Exmark Manufacturing Company Inc. v. Briggs & Stratton Power Product Group

Filing 689

MEMORANDUM AND ORDER - IT IS ORDERED: Exmark's motions for attorney fees and enhanced damages (Filing No. 646 ) is granted with respect to enhanced damages and denied with respect to attorney fees. A judgment for enhanced damages in the amount of $24,280,330.00 will issue this date. Ordered by Senior Judge Joseph F. Bataillon. (TCL)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
EXMARK MANUFACTURING COMPANY
INC.,
8:10CV187
Plaintiff,
vs.

MEMORANDUM AND ORDER

BRIGGS & STRATTON POWER
PRODUCTS GROUP, LLC,
Defendant.

This matter is before the court on Exmark's motions for enhanced damages and
for attorney fees. Filing Nos. 646 and 648.1
This action was tried to a jury on September 8-11, 2015, and September 14-17,
2015, resulting in a compensatory award to the plaintiff for patent infringement in
connection with Briggs's original mower deck in the amount of $24,280,330 and a
finding of willful infringement. See Filing No. 599, Verdict.
I.

FACTS

Facts recited in the court's opinions on other post-trial motions are incorporated
herein and need not be repeated. See Filing No. 687, Memorandum and Order (laches)
at 1-11; Filing No. 688, Memorandum and Order at 1-3 (judgment as a matter of law on
damages and willfulness). The record supports the jury's finding of willful infringement.
There is evidence that suggests that Briggs copied Exmark's design. See, e.g.,
Filing No. 611, T. Tr., Vol. II at 210-12; T. Ex. 36 (Engineering change form); Filing No.

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Also pending is Briggs's motion for reconsideration, Filing No. 581, of the court's order granting
Exmark's motion in limine, Filing No. 565. That motion was ruled on at trial and will be denied as moot.
See Filing No. 615, T. Tr., Vol. VI at 1012.

614, T. Tr., Vol. V at 965. Testimony adduced at trial suggests Dale Baumbach, then
Ferris's acting engineering manager, instructed its technician to modify its mower deck
as shown in a sketch that is strikingly similar to Exmark's Lazer Z mower deck, shortly
after he had observed flow control baffles on Exmark's mower. See Filing No. 615, T.
Tr., Vol. VI at, 1073; Filing No. 616, T. Tr., Vol. VII at 1500-01; T. Ex. 521, Marshall Dep.
at 54, 59, 62-64, 124-25; T. Ex. 9, Exmark deck; T. Ex. 42, Baumbach sketch. A
change order was subsequently issued, ostensibly intended to "improve cut quality."
Filing No. 611, T. Tr., Vol. II at 210; T. Ex. 36. There is no evidence to suggest that
Baumbach obtained the idea from any other source than the Exmark Lazer Z, and
Briggs had an Exmark Lazer Z in its possession in 1996. See Filing No. 615, T. Tr., Vol.
VI at 1073.
The head of Briggs's commercial lawn mower business, Philip Wenzel, testified
that its predecessor corporation, Ferris, had an Exmark mower in its possession in 1996
and Wenzel and his technical engineer personally drove the mower and observed the
flow-control baffles on the mower. Filing No. 615, T. Tr., Vol. VI at 1073; Filing No. 616,
T. Tr., Vol. VII at 1500.

Shortly thereafter, its designer produced a sketch of a

redesigned mower deck strikingly similar to Exmark's. See T. Exs. 9 and 42. The
modification was implemented to improve cut quality. Filing No. 611, T. Tr., Vol. II at
210; T. Ex. 36. Even Briggs’s own witnesses conceded it was “possible” there was
copying. Filing No. 614, T. Tr., Vol. V at 965 (Philip Wenzel testimony); Filing No. 615,
T. Tr., Vol. VI at 1072 (Philip Wenzel testimony); Filing No. 616, T. Tr., Vol. VII at 1508
(John Marshall testimony).

