Mondis Technology Ltd v. Chimei InnoLux Corporation et al
Filing
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MEMORANDUM OPINION AND ORDER - the court DENIES the motion. Signed by Judge Rodney Gilstrap on 2/27/2012. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
MONDIS TECHNOLOGY LTD.,
Plaintiff,
v.
CHIMEI INNOLUX CORP., et al.,
Defendants.
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§ CIVIL ACTION NO. 2:11-cv-378-JRG
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MEMORANDUM OPINION AND ORDER
Before the Court is Defendants Chimei InnoLux Corp. and InnoLux Corp. (collectively
“InnoLux”) Motion to Reconsider Order Regarding Mondis’ Motion for Supplemental Damages
and an Ongoing Royalty (Dkt. No. 13.) Having considered the parties’ written submissions and
the arguments of counsel, the Court DENIES the motion.
I.
Background
Mondis Technology Ltd. (“Mondis”) filed this patent infringement case on December 31,
2007. On June 27, 2011, the jury entered a verdict in favor of Mondis, awarding $15,000,000 in
damages for past infringement. (2:07-cv-565, Dkt. No. 586.) Because the jury had only been
presented with damages data through the end of 2010, Mondis moved on August 4, 2011 for an
award of supplemental damages for InnoLux’s infringing sales between January 1, 2011 and the
June 27, 2011 verdict. (2:07-cv-565, Dkt. No. 631.) In the same motion, Mondis moved for an
enhanced royalty rate for InnoLux’s anticipated post-verdict willful infringement. Id.
As part of its Amended Final Judgment in the 2:07-cv-565 case, the Court sua sponte
severed Mondis’ motion for supplemental damages and an enhanced ongoing royalty rate, and
ordered the Clerk of the Court to open a new case number for this motion. (2:07-cv-565, Dkt. No.
666.) As a result, the Clerk opened this case, No. 2:11-cv-378. The parties further briefed the
specific issues to be dealt with in this case, and a hearing was held on September 15, 2011. On the
same day that he retired from the bench (September 30, 2011), Judge Ward issued an Order on the
issues of supplemental damages and ongoing royalties. (Dkt. No. 11.)
In the portion of that Order addressing enhanced damages related to ongoing infringement,
Judge Ward considered each of the conventional Read factors: (1) deliberate copying; (2)
infringer’s investigation and good-faith belief of invalidity or non-infringement; (3) litigation
conduct; (4) infringer’s size and financial situation; (5) closeness of the case; (6) duration of the
misconduct; (7) remedial action by the infringer; (8) infringer’s motivation for harm; and (9)
concealment. Read Corp. v. Portec, Inc., 970 F.2d 816, 827 (Fed. Cir. 1992). Judge Ward noted
that “many of these factors are not well-suited for analyzing future willful infringement, as the
factors were designed to analyze a party’s willful infringement in the past,” but he nonetheless
determined that factors two and five weighed in favor of strong enhancement of damages, and that
all other factors were not relevant or not worthy of significant weight considering the
circumstances. (Dkt. No. 11, at 20.)
In addition to the conventional Read factors, Judge Ward also took into account
“InnoLux’s corporate attitude, which is reflected by its CEO’s statements to a Chinese newspaper
after the verdict in this case,” to determine the appropriate amount of enhanced damages. Id., at
21. The newspaper article quotes Dr. Tuan as stating that “[t]he issue of patent infringement is
being taken too seriously sometimes.” Id. (citing “Chimei to Postpone Chinese Fab Investment,”
The China Post, June 29, 2011, at 5) (the “China Post article”). Judge Ward found that Dr.
Tuan’s statement “is an affront to the United States patent system – a system of Constitutional
origin,” and that it, in addition to his analysis of the Read factors, warranted a strong enhancement
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of damages.
Id. Accordingly, Judge Ward enhanced the previously calculated reasonable
royalty rate of 0.75% to 1.50% to reflect “the egregiousness of InnoLux’s continued
infringement…” Id., at 21.
Through the Motion now pending before the Court, InnoLux asks this Court to reconsider
Judge Ward’s determination of ongoing damages and to provide relief under Federal Rule of Civil
Procedure 60(b) because: (1) Judge Ward’s opinion was based on inadmissible hearsay (e.g., the
newspaper article); (2) the hearsay was inadvertently admitted due to miscommunication, and (3)
if any statement is to be considered, it should be the complete statement now available before the
Court.” (Dkt. No. 13, at 6.)
II.
