Loggerhead Tools, LLC v. Sears Holdings Corporation

Filing 457

MOTION by Plaintiff Loggerhead Tools, LLC for judgment , Award of Prejudgment and Post-Judgment Interest and Costs, and Identification of the Applicable Schedule for LoggerHead's Motion for Attorney's Fees and Nontaxable Expenses (Attachments: # 1 Memorandum, # 2 Declaration of Christopher Bokhart, # 3 Exhibit A to Declaration of Christopher Bokhart, # 4 Trial Exhibit, # 5 Exhibit A - Proposed Order)(Skiermont, Paul)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LOGGERHEAD TOOLS, LLC,
Plaintiff,

SEARS HOLDINGS CORPORATION
and APEX TOOL GROUP, LLC,
Defendants.

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Case No. 1:12-cv-09033
Honorable Rebecca R. Pallmeyer

JURY TRIAL DEMANDED

LOGGERHEAD’S MEMORANDUM IN SUPPORT OF ITS
MOTION FOR ENTRY OF JUDGMENT, AWARD OF PREJUDGMENT AND
POST-JUDGMENT INTEREST AND COSTS, AND IDENTIFICATION OF THE
APPLICABLE SCHEDULE FOR LOGGERHEAD’S MOTION FOR
ATTORNEY’S FEES AND NONTAXABLE EXPENSES

TABLE OF CONTENTS
INTRODUCTION .......................................................................................................................... 1 
I. 

PREJUDGMENT INTEREST SHOULD BE AWARDED ............................................... 1 
A. 

The Court Should Award Prejudgment Interest at the Rate of 8% ..........................1 

B. 

The Prejudgment Interest Rate Should Approximate the Rate that the Defendants
Pay for Unsecured Credit .........................................................................................4 

C. 

In the Alternative, the Prejudgment Interest Rate Should Be Based on the Prime
Rate Plus Two Percent .............................................................................................8 

D. 

Prejudgment Interest Should be Compounded Quarterly ........................................9 

E. 

Calculation of Prejudgment Interest ......................................................................10 

II. 

THE COURT SHOULD AWARD COSTS TO LOGGERHEAD ................................... 12 

III. 

28 U.S.C. § 1961 REQUIRES AWARD OF POST-JUDGMENT INTEREST AND
SETS THE RATE ............................................................................................................. 12 

IV. 

UPON ENTRY OF JUDGMENT FOR LOGGERHEAD, IT WILL SEEK
ATTORNEY’S FEES AND RELATED NONTAXABLE EXPENSES PURSUANT
TO 35 U.S.C. § 285 .......................................................................................................... 13 

CONCLUSION ............................................................................................................................. 14 

i

TABLE OF AUTHORITIES
Cases 
Am. Nat’l Fire Ins. Co. v. Yellow Freight Sys., Inc.,
325 F.3d 924 (7th Cir. 2003) ................................................................................................... 2, 9
Amsted Indus., Inc. v. Nat’l Castings, Inc.,
No. 88 C 0924, 1990 WL 205878 (N.D. Ill. Dec. 7, 1990) .......................................... 4, 5, 6, 10
Arrivalstar S.A. v. Ontec, Inc.,
Case No. 11-cv-4775 (N.D. Ill. Feb. 6, 2012) .......................................................................... 10
Beamon v. Marshall & Ilsley Trust Co.,
411 F.3d 854 (7th Cir. 2005) ..................................................................................................... 12
Bio-Rad Labs., Inc. v. Nicolet Instrument Corp.,
807 F.2d 964 (Fed. Cir. 1986) .................................................................................................... 4
Cement Div., Nat’l Gypsum Co. v. City of Milwaukee,
144 F.3d 1111 (7th Cir. 1998) ..................................................................................................... 4
Chisum v. Brewco Sales & Mfg. Inc.,
726 F. Supp. 1499 (W.D. Ky. 1989), aff’d, 915 F.2d 1583 (Fed. Cir. 1990) ............................. 6
Dana Corp. v. IPC Ltd. P’ship,
1987 WL 125110 (E.D. Mich. 1987), reversed on grounds of invalidity,
860 F.2d 415 (Fed. Cir. 1988) .................................................................................................. 10
Ecolab, Inc. v. FMC Corp.,
569 F.3d 1335 (Fed. Cir.), amended in part on rehearing, 366 F. App’x 154
(Fed. Cir. 2009) ........................................................................................................................... 2
First Nat’l Bank of Chicago v. Standard Bank & Trust,
172 F.3d 472 (7th Cir. 1999) ....................................................................................................... 4
Gen. Motors Corp. v. Devex Corp.,
461 U.S. 648 (1983) ................................................................................................................ 1, 2
GNB Battery Techs., Inc. v. Exide Corp.,
886 F. Supp. 420 (D. Del. 1995), aff’d, 78 F.3d 605 (Fed. Cir. 1996) ..................................... 10
Goodwall Constr. Co. v. Beers Constr. Co.,
824 F. Supp. 1044 (N.D. Ga. 1992) ............................................................................................ 9
Gorenstein Enters., Inc. v. Quality Care-USA, Inc.,
874 F.2d 431 (7th Cir. 1989) ................................................................................................... 2, 4
Hockerson-Halberstadt, Inc. v. Propet USA, Inc.,
62 F. App’x 322 (Fed. Cir. 2003) ............................................................................................... 5
In re Mahurkar Double Lumen Hemodialysis Catheter Patient Litig.,
831 F. Supp. 1354 (N.D. Ill. 1993) ................................................................................... 6, 9, 10
In re Oil Spill by the Amoco Cadiz Off the Coast of France on March 16, 1978,
954 F.2d 1279 (7th Cir. 1992) ................................................................................................. 4, 5
ii