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Though the '863 patent had not been issued in 1996, Wenzel testified that he
knew that obtaining a patent can take years. Filing No. 615, T. Tr., Vol. VI at 1092. He
stated that it is not enough for a company to check for a patent if it copies a design, it
must also check for later-issued patents. Id. at 1092-93. Although Wenzel testified that
Briggs (then Ferris) had a policy of performing patent clearances on new product
designs prior to their introduction, it presented no evidence that it conducted any sort of
patent clearance relative to its infringing flow control baffles or the mowers they were
employed on. Id. at 1043-48. He characterized Ferris's patent clearing practices was
flawed for not doing so. Id. at 1093.
Briggs later possessed at least four Exmark mowers that were marked with
patent numbers, as well as Exmark brochures referring to "patented flow control baffles.
Filing No. 615, T. Tr., Vol. VI at, 1093-98, 1123-34. Wenzel stated that Briggs knew that
companies in the industry mark their products with patent numbers and that the reason
they do so is to notify competitors of their patent rights. Id. at 1090-91. Two Briggs
employees—Mr. Wenzel and Mr. Marshall—admitted seeing Exmark patent markings
on Exmark mowers in Briggs’ possession. Filing No. 615, Trial Tr. vol. VI at 1099; T. Ex.
521, Marshall Dep. Tr. at 139-41. Wenzel testified that Briggs should have known about
Exmark’s ‘863 patent. Id. at 1138-39.
Wenzel was deposed in the Scag case in May, 2002. Filing No. 615, T. Tr., Vol.
VI at 1139-40; 1147-49; Filing No. 392-20, Index of Evid., Ex. 32, Toro V. Scag, No.
01cv279 ("Scag litigation"), Wenzel Dep. Tr.

One of Scag's lawyers represented

Wenzel at the deposition. Filing No. 615, T. Tr., Vol. VI at 1147-49. He also stated he

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was shown drawings from one of the patents in the lawsuit before his deposition. Filing
No. 614, T. Tr., Vol. V at 974-79.
Briggs continued to market and sell infringing mowers until 2014, four years after
this suit was filed.
This court found Briggs's noninfringement arguments with respect to the original
mower designs were "meaningless, contrary to the court's claim construction, and
presented a strained and nonsensical reading of the asserted claims." Filing No. 476,
Memorandum and Order at 28. In opposition to Exmark's motion for summary judgment
on the infringement issue, Briggs admitted that the infringing products met every
limitation of claim 1 except for the requirement that the front flow control baffle “extends
away from” the closed side wall. Filing No. 374, Briggs's Brief at 16-19.
The record shows the patent was examined and found valid three times after it
was issued in 1999. See T. Ex. 1, ''863 Patent at 12-14. Briggs continued to contest
validity and contests validity to this day. Filing No. 644, Laches Proc. Tr., Vol. II at 273.
It continued to sell out its infringing inventory well into 2014. Filing No. 615, T. Tr., Vol.
VI at 1189-90; T. Ex. 523; Filing No. 644, Laches Proc. Tr., Vol. II at 277.
There is evidence that Briggs used Exmark's patent to sell mowers and take
business away from Exmark. Filing No. 613, T. Tr., Vol. IV at, 688-91; T. Exs. 299, 311,
313, 314, 323. Wenzel told Briggs's distributors not to make a big splash” regarding
mulching products because “Toro is aggressively pursuing legal action on . . .
‘questionable patents’” referring to the Scag litigation). Filing No. 615, T. Tr., Vol. VI at
1077-78.

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Exmark has presented evidence that Briggs and Stratton Power Products Group
LLC has annual revenues of over $700 million, and an annual gross profit in excess of
$85 million. Filing No. 647-2, Affidavit of Alexander S. Rinn, Ex. 1, 2015 Briggs and
Stratton Annual Report at 18. The defendant is a wholly owned subsidiary of the Briggs
and Stratton Corporation that publicly reports annual revenues in excess of $1.85 billion
and gross profit in excess of $345 million. Id.; see Filing No. 60, Corporate Disclosure
Statement.
II.

LAW
A.

Enhanced damages

In a patent infringement case, the Court “may increase the damages up to three
times the amount found or assessed.” 35 U.S.C. § 284. The decision whether to grant
enhanced damages as allowed under 35 U.S.C. § 284 requires a two-step process.
Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 37 (Fed. Cir. 2012). "'First,
the fact-finder must determine whether an infringer is guilty of conduct upon which
increased damages may be based.