Legal Standard
A party may request relief from a court order pursuant to Fed. R. Civ. P. 60(b), which
recites in relevant part: “[o]n motion and upon such terms as are just, the court may relieve a party
or party’s legal representatives from a final judgment, order, or proceeding for the following
reasons: (1) mistake, inadvertence, surprise, or excusable neglect … (6) any other reason that
justifies relief.” Fed. R. Civ. P. 60(b). The motion must be made “within a reasonable time …
and for reasons (1), (2) and (3) no more than a year after date of entry of the judgment or order.”
Id. “Implicit in the fact that Rule 60(b)(1) affords extraordinary relief is the requirement that the
movant make a sufficient showing of unusual or unique circumstances justifying the relief.”
Pryor v. U.S. Postal Serv., 769 F.2d 281, 286 (5th Cir. 1985). Rule 60(b)(6) is a “catch-all
provision, meant to encompass circumstances not covered by Rule 60(b)’s other enumerated
provisions.” Hess v. Cockrell, 281 F.3d 212, 216 (5th Cir. 2002). As such, a Rule 60(b)(6)
motion “will be granted only if extraordinary circumstances are present.” Id.
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III.
Discussion
InnoLux argues that: (1) the newspaper article quoting Dr. Tuan should not have been
considered by Judge Ward because it is inadmissible hearsay; (2) miscommunication contributed
to the improper admission of the hearsay article; and (3) that the article misquoted InnoLux’s
CEO, and that if any statement should be considered, it should be a complete statement that
InnoLux obtained from the recording of the newspaper’s interview with Dr. Tuan. (Dkt. No. 13.)
Mondis responds that (1) InnoLux adopted Dr. Tuan’s statement and knowingly waived
any objections to the admissibility of the quoted portions of the article on hearsay grounds; (2)
Rule 60(b) does not provide relief where InnoLux’s counsel failed to timely object to the
admission of evidence; and (3) even if the Court were to credit InnoLux’s late hearsay objection,
there is no basis for disturbing Judge Ward’s enhanced damages award. (Dkt. No. 16.)
A. Judge Ward’s Admission of the China Post Article Does Not Warrant the
Extraordinary Relief Provided for Under Fed. R. Civ. P. 60(b)
On June 29, 2011, two days after the jury returned its damages verdict and finding of
willful infringement, the China Post published the newspaper article with the following quote from
Dr. Tuan: “The issue of patent infringement is being taken too seriously sometimes.” See China
Post Article at 5. On August 4, 2011, Mondis submitted the China Post article to the Court in
connection with briefing on supplemental damages, and Mondis moved for admission of the
article at the September 15, 2011 hearing on supplemental damages. (Dkt. No. 16, at 1.)
InnoLux did not object to the admission of this article in its written submissions to the Court, and
InnoLux also failed to object on hearsay grounds at the post-trial hearing on ongoing royalties,
even after Mondis expressly moved to have the article admitted into evidence. (2:07-cv-565,
9/15/2011 Tr. At 27:8-9.) When asked by the Court if InnoLux had any objection to the
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admission of the article, InnoLux objected on foundation grounds, but did not object to the
introduction of the newspaper article on hearsay grounds. Id., at 27:18-21 (“… I don’t think it’s
proper from a foundational standpoint, for Mr. Spiro to talk about what might have been the
intention or understanding of InnoLux’s management.). Judge Ward pressed the issue, and asked
InnoLux’s counsel “insofar as the statement, you don’t dispute that that’s what he said.” Id.,
27:22-23 (emphasis added). InnoLux’s counsel stated that Judge Ward was correct.1
InnoLux has a significant burden in justifying the “extraordinary” relief sought under Rule
60(b)(1). See Edward H. Bohlin Co., Inc. v. Banning Co., Inc., 6 F.3d 350, 357 (5th Cir. 1993)
(“In fact, a court would abuse its discretion if it were to reopen a case under Rule 60(b)(1) when the
reason asserted justifying relief is on attributable solely to counsel’s carelessness with or
misapprehension of the law or the applicable rules of court.); Blinder, Robinson & Co., Inc. v.
United States SEC, 748 F.2d 1415, 1420 (10th Cir. 1984) (“Even assuming that [plaintiff’s]
attorney’s failure to object to the allegedly improper evidence was due solely to the negligence of
their counsel rather than to deliberate litigation strategy, this would not constitute a sufficient
showing to warrant the extraordinary relief sought.”) In light of this burden, the Court concludes
that, based on the parties’ arguments and the evidence of record, InnoLux’s counsel made a
conscious and knowing admission regarding the admissibility of the quotation from the China Post
article, and such admission is therefore binding on InnoLux. See Martinez v. Bailey’s La., Inc.,
244 F.3d 474, 476 (5th Cir. 2001) (finding that attorney’s arguments made during the course of
trial were judicial admissions).