Krippelz v. Ford Motor Co.,
670 F. Supp. 2d 815 (N.D. Ill. 2009), rev’d on other grounds,
667 F.3d 1261 (Fed. Cir. 2012) ............................................................................................ 5, 10
Lam, Inc. v. Johns-Manville Corp.,
718 F.2d 1056 (Fed. Cir. 1983) .................................................................................................. 3
Lampi Corp. v. Am. Power Prods., Inc.,
No. 93 C 1225, 2004 WL 1656547 (N.D. Ill. July 22, 2004) ................................................... 10
Lisle Corp. v. A.J. Mfg. Co.,
No. 02 C 7024, 2004 WL 765872 (N.D. Ill. April 7, 2004) ..................................................... 11
Manildra Milling Corp. v. Ogilvie Mills, Inc.,
76 F.3d 1178 (Fed. Cir. 1996) .................................................................................................. 12
McRoberts Software, Inc. v. Media 100, Inc.,
329 F.3d 557 (7th Cir. 2003) ....................................................................................................... 2
Medcom Holding Co. v. Baxter Travenol Labs., Inc.,
200 F.3d 518 (7th Cir. 1999) ....................................................................................................... 5
Monessen S.W. Ry. Co. v. Morgan,
486 U.S. 330 (1988) .................................................................................................................. 13
Northlake Mktg. & Supply, Inc. v. Glaverbel, S.A.,
72 F. Supp. 2d 893 (N.D. Ill. 1999) .......................................................................................... 10
Quidgeon v. Olsen,
No. 10-cv-1168, 2011 WL 1480537 (C.D. Ill. April 19, 2011) ................................................ 12
R.J. Reynolds Tobacco Co. v. Premium Tobacco Stores, No. 99 C 1174,
2005 WL 293512 (N.D. Ill. Feb. 8, 2005) ............................................................................ 3, 13
R-Boc Representatives, Inc. v. Minemyer,
No. 11 C 8433, 2017 WL 543045 (N.D. Ill. Feb. 10, 2017) ................................................. 8, 10
Studiengesellschaft Kohle, m.b.H., v. Dart Indus., Inc.,
862 F.2d 1564 (Fed. Cir. 1988) ................................................................................................ 10
Thorncreek Apartments I, LLC v. Vill. of Park Forest,
No. 08 C 869, 2015 WL 2444498 (N.D. Ill. May 20, 2015) ................................................ 3, 10
Trading Techs. Int’l, Inc. v. eSpeed, Inc.,
No. 04 C 5312, 2008 WL 345604 (N.D. Ill. Feb. 5, 2008) ....................................................... 10
Trans-World Mfg. Corp. v. Al Nyman & Sons, Inc.,
633 F. Supp. 1047 (D. Del. 1986) ............................................................................................. 10
Uniroyal Inc. v. Rudkin-Wiley Corp.,
721 F. Supp. 28 (D. Conn. 1989), aff’d-in-part, vacated-in- part on other grounds,
939 F.2d 1540 (Fed. Cir. 1991) ................................................................................................ 10
Whitserve, LLC v. Comput. Packages, Inc.,
694 F.3d 10 (Fed. Cir. 2012) ...................................................................................................... 2

iii

Statutes 
28 U.S.C. § 1920 ........................................................................................................................... 14
28 U.S.C. § 1961(a) ...................................................................................................................... 12
35 U.S.C. § 284 ............................................................................................................... 1, 2, 12, 14
35 U.S.C. § 285 ......................................................................................................................... 1, 13
Rules 
Fed. R. Civ. P. 54(d)(1)........................................................................................................... 12, 14
Fed. R. Civ. P. 54(d)(2)................................................................................................................. 13

iv

INTRODUCTION
Plaintiff LoggerHead Tools, LLC moves for entry of judgment on the jury’s verdict that
Defendants Sears Holdings Corporation and Apex Tool Group, LLC infringed Clams 1, 9, and
16 of U.S. Patent No. 6,889,579 and infringed Claims 1 and 9 of U.S. Patent No. 7,992,470, that
Defendants did not prove any of these Claims are invalid as anticipated, that Defendants did not
prove Claims 1 and 9 of the ‘470 patent are invalid as obvious, that LoggerHead is entitled to
receive $5,979,616 from Defendants for infringement, that both Sears’ and Apex’s infringement
was willful, and for any enhanced damages the Court may award against both Sears and Apex.
LoggerHead further requests that the Court award LoggerHead prejudgment interest and costs,
and post-judgment interest. LoggerHead requests that the Court award prejudgment interest at a
rate of 8%, or alternatively at a rate of the prime rate plus 2%, in either case compounded
quarterly. LoggerHead’s proposed form of judgment is attached as Exhibit A.
Finally, LoggerHead seeks guidance from the Court as to whether LoggerHead should
file its motion pursuant to 35 U.S.C. § 285 seeking an award of attorney’s fees and related
nontaxable expenses in accordance with Local Rule 54.3 of the Northern District of Illinois, or
whether the Court will enter an order for a different briefing schedule for this motion.
I.

