Willis Electric Co., Ltd. v. Polygroup Limited et al

Filing 993

ORDER: 1. Plaintiff Willis Electric's reasonable royalty damages of $42,494,772 awarded by the jury shall not be enhanced. 2. Plaintiff Willis Electric's Motion for Prejudgment and Post-Judgment Interest, (Dkt. 965 ), is GRANTED. a. The Court's judgment order, to be entered following this order, shall include the order that Willis Electric is awarded $42,494,772 in reasonable royalty damages, plus prejudgment interest calculated at the 10% Minnesota statutory r ate from June 4, 2013 through the date of final judgment.b. The Court's judgment order, to be entered following this order, shall also include the order that Willis Electric is entitled to post-judgment interest at the weekly average 1-year Treasury rate, accruing from the date of entry of judgment until the judgment is satisfied.(Written Opinion) Signed by Judge Joan N. Ericksen on 3/8/2024. (CBC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Willis Electric Co., Ltd.,

Case No. 15-cv-3443 (JNE/DTS)
Plaintiff,

v.

ORDER

Polygroup Limited et al,
Defendants.
This matter is before the Court on the issue of enhanced damages and Plaintiff Willis
Electric Co., Ltd.’s (“Willis Electric”) motion for prejudgment and post-judgment interest,
(Dkt. 965). Following the jury verdict, the Court requested supplemental briefing on the
issue of whether enhanced damages should be awarded based on the willful infringement
finding. (Dkt. 952.) Defendants Polygroup Limited (Macao Commercial Offshore),
Polygroup Macau Limited (BVI), Polytree (H.K.) Co. Ltd., Polygroup Trading Limited
(collectively, “Defendants”) submitted briefing in opposition to enhanced damages and in
opposition to the motion for prejudgment and post-judgment interest. For the reasons
addressed below, the Court declines to enhance the jury award and grants the motion for
prejudgment and post-judgment interest.
BACKGROUND
Willis Electric filed this patent infringement action in 2015 alleging that Polygroup
infringed various claims of several patents, including U.S. Patent No. 8,454,186 (’186
patent). Polygroup asserted defenses of non-infringement and invalidity of these patents.

After motion practice and inter partes review (IPR) proceedings challenging the validity of
the asserted patents, see, e.g., Polygroup Ltd. MCO v. Willis Elec. Co., Ltd., 2021-1401,
2021-1402, 2022 WL 1183332 (Fed. Cir. Apr. 20, 2022), the sole claim tried to the jury
was claim 15 of the ’186 patent.
The jury trial commenced on January 8, 2024, before this Court. On January 17,
2024, the jury returned a unanimous verdict finding that Polygroup willfully infringed
claim 15 of the ’186 patent. The jury awarded $42,494,772 in damages. Following the
jury verdict, the Court requested supplemental briefing on the issue of whether enhanced
damages should be awarded based on the willful infringement finding. Also following the
jury verdict, Willis Electric filed a motion for prejudgment and post-judgment interest.
ANALYSIS
I.

Willful Infringement and Enhanced Damages
A.

Legal Standard

The Court “may increase the damages up to three times the amount found or
assessed.”

35 U.S.C. § 284.

Enhanced damages are “designed as a ‘punitive’ or

‘vindictive’ sanction for egregious infringement behavior.” Halo Elecs., Inc. v. Pulse
Elecs., Inc., 136 S. Ct. 1923, 1932, 195 L. Ed. 2d 278 (2016). “The sort of conduct
warranting enhanced damages has been variously described . . . as willful, wanton,
malicious, bad-faith, deliberate, consciously wrongful, flagrant, or — indeed —
characteristic of a pirate.” Id. Importantly, “[e]nhanced damages are generally only
appropriate in egregious cases of misconduct.” Presidio Components, Inc. v. Am. Tech.
Ceramics Corp., 875 F.3d 1369, 1382 (Fed. Cir. 2017).

