id. at 146-47; 15 see Tr. Exh. 316 at 2. The Court agrees with the jury’s implicit finding that 16 Lindsey’s analysis offered little support for an argument that Campbell 17 believed the ’476 Patent was invalid; Lindsey’s analysis (Tr. Exh. 317) was 18 limited to Claim 11. As a result, the record does not support Tate’s testimony 19 that he believed that Campbell’s device did not infringe and that the ’476 20 Patent was invalid. This factor also favors an award of enhanced damages. 21 Campbell’s litigation behavior. Polara argues that Campbell’s behavior 22 during this litigation supports an award of enhanced damages. The Court 23 disagrees. “Typically, ‘litigation misconduct’ refers to bringing vexatious or 24 unjustified suits, discovery abuses, failure to obey orders of the court, or acts 25 that unnecessarily prolong litigation.” i4i Ltd. P’ship, 598 F.3d at 859. Both 26 sides assail their opponent’s litigation tactics. But the record reveals little 27 behavior by either side that cannot be fairly characterized as zealous and 28 aggressive advocacy. Campbell’s invalidity and unenforceability defenses 55 1 required a trial, indicating that neither position was vexatious or unjustified. 2 While counsel represented their clients vigorously at trial, both parties acted 3 professionally throughout the proceedings in front of this Court, and neither 4 party points to any findings by Judge Carney or Judge Rosenbluth of flagrant 5 or sanctionable behavior.13 Accordingly, the Court finds that this factor weighs 6 against awarding enhanced damages. 7 Campbell’s size and financial condition. Polara argues that Campbell’s size 8 and financial condition support an award of enhanced damages. The Court 9 heard little evidence at trial on this topic. Polara and Campbell are both 10 relatively small companies, each employing fewer than 100 employees. 1 Tr. 11 44; 2 Tr. 12. But the damages awarded by the jury are not colossal, and there is 12 no evidence that trebling those damages would threaten to destroy Campbell’s 13 financial condition. As a result, the Court finds that this factor is neutral. 14 Closeness of the case. Polara argues that “[n]othing about this case was 15 ‘close.’” Dkt. 460-1 at 15. This is an overstatement. In particular, the 16 affirmative defense of invalidity due to obviousness was a close call; although 17 Polara did not bear the burden of proof, it did not marshal overwhelming 18 evidence to refute Campbell’s arguments that its two-wire system was obvious. 19 But Campbell’s other invalidity theories were weaker, and the fact that those 20 issues required a resolution at trial does not indicate that they were particularly 21 close. See PPC Broadband, Inc. v. Corning Optical Commc’ns RF, LLC, No. 22 11-761, 2016 WL 6537977, at *7 (N.D.N.Y. Nov. 3, 2016). In sum, the Court 23 finds that this factor is also neutral. 24 Duration of the infringer’s misconduct. Polara argues that the duration of 25 Campbell’s infringement weighs in favor of enhancement. The Court agrees. 26 Before the parties consented to this Court, U.S. Magistrate Judge Jean Rosenbluth handled the pretrial discovery disputes in this matter, of which there were several. 27 28 13 56 1 Campbell’s infringement began more than six years ago. Courts have 2 concluded that similarly lengthy periods of infringement weigh in favor of 3 enhancement. See, e.g., I-Flow Corp. v. Apex Med. Tech., Inc., No. 07-1200, 4 2010 WL 114005, at *3 (S.D. Cal. Jan. 6, 2010) (finding six years of 5 misconduct was “substantial,” favoring enhancement). 6 Campbell’s remedial actions. Polara argues that Campbell’s failure to take 7 any remedial action, most notably its failure to discontinue sales of the 8 infringing product after Polara filed suit and Judge Carney granted partial 9 summary judgment, weighs in favor of enhancement. The Court agrees. 10 Courts have concluded that continuing to sell the infringing products after 11 notice of infringement and during the course of litigation supports 12 enhancement. See Novozymes A/S v. Genencor Int’l, Inc., 474 F. Supp. 2d 13 592, 611 (D. Del. 2007) (“That Defendants failed to take remedial action and 14 continued to infringe until after the liability trial also supports an enhanced 15 award.”). The record shows that Campbell took no remedial action. This 16 factor weighs in favor of enhancement. 