WCM Industries, Inc. v. IPS Corporation et al

Filing 594

ORDER granting 488 Motion ; denying 525 Sealed Motion. Signed by Judge Jon Phipps McCalla on 5/12/2016. (McCalla, Jon)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

WCM INDUSTRIES, INC.,
Plaintiff,
v.
IPS CORPORATION,
Defendant.

)
)
) CIVIL ACTION NO.: 2:13-cv-02019-JPM-tmp
)
)
)
Jury Trial Demanded
)
)
)

ORDER GRANTING MOTION FOR ENHANCED DAMAGES AND DENYING MOTION
FOR JUDGMENT AS A MATTER OF LAW OF NO WILLFUL INFRINGEMENT

Before the Court are Plaintiff WCM Industries, Inc.’s
(“WCM”) Motion for Enhanced Damages (ECF No. 488), filed
December 10, 2015, and Defendant IPS Corporation’s (“IPS”)
Renewed Motion for Judgment as a Matter of Law of No Willful
Infringement (ECF No. 525), filed January 4, 2016.
For the reasons that follow, the Court GRANTS WCM’s motion
and DENIES IPS’s motion.
I.

BACKGROUND
Plaintiff WCM brought claims for patent infringement

against Defendant IPS, alleging that IPS infringed claims in
three of WCM’s patents. 1

1

(Joint Pretrial Order at 2, ECF No.

The three patents at issue are U.S. Patent No. 8,302,220 (“the ’220
Patent”); U.S. Patent No. 8,321,970 (“the ’970 Patent”); and U.S. Patent No.
8,584,272 (“the ’272 Patent”). (Joint Pretrial Order at 2, ECF No. 424.)
The IPS products that WCM alleges infringe WCM’s patents (“the Accused
(cont.)

424.)

IPS denied that it infringed the patents and also

asserted claims that WCM’s patents were invalid.

(Id.)

A jury trial was held over ten days between October 13,
2015, and October 27, 2015.

(Min. Entries, ECF Nos. 430,

432-434, 439, 441, 444, 447, 451, 453.)

On October 27, 2015,

the jury returned a verdict for WCM, finding that IPS had
willfully infringed the asserted claims and that the asserted
claims were not invalid.

(See Jury Verdict Form, ECF No. 454.)

On December 4, 2015, the Court granted in part and denied
in part IPS’s motions for judgment as a matter of law.
477.)

(ECF No.

The Court granted judgment as a matter of law of

noninfringement under the doctrine of equivalents and granted
judgment as a matter of law of no willfulness as to the ’272
Patent, which was issued after the filing of the complaint in
this case.

(See id. at 6-8, 9, 11-12.)

judgment on December 4, 2015.

The Court entered a

(ECF No. 478.)

On December 10, 2015, WCM filed the motion for enhanced
damages.

(ECF No. 488.)

December 28, 2015.

IPS responded in opposition on

(ECF No. 507.)

filed a reply on January 25, 2016.
sur-reply on January 26, 2016.

With leave of Court, WCM
(ECF No. 549.)

IPS filed a

(ECF No. 550.)

Products”) include the Original Classic line and the Revised Classic line of
bathtub overflow and drain assemblies. (See id. at 3-4.)

2

On January 4, 2016, IPS filed the renewed motion for
judgment as a matter of law of no willful infringement.
No. 525.)

(ECF

WCM responded in opposition on January 22, 2016.

(ECF No. 542.)

With leave of Court, IPS filed a reply on

February 8, 2016.

(ECF No. 575.)

On March 1, 2016, the Court held a hearing on several
motions, including the instant motions.

(Min. Entry, ECF No.

589.)
II.

LEGAL STANDARDS
A.

Motion for Judgment as a Matter of Law

Rule 50 of the Federal Rules of Civil Procedure provides
that a court may grant a motion for judgment as a matter of law
when “a party has been fully heard on an issue during a jury
trial and the court finds that a reasonable jury would not have
a legally sufficient evidentiary basis to find for the party on
that issue.”

