Tinnus Enterprises, LLC et al v. Telebrands Corporation

Filing 725

REDACTED VERSION OF 719 SEALED MEMORANDUM AND OPINION. Signed by District Judge Robert W. Schroeder, III on 3/15/2019. (rlf)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
TINNUS ENTERPRISES, LLC,
LTD.,

ZURU

Plaintiffs,
v.
TELEBRANDS
CORPORATION,
BULBHEAD.COM, LLC,
Defendants.

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CIVIL ACTION NO. 6:16-CV-00033-RWS
(LEAD CASE)

REDACTED MEMORANDUM OPINION AND ORDER
Before the Court are the parties’ motions for post-trial relief. Having considered the
parties’ written submissions and the arguments at the April 18, 2018 hearing, the Court rules as
follows:


Plaintiffs’ Motion for Enhanced Damages under 35 U.S.C. § 284 (Docket No. 578) is
GRANTED;



Plaintiffs’ Motion for Apportionment of Damages as to Retailer Defendants (Docket No.
579) is DENIED;



Plaintiffs’ Motion for a Permanent Injunction (Docket No. 580) is GRANTED;



Plaintiffs’ Motion for Prejudgment and Post-judgment Interest (Docket No. 581) is
GRANTED;



Defendants’ Renewed Motions for Judgment as a Matter of Law and for a New Trial
(Docket No. 582) are GRANTED-IN-PART and DENIED-IN-PART;



Defendants’ Renewed Supplemental Motion for Judgment as a Matter of Law or
Alternatively a New Trial (Docket No. 702) is DENIED; and



Plaintiffs’ Motion to Declare These Consolidated Cases as Exceptional and for Attorneys’
Fees (Docket No. 583) is GRANTED.

BACKGROUND
This case concerns a group of water balloon patents assigned to Tinnus Enterprises and
invented by Tinnus’s founder, Mr. Malone. Plaintiffs Tinnus Enterprises, LLC and Zuru Ltd.
(“Plaintiffs”) and Defendants Telebrands Corporation (“Telebrands”) and Bulbhead.com, LLC
(“Bulbhead”) are direct competitors in the water balloon market. The parties’ products fill multiple
water balloons simultaneously; exemplary pictures of the products at issue are shown below:

(Plaintiffs’ Bunch O Balloons) (Telebrands’ Balloon Bonanza) (Telebrands’ Battle Balloons)
This dispute led to multiple cases before this Court. Plaintiffs filed their first complaint on
June 9, 2015, alleging that Telebrands’ Balloon Bonanza product infringes U.S. Patent No.
9,051,066 (“the ’066 Patent”). Case No. 6:15-cv-551 (“Tinnus I”), Docket No. 1. Defendants then
filed an ultimately unsuccessful petition for post-grant review (“PGR”) of the ’066 patent. Case
No. 6:15-cv-551, Docket No. 334.
In the early stages of Tinnus I, the Court granted a preliminary injunction, which enjoined
the sale of Telebrands’ Balloon Bonanza products. See Case No. 6:15-cv-551, Docket Nos. 66,

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84, 91).1 During the pendency of the injunction, Plaintiffs sued Telebrands and Bulbhead in this
action. See Amended Complaint, Docket No. 265. Here, Plaintiffs allege that Defendants’ Battle
Balloons product (a redesign of Balloon Bonanza) infringes claims 1–3 of U.S. Patent No.
9,315,282 (“the ’282 Patent”) and claim 1 of U.S. Patent No. 9,242,749 (“the ’749 Patent”)
(collectively “the patents-in-suit”).
The ’282 Patent is entitled “System and Method for Filling Containers with Fluids.” ’282
Patent. The disclosure of the ’282 Patent relates to fluid inflatable systems, specifically to a
system and method for filling containers with fluids. ’282 Patent at 1:22–24. Like the ’282
Patent, the ’749 Patent describes a system for simultaneously filling multiple water balloons.
’749 Patent at 6:35–57.
In early 2016, Plaintiffs filed suit against Bed Bath & Beyond, Fry’s Electronics, The
Kroger Company, Sears Holding Corporation and Walgreen Co. (“Retailers”), again alleging
infringement of the patents-in-suit. See Amended Complaint, Case No. 6:16-cv-34, Docket No.
5. Plaintiffs filed an emergency motion for a preliminary injunction in both cases as to the Battle
Balloons products. Docket No. 19; Case No. 6:16-cv-34, Docket No. 26. The Court consolidated
both actions, and issued an injunction against Defendant Telebrands. Docket No. 159.
However, the Retailers did not agree to be bound by the injunction against Telebrands. The
Court held a hearing and ultimately issued an injunction against the Retailers. Docket Nos. 182,
211, 224. The Federal Circuit later affirmed the both injunctions. Tinnus Enterprises, LLC v.
Telebrands Corp., Nos. 2017-1175, 2017-1760, 2017-1811 (Fed. Cir. Jan. 16, 2018).
The parties agreed to consolidate the two cases for jury trial, which took place in November
2017. Docket Nos. 468, 473, 546–556. At trial, Defendants stipulated to infringement of claims

