Cellport Systems, Inc. v. Peiker Acustic GMBH & Co. KG

Filing 301

ORDER re pre-judgment interest. by Judge R. Brooke Jackson on 4/29/15. (jdyne, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No. 09-cv-01007-RBJ-MJW
CELLPORT SYSTEMS, INC.,
Plaintiff,
v.
PEIKER ACUSTIC GMBH & CO. KG,
Defendant.

ORDER

This case is before the Court on remand from the United States Court of Appeals for the
Tenth Circuit. Specifically, the appellate court remanded the case with instructions to determine
(1) royalties owed by Peiker to Cellport under the Licensing Agreement with respect to Peiker’s
CKII/CIB product sold to Volkswagen; (2) same with respect to the CKII/CIB pocket sold to
BMW; (3) whether § 1.17(i) of the Licensing Agreement applies to Peiker’s CKVI product sole
to Audi, and if so, the royalties due under the contract; (4) whether Peiker’s BT-PSC product
practices Cellport’s ‘456 patent, and if so, royalties due; (5) whether, in view of the appellate
order and this Court’s rulings on remand, there is a “prevailing party” which is entitled to an
award of attorney’s fees, costs and expenses under the Licensing Agreement. See ECF No. 275
at 11-22. The remand also directed this Court to vacate the part of its judgment which, as I
understand it, prematurely applied the ‘456 patent while an appeal of the revocation of the patent
was pending. Id. at 22-24.

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The parties have briefed the issues on remand. ECF Nos. 293, 294 and 295. However, in
a joint status report filed on the same day as Cellport’s reply brief the parties asked the Court
first to determine the manner in which pre-judgment interest will be calculated. ECF No. 296.
The parties state: “Once that issue is decided, the Parties will endeavor to stipulate to damages
for the VW CKII/CIB and BMW CKII/CIP products, as well as any other products as to which
the Court finds liability.” Id. In this Order, therefore, the Court addresses only the pre-judgment
interest issue. The Court requests that, after receiving and considering this Order, the parties
then advise the Court as to what issues, if any, remain disputed and require resolution by this
Court.
By way of background, the parties disputed whether pre-judgment interest should be
calculated at the 1.5% rate set forth in paragraph 3.4 of the Licensing Agreement [ECF No. 1-5
at 13] or at the Colorado statutory rate. This Court held, and the Tenth Circuit agreed, that the
contractual rate only applies to accounting disputes, which were not at issue in this case, such
that the statutory rate was appropriate. ECF No. 275 at 21-22. The parties now dispute the date
on which pre-judgment interest begins to run. Cellport argues that it is the date of the quarterly
sales reports that Peiker is required to submit. ECF No. 293 at 10 (brief page 7). Peiker argues
that it is the date Cellport identified a product as an accused product and demanded royalties.
ECF No. 294 at 26 (brief page 23). I conclude that neither party’s proposed trigger date is
correct, although I am closer to Cellport’s position.
Statutory interest in Colorado is governed by C.R.S. § 5-12-102. The statute provides:
(1) Except as provided in section 13-21-101, C.R.S. 1, when there is no agreement
as to the rate thereof, creditors shall receive interest as follows:
(a) When money or property has been wrongfully withheld, interest shall be
an amount which fully recognizes the gain or benefit realized by the person
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That section concerns personal injury cases and is not relevant here.
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withholding such money or property from the date of wrongful withholding
to the date of payment or to the date judgment is entered, whichever first
occurs; or, at the election of the claimant,
(b) Interest shall be at the rate of eight percent per annum compounded
annually for all moneys or the value of all property after they are wrongfully
withheld or after they become due to the date of payment or to the date
judgment is entered, whichever first occurs.”
(2) When there is no agreement as to the rate thereof, creditors shall be allowed to
receive interest at the rate of eight percent per annum compounded annually for
all moneys after they become due on any bill, bond, promissory note, or other
instrument in writing.” (emphasis added).
Cellport suggests that either subsection (1)(b) or (2) applies here. ECF No. 293 at 11 and
11 n.3. I agree. Cellport, as the claimant, can elect subsection (1)(b) rather than subsection
(1)(a). Under either subsection 1(b) or subsection (2), the date that payment becomes due is a
date that triggers the running of pre-judgment interest.
The Licensing Agreement provides that royalties on licensed products “shall be due upon
shipment by or on behalf of Licensee or any Subsidiary of Licensee and shall be paid at the time
of delivery of each statement required by Section 3.3 below by wire transfer of immediately
available funds to the account specified by Cellport.” Licensing Agreement § 3.1 [ECF No. 1-5
at 12] (emphasis added). Unlike cases cited by Peiker, 2 there is no need in this case to deem
when the money became due. The contract specifies the due date.
Putting the contractual and statutory sections together, the Court concludes that prejudgment interest runs from the date royalty payments were due, which means the date that the
product was shipped by or on behalf of Peiker or a Peiker subsidiary. The date of the quarterly
sales report is the date on which payment was to be physically made, not the day the royalty was
“due.” The dates of the quarterly sales reports might make calculation of pre-judgment interest
easier, and the parties can stipulate to using those dates rather than the shipment dates if they
2

See, e.g., Riva Ridge Apartments v. Robert G. Fisher Co., 745 P.2d 1034, 1040 (Colo. App. 1987); W.H.
Woolley & Co. v. Bear Creek Manors, 735 P.2d 910, 912 (Colo. App. 1986).
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wish. However, construing the contract strictly, the due date (and therefore the pre-judgment
interest trigger date) is the shipment date.
DATED this 29th day of April, 2015.

BY THE COURT:

___________________________________
R. Brooke Jackson
United States District Judge

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