17 Campbell’s motivation for harm. Polara argues that Campbell, as its direct 18 competitor, was motivated to take market share from Polara. It is undisputed 19 that Polara and Campbell are direct competitors in a relatively small market 20 for APS systems; “infringement by a direct competitor in such a market 21 mitigates in favor of enhanced damages.” TruePosition Inc. v. Andrew Corp., 22 611 F. Supp. 2d 400, 412 (D. Del. 2009). Moreover, the evidence supports the 23 conclusion that Campbell preferred taking the risk of infringement over 24 designing a non-infringing device, and that Campbell did so to divert business 25 from Polara. See Funai Elec. Co., Ltd. v. Daewoo Elecs. Corp., 593 F. Supp. 26 2d 1088, 1116-17 (N.D. Cal. 2009) (agreeing that “where, as here, the infringer 27 engages in infringing conduct to gain an edge over the patentee in a 28 competitive market, this factor favors an award of enhanced damages.”). This 57 1 factor weighs in favor of enhancement. 2 Whether Campbell attempted to conceal its misconduct. Polara does not argue 3 that Campbell attempted to conceal its misconduct. This factor weighs against 4 enhancement. Taking into account the jury’s verdict, the Read factors, and, most 5 6 importantly, the rationale underlying enhanced damages, the Court is 7 persuaded that enhanced damages are appropriate. Five of the nine Read 8 factors—deliberate copying, no good faith belief in non-infringement or 9 invalidity, duration of infringement, the absence of remedial actions, and 10 motivation for harm—weigh in favor of enhancement. Two factors are neutral, 11 and two factors weigh against enhancement. Although Campbell’s misconduct warrants an enhancement, the Court 12 13 recognizes that there is a spectrum of improper conduct. See Cleancut, LLC v. 14 Rug Doctor, Inc., No. 08-836, 2013 WL 441209, at *4 (D. Utah Feb. 5, 2013). 15 Trebling damages is reserved for the cases at the most egregious end of the 16 spectrum. See PPC Broadband, 2016 WL 6537977 at *9. Here, the Court 17 exercises its discretion and finds that increasing the damages award by two- 18 and-a-half times is a sufficiently punitive sanction for Campbell’s misconduct. 19 See Halo, 136 S. Ct. at 1932; see Dominion Res. Inc., 2016 WL 5674713 at 20 *20-24 (awarding double damages because of the jury’s willfulness finding and 21 two Read factors weighed in infringer’s favor); Metso Minerals, Inc. v. 22 Powerscreen Int’l Distrib. Ltd., 833 F. Supp. 2d 333, 341 (E.D.N.Y. 2011) 23 (concluding that full enhancement of treble damages was not warranted 24 because of mitigating factors, especially the lack of litigation misconduct). 25 E. 26 Polara’s Motion to Award Attorney’s Fees Polara moves for an order awarding attorney’s fees under 35 U.S.C. § 27 285, which provides that reasonable attorney’s fees may be awarded to the 28 prevailing party in “exceptional cases.” Dkt. 454. 58 1 In Octane Fitness, LLC v. Icon Health & Fitness, Inc., --- U.S. ---, 134 S. 2 Ct. 1749 (2014), the Supreme Court held that an “exceptional” case is “one 3 that stands out from others with respect to the substantive strength of a party’s 4 litigating position (concerning both the governing law and the facts of the case) 5 or the unreasonable manner in which the case was litigated.” Id. at 1756. The 6 courts must look at the totality of the circumstances to decide if a case is 7 “exceptional.” Id. In making this determination, courts may consider the 8 “frivolousness, motivation, objective unreasonableness (both in the factual and 9 legal components of the case) and the need in particular circumstances to 10 advance considerations of compensation and deterrence.” Id. at 1756 n.6. 11 Courts may also award fees in a case presenting “either subjective bad faith or 12 exceptionally meritless claims.” Id. at 1757. 13 Here, although Campbell’s infringement and invalidity defenses were 14 unsuccessful, its litigating positions were not objectively unreasonable. See 15 SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1347-48 (Fed. Cir. 2015) 16 (clarifying that what matters is the substantive strength of a party’s litigating 17 position rather than the eventual success of that position); see also Gaymar 18 Indus., Inc. v. Cincinnati Sub-Zero Prods., Inc., 790 F.3d 1369, 1373 (Fed. 19 Cir. 2015) (noting that “fees are not awarded solely because one party’s 20 position did not prevail”). Campbell’s anticipation, obviousness, and 21 unenforceability defenses all proceeded to trial; although ultimately the jury 22 and the Court found those defenses unpersuasive, there was evidence in the 23 record to support them. The substantive strength of Campbell’s litigating 24 position does not “stand out” from other cases to merit a finding that this case 25 is “exceptional” under § 285. 