Fed. R. Civ. P. 50(a)(1); accord Interactive

Pictures Corp. v. Infinite Pictures, Inc., 274 F.3d 1371, 1375
(Fed. Cir. 2001) (quoting Fed. R. Civ. P. 50(a)).
Judgment as a matter of law may only be granted if,
when viewing the evidence in a light most favorable to
the non-moving party, giving that party the benefit of
all reasonable inferences, there is no genuine issue
of material fact for the jury, and reasonable minds
could come to but one conclusion in favor of the
moving party.
Barnes v. City of Cincinnati, 401 F.3d 729, 736 (6th Cir. 2005),
cert. denied, 546 U.S. 1003 (2005).
3

After trial, a party may

file a renewed motion for judgment as a matter of law if the
court did not grant the earlier Rule 50(a) motion.
P. 50(b).

Fed. R. Civ.

“A motion under Rule 50(b) is not allowed unless the

movant sought relief on similar grounds under Rule 50(a) before
the case was submitted to the jury.”

Exxon Shipping Co. v.

Baker, 554 U.S. 471, 485 n.5 (2008) (quoting 11 Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure
§ 2810.1 pp. 127-128 (2d ed. 1995)).
B.

Motion for Enhanced Damages

When the damages [adequate to compensate for the
infringement] are not found by a jury, the court shall
assess them. In either event the court may increase
the damages up to three times the amount found or
assessed.
Increased damages under this paragraph
shall not apply to provisional rights under section
154(d).
The court may receive expert testimony as an aid
to the determination of damages or of what royalty
would be reasonable under the circumstances.
35 U.S.C. § 284 (emphasis added); see also i4i Ltd. P’ship v.
Microsoft Corp., 598 F.3d 831, 858 (Fed. Cir. 2010) (“A finding
of willful infringement is a prerequisite to the award of
enhanced damages.” (citing In re Seagate Tech., LLC, 497 F.3d
1360, 1368 (Fed. Cir. 2007) (en banc))).

Factors relevant to a

court’s determination of the extent of enhanced damages include
the infringer’s behavior, the infringer’s good faith belief of
invalidity or infringement, and the infringer’s size and
finances.

See Read Corp. v. Portec, Inc., 970 F.2d 816, 826-27
4

(Fed. Cir. 1992) (listing nine factors 2), abrogated on other
grounds by Markman v. Westview Instrs., Inc., 52 F.3d 967 (Fed
Cir. 1995) (en banc), aff’d, 517 U.S. 370 (1996); see also
Transclean Corp. v. Bridgewood Servs., Inc., 290 F.3d 1364,
1377-78 (Fed. Cir. 2002).
III. ANALYSIS
A.

Renewed Motion for Judgment as a Matter of Law of No
Willfulness

IPS asserts in its renewed motion for judgment as a matter
of law of no willfulness that WCM failed to present sufficient
evidence for a finding of willful infringement of the ’220 and
’970 Patents.

(ECF No. 525 at 8-13.)

IPS also asserts that the

jury instruction on willful blindness was erroneous and
prejudicial to IPS.

(Id. at 13-15.)

WCM argues that the

relevant test for willfulness has been met and that IPS has
waived its objections to the jury instruction.
2

(ECF No. 542 at

The factors are:

(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; and
(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.
(9) Whether defendant attempted to conceal its misconduct.
Read, 970 F.2d at 826-27 (citations and footnote omitted).

5

8-19.)

The Court finds that both the objective and subjective

prongs of the Seagate test are satisfied and that there was no
error as to the jury instruction.

Thus, the Court denies the

motion.
1.

Seagate Test for Willfulness

Seagate requires that “a patentee must show by clear and
convincing evidence that the infringer acted despite an
objectively high likelihood that its actions constituted
infringement of a valid patent.”

In re Seagate Tech., LLC, 497

F.3d 1360, 1371 (Fed. Cir. 2007) (en banc).