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The decision to award enhanced damages is committed to the court’s discretion.
Halo Elecs., 136 S. Ct. at 1934-35. In deciding whether to award enhanced damages, the
court considers “the particular circumstances of the case to determine whether it is
egregious.” Presidio Components, 875 F.3d at 1383. Even in cases where the jury finds
willful infringement, a court is not required to award enhanced damages. Id. at 1382.
Courts traditionally examine the Read factors in deciding whether to award
enhanced damages: (1) whether the infringer deliberately copied the ideas or design of
another; (2) whether the infringer, when he knew of the other’s patent protection,
investigated the scope of the patent and formed a good-faith belief that it was invalid or
that it was not infringed; (3) the infringer’s behavior as a party to the litigation; (4)
defendant’s size and financial condition; (5) closeness of the case; (6) duration of
defendant’s misconduct; (7) remedial action by the defendant; (8) defendant’s motivation
for harm; and (9) whether defendant attempted to conceal its misconduct. Read Corp. v.
Portec, Inc., 970 F.2d 816, 827 (Fed. Cir. 1992). The Read factors are “non-exclusive,”
but provide a structure to the Court’s analysis. Georgetown Rail Equip. Co. v. Holland
L.P., 867 F.3d 1229, 1244-45 & n.6 (Fed. Cir. 2017).
Several of the Read factors relate to issues “that were not before the jury and/or
which the jury would not have been in a position to assess.” Idenix Pharms. LLC v. Gilead
Scis., Inc., 271 F. Supp. 3d 694, 697 (D. Del. 2017). “Therefore, it is entirely appropriate,
even required, for the Court to consider — based on its extensive familiarity with the entire
course of this case, as well as what it observed a trial — where, notwithstanding the jury’s
verdict in favor of [Willis Electric], substantial contrary evidence was presented by

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[Polygroup].” Id. Indeed, the Court cannot substitute its factual determination for a jury’s
willfulness finding. Advanced Cardiovascular Sys., Inc. v. Medtronic, Inc., 265 F.3d 1294,
1311 (Fed. Cir. 2001). However, this does not prevent the Court from “observing where,
as the case may be, there was also substantial evidence presented by the willful infringer,
where the jury may have made findings that were not supported by the record, and where
the jury heard no evidence and cannot be presumed to have made a particular finding.”
Idenix Pharms., 271 F. Supp. 3d at 697.
B.

Analysis

The Court finds that, based on the totality of the circumstances, Polygroup did not
engage in the type of egregious misconduct warranting enhanced damages under 35
U.S.C. § 284 and Halo. Enhanced damages are generally appropriate only in “egregious
cases of misconduct beyond typical infringement.” Halo, 136 S. Ct. at 1935; see also
Presidio Components, 875 F.3d at 1382.
Willis Electric argues several factors from the Read Corp. test support increasing
damages, including evidence suggesting Polygroup may have deliberately copied Willis
Electric’s patented “One Plug” artificial tree design, failed to form a good faith belief of
non-infringement or invalidity, engaged in concerning litigation conduct, has substantial
financial resources as the world’s largest artificial tree company, and did not attempt to
switch to a non-infringing alternative until 2019. 970 F.2d at 827. Willis Electric also
cites the lengthy six-year infringement period and Polygroup’s rule against writing emails
about intellectual property (IP) issues.

