Leonard v. Stemtech Health Sciences Inc. et al

Filing 247

MEMORANDUM ORDER DENYING re 241 MOTION for Award of Prejudgment Interest filed by Andrew Paul Leonard. (Proposed form of Judgment Order due by 7/11/2014). Signed by Judge Leonard P. Stark on 7/8/2014. (rpg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

ANDREW PAUL LEONARD,
Plaintiff,
Civ. No. 08-067-LPS-CJB
Consolidated

v.

STEMTECH HEALTH SCIENCES,
INC., et al.,
Defendants.

MEMORANDUM ORDER
Pending before the Court is the Motion for Award of Prejudgment Interest filed by
Plaintiff Andrew Paul Leonard ("Plaintiff' or "Leonard"). (D.I. 241) For the reasons stated
below, the Court will deny the motion.
I.

BACKGROUND
The factual background and procedural history of this case leading up to the filing of the

pending motion are detailed in the Court's prior opinions. 1 For present purposes, the following
background will suffice.
1

The consolidated cases are Andrew Paul Leonard v. Stemtech Health Sciences, Inc. and
John Does 1-11, Inclusive, Civil Action No. 08-067-LPS-CJB ("Leonard I"), and Andrew Paul
Leonard v. Stemtech International Inc., 12-86-LPS-CJB ("Leonard If'). For additional
background, see Leonard I, 2013 WL 5311295 (D. Del. Sept. 23, 2013); Leonard I, 2013 WL
5288266 (D. Del. Sept. 19, 2013); Leonard II, 2012 WL 3655512 (D. Del. Aug. 24, 2012); and
Leonard I, 2011 WL 6046701 (D. Del. Dec. 5, 2011).
1

Plaintiff Leonard brought suit against Defendant Stemtech Health Sciences, Inc./Stemtech
International, Inc. ("Stemtech" or "Defendant") and John Does 1-100 for copyright infringement,
relating to certain photographic images created by Plaintiff. On October 11, 2013, following a
trial, the jury returned a verdict in favor of Plaintiff and against Defendant, which included an
award of actual damages in the amount of $1.6 million. (D.I. 229, 230) Thereafter, the Court
directed the parties to meet and confer and submit a form of judgment. (See D.I. 240 at 248) On
October 17, 2013, Plaintiff's counsel advised the Court that the parties were unable to reach
agreement upon the form of judgment. (D.I. 231) The next day, the parties submitted competing
forms of order. (D.I. 232, 233) Plaintiff proposed two alternative forms of judgment order, both
of which seek, inter alia, to incorporate an award of prejudgment interest. (See D.I. 233 Exs. A,
B) On October 22, 2013, the Court denied Plaintiff's request for entry of either of its proposed
forms of judgment, without prejudice to Plaintiff's ability to renew its request for an award of
prejudgment interest, following the filing of a motion and full briefing. (D.I. 235)
On November 8, 2013, Plaintiff filed its Motion for an Award of Prejudgment Interest on
the jury's monetary award. (D.I. 241) Plaintiff seeks prejudgment interest from June 1, 2006 to
be awarded at an interest rate of 11 %, which would result in a total interest award of between
$960,000 and $1,298, 179 (depending on whether and how often interest is compounded). (D.I.
242 at 8, 19) Defendant opposes the motion, arguing that an award of prejudgment interest
would be inequitable and unfair. Briefing on the motion was completed on December 5, 2013.
(D.I. 242, 243, 244)

II.

LEGALSTANDARDS
The Copyright Act is silent on the issue of whether prejudgment interest may be

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recovered. See 17 U.S.C. § 101, et seq. In the Third Circuit awards of prejudgment interest are
permitted in copyright cases. See William A. Graham Co. v. Haughey, 646 F.3d 138 (3d Cir.
2011).
In Graham, the Third Circuit held that an award of prejudgment interest "is available in
copyright cases at the District Court's discretion, exercised in light of' consideration[ s] of
fairness."' Id. at 145-46. The Court further stated that it generally "favor[ s] permitting
prejudgment interest awards." Id. at 144. In other contexts, the Third Circuit has added that
there is generally "a strong presumption in favor of awarding prejudgment interest," Booker v.

Taylor Milk Co., 64 F.3d 860, 868 (3d Cir. 1995), and has directed District Courts to "explain
why the usual equities in favor of such interest are not applicable" when interest is denied,

Pignataro v. Port. Auth., 593 F.3d 265, 274 (3d Cir. 2010); see also generally Kansas v.
Colorado, 533 U.S. 1, 10 (2001) ("Our cases since 1933 have consistently acknowledged that a
monetary award does not fully compensate for injury unless it includes an interest component.").

III.

DISCUSSION
The Court will exercise its discretion to deny Plaintiff's request for prejudgment interest.