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“THE COURT: Well, but insofar as the statement, you don’t dispute that’s what he said?
MR. BROGAN: That is correct.
…
THE COURT: Well, he [Mr. Brogan] has admitted that the statement was made and I will give it such
weight as I think it is entitled to.” 9/15/2011 Tr. at 27:22-24; 28:7-9.
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To the extent that InnoLux argues that the Court committed a legal “mistake,” such
“mistake” is only correctable via a Rule 60(b) motion where the legal mistake involves “a
fundamental misconception of the law or a conflict with a clear statutory mandate.” In re
Grimland, Inc., 243 F.3d 228. 233 (5th Cir. 2001); McMillan v. MBank Fort Worth, N.A., 4 F.3d
362, 367 (5th Cir. 1993) (finding that plaintiff’s claim of “mere legal error” did not warrant Rule
60(b)(1) relief). Here, Judge Ward’s ruling did not constitute “a fundamental misconception of
the law” because InnoLux failed to object on hearsay grounds. See United States v. Gresham, 585
F.2d 103, 106 (5th Cir. 1978) (“since this evidence, through hearsay, came in without objection, ‘it
is to be considered and given its natural probative effect as if it were admissible.’”) (quoting
Daniel v. United States, 234 F.2d 102, 107 (5th Cir. 1956)).
Accordingly, the Court find that the requested relief under Rule 60(b)(1) is not warranted
in this case because InnoLux’s counsel failed to timely object to the admission of the China Post
article. With regard to Rule 60(b)(6), InnoLux has also failed to show how InnoLux’s counsel’s
failure to object to the admission of the China Post article constitutes an “extraordinary
circumstance” justifying relief under the catch-all provision of Rule 60(b).
B. Even if the China Post Article Were Inadmissible, and the Court Were to
Credit InnoLux’s Late Hearsay Objection, there would be no Basis to
Disturb the Enhanced Damages Award
Judge Ward considered each of the Read factors regarding enhanced damages and
determined that “factors two and five weigh in favor of a strong enhancement.” (Dkt. No. 11, at
20.) There is nothing in Judge Ward’s Opinion to indicate that Dr. Tuan’s statement in the China
Post article factored into the Court’s analysis of any of the Read factors. Therefore, even before
considering the China Post article, Judge Ward concluded that a “strong enhancement” of
damages based on willful infringement was justified. And while it’s clear that Judge Ward did
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place some reliance on Dr. Tuan’s statement, there is nothing before the Court to demonstrate that
the doubling of the post-verdict royalty rate was outside the Court’s discretion based on Judge
Ward’s analysis of the Read factors alone. See Read Corp., 970 F.2d at 826 (“An award of
enhanced damages for infringement, as well as the extent of the enhancement, is committed to the
discretion of the trial court.”), abrogated on other grounds by Markman v. Westview Instruments,
Inc., 52 F.3d 967, 975 (Fed. Cir. 1996) (en banc); DataTreasury Corp. v. Wells Fargo & Co., No.
2:06-cv-72, Dkt. No. 2496 at 12 (E.D. Tex. Aug. 2, 2011) (“Although the Court has not enhanced
the supplemental damages …, the ongoing royalty analysis can take into account that because [the
Defendant] is an adjudged infringer, infringement going forward would likely be willful.”); QPSX
Devs. 5 Pty Ltd. v. Nortel Networks, Inc., 2:05-cv-268. 2008 WL 728201, *2 (E.D. Tex. Mar. 18.
2008) (applying multiplier of 1.7 to the jury’s award in light of defendant’s willful infringement
with three of the nine Read factors weighing in favor of enhancement).
. IV.
Conclusion
InnoLux has failed to demonstrate that it is entitled to the “extraordinary” relief provided
for by Rule 60(b). The record is clear that InnoLux’s counsel failed to raise a timely objection to
the China Post article on hearsay grounds, thereby waiving it, and, even if the China Post article
were excluded, Judge Ward was within his discretion to enhance damages based solely upon his
analysis of the Read factors. Therefore, InnoLux’s Motion to Reconsider Order Regarding
Mondis’ Motion for Supplemental Damages and Ongoing Royalty is DENIED.
SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 27th day of February, 2012.
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____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE
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