Prejudgment Interest Should Be Awarded
A.

The Court Should Award Prejudgment Interest at the Rate of 8%

A plaintiff who succeeds on its claims for patent infringement damages is ordinarily
entitled to an award of prejudgment interest. Gen. Motors Corp. v. Devex Corp., 461 U.S. 648,
654-55 (1983). 35 U.S.C. § 284 provides: “[u]pon finding for the claimant the court shall award
the claimant damages adequate to compensate for the infringement, but in no event less than a
reasonable royalty for the use made of the invention by the infringer, together with interest and
costs as fixed by the court.” (emphasis added) In Devex, the Supreme Court considered the

applicable standard for awarding prejudgment interest under 35 U.S.C. § 284, explaining that the
“overriding purpose” for enacting Section 284 was to afford patent owners “complete
compensation” for the infringement, and that therefore “prejudgment interest should ordinarily
be awarded.” Gen. Motors, 461 U.S. at 655. The Court also stated:
In the typical case an award of prejudgment interest is necessary to ensure
that the patent owner is placed in as good a position as he would have
been in had the infringer entered into a reasonable royalty agreement. An
award of interest from the time that the royalty payments would have been
received merely serves to make the patent owner whole, since his damages
consist not only of the value of the royalty payments but also the foregone
use of the money between the time of infringement and the date of the
judgment.
Id. at 655-56 (footnote omitted). The Court further held “that prejudgment interest should be
awarded under § 284 absent some justification for withholding such an award.” Id. at 657.1
In Gorenstein Enters., Inc. v. Quality Care-USA, Inc., 874 F.2d 431, 436 (7th Cir. 1989),
the Court of Appeals for the Seventh Circuit affirmed an award of prejudgment interest for a
trademark infringement because prejudgment interest was necessary to make the plaintiff whole
and to discourage delay by the defendant in making reparations. The Seventh Circuit later
observed that it has “consistently applied the presumption in favor of prejudgment interest for
willful violations of federal law in the years since [Gorenstein].” McRoberts Software, Inc. v.
Media 100, Inc., 329 F.3d 557, 572 (7th Cir. 2003).
Prejudgment interest typically accrues from the date of the loss or from the date on which
the claim accrued.2 Am. Nat’l Fire Ins. Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 935 (7th
1

If the district court exercises its discretion not to award prejudgment interest, the court must provide a
valid justification for withholding interest. See Whitserve, LLC v. Comput. Packages, Inc., 694 F.3d 10,
36-37 (Fed. Cir. 2012), cert. denied, 133 S. Ct. 1291 (2013) (trial court abused its discretion in denying
prejudgment interest without further analysis or justification; vacating the denial and remanding); Ecolab,
Inc. v. FMC Corp., 569 F.3d 1335, 1352-53 (Fed. Cir.), amended in part on rehearing, 366 F. App’x 154
(Fed. Cir. 2009) (remanding to district court where district court denied motion for prejudgment interest
without explanation).

2

Cir. 2003); Thorncreek Apartments I, LLC v. Vill. of Park Forest, No. 08 C 869, 2015 WL
2444498, at *11 (N.D. Ill. May 20, 2015); R.J. Reynolds Tobacco Co. v. Premium Tobacco
Stores, No. 99 C 1174, 2005 WL 293512, at *2 (N.D. Ill. Feb. 8, 2005). Defendants’
infringement in this case began in September 2012, and consisted of the sale of 770,384
infringing Max Axess Locking Wrenches (“MALWs”). (Bokhart Decl. ¶ 4; Bokhart Ex. A.4.)
The jury determined that Defendants owe LoggerHead a reasonable royalty of $5,979,616. This
equals an effective per wrench royalty rate for 6-inch MALWs of $7.00, and an effective per
wrench royalty rate for 8-inch MALWs of $8.00. (Bokhart Decl. ¶ 7.)
Since at least September 2012, LoggerHead has effectively been an unsecured and
unwilling creditor to Defendants because they infringed LoggerHead patents and did not make
royalty payments. In order to fully compensate LoggerHead for the Defendants’ infringement, it
should be awarded prejudgment interest.
For purposes of determining prejudgment interest, LoggerHead’s damages expert,
Christopher Bokhart, has calculated the reasonable royalty that Defendants would have paid
LoggerHead each quarter from September 2012 to November 2015 for sales of infringing Max
Axess Locking Wrenches in each of the quarters during that period, based on the effective per
wrench royalty rates. (Bokhart Decl. ¶ 8; Bokhart Ex. A.4) Prejudgment interest should be
calculated by applying the prejudgment interest rate to the reasonable royalty payment due each
quarter. (Bokhart Decl. ¶ 10)

2

Prejudgment interest applies only to the compensatory damages awarded by the jury, and not to any
award of enhanced damages awarded for willful infringement because the purpose of prejudgment
interest is to compensate for the delay in payment of damages, not to punish the infringer. Lam, Inc. v.
Johns-Manville Corp., 718 F.2d 1056, 1066 (Fed. Cir. 1983).