26 Nor was the case litigated in an unreasonable manner. Both parties 27 spend much of their briefs assailing the other side’s litigation conduct. The 28 Court finds that none of the parties’ allegations demonstrates substantial 59 1 litigation misconduct. As the Court noted above, both counsel litigated this 2 case vigorously on behalf of their respective clients. In sum, this case is not exceptional. While Campbell’s decisions outside 3 4 the litigation warrant enhanced damages, its litigation conduct does not “stand 5 out” from other hard-fought cases as unreasonable. Polara’s motion for an 6 award of attorney’s fees is denied. 7 F. 8 9 Polara’s Motion for an Accounting Polara requests supplemental damages for the “entire scope” of Campbell’s infringement. Dkt. 452. Polara also requests prejudgment and 10 postjudgment interest. Id. Campbell does not resist Polara’s request for 11 supplemental damages, but contends that any accounting should run from 12 February 1, 2016. Dkt. 462 at 4. Campbell argues that no prejudgment interest 13 is warranted. Id. at 1-4. 14 1. 15 The Court begins with Polara’s request for supplemental damages. Upon Supplemental Damages and Accounting 16 a finding of infringement, the patentee is entitled to “damages adequate to 17 compensate for the infringement, but in no event less than a reasonable royalty 18 for the use made of the invention by the infringer.” 35 U.S.C. § 284. Patentees 19 are entitled to supplemental damage awards for any infringement prior to the 20 entry of a permanent injunction that was not considered by the jury. See 21 Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1212-13 (Fed. Cir. 22 2010). “Courts routinely grant motions for a further accounting where the jury 23 did not consider certain periods of infringing activity post-verdict.” Metso 24 Minerals, 833 F. Supp. 2d at 347. This reasoning has been applied to situations 25 like this one in which an infringer provides sales data that does not cover all 26 sales made before trial. See Hynix Semiconductor Inc. v. Rambus Inc., 609 F. 27 Supp. 2d 951, 960-61 (N.D. Cal. 2009) (awarding supplemental damages for 28 infringement occurring between verdict and entry of judgment, which could 60 1 not have been considered by jury); Activevideo Networks, Inc. v. Verizon 2 Comms., Inc., No. 10-248, 2011 WL 4899922, at *4 (E.D. Va. Oct. 14, 2011) 3 (holding that supplemental “damages may take into account pre-verdict 4 infringing sales that were not covered by the jury verdict due to deficiencies in 5 the discovery production”). In calculating supplemental damages to correct 6 this deficiency, the Court may apply the reasonable royalty rate found by the 7 jury. See Hynix, 609 F. Supp. 2d at 964-65 (applying jury’s royalty 8 determination to all infringement); Mondis Tech. Ltd. v. Chimei Innolux 9 Corp., 822 F. Supp. 2d 639, 643 (E.D. Tex. 2011) (“The Court holds that the 10 proper rate for the supplemental damages is the same rates the jury answered 11 were applicable, which are 0.5% for monitors and 0.75% for televisions.”). 12 Here, the jury decided that 15% of total sales was a reasonable royalty. 13 Dkt. 440 at 4. The jury also found that the total infringing sales were 14 $2,752,842. Id. This figure is the amount, as stipulated by the parties, that 15 Polara’s damages expert, David Hanson, would have testified to as total 16 infringing sales since January 2, 2013. See 7 Tr. 36; Tr. Exh. 350.14 Hanson did 17 testify that his sales numbers “go through January of 2016.” 5 Tr. 18, 32. His 18 report shows that he included sales figures through January 29, 2016. See Tr. 19 Exh. 345 at 55. A later stipulation was only necessary because Hanson had not 20 provided a damages figure dating from January 2, 2013—not because he was 21 changing his “end” date. See 5 Tr. 54-55; 7 Tr. 35-36. Polara is entitled to 22 supplemental damages of 15% of Campbell’s total sales of the AAPS from 23 January 30, 2016 through the date of this Order. 24 2. 25 Damages for infringement should be awarded “together with interest 26 27 28 Prejudgment Interest and costs as fixed by the court.” 35 U.S.C. § 284. Prejudgment interest should 14 The transcript and exhibit mistakenly list the figure as $12,752,842. 61 1 ordinarily be awarded to a victorious patentee. See Gen. Motors Corp. v. 2 Devex Corp., 461 U.S. 648, 655-56 (1983). Prejudgment interest is meant to be 3 compensatory, not punitive. Oiness v. Walgreens Co., 88 F.3d 1025, 1033 4 (Fed. Cir. 1996). The purpose of prejudgment interest is to put the patent 5 owner “in as good a position as he would have been in had the infringer 6 entered into a reasonable royalty agreement.” Gen. Motors, 461 U.S. at 655. 7 The rate of prejudgment interest is “left largely to the discretion of the district 8 court.” Bio-Rad Labs., Inc. v. Nicolet Instrument Corp., 807 F.2d 964, 969 9 (Fed. Cir. 1986). Prejudgment interest may not be awarded on enhanced 10 damages. See Metso Minerals, 833 F. Supp. 2d at 342 (“[P]re-judgment 11 interest can only be applied to the primary or actual damage portion and not to 12 the punitive or enhanced portion of a damage award.”). 