“If this threshold

objective standard is satisfied, the patentee must also
demonstrate that this objectively-defined risk (determined by
the record developed in the infringement proceeding) was either
known or so obvious that it should have been known to the
accused infringer.”

Id.

The Court has found that there was sufficient evidence to
support a finding of willfulness.
12.)

(See, e.g., ECF No. 477 at 9-

IPS asserts, however, that the objective prong of the

Seagate test was not met.

(ECF No. 525 at 8-10.) 3

3

One of IPS’s arguments is that its redesign of the locknut
demonstrates that it did not act with objective recklessness. (ECF No. 525
at 9-10 (citing Alloc, Inc. v. Norman D. Lifton Co., 653 F. Supp. 2d 469,
475-76 (S.D.N.Y. 2009)).) IPS’s locknut, however, was not redesigned until
mid-2014, after the instant case had been ongoing for over a year. (Trial
Tr. 771:19-772:10, Oct. 16, 2015, ECF No. 466.) Since post-litigation
conduct is not at issue (see, e.g., ECF No. 477 at 9), IPS’s redesign efforts
are irrelevant considerations. See Applied Med. Res. Corp. v. U.S. Surgical
Corp., 435 F.3d 1356, 1365 (Fed. Cir. 2006). IPS asserts that Applied is
(cont.)

6

“[W]illfulness is not established where the defendant has a
substantial, objectively reasonable, though ultimately rejected,
defense . . . .”

Innovention Toys, LLC v. MGA Entm’t, Inc., 611

F. App’x 693, 700 (Fed. Cir. 2015), petition for cert. filed,
2015 WL 7180653 (U.S. Nov. 10, 2015) (No. 15-635).

The district

court must “consider[] the totality of the record evidence . . .
to determine whether there was an objectively-defined risk of
infringement of a valid patent.”

Halo Elecs., Inc. v. Pulse

Elecs., Inc., 769 F.3d 1371, 1382 (Fed. Cir. 2014), cert.
granted, 136 S. Ct. 356 (U.S. argued Feb. 23, 2016) (No. 141513).

Although IPS asserts that it raised substantial

questions as to invalidity and noninfringement, thus barring a
finding of objective recklessness, (ECF No. 525 at 9 (citing
Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 776
F.3d 837, 844 (Fed. Cir. 2015))), the invalidity and
noninfringement defenses were not objectively reasonable.
Unlike the defendant in Halo, IPS failed to show that the
prior art disclosed each element of the asserted claims or that
it was obvious to combine and modify the prior art to create the
claimed invention.

See (ECF No. 593 at 11-12; see also Halo,

769 F.3d at 1382 (citing Halo Elecs., Inc. v. Pulse Elecs.,

distinguishable in part because “the defendant’s redesign was found to be
infringing.” (ECF No. 575 at 2.) Although IPS has consistently argued in
this case that the Revised Products do not infringe, the jury and the Court
have found otherwise. (See ECF Nos. 592 at 4-7; ECF No. 593 at 6-10.)

7

Inc., No. 2:07-cv-00331-PMP-PAL, 2013 WL 2319145, at *15 (D.
Nev. May 28, 2013)).

IPS’s reliance on prior art that did not

contain elements of the asserted patents, particularly when
IPS’s own opinion witness conceded that he did not know if the
prior art references were anticipatory (Trial Tr. 1436:13-15,
Oct. 20, 2015, ECF No. 469), demonstrates that IPS acted with
objective recklessness in its infringement.

Cf. Spine Sols.,

Inc. v. Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305, 1312
(Fed. Cir. 2010) (finding that the defendant raised a
substantial question of obviousness when a combination of prior
art “plainly disclose[d] every limitation of” an asserted
claim).
Further, while “there is no affirmative obligation to
obtain opinion of counsel,” Seagate, 497 F.3d at 1371, whether
or not an alleged infringer does so is a factor for the Court to
consider when assessing willful recklessness.