3

B.

The Prejudgment Interest Rate Should Approximate the Rate that the
Defendants Pay for Unsecured Credit

The Seventh Circuit uses the prime rate as the default standard to determine the amount
of prejudgment interest. Gorenstein, 874 F.2d at 436.3 The Seventh Circuit has cautioned district
courts, however, against “the danger of setting prejudgment interest rates too low by neglecting
the risk, often non-trivial, of default.” Id. at 437. The court in Gorenstein chose the prime rate for
convenience, but “a more precise estimate would be the interest rate paid by the defendant for
unsecured loans.” Id. The Seventh Circuit has emphasized that prejudgment interest must make
the victim whole. First Nat’l Bank of Chicago v. Standard Bank & Trust, 172 F.3d 472, 479 (7th
Cir. 1999) (discussing Gorenstein).
Although the Seventh Circuit’s practice has been to use the prime rate as the benchmark
for prejudgment interest, the court also recognizes that a district court has the discretion to
engage in ‘“refined rate-setting”’ directed at determining a more accurate market rate of interest.
Id. at 479 (citing Cement Div., Nat’l Gypsum Co. v. City of Milwaukee, 144 F.3d 1111, 1114 (7th
Cir. 1998); and In re Oil Spill by the Amoco Cadiz Off the Coast of France on March 16, 1978,
954 F.2d 1279, 1332 (7th Cir. 1992)). Although the district court has discretion in determining
the prejudgment interest rate, the court must be guided by the purpose of prejudgment interest in
exercising that discretion. Bio-Rad Labs., Inc. v. Nicolet Instrument Corp., 807 F.2d 964, 969
(Fed. Cir. 1986) (citations omitted).4

3

Although Gorenstein involved prejudgment interest in a trademark infringement case, the Seventh
Circuit’s statements in that case are instructive in patent cases also. In fact, district courts in the Seventh
Circuit have applied Gorenstein’s logic to prejudgment interest issues in patent cases. See Amsted Indus.,
Inc. v. Nat’l Castings, Inc., No. 88 C 0924, 1990 WL 205878, at *5 (N.D. Ill. Dec. 7, 1990).
4

The Court of Appeals for the Federal Circuit in Bio-Rad reversed an award of prejudgment interest
using a seven percent rate set by state statute, where the only evidence in the record as to the appropriate
rate of interest suggested use of either the prime rate or the rate at which the plaintiff paid on corporate

4

The Seventh Circuit explicitly observed that a prejudgment interest rate should not be
based on the rate applicable to safe securities because “[t]he defendant may go out of business
(or encounter less serious reverses).” In re Amoco Cadiz, 954 F.2d at 1332. Instead, in discussing
the “principles” applicable to prejudgment interest, the court described “refined rate-setting” in
which a district court could engage:
Any market interest rate reflects three things: the social return on investment (that
is, the amount necessary to bid money away from other productive uses), the
expected change in the value of money during the term of the loan (i.e.,
anticipated inflation), and the risk of nonpayment. The best estimate of these
three variables is the amount the defendant must pay for money, which
reflects variables specific to that entity. Amoco has publicly traded notes and
debentures; a court could draw an interest rate directly from them.
Id. (emphasis added) See Medcom Holding Co. v. Baxter Travenol Labs., Inc., 200 F.3d 518,
519-20 (7th Cir. 1999) (in contract dispute where contract “does everything possible to mandate
complete compensation, the court should provide prejudgment interest at the market rate.… For
reasons covered in Amoco Cadiz, the [prejudgment interest] rate must be increased to what
[defendant] paid to its voluntary creditors during the same period (or, if that amount is unknown
and the parties do not agree on a different rate, then to the prime rate.”);5 Krippelz v. Ford Motor
Co., 670 F. Supp. 2d 815 (N.D. Ill. 2009), rev’d on other grounds, 667 F.3d 1261 (Fed. Cir.
2012) (awarding prejudgment interest at prime rate plus 1% where defendant’s long-term and

borrowing during the infringement period and the district court’s reasons for use of the lower rate were
unconvincing. Id. at 969. See Amsted Indus., 1990 WL 205878, at *4 (discussing Bio-Rad).
5

The Court of Appeals for the Federal Circuit vacated a district court’s award of prejudgment interest at
the prime rate in effect on the date of the court’s order, where there was evidence in the record, among
other things, that the defendant was paying interest above the prime rate during the time of infringement.
Hockerson-Halberstadt, Inc. v. Propet USA, Inc., 62 F. App’x 322, 333-34 (Fed. Cir. 2003). “Here, we do
not believe that the district court’s use of the prime rate in effect at the time of the prejudgment interest
award ensures that [plaintiff] is placed in as good a position as it would have been had [defendant] entered
into a reasonable royalty agreement.… The district court’s use of the prime rate in effect [on the date of
the court’s order] had the effect of limiting the amount of prejudgment interest that [the plaintiff] was
entitled to.” Id.