13 Campbell argues that the Court should award no prejudgment interest. 14 See Dkt. 462 at 1-2. Campbell claims that because the two experts disagreed on 15 a reasonable royalty rate, Polara’s royalties are “indefinite” and “not subject to 16 liquidation,” meaning that prejudgment interest should not be assessed. Id. 17 This argument flies in the face of the aforementioned authorities. As noted 18 above, the jury concluded that 15% was a reasonable royalty rate. Prejudgment 19 interest should ordinarily be awarded absent some justification for withholding 20 such an award. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1263 21 (Fed. Cir. 2014). Campbell offers no such justification. 22 The parties propose different rates and compounding methods for 23 calculating prejudgment interest. Polara argues that the Court should apply 24 California’s breach-of-contract law for a rate of 10% per annum. Dkt. 452-1 at 25 5-6. Campbell argues that the appropriate rate is the prime rate, calculated at a 26 simple rate. Dkt. 462 at 2-4. 27 28 The Court agrees with Campbell that the prime rate is appropriate. As the “rate charged by banks to its most credit-worthy customers,” the prime rate 62 1 is frequently found to be the appropriate rate for calculation of prejudgment 2 interest in a patent case. Atmel Corp. v. Silicon Storage Tech., Inc., 202 F. 3 Supp. 2d 1096, 1101 (N.D. Cal. 2002); see also IMX, Inc. v. Lendingtree, 4 L.L.C., 469 F. Supp. 2d 203, 227 (D. Del. 2007) (holding that prime rate 5 provides best compensation to corporate patentee because it “represents the 6 cost of borrowing money, which is ‘a better measure of the harm suffered as a 7 result of the loss of the use of money over time’” (citation omitted)). And, 8 because a patentee’s damages include the foregone use of money, annual 9 compounding is warranted. See Fresenius Med. Care Holdings, Inc. v. Baxter 10 Int’l, Inc., No. 03-1431, 2008 WL 928535, at *2 (N.D. Cal. Apr. 4, 2008). 11 3. 12 Under 28 U.S.C. § 1961, Polara requests postjudgment interest Postjudgment Interest 13 calculated at the statutory rate on the total money award, including damages, 14 enhanced damages, and prejudgment interest. Campbell does not oppose 15 Polara’s request. 16 III. 17 CONCLUSION 18 For the foregoing reasons, 19 1. Campbell’s motion for judgment as a matter of law is DENIED. 20 2. Judgment shall be entered denying Campbell’s inequitable conduct 21 defense. 22 3. Polara’s motion for a permanent injunction is GRANTED. Polara 23 is ORDERED to submit a proposed injunction consistent with this Order. 24 Campbell will file any objections to Polara’s proposed injunction within seven 25 (7) days of Polara’s submission. Polara’s request for inspection is DENIED. 26 4. Polara’s motion for an accounting and supplemental damages for 27 previously unaccounted-for infringing sales is GRANTED. Campbell shall 28 provide Polara a full accounting of all infringing sales from the period 63 1 beginning January 30, 2016, through the date of this Order within seven (7) 2 days of the date of this Order. 3 5. Polara’s motion for pre- and postjudgment interest is GRANTED. 4 With respect to prejudgment interest, it shall be calculated at the prime rate, 5 compounded annually. Prejudgment interest shall not be awarded on any 6 enhanced damages. Polara is ORDERED to submit calculations for 7 supplemental damages and prejudgment interest consistent with this Order, 8 and a form of judgment reflecting the same, within fourteen (14) days of 9 receiving Campbell’s updated sales figures as ordered in the preceding 10 paragraph. Campbell may submit its objections, if any, to Polara’s form of 11 judgment, within seven (7) days after the judgment is submitted. Polara may 12 reply within seven (7) days thereafter. 13 6. Polara’s motion to enhance the damages award is GRANTED, 14 but only to the extent that any damages award shall be increased by two-and-a- 15 half times. 16 17 18 7. Polara’s motion for attorney’s fees pursuant to 35 U.S.C. § 285 is DENIED. 8. In light of the aforementioned rulings, Polara’s request for a status 19 conference (Dkt. 493) is DENIED. The Court will schedule any further 20 hearing it deems necessary on any remaining issues related to the scope of the 21 injunction and the calculation of damages and interest. 22 IT IS SO ORDERED. 23 24 Dated: February 27, 2017 ______________________________ DOUGLAS F. McCORMICK United States Magistrate Judge 25 26 27 28 64

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