Aspex Eyewear

Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305, 1313 (Fed. Cir.
2010) (“the timing as well as the content of an opinion of
counsel may be relevant to the issue of willful infringement,
for timely consultation with counsel may be evidence that an
infringer did not engage in objectively reckless behavior”); see
also Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1347-48
(Fed. Cir. 2011) (“the failure to obtain an opinion of counsel
or otherwise investigate the patent situation can be considered,
8

in the totality of the circumstances”).

In this case, WCM

asserts, and IPS does not dispute, that IPS did not seek an
opinion of counsel.

(See ECF No. 542 at 10.)

IPS argues that during the claim construction stage, WCM
abandoned the majority of its asserted claims.
2-3.)

(ECF No. 525 at

Even if the Court considers WCM’s strategy not to pursue

these claims as evidence of IPS’s reasonable claim constructions
under which its products did not infringe, consideration of the
totality of the circumstances is required, see Halo, 769 F.3d at
1382, and the record evidence demonstrates IPS’s defenses were
not objectively reasonable.

Thus, the objective Seagate prong

is satisfied.
The subjective Seagate prong is supported by the jury
verdict.

(See ECF No. 454 at 31; ECF No. 477 at 9-12; see also

Bard, 682 F.3d at 1008 (“If, in view of the facts, the asserted
defenses were not reasonable, only then can the jury’s
subjective willfulness finding be reviewed for substantial
evidence.”).

Since both prongs of the Seagate analysis are

satisfied, the Court finds that willfulness on the part of IPS
has been established.
2.

Jury Instructions and Verdict Form

IPS asserts that because the jury was allowed to find IPS
infringed either by finding willful infringement or finding
willful blindness, the instruction on willfulness was erroneous
9

and prejudicial to IPS.

(ECF No. 525 at 13.)

WCM asserts that

IPS was willfully blind and infringed willfully, and that IPS
failed to object properly to the jury instruction.

(ECF No. 542

at 15-20.)
As an initial matter, IPS did not object to the willfulness
jury instruction during trial for the same reasons it provides
in its motion now. 4

Thus, it has waived its current objection.

See Bonkowski v. Allstate Ins. Co., 544 F. App’x 597, 608-09
(6th Cir. 2013). 5

Even if the objection were not waived, 6 while

IPS is correct that willful blindness and willful infringement
are governed by different standards, the instructions provided
were not prejudicial.
Under both the lower willful blindness standard and the
higher willful infringement standard, there was sufficient
4
IPS previously objected only that question 17 on the verdict form
allowed for a finding of willfulness before the Court determined the
objective Seagate prong was satisfied and that question 17 implied willful
blindness was equivalent to willful infringement. (ECF No. 448 at 6-7.) IPS
now asserts that willful blindness is irrelevant to willful infringement and
is only applicable as to induced infringement. (ECF No. 525 at 13-14.)
5
IPS also asserts that it is entitled to a new trial on the grounds
that the jury instructions on willfulness were erroneous and prejudicial.
(ECF No. 525 at 13.) Pursuant to Rule 59(a), a new trial is only permitted
when there is a “seriously erroneous result.” Holmes v. City of Massillon,
Ohio, 78 F.3d 1041, 1045-46 (providing that such result is “evidenced by: (1)
the verdict being against the weight of the evidence; (2) the damages being
excessive; or (3) the trial being unfair to the moving party in some
fashion”). The Court does not find that there was a “seriously erroneous
result” such that a new trial is warranted.
6
IPS also argues that “a litigant’s failure to object to a jury
instruction does not create a jurisdictional bar to review.” (ECF No. 575 at
5 (quoting Reynolds v. Green, 184 F.3d 589, 594 (6th Cir. 1999).) Rule 51,
however, permits consideration of a newly asserted objection to the jury
instructions only if the error “affects substantial rights.” Fed. R. Civ. P.
51(d)(2). In this case, the Court does not find that the asserted error was
substantially prejudicial to IPS.

10

evidence to support the jury verdict.

“The doctrine of willful

blindness requires that ‘(1) the defendant must subjectively
believe that there is a high probability that a fact exists and
(2) the defendant must take deliberate actions to avoid learning
that fact.’”