5

short-term borrowing rate averaged between .7% and 1.47% above the prime rate); Amsted
Indus., 1990 WL 205878, at *4 (observing that it would be preferable to calculate prejudgment
interest using the rate that defendant paid for unsecured loans during the damages period); In re
Mahurkar Double Lumen Hemodialysis Catheter Patient Litig., 831 F. Supp. 1354, 1395 (N.D.
Ill. 1993) (Easterbrook, J., sitting by designation) (“Plaintiffs are entitled to the market rate their
debtor pays for money.”), aff’d 71 F.3d 1573 (Fed. Cir. 1995);6 Chisum v. Brewco Sales & Mfg.
Inc., 726 F. Supp. 1499, 1515 (W.D. Ky. 1989) (awarding prejudgment interest based on the
corporate bond rate), aff’d, 915 F.2d 1583 (Fed. Cir. 1990). The use of Defendants’ unsecured
borrowing rate is an appropriate rate to consider since they are unsecured debtors to
LoggerHead. (Bokhart Decl. ¶ 10)
There is publicly available information about each of Defendants’ unsecured borrowing
rate. Although Apex does not file information with the Securities and Exchange Commission
(the “SEC”), other SEC filers include information about Apex in their own filings that show
Apex paying 7% on its unsecured debt. For example, in a filing on May 30, 2017, Blackstone /
GSO Senior Floating Rate Term Fund included in its Form N-Q, Quarterly Schedule of Portfolio
Holdings of Registered Management Investment Company, filed on May 30, 2017, a reference to
Apex Tool Group LLC, Senior Unsecured Bond, 7.000%, due February 1, 2021. In January

6

In each of Amsted and Mahurkar, the court applied the prime rate or the prime rate plus an enhancement
because the evidence in each case was inconclusive as to the defendants’ borrowing rate. Here, public
filings establish the Defendants’ unsecured borrowing rates.

The Mahurkar court also rejected the defendant’s argument that the prejudgment interest rate should be
the rate the United States pays to borrow money, which is the rate that by statute is used for postjudgment interest. Plaintiffs have had their funds at risk. “Winners in litigation are not called ‘judgment
creditors’ for nothing. They have made a large, involuntary, unsecured loan to a debtor of uncertain
creditworthiness that is doing its utmost to avoid paying. In the market the rate of interest on such loans
greatly exceeds the rate the United States has to pay—a rate that economists usually call the ‘risk-free
rate.’” Mahukar, 831 F. Supp. at 1394.

6

2013, Moody’s assigned a B3 rating (indicating high credit risk) to those notes.7 Publicly
available information establishes that Apex’s unsecured borrowing rate is similar to the rate that
Sears has to pay.
Sears is a publicly held corporation. Its required annual filings with the Securities and
Exchange Commission establish that Sears pays 8% for certain unsecured borrowing. In
addition, credit rating agencies provide an assessment of the credit risk associated with
corporations and their debt obligations. For example, Moody’s Investors Service assigns credit
ratings to companies as well as debt obligations. Moody’s uses Corporate Family Ratings to
reflect the creditworthiness of corporations and holding companies like Sears. “Moody’s
Corporate Family Ratings (CFRs) are long-term ratings that reflect the relative likelihood of a
default on the corporate family’s debt and debt-like obligations and the expected financial loss
suffered in the event of default. A CFR is assigned to a corporate family as if it had a single class
of debt and a single consolidated legal structure.”8
The Corporate Family Ratings assigned by Moody’s to Sears Holdings Corporation have
dropped steadily during the period from 2012 to 2017. Moody’s announced the CFR for Sears as
B3 in January 2012; downgraded that CFR to Caa1 in January 2014; and downgraded that CFR
to Caa2 in January 2017. Obligations rated “B” “are considered speculative and are subject to
high credit risk.” Id. at 5. Obligations rated “Caa” by Moody’s “are judged to be speculative of
poor standing and are subject to very high credit risk.” Id. A modifier of 1 indicates that the
obligation ranks in the higher end of its generic rating category. Higher numbers indicate a lower

7

See https://www.moodys.com/research/Moodys-assigns-B2-CFR-to-Apex-B1-rating-to-senior-PR 259274# (visited on June 1, 2017).
8

See https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC 79004 at p. 7 (visited on
June 1, 2017).

7

ranking in that category. Id. In October 2014, Sears issued senior unsecured notes bearing an
interest rate of 8% per year.9 For these reasons and based on the case law cited supra at 5-7, a
prejudgment interest rate of 8% is appropriate.
C.