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However, Polygroup counters that it independently developed its initial “Quick Set”
tree designs before seeing the One Plug tree, and that its engineers reasonably believed the
Quick Set trees did not infringe and the patent was invalid over prior art such as the Loomis
patent. Polygroup points to its pursuit of IPR challenges as evidence of its good faith
invalidity position. Polygroup further argues that both parties litigated aggressively, that
artificial trees are a minor product line, and that it lacked egregious motivations or clear
concealment of evidence warranting enhanced damages.
The Court finds that Willis Electric’s copying evidence, while concerning, does not
definitively show egregious infringement. At most, the evidence indicates a company
monitoring a competitor’s anticipated patent and aggressively developing a competing
product, not “wanton and malicious pirac[y].” Halo, 136 S. Ct. at 1932 (quoting Seymour
v. McCormick, 57 U.S. 480, 488, 14 L. Ed. 1024 (1853)). The Court credits Polygroup’s
engineers’ good faith belief in non-infringement and invalidity based on their analysis and
IPR petitions. See Presidio Components, 875 F.3d at 1382-83 (noting courts need only
“consider the particular circumstances of the case to determine whether it is egregious”).
Willis Electric’s litigation misconduct assertions do not clearly show extraordinary
malfeasance. See Halo, 136 S. Ct. at 1932, 1934. And while the infringement duration
was substantial, Polygroup’s preemptive redesign efforts in 2019 mitigate against deeming
this an egregious case. See Read Corp., 970 F.2d at 827.
In sum, considering the totality of the circumstances, Polygroup’s conduct does not
constitute the type of willful, wanton, malicious, bad-faith, deliberate, consciously
wrongful, flagrant, or “characteristic of a pirate” behavior required for enhanced damages

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under Section 284 and Halo. 136 S. Ct. at 1932. The evidence fails to show the sort of
egregious infringement behavior or “misconduct beyond typical infringement”
contemplated in Halo that would mandate increasing the award here. Id. at 1935; see also
Presidio Components, 875 F.3d at 1382. Accordingly, enhanced damages are denied.
II.

Prejudgment Interest
“[P]rejudgment interest should ordinarily be awarded under [35 U.S.C.] § 284.”

Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 656, 103 S. Ct. 2058, 2063 (1983). “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.” Id. at 655. The Court has “wide latitude in the
selection of interest rates.” Uniroyal, Inc. v. Rudkin-Wiley Corp., 939 F.2d 1540, 1545
(Fed. Cir. 1991). Section 284 does not specify the interest rate to be used, and “[a] variety
of rates have been utilized by courts in patent cases, including statutory rates set by state
statutes, the U.S. Treasury bill rate, the prime rate, the prime rate plus a percentage, and a
rate on borrowed funds.” Global Traffic Techs., LLC v. Emtrac Sys., Inc., 2014 U.S. Dist.
LEXIS 57840, 2014 WL 1663420, at *15 (D. Minn. Apr. 25, 2014), aff’d in part, rev’d in
part on different grounds, 620 F. App’x 895 (Fed. Cir. 2015). “[C]ourts often use the
statutory interest rate of the state in which they sit.” 2014 U.S. Dist. LEXIS 57840, [WL]
at *16. Prejudgment interest is awarded from the date of infringement to the date of
judgment. Nickson Indus., Inc. v. Rol Mfg. Co., 847 F.2d 795, 800 (Fed. Cir. 1988).
First, the Court must decide what interest rate should be used in calculating
prejudgment interest. Willis Electric requests that the Court award prejudgment interest of

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10% pursuant to Minn. Stat. § 549.09. Polygroup argues that Minn. Stat. § 334.01,
providing a maximum interest rate of 6%, is the appropriate rate to apply. Applying a rate
of 6% results in interest amounts ranging between $1-4 million, depending on whether the
Court applies simple or compounding interest.
Polygroup does not dispute that courts in the District of Minnesota have generally
awarded interest at the 10% Minnesota statutory rate in patent cases over the last decade.
However, Polygroup argues that Minn. Stat. § 334.01 should govern here since
prejudgment interest was otherwise allowed under federal patent law before Minn. Stat.
§ 549.09 was enacted. Willis Electric counters that Minn. Stat. § 334.01 does not apply
because damages were not readily ascertainable until determined by the jury at trial.
Second, the Court must consider whether any circumstances warrant limiting
prejudgment interest. Polygroup argues that such interest should be denied or reduced
given Willis Electric’s pursuit of frivolous claims and the excessive jury award. Willis
Electric contends that Polygroup fails to prove the required undue delay or prejudice for
limiting interest.
Considering the parties’ arguments and precedent in this District regarding
prejudgment interest in patent cases, the Court finds that the 10% Minnesota statutory rate
is most appropriate to apply here. Schwendimann v. Arkwright Advanced Coating, Inc.,
No. 11-820, 2018 U.S. Dist. LEXIS 127732, 2018 WL 3621206, *22-23 (D. Minn. July
30, 2018); August Tech. Corp. v. Camtek, Ltd., No. 05-1396, 2015 U.S. Dist. LEXIS 15017,
2015 WL 520546, at *8 (D. Minn. Feb. 9, 2015). Courts routinely award interest at the