Suprema, Inc. v. Int’l Trade Comm’n, 626 F. App’x

273, 280 (Fed. Cir. 2015) (quoting Global-Tech Appliances, Inc.
v. SEB S.A., 131 S. Ct. 2060, 2070 (2011)).

AB&A, whose assets

were purchased by IPS, did not have engineers, draftsmen, or
full-time product developers, which demonstrates that there was
a high probability that AB&A’s Classic products infringed.
(See, e.g., Trial Tr. 539:17-23, Oct. 16, 2015, ECF No. 465.)
IPS’s failure to perform due diligence and ask about AB&A’s
development of its Classic product line demonstrates that IPS
subjectively believed the products were infringing but
deliberately avoided knowledge of that fact.
903:9-13, Oct. 19, 2015, ECF No. 467.)

(See Trial Tr.

Further, the willful

blindness inquiry is applicable to the subjective prong of the
Seagate analysis.

See 497 F.3d at 1371.

The Court has also

found that the test for willful infringement has been met.

(See

supra Part III.A.1.)
IPS was not prejudiced by the jury instructions or verdict
form question on willfulness because sufficient evidence was
presented to support a finding of both willful infringement and
willful blindness.

Accordingly, IPS’s renewed motion for
11

judgment as a matter of law of no willful infringement is
DENIED.
B.

Motion for Enhanced Damages

WCM asserts that the finding of willful infringement
entitles it to enhanced damages of $4,151,934.
5, 21.)

(ECF No. 488 at

IPS argues that the jury’s finding of willfulness is

unclear and that WCM incorrectly attributes AB&A’s activities to
IPS.

(ECF No. 507 at 5, 8.)

For the reasons stated, the Court

will not disrupt the jury’s finding of willfulness and finds
that the Read factors for enhanced damages are satisfied.

Thus,

the Court grants the motion.
The Court has determined that both prongs of Seagate are
met.

See supra Part III.A.1; see also Seagate, 497 F.3d at 1368

(“an award of enhanced damages requires a showing a willful
infringement”).

When “all the facts and circumstances” are

considered, Read, 970 F.2d at 826, the factors for enhanced
damages weigh in favor of WCM.
First, while IPS correctly asserts that the actions of AB&A
cannot be attributed to IPS (ECF No. 507 at 8 (citing ECF No.
498-6 at 182:9-183:12); see also ECF No. 446 at 5), there is
evidence of copying on IPS’s part as well.

(See, e.g., Kirk

Dep. 7 133:14-135:16, ECF No. 507-4 (discussing an IPS e-mail,

7

The videotaped deposition of Steve Kirk was played at trial on October
15, 2015. (See Trial Tr. 465:8-9, Oct. 15, 2015, ECF No. 464.)

12

which referred to “knock[ing] off” a WCM product).)

Notably,

evidence of copying is not limited to the elements of the
asserted claims, but also includes “ideas” and “design,” which
“encompass . . . copying the commercial embodiment.”
F.2d at 827 & n.7.

Read, 970

Thus, this factor weighs in favor of WCM.

Second, and perhaps most importantly, IPS failed to
investigate the asserted patents.

Id. at 827 (citing as a

factor “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”).

Jeffrey Humber, IPS’s Director of Engineering,

testified that he possessed catalogs and other literature that
indicated that WCM’s products were patent protected.

(Trial Tr.

1213:2-1215:9, Oct. 20, 2015, ECF No. 468.)

Mr. Cassella

testified that IPS monitored WCM’s patents.

(Trial Tr. 900:25-

901:6, Oct. 19, 2015, ECF No. 467.)

Despite knowing that WCM

had patent protection, IPS did not even investigate the claims
of a patent at issue in an earlier lawsuit between WCM and IPS
at the time IPS was purchasing AB&A’s assets.
18.) 8

(Id. at 1133:16-

Mr. Cassella’s testimony that IPS did not investigate the

8

That this conduct occurred prior to the patents-in-suit is not fatal
to WCM’s case. See Global-Tech, 131 S. Ct. at 2072 (“Taken together, this
evidence was more than sufficient for a jury to find that [defendant]
subjectively believed there was a high probability that [plaintiff’s] fryer
was patented, [and] that [defendant] took deliberate steps to avoid knowing
that fact . . . .”).