In the Alternative, the Prejudgment Interest Rate Should Be Based on the
Prime Rate Plus Two Percent

Alternatively, in the event the Court chooses not to engage in “refined rate-setting” based
on Defendants’ unsecured borrowing rate, and instead chooses to use the prime rate as a
benchmark, the Court should use a rate at least two percentage points higher than the prime rate
to adjust for the fact that the prime rate assumes a risk-free, voluntary loan—rather than the
involuntary loan LoggerHead provided to Defendants during the period from September 2012 to
the entry of judgment.10 For example, in R-Boc Representatives, Inc. v. Minemyer, No. 11 C

9

Moody’s assigned a rating of Caa3 (LGD6) rating to the Sears Holdings Corporation 8% Senior
Unsecured Notes due 2019, which were issued in the aggregate principal amount of $625 million. See
Moody’s Investors Service, Rating Action (November 11, 2014). LGD6 is Moody’s Loss Given Default
assessment, which is its opinion about expected loss given default expressed as a percent of principal and
accrued interest at the resolution of default. LGD6 represents an expected loss range of between 90% and
100% of the principal and accrued interest.
In addition to payments of principal and interest, the notes were accompanied by certain warrants,
authorizing the holder to purchase shares of Sears stock.
Even Sears’ reported weighted-average annual interest rate on long-term debt, which unlike the unsecured
and involuntary loan from LoggerHead is predominantly secured and/or guaranteed, ranged from about
6% to about 7% during the 2012 to 2016 fiscal years. See Sears Holdings Corporation Annual Reports on
Form 10-K filed with the SEC for its 2012 through 2016 fiscal years, at note 3 to the financial statements.

10

The prime rate is an interest rate determined by individual banks, often used as a reference rate (or base
rate) for short-term loans to businesses. The Board of Governors of the Federal Reserve System reports
on a daily H.15 Selected Interest Rates release the prime rate posted by the majority of the largest twentyfive banks. Many banks choose to set their prime rates based partly on the target level of the federal funds
rate—the rate that banks charge each other for short-term loans—established by the Federal Open Market
Committee. https://www.federalreserve.gov/faqs/credit 12846.htm (last updated August 2, 2013) (visited
on June 4, 2017).
The average prime rate was 3.25% in September 2012, was increased to 3.50% on December 17, 2015,
was increased to 3.75% on December 15, 2016, was increased to 4.00% on March 16, 2017, and was
increased to 4.25% on June 16, 2017. https://www.federalreserve.gov/releases/H15/default.htm (visited

8

8433, 2017 WL 543045, at *29 (N.D. Ill. Feb. 10, 2017), the court applied the prime rate plus
two percent as prejudgment interest rate, and explained that Judge Easterbrook, sitting by
designation in a patent case (Mahurkar, 831 F. Supp. at 1395), held that the prime rate assumes a
risk-free loan and that the judgment creditor has made a high-risk, involuntary loan. See also
Goodwall Constr. Co. v. Beers Constr. Co., 824 F. Supp. 1044, 1058 (N.D. Ga. 1992) (awarding
prejudgment interest at the prime rate plus two percent), aff’d in part and rev’d in part on other
grounds and remanded, 991 F.2d 751 (Fed. Cir. 1993).
D.

Prejudgment Interest Should be Compounded Quarterly

Whether interest should be compounded is a matter of discretion for the district court.
Amer. Nat., 325 F.3d at 937(“As a general rule, the decision whether to award compound or
simple prejudgment interest is left to the discretion of the trial court.”). “Nevertheless, noting
that ‘prejudgment interest is an element of complete compensation’, we have stated that
‘compound prejudgment interest is the norm in federal litigation.”’ Id. at 937-38 (internal quotes
and citations omitted). As a result, if the Court declines to compound the prejudgment interest, it
must explain why. Id. 11
The prejudgment interest should be compounded quarterly. If the parties had negotiated
for royalty payments, they are likely to have provided that the payments would be made
quarterly based on sales during each quarter. Parties to a license agreement commonly agree to
make payments on a quarterly basis. (Bokhart Decl. ¶ 9)

on June 16, 2017); https://www.jpmorganchase.com/corporate/About-JPMC/historical-prime-rate.htm
(visited on June 16, 2017).
11
The Court in American National Fire noted that “at least in a federal question case, a district court must
explain why it believes it appropriate to deviate from the norm of compound interest, the measure that
most completely fulfills the purpose of prejudgment interest of ensuring ‘complete compensation.’” 325
F.3d at n.11.

9

Courts in this District have approved compounding prejudgment interest quarterly. R-Boc
Representatives, No. 11 C 8433, 2017 WL 543045, at *29 (N.D. Ill. Feb. 10, 2017) (awarding
prejudgment interest compounded quarterly); Arrivalstar S.A. v. Ontec, Inc., Case No. 11-cv4775 (N.D. Ill. Feb. 6, 2012) (Pallmeyer, J.) (court order awarding prejudgment interest
compounded quarterly); Krippelz, 670 F. Supp. 2d at 819 (awarding prejudgment interest
compounded quarterly; rejecting infringer’s argument that interest should be compounded
annually instead), rev’d on other grounds by 667 F.3d 1261 (Fed. Cir. 2012); Northlake Mktg. &
Supply, Inc. v. Glaverbel, S.A., 72 F. Supp. 2d 893, 912 (N.D. Ill. 1999) (awarding prejudgment
interest compounded quarterly), appeal dismissed by 217 F.3d 857 (Fed. Cir. 1999); Amsted
Indus., 1990 WL 205878, at *5 (awarding prejudgment interest compounded quarterly).12 The
Federal Circuit has approved awards of prejudgment interest compounded quarterly. See, e.g.,
Studiengesellschaft Kohle, m.b.H., v. Dart Indus., Inc., 862 F.2d 1564, 1579 (Fed. Cir. 1988)
(affirming award of prejudgment interest compounded quarterly).
E.