1

The Federal Circuit affirmed the injunction on January 24, 2017. See Tinnus Enterprises, LLC v. Telebrands Corp.,
846 F.3d 1190, 1202 (Fed. Cir. 2017).

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1–3 of the ’282 Patent, and the jury found that those claims were not invalid. Docket No. 543 at
3. As to the ’749 Patent, the jury found that Defendants infringed claim 1 and the claim was not
invalid. Id. at 2. The jury awarded Plaintiffs $10,250,000 in lost profits and $2,000,000 as a
reasonable royalty. Id. at 4. The jury further awarded Plaintiffs $67,000 to compensate Plaintiffs
for the Retailers’ infringement. Id. at 5. Finally, the jury found that Telebrands and the Retailers’
infringement was willful. Id. The parties now move the Court for post-trial relief.
I.

Plaintiffs’ Motion for Enhanced Damages under 35 U.S.C. § 284 (Docket No.
578)
In exceptional cases, “the court may increase the damages up to three times the amount

found or assessed.” 35 U.S.C. § 284. The decision to increase damages, and the amount of such
increase, is within the court’s discretion. See Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct.
1923, 1935–36 (2016). “As with any exercise of discretion, courts should continue to take into
account the particular circumstances of each case in deciding whether to award damages, and in
what amount.” Id. at 1933. “When deciding how much to award in enhanced damages, district
courts often apply the non-exclusive factors articulated in Read Corp. v. Portec, Inc., 970 F.2d 816
(Fed. Cir. 1992), abrogated in part on other grounds by Markman v. Westview Instruments, Inc.,
517 U.S. 370 (1996).” Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229, 1244–45
(Fed. Cir. 2017).
Read sets forth nine non-exclusive factors: (1) whether the infringer deliberately copied
the ideas of another; (2) whether the infringer 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 the defendant’s misconduct; (7) remedial action by the defendant; (8) the
defendant’s motivation for harm; and (9) whether the defendant attempted to conceal its
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misconduct. Read, 970 F.2d at 827 (Fed. Cir. 1992). An award need not rest on any particular
factor, and not all relevant factors need to weigh in favor of an enhanced award. See SRI Int’l, Inc.
v. Advanced Tech. Labs., Inc., 127 F.3d 1462, 1469 (Fed. Cir. 1997). While the Read factors are
helpful to the Court’s exercise of its discretion, an analysis focused on “egregious infringement
behavior” is the touchstone for enhancing damages rather, than a more rigid, mechanical
assessment. See Finjan, Inc. v. Blue Coat Sys., Inc., No. 13-cv-3999, 2016 WL 3880774, at *16
(N.D. Cal. July 18, 2016).
Plaintiffs argue that enhanced damages are appropriate in this case because Telebrands’
infringement was particularly egregious.