If so, the court then determines, exercising its

sound discretion, whether, and to what extent, to increase the damages award given the
totality of the circumstances."' Id. (quoting Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570
(Fed. Cir. 1996)).
A finding of willful infringement satisfies the culpability requirement and is
sufficient to meet the first requirement to increase a compensatory damages award. Id.;
see Johns Hopkins Univ. v. Cellpro, Inc., 152 F.3d 1342, 1364–65 (Fed. Cir. 1998). “A
finding of willfulness does not require an award of enhanced damages; it merely permits
it.” In re Seagate Technology, LLC, 497 F.3d 1360, 1368 (Fed. Cir. 2007) (en banc)
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(noting that “proof of willful infringement permitting enhanced damages requires at least
a showing of objective recklessness.”) However, once willful infringement is found, it is
an abuse of discretion to deny an award of enhanced damages without providing a
justification for doing so. Whitserve, 694 F.3d at 37.
Enhanced damages for willful infringement are punitive in nature, not
compensatory. Whitserve, 694 F.3d at 37. Hence, the fact that the patentee may have
received “complete compensation” from the jury for the infringement should not
influence the decision of whether to award enhanced damages. Id.
In deciding how much to enhance damages, a court considers the factors
outlined in Read Corp. v. Portec, Inc., 970 F.2d 816, 826–28 (Fed. Cir. 1992). These
factors include: (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) the
defendant’s size and financial condition; (5) the closeness of the case; (6) the duration
of defendant’s misconduct; (7) the remedial action by the defendant; (8) the defendant’s
motivation for harm; and (9) whether defendant attempted to conceal its misconduct. Id.
at 827.
B.

Attorney fees

Under patent law, “[t]he court in exceptional cases may award reasonable
attorney fees to the prevailing party.”

35 U.S.C. § 285.

Courts may, but are not

required to, award reasonable attorney fees in “exceptional” cases.

See Octane

Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1755-56 (2014). "An
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'exceptional' case is one that stands out from others with respect to the substantive
strength of a party’s litigating position (considering both the governing law and the facts
of the case) or the unreasonable manner in which the case was litigated." Id. at 1756.
Litigants need only establish their entitlement to fees by a preponderance of evidence.
Id. at 1758. "District courts may determine whether a case is 'exceptional' in the caseby-case exercise of their discretion, considering the totality of the circumstances." Id. at
1756. Though there is no precise rule or formula for making these determinations,
courts can consider a nonexclusive list of factors, including frivolousness, motivation,
objective unreasonableness (both in the factual and legal components of the case) and
the need in particular circumstances to advance considerations of compensation and
deterrence. Id. at 1756 & n.6.
III.

DISCUSSION
A.

Enhanced Damages

Exmark seeks an award of enhanced damages under 35 U.S.C. § 284. It seeks
a meaningful or substantial enhancement and an award of its reasonable attorney fees.
It argues that enhancement is necessary so as not to reward Briggs for its willful
infringement and for causing years of expensive and time-consuming litigation.

In

opposition, Briggs first contends the court should find no willfulness as a matter of law
as set forth in its motion for judgment as a matter of law on willfulness. See Filing No.
656, Motion; Filing No. 657, Brief. Next, Briggs argues that an award of enhanced
damages would be unwarranted and manifestly unjust.
The court finds that application of the Read factors shows that enhanced
damages are warranted. Exmark presented strong evidence of deliberate copying. And
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Briggs presented no evidence as to where, other than in Exmark's product, it would
have obtained the idea for such a flow control baffle. Wenzel also testified that he knew
that obtaining a patent could take years, and testified that Ferris's alleged patentchecking process was flawed for failing to check for later-obtained patents. He admitted
it was possible there had been copying.
There is evidence that Briggs knew of the patent by virtue of the patent numbers
on the Exmark mowers and language in Exmark brochures in its possession. There is
no evidence that Briggs conducted any good faith investigation into the scope of the
'863 patent or formed any good faith belief regarding alleged invalidity or
noninfringement. Most importantly, the court finds Briggs was aware of the '863 patent
including the claims relating to flow-control baffles by virtue of Wenzel's participation in
the Scag litigation. Wenzel testimony to the effect that he was not aware of the '863
patent although he was deposed in the Scag litigation defies credulity. He admitted that
Scag's lawyers represented him and that he was shown drawings from one of the
patents in preparation for his deposition.
The evidence suggests that Briggs actually knew of the patent or was at least
willfully blind to its existence. There is no question that Briggs's original baffle design
presented an objectively high risk of infringement and the evidence shows that Briggs
continued to sell the mowers for years after suit was filed. For the reasons stated in its
order denying Briggs's motion for judgment as a matter of law or a new trial on
willfulness, the court finds the jury's finding of willful infringement is amply supported by
the evidence. Briggs's conduct has been shown to be reckless at the least.

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The factor of litigation behavior also favors enhancement. In this litigation, Briggs
vigorously disputed that its original designs infringed the patent, despite the fact that the
designs are strikingly similar to the preferred embodiment in the patent.