Calculation of Prejudgment Interest

Mr. Bokhart has calculated the amount of prejudgment interest to which LoggerHead is
entitled using an 8% interest rate, compounded quarterly. To do this, Mr. Bokhart: (1) multiplied
12

Courts in this District have also approved compounding prejudgment interest monthly. See, e.g., Thorncreek
Apartments, 2015 WL 2444498, at *11 (awarding prejudgment interest compounded monthly); Trading Techs. Int’l,
Inc. v. eSpeed, Inc., No. 04 C 5312, 2008 WL 345604, at *4 (N.D. Ill. Feb. 5, 2008) (awarding prejudgment interest
compounded monthly); Lampi Corp. v. Am. Power Prods., Inc., No. 93 C 1225, 2004 WL 1656547, at *8 (N.D. Ill.
July 22, 2004) (awarding prejudgment interest compounded monthly); Mahurkar, 831 F. Supp. at 1395 (awarding
prejudgment interest compounded monthly). Some courts have even awarded prejudgment interest compounded
daily in that patent infringement context. See, e.g., GNB Battery Techs., Inc. v. Exide Corp., 886 F. Supp.

420, 442 (D. Del. 1995), aff’d, 78 F.3d 605 (Fed. Cir. 1996) (compounded daily); Uniroyal Inc. v.
Rudkin-Wiley Corp., 721 F. Supp. 28, 29 (D. Conn. 1989), aff’d-in-part, vacated-in- part on other
grounds, 939 F.2d 1540 (Fed. Cir. 1991) (“[T]he interest should be compounded on a daily basis. Daily
compounding more accurately reflects modern banking and investment practices[.]”); Dana Corp. v. IPC
Ltd. P’ship, 1987 WL 125110, at *5 (E.D. Mich. 1987) (compounded daily), reversed on grounds of
invalidity, 860 F.2d 415 (Fed. Cir. 1988); Trans-World Mfg. Corp. v. Al Nyman & Sons, Inc., 633 F.
Supp. 1047, 1057 (D. Del. 1986) (“The interest will be compounded daily. … Daily compounding of
prejudgment interest on a damages award for patent infringement similarly will conform to commercial
practice and provide the patent holder with adequate compensation for foregone royalty payments—i.e.,
the interest the patent holder could have earned had royalties been paid at the time of infringement.”).

10

the number of 6-inch and 8-inch Max Axess Locking Wrenches sold each month by the
respective $7 or $8 per wrench royalty rate to determine the monthly royalty amount; (2) added
the monthly royalty amounts in each quarter to determine the quarterly royalty amounts, (3)
determined the quarterly interest rates for the 8% interest rate, (4) multiplied the quarterly
royalty amount by the 8% interest rate; (5) compounded the interest quarterly; and (6) added the
total compounded interest to the damages award. (Bokhart Decl. ¶ 14, Bokhart Ex. A.2, A.4)
Based on this analysis, from September 2012 to the date of the filing of this brief, Defendants
owe LoggerHead $2,128, 476 in prejudgment interest, for a total of $8,108,092 in damages and
prejudgment interest. (Bokhart Decl. ¶14; Bokhart Ex. A.1, A.2.)
Alternatively, in the event the Court determines that the prime rate plus two percent,
compounded monthly, is the appropriate rate, Mr. Bokhart has prepared prejudgment interest
calculations accordingly.13 Using the prime rate plus 2% and compounding the interest quarterly,
from September 2012 to the date of this brief, Defendants owe Loggerhead $1,380,360 in
prejudgment interest, for a total of $7,359,976 in damages and prejudgment interest. (Bokhart
Decl. ¶ 15, Bokhart Ex. A.1, A.3)
Mr. Bokhart’s prejudgment interest calculation runs through June 22, 2017. However,
prejudgment interest will continue to accrue until the Court enters judgment. Therefore,
LoggerHead asks the Court to award it prejudgment interest that accrues each day from June 22,
2017, until the date the Court enters judgment. Mr. Bokhart performed a calculation that details
the interest that accrues daily under either method described above. If the Court uses 8%, the
daily amount of prejudgment interest is $1,696.00. (Bokhart Decl. ¶ 15, Bokhart Ex. A.1) If the

13

Mr. Bokhart applied the prime rate that was in effect at the time the royalties accrued, which is the
same approach used in Lisle Corp. v. A.J. Mfg. Co., No. 02 C 7024, 2004 WL 765872, at *2 (N.D. Ill.
April 7, 2004).

11

Court uses the prime rate plus 2%, the daily amount of prejudgment interest is $1,173.00.
(Bokhart Decl. ¶ 15, Bokhart Ex. A.1)
II.