The Court is unpersuaded by Plaintiff's contention that such an award "is necessary to fully
compensate Plaintiff for misappropriation of his property and to avoid unjust enrichment to
Defendant" and that "considerations of fairness support an award of prejudgment interest." (D .I.
242 at 2, 15) Instead, the Court agrees with Defendant that, here, an award of prejudgment
interest would be "inequitable and unfair." (D.I. 243 at 10)
The Court reaches these conclusions because it agrees with Defendant that Plaintiff is
"sufficiently compensated by the verdict and the award of interest would constitute a windfall to

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Leonard." (Id. at 11) The jury's $1.6 million verdict more than fully compensates Plaintiff for
the misappropriated value of his property. As Plaintiff's expert witness, Professor Jeff Sedlick,
testified at trial, $1.6 far exceeds the aggregate value Plaintiff "received for all of [his] 92
previous licenses Photo Researchers obtained over a 15-year time period for the use of the
Leonard's Image 3 or 4 .... " (D .I. 24 3 at 15)2 The evidence presented at trial showed that from
November 1997 through December 2012, Plaintiff (through Photo Researchers) earned a total of
no more than $16,000 for licensing of the two images at issue at trial. (See D.I. 243 at 2-3, 12)
(citing evidence of total fees earned by Leonard for all licenses to Images 3 and 4) The average
fees he earned for commercial use of the images during that period were under $400 per image.
(See id. at 3) (citing evidence) Thus, the license amount implied by the jury's verdict is an

average of approximately $17 ,000 more per infringing use than Leonard's average commercial
license fee actually obtained by Photo Researchers. (D.I. 243 at 15)
Additionally, the undisputed evidence presented at trial was that Leonard offered
Stemtech yearly licenses to the use of Images 3 and 4 (including usage on the internet) for
amounts measured in the hundreds of dollars, not thousands or millions of dollars. Also, as
Defendant points out, "there was no evidence at trial, let alone a finding, that Stemtech's conduct
was intentional or willful[.]" (D.I. 243 at 14) Nor did Plaintiff prove that any of the
infringement drove Defendant's sales or caused anyone to sign up as a distributor for Stemtech.
While none of this means the jury's verdict was unreasonable (an issue no party has placed

2

Professor Sedlick opined that a reasonable base license fee for all of Defendant's
unauthorized uses of Plaintiff's images was $215,767.65, making a reasonable total fee (when
potential premiums for scarcity and exclusivity are considered) something in the range of
$1,456,431.71 to $2,966,805.33. (D.I. 239 at 173-75)

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before the Court), it all properly factors into the Court's exercise of its discretion. In the Court's
view, the record demonstrates that awarding Plaintiff additional sums on top of the $1.6 million
already awarded by the jury is not necessary to ensure either that Plaintiff is fully compensated or
that Defendant is adequately deterred.
Another reason the Court rejects Plaintiffs request for prejudgment interest is that it
would be extremely difficult to calculate the appropriate amount of prejudgment interest to
award. 3 Plaintiff fails to adequately address Defendant's arguments relating to the multiplicity of
infringing activities and their varying dates of occurrence, which would appear to require the
Court to determine perhaps 92 different accrual dates and interest rates, in order to calculate up to
92 different amounts of interest. (See D.l. 232 at 1-2) ("[T]here is no evidence of (1) when each
of the nearly 100 instances of direct, vicarious and/or contributory infringement commenced; or
(2) the individual licensing fee applicable to each separate infringement. Without this
information, it is impossible for this Court or anybody else to calculate prejudgment interest.");
D.I. 243 at 13-15)4 Unlike in Graham, 646 F.2d at 142, for instance, Plaintiff has not presented
an expert opinion calculating prejudgment interest. See also Kansas, 533 U.S. at 12. 5
3

The Court does not agree with Defendant that calculating the appropriate amount of
prejudgment interest would be "impossible" (D.1. 243 at 12), finding only that it would be
extremely difficult, and not an appropriate exercise of discretion under the circumstances. The
Court further disagrees with Defendant that additional reasons for denying Plaintiff's motion are
that he "unreasonably delayed the litigation of this case" or "failed to request such [prejudgment]
interest in his pleadings or raise the issue at trial." (Id.)
4

The Court is not convinced by Plaintiff's contention that the starting date for when
interest should accrue on each separate act of infringement is the same, single date that
Defendant first infringed, a position which seems to shift the burden to Defendant. (D.I. 242 at 5
n.1, 13-14)
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ln exercising its discretion, the Court has considered Plaintiffs contention that
Defendant should be judicially estopped from arguing that an appropriate calculation of

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At bottom, the Court does not find that an award of prejudgment interest is necessary in
order for the judgment entered in this case to serve the goal of fully compensating a copyright
owner for the misappropriated value of his property. A judgment of $1.6 million more than
adequately serves this goal. After paying the $1.6 million awarded by the jury, Defendant will
not be unjustly benefitting from its misuse of Plaintiff's property. The amount of damages
awarded by the jury are more than adequate to deter Defendant (or similarly situated parties)
from misappropriating Plaintiff's copyrighted images.

IV.

CONCLUSION
For the reasons stated above, IT IS HEREBY ORDERED that
1.

Plaintiff's Motion for Award of Prejudgment Interest (D.I. 241) is DENIED.

2.

The parties shall submit a proposed form of judgment order, consistent with the

jury's verdict and this Memorandum Order, no later than July 11, 2014.

July 8, 2014
Wilmington, Delaware

~~~·fA

UNITED STATES DISTRICT JUDGE

prejudgment interest requires separate consideration of the date of infringement of each of the
90+ instances of infringement. As Defendant did not previously take an inconsistent position
with respect to prejudgment interest, the Court does not find Defendant to be estopped. Even
were Defendant estopped, the reality would remain that, to craft an equitable award under the
circumstances here, it would be necessary for the Court to calculate an amount of interest for
each separate act of infringement, a task whose complexity disfavors granting the requested
relief.

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