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Minn. Stat. § 549.09 rate in patent infringement cases, and Polygroup has not presented
sufficiently compelling reasons to depart from this standard practice.
While Polygroup cites Minn. Stat. § 334.01 and argues damages were ascertainable,
the record indicates significant disputes existed between the parties’ damages experts
regarding applicable theories, comparable licenses, and reasonable royalty rates. This
supports that damages were not readily ascertainable until determined by the jury verdict.
Therefore, Minn. Stat. § 549.09 and its 10% rate governs.
In addition, Polygroup fails to prove the undue delay or prejudice needed to limit
prejudgment interest. The record instead reflects reasonable diligence by Willis Electric
in pursuing and prosecuting its infringement claims. Much of the “delay” Polygroup
complains of was either necessitated by court schedules or resulted directly from
Polygroup’s own IPR challenges. Polygroup offers no concrete evidence of corresponding
prejudice tied to these case events.
As such, the Court concludes that Willis Electric is entitled to prejudgment interest
at the 10% Minnesota statutory rate based on the $42,494,772 reasonable royalty damages
awarded by the jury. Accrued interest shall be calculated from June 4, 2013 through the
date of final judgment.
III.

Post-Judgment Interest
The Court must decide how much post-judgment interest to award Willis Electric.

Under 28 U.S.C. § 1961(a), “[i]nterest shall be allowed on any money judgment in a civil
case recovered in a district court.” “Such interest shall be calculated from the date of the
entry of judgment, at a rate equal to the weekly average 1-year constant maturity Treasury

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yield . . . for the calendar week preceding the date of judgment.” 28 U.S.C. § 1961(a).
Post-judgment interest applies to both the amount awarded in damages and prejudgment
interest. See Travelers Prop. Cas. Ins. Co. of Am. v. Nat’l Union Ins. Co., 735 F.3d 993,
1008 (8th Cir. 2013) (citing Arthur Young & Co. v. Reves, 937 F.2d 1310, 1338 (8th Cir.
1991)).
In its motion, Willis Electric requested post-judgment interest at the rate of 4.8%,
based on the Treasury yield for the week prior to its filing on January 31, 2024. The
judgment in this case has not yet been entered. Thus, consistent with Section 1961(a), the
appropriate post-judgment interest rate will be the weekly average 1-year Treasury yield
for the week preceding the Court’s entry of judgment.
The Court grants Willis Electric’s motion for post-judgment interest at the weekly
average Treasury yield rate, to be calculated from the date judgment is entered until
satisfaction. This post-judgment interest shall apply to the total judgment amount,
including prejudgment interest, and any fee and cost awards.

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ORDER
Based on the foregoing analysis and all the files, records and proceedings herein, IT
IS HEREBY ORDERED that:
1.

Plaintiff Willis Electric’s reasonable royalty damages of $42,494,772

awarded by the jury shall not be enhanced.
2.

Plaintiff Willis Electric’s Motion for Prejudgment and Post-Judgment

Interest, (Dkt. 965), is GRANTED.
a.

The Court’s judgment order, to be entered following this order, shall

include the order that Willis Electric is awarded $42,494,772 in reasonable royalty
damages, plus prejudgment interest calculated at the 10% Minnesota statutory rate
from June 4, 2013 through the date of final judgment.
b.

The Court’s judgment order, to be entered following this order, shall

also include the order that Willis Electric is entitled to post-judgment interest at the
weekly average 1-year Treasury rate, accruing from the date of entry of judgment
until the judgment is satisfied.
Dated: March 8, 2024

s/Joan N. Ericksen
Joan N. Ericksen
United States District Judge

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