The Court Should Award Costs to LoggerHead
LoggerHead is also entitled to its costs pursuant to 35 U.S.C. §284 (“Upon finding for the

claimant the court shall award the claimant damages … together with interest and costs as fixed
by the court.”) (emphasis added); see also Fed. R. Civ. P. 54(d)(1) (“Unless a federal statute,
these rules, or a court order provides otherwise, costs—other than attorney’s fees—should be
allowed to the prevailing party.”); Beamon v. Marshall & Ilsley Trust Co., 411 F.3d 854, 864 (7th
Cir. 2005) (“There is a presumption that the prevailing party will recover costs.”); Manildra
Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1183 (Fed. Cir. 1996) (noting “presumption in
Rule 54(d)(1) that costs are to be awarded” and explaining that the Federal Circuit defers to
regional circuit law in reviewing a district court’s decision to award costs to a prevailing party).
LoggerHead requests that the Court award it costs. If the Court grants this motion,
LoggerHead will meet and confer with Defendants and submit a bill of costs pursuant to Fed. R.
Civ. P. 54(d)(1).
III.

28 U.S.C. § 1961 Requires Award of Post-Judgment Interest and Sets the Rate
Post-judgment interest is required by statute in all federal civil cases, including patent

cases. 28 U.S.C. § 1961(a) (“Interest shall be allowed on any money judgment in a civil case
recovered in a district court.”). The statutory interest rate is “the weekly average 1-year constant
maturity Treasury yield … for the calendar week preceding. [sic] the date of judgment.” Id.
Interest is calculated from the date of entry of the judgment, is computed daily to the date of
payment, and is compounded annually. Id.
Post-judgment interest applies to the entire money judgment. Quidgeon v. Olsen, No. 10cv-1168, 2011 WL 1480537 (C.D. Ill. April 19, 2011) (court ordered that post-judgment interest
12

accrue on punitive damages, costs, and attorney’s fees awarded to plaintiff). To ensure that the
patent owner is made whole, post-judgment interest applies not only to the compensatory
damages award, but also to the prejudgment interest award. R.J. Reynolds, 2005 WL 293512, at
*2 (concluding that post-judgment interest would accrue on the amount of the jury’s award plus
prejudgment interest from the date judgment was entered on the jury’s verdict until the judgment
is paid); see Monessen S.W. Ry. Co. v. Morgan, 486 U.S. 330, 335 (1988) (“Prejudgment interest
is normally designed to make the plaintiff whole and is part of the actual damages sought to be
recovered.”).
LoggerHead requests the post-judgment interest required by statute, as applied to the total
award in the judgment entered by the court.
IV.

Upon Entry of Judgment for LoggerHead, It Will Seek Attorney’s Fees and Related
Nontaxable Expenses Pursuant to 35 U.S.C. § 285
Because Fed. R. Civ. P. 54(d)(2)(B)(ii) requires that any motion for attorney’s fees

“specify the judgment and the statute, rule, or other grounds entitling the movant to the award,”
LoggerHead’s motion for attorney’s fees is not yet ripe. For that reason, upon entry of judgment
in its favor, LoggerHead will file a motion for attorney’s fees and related nontaxable expenses
pursuant to 35 U.S.C. § 285 and Fed. R. Civ. P. 54(d)(2) (A) and (B). LoggerHead respectfully
seeks the Court’s guidance as to whether (i) LoggerHead should file its motion seeking an award
of attorney’s fees and related nontaxable expenses in accordance with Local Rule 54.3 of the
Northern District of Illinois or (ii) the Court will enter an order for a different schedule for such
filing. Post-judgment interest would also apply to any such award.

13

CONCLUSION
For the foregoing reasons, LoggerHead respectfully requests that the Court enter
judgment on the entirety of the jury’s verdict. LoggerHead also requests that the Court award
LoggerHead prejudgment interest of 8%, or an alternative rate, compounded monthly through the
date of the entry of judgment, and that the Court award LoggerHead post-judgment interest on
the entire money judgment as mandated by statute. LoggerHead also requests that the Court
award it costs pursuant to Fed. R. Civ. Pro. 54(d)(1), 35 U.S.C. § 284, and 28 U.S.C. § 1920.

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Dated: June 22, 2017

Respectfully submitted,
/s/ Paul J. Skiermont
Paul J. Skiermont
N.D. Ill. Bar No. 6278464
Sarah Spires
Admitted pro hac vice
Sadaf Abdullah
Admitted pro hac vice
Steven Hartsell
N.D. Ill. Bar No. 24040199
Steve Udick
Admitted pro hac vice
Skiermont Derby LLP
2200 Ross Avenue, Suite 4800W
Dallas, Texas 75201
[phone] (Telephone)
[phone] (Facsimile)
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
Jason L. Peltz
Asha L.I. Spencer
Jean Tinkham
Bartlit Beck Herman
Palenchar & Scott, LLP
Courthouse Place
54 West Hubbard Street, Suite 300
Chicago, Illinois 60654
[phone] (Telephone)
[phone] (Facsimile)
[e-mail]
[e-mail]
[e-mail]
Counsel for Plaintiff
LoggerHead Tools, LLC

15

CERTIFICATE OF ELECTRONIC SERVICE
I hereby certify that on June 22, 2017, the foregoing document was filed electronically
through the Court’s Electronic Case Filing System. Service of this document is being made upon
all counsel of record in this case by the Notice of Electronic Filing issued through the Court’s
Electronic Case Filing System on this date.

/s/ Paul J. Skiermont
Paul J. Skiermont