Plaintiffs cite communications among Telebrands

employees that demonstrate an intent to deliberately copy Plaintiffs’ patented “Bunch O Balloons”
product. Docket No. 578 at 8. Plaintiffs assert that Defendants presented no evidence of any
reasonable investigation that led to a good-faith belief that the patents-in-suit were not infringed
or invalid. Id. at 10. Plaintiffs further argue that Defendants’ litigation tactics were designed
solely to delay resolution of the case, obstruct Plaintiffs’ ability to prove its case, frustrate the
Court by ignoring important orders and ultimately drive up litigation costs. Id. at 13. Specifically,
Plaintiffs argue Defendants filed numerous dilatory motions, attempted to inject Post Grant
Review (“PGR”) proceedings into the trial after the Court ruled that information regarding those
proceedings was excluded, repeatedly argued claim constructions that were previously rejected by
the Court and engaged in inappropriate discovery practices that caused unnecessary delay and
expense. Id.
Plaintiffs also argue that this was not a close case because Defendants presented no
legitimate defense as to infringement or invalidity for either of the patents-in-suit. Id. at 17.
Plaintiffs assert that the duration of Defendants’ misconduct was significant and that Defendants’

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infringement began on the day the patents-in-suit issued and continued until they were enjoined.
Id. Lastly, Plaintiffs argue that “Defendants attempted to conceal their motivations behind the
development of the Battle Balloons product under the guise of privilege and advice of counsel,
even though Defendants changed their story at trial and claimed it was their expert, Dr. Kamrin,
who spearheaded the development effort.” Id. at 19. According to Plaintiffs, the totality of
circumstances warrants enhancing the jury’s damages award to the maximum amount permitted
under 35 U.S.C. § 284, which would be $36,951,000.00. Id. at 21.
In response, Defendants argue this was a close, hard-fought case. Docket No. 589 at 10.
Defendants contend that their non-infringement and invalidity arguments were reasonable. Id. at
11–12. According to Telebrands, the Battle Balloons product was the result of its efforts to design
around the ’066 Patent in order to avoid another lawsuit from Plaintiffs. Docket No. 589 at 13.
Telebrands alleges it had a good-faith belief it had avoided the “common face” and “second end”
claim limitations of the ’066 Patent. Id. Telebrands further asserts that when the ’749 Patent first
issued in January 2016, it had a good-faith belief of non-infringement because the ’749 patent
claimed the same “common face” and “second end” limitations as the ’066 Patent. Id. at 14.
Telebrands contends it already began selling the infringing Battle Balloons before either of the
patents-in-suit issued. Id.
Next, Telebrands argues that it had a good-faith belief that the patents-in-suit were invalid
based, in part, on proceedings before the PTAB. Id. at 14. In June 2015, Telebrands filed a petition
for PGR on Plaintiffs’ ’066 Patent. Id. at 13. Then, on January 6, 2016 (prior to the issuance of
the ’749 Patent), the PTAB instituted the PGR, finding it more likely than not that the ’066 Patent
claims were obvious and indefinite. Id. at 14. Telebrands further contends that it also relied on
declarations from its infringement/invalidity expert, Dr. Kamrin, who opined that the Battle

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Balloons product did not infringe the ’749 Patent and that both patents-in-suit were invalid. Id. at
15. Thus, Telebrands asserts this weighs against enhancement under the second and fifth Read
factors because its non-infringement and invalidity arguments were reasonable. Id. at 20, 28.
Defendants argue that other Read factors weigh against enhancement as well. According
to Defendants, their litigation conduct was not egregious. Defendants rely on the fact that they
stipulated to infringement of the ’282 Patent to streamline the issues at trial. Id. at 21–22.
Defendants also argue that their allegedly dilatory motions were, in fact, reasonable and brought
in good faith. Id. at 22–23. As to size and financial condition, Telebrands argues it is a company
with only 90 employees and that the total damages requested by Plaintiffs represent a
of Telebrands’ overall yearly profits. Id. at 28. Telebrands further argues it had no
motivation to harm Plaintiffs and that it made no attempt to conceal any misconduct. Id. at 28–
29.
A. Whether Defendants Deliberately Copied Plaintiffs’ Ideas or Design
Plaintiffs argue that Telebrands’ copying is undeniably evidenced by internal
communications from Telebrands’ employees regarding Mr. Malone’s Kickstarter campaign and
the “development” of the Balloon Bonanza product. Docket No. 578 at 7. Defendants argue that
the Battle Balloons product has different stair-cased housing and that the modification resulted
from legitimate design-around efforts. Docket No. 589 at 7–8.
This factor weighs in favor of enhanced damages. The evidence presented at trial showed
that Telebrands worked with an outside consultant, Mr. Rogai, to develop a copy of Plaintiffs’
Bunch O Balloons product, which they originally discovered on a Kickstarter campaign started by
Mr. Malone. See 11/15/17 P.M. Tr. at 11:13–26:18, 42:6–9; see also PTX 83, PTX 87, PTX 137.
For example, one email from Mr. Rogai to Telebrands employees states: “Here it is with 37 fillers