Briggs

proposed strained claim constructions and argued meaningless distinctions in an
attempt to avoid a finding of infringement. Briggs continued to assert that the original
baffle design did not infringe—a position that became particularly untenable after the
Court’s claim construction order on November 29, 2011.
Briggs contested the validity of Exmark's patent throughout the litigation in spite
of several PTO reexaminations finding it was valid. Briggs's conduct also prolonged the
litigation.

Briggs chose to wait more than two years after suit was filed, until fact

discovery and expert reports were completed, to challenge Exmark’s patent in
reexamination.

The reexaminations that resulted in a stay of this case took an

additional two years, after which Briggs insisted on presenting new invalidity theories,
resulting in additional delay. Briggs continues to maintain that the patent is invalid. The
court finds that neither the validity issue nor infringement with respect to the original
product design were close questions.
The duration of the infringement also favors the enhancement. The infringement
began in 1999, when the patent was issued and continued until 2014—four years after
this action was filed. In the interim, Wenzel had been deposed in the Scag case and
must have been aware of the objective risk of infringing. Exmark is statutorily precluded
from recovering damages prior to May 2004. Briggs has received the benefit of the
statutory six-year limitation period.

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Also, although Briggs ultimately changed its infringing design, it did so reluctantly
and belatedly.

Moreover, although the jury found that it did not infringe, Briggs's

redesign was not unquestionably outside the scope of the patent, like Scag's redesign
had been. The issue of alleged infringement with respect to the redesign presented a
close question that had to be resolved by a jury.
There is also some evidence, though weak, that Briggs attempted to "conceal" its
behavior by instructing distributors not to "make a big splash” regarding mulching
products.

Briggs's size and financial condition also favors an award of enhanced

damages. The evidence shows that the named defendant is able to pay an enhanced
award.
On the whole, the court finds that an analysis of the Read factors favors
enhancing damages in this case. Generally speaking, Briggs's defenses to the claims
of infringement were not reasonable and it has been found to be a willful infringer.
Although the court is authorized to award damages of up to triple the amount of the
compensatory award, the court finds that an award equal to the jury’s award of
damages is sufficient to serve the purposes of the enhanced damages provision of the
statute. This award doubles the plaintiff’s recovery.

In connection with this

determination, the court notes that Briggs was successful on the infringement allegation
with respect to the redesigned mowers.
B.

Attorneys' Fees

Exmark requests that the Court award it 50% of its attorney fees incurred prior to
June 1, 2015, and 90% of its attorney fees incurred thereafter. It estimates that the
value of such a fee award at the present time would be approximately $3.5 million,
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which is about 60% of the roughly $5.9 million in total fees it incurred, and states it will
provide documentation to support any award under Local Rule 54.3 (a) at a later date.
Briggs argues that attorney fees should not be awarded because this is not an
exceptional case. Alternatively, it proposes that, if fees are awarded, the award should
be limited to half of what Exmark has allotted to this case versus the Schiller case—i.e.,
25% of its fees before July 1, 2015 and 45% thereafter. It also argues that any such
award should exclude fees for prosecuting the reexamination, responding to Briggs’s
laches defense, and defending the second Rule 30(b)(6) deposition of Mr. Benson. It
contends such an award would reflect the degree to which Exmark prevailed at trial.
The court finds Exmark has not shown by a preponderance of evidence that this
case is exceptional so as to warrant an award of fees. Although Briggs's continued
denial of infringement with respect to its original designs and continued assertions of
invalidity undoubtedly contributed to delay and added to the costs of litigation, such
conduct in a patent or commercial litigation case does not stand out from other cases
with respect to the substantive strength of litigating position in terms of the law and the
facts, or the manner of litigating.

In this court's experience, unreasonable claim

constructions, prolix pleadings, positions that strain credulity, flawed theories, and
incorrect or unsupported arguments are the norm and not the exception in a hotly
contested, high-stakes patent or commercial litigation case. The court cannot say that
Briggs's contentions were vexatious, frivolous, offensive, or improper. Losing a case
does not make the case exceptional.

Both parties contributed to delaying and

overcomplicating the litigation and both parties succeeded on some of their claims.

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Accordingly, under the totality of circumstances, the court finds Exmark's motion for
attorney fees should be denied.
IT IS ORDERED:
1.

Exmark's motions for attorney fees and enhanced damages (Filing No.

646) is granted with respect to enhanced damages and denied with respect to attorney
fees.
2.

A judgment for enhanced damages in the amount of $24,280,330.00 will

issue this date.
DATED this 11th day of May, 2016.

BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge

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