13

AB&A product line in the process of purchasing AB&A’s assets
also suggests that IPS could not have developed a good-faith
belief that the patents were either invalid or not infringed.
(Id. at 903:9-13.)

This factor weighs strongly in favor of WCM.

IPS’s size and financial condition also weigh in favor of
awarding enhanced damages.

Although IPS argues that the damages

put IPS at a loss on the product line, the company as a whole is
able to satisfy a judgment of enhanced damages. 9

See, e.g.,

Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370 F.3d
1354, 1371 (Fed. Cir. 2004) (“[Defendant] is a large company
with extensive financial means”).

IPS has the means to pay

enhanced damages such that the damages would “not unduly
prejudice the defendants’ non-infringing business.”

Read, 970

F.2d at 827 (quoting Kori Corp. v. Wilco Marsh Buggies &
Draglines, Inc., 561 F. Supp. 2d. 512, 533 (E.D. La. 1982),
aff’d, 761 F.2d 649 (Fed. Cir. 1985), cert. denied, 474 U.S. 902
(1985)).

Moreover, enhanced damages are necessary to deter

future infringement.

This factor weighs in WCM’s favor.

Also in WCM’s favor is the fact that the jury’s verdict was
not a “close call,” because the evidence at trial strongly
supported WCM’s case.

See, e.g., CleanCut, LLC v. Rug Doctor,

9
IPS’s profit from November 2012 to July 2015 on the Classic line of
products was approximately $3.7 million on approximately $8.85 million of
sales. (See Trial Ex. 132.) IPS’s entire plumbing division, however, had
over $101 million in sales in 2014 alone, and is only one division of IPS.
(Trial Tr. 843:15-18, Oct. 16, 2015, ECF No. 466.)

14

Inc., No. 2:08-cv-836, 2013 WL 441209, at *3 (D. Utah Feb. 5,
2013) (listing the court’s inability to grant summary judgment
prior to trial, the relative strength of plaintiff’s proof at
trial, and the jury verdict as considerations for closeness of
the case).

In this case, like in CleanCut, the Court was unable

to grant summary judgment on several issues, including
invalidity and infringement (see ECF No. 389), and IPS’s
evidence of invalidity and noninfringement at trial was weak
(see ECF No. 593 at 6-15).

Thus, this factor favors enhanced

damages.
The Court, however, does not find that IPS engaged in
litigation misconduct.

The incidents WCM cites as examples of

misconduct must be considered warranted in the interest of
zealous advocacy and do not rise to the level of misconduct,
which “generally involves unethical or unprofessional conduct by
a party or his attorneys.”

Old Reliable Wholesale, Inc. v.

Cornell Corp., 635 F.3d 539, 549 (Fed. Cir. 2011).

This factor

is against the awarding of enhanced damages.
Based on the total record, however, the weight of evidence
is strongly in favor of enhanced damages.

IPS infringed WCM’s

patents willfully, see supra Part III.A, and notably, IPS failed
to conduct an adequate investigation of the asserted patents
after the AB&A asset purchase.
are also in WCM’s favor.

A number of other Read factors

The Court, therefore, GRANTS WCM’s
15

motion for enhanced damages.

The Court further finds, based on

the egregious nature of IPS’s conduct, that treble damages are
appropriate.
IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS WCM’s motion

for enhanced damages and DENIES IPS’s renewed motion for
judgment as a matter of law of no willful infringement.

WCM is

awarded damages treble the amount of the judgment, $1,383,978,
for enhanced damages of $4,151,934.
IT IS SO ORDERED, this 12th day of May, 2016.

/s/ Jon P. McCalla
JON P. McCALLA
UNITED STATES DISTRICT JUDGE

16