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in one cap. Tested and it works just like Bunch of Balloons.” PTX 137. In another email, Mr.
Rogai further explains:
“So you know what the original actual product ‘Bunch of Balloons’ looks like.
Here is a pic below. [Includes picture of Plaintiffs’ Bunch O Balloons product.]
Here is our version below where we would just paint the cap and change out the
balloons using the bands removed from their product, new BLUE balloons we
loaded on, and a painted cap. [Includes picture of prototype.]”
Id. These emails were exchanged in 2014 and describe the original development of Telebrands’
first water balloons product, Balloon Bonanza. Id.
To be clear, Balloon Bonanza is not an accused product in this case.2 However, those
emails are still highly relevant because the product at issue here (Battle Balloons) is a modified
version of Balloon Bonanza, designed after Balloon Bonanza was enjoined in Tinnus I. Case No.
6:15-cv-551, Docket No. 84.

The record shows that Telebrands discovered Mr. Malone’s

Kickstarter campaign (11/15/17 P.M. Tr. at 11:21–24) and decided it was a “cool idea” (11/14/17
P.M. Tr. at 45:17–18) before manufacturing the functionally similar product Balloon Bonanza.
After Balloon Bonanza was enjoined, Telebrands only made superficial changes to the product’s
housing and renamed it Battle Balloons. In reality, Battle Balloons was functionally identical to
Balloon Bonanza:

2

Plaintiffs sued Defendants over Balloon Bonanza in 2015 (Tinnus I), alleging it infringed a different patent (the ’066
Patent). See Case No. 6:15-cv-551.

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This modification does not change the fact that Telebrands copied Mr. Malone’s idea. See
Whirlpool Corp. v. TST Water, LLC, No. 2:15-CV-01528-JRG, 2018 WL 1536874, at *3 (E.D.
Tex. Mar. 29, 2018) (granting a motion for enhanced damages after finding that “the attempted
design around process engaged in by [the plaintiff] began with copying”). For these reasons, the
Court finds that the first Read factor favors enhanced damages.
B. Whether Defendants Investigated Plaintiffs’ Patent and Formed a Good Faith Belief That
It Was Invalid or That It Was Not Infringed
Plaintiffs argue that this factor strongly favors enhancement because Defendants did not
provide any evidence supporting a good-faith belief that the patents-in-suit were not infringed or
invalid. Docket No. 578 at 9. Specifically, Plaintiffs argue that Defendants waived their advice
of counsel defense and then attempted to rely on their expert, Dr. Kamrin, as having provided
infringement and invalidity opinions. Id. at 10. Regardless, Plaintiffs argue that any of Dr.
Kamrin’s opinions would have been flawed because he offered positions that were excluded by
the Court, he is not a lawyer and he failed to consider secondary considerations of non-obviousness
in formulating his opinions. Id. at 11.

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Defendants argue that they had a good-faith belief that they were not infringing the ’749
Patent based on their interpretation of the terms “common face” and “second end.” Docket No.
589 at 13. Defendants assert that they also believed the patent was invalid based on the PTAB’s
grant of their PGR petition for the ’066 Patent, which also disclosed the “common face” and
“second end” limitations. Additionally, Defendants argue that they relied on the analysis of their
expert with respect to invalidity of the ’749 and ’282 Patents. Id. at 15.
A brief recap of the timeline of this case is important to the Court’s analysis. On January
4, 2016, the Patent Trial and Appeal Board (PTAB) authorized a post-grant review to be instituted
on claims of the ’066 Patent. See ’066 Institution Decision, Docket No. 589-8. The PTAB found
that “the information presented in the Petition demonstrates that it is more likely than not that
Petitioner [Telebrands] would prevail in showing that the challenged claims, except claims 7 and
9, are unpatentable.”3 Id. at 3. The ’749 Patent then issued on January 26, 2016. Docket No. 11. The ’282 Patent issued on April 19, 2016. Docket No. 3-2.
As to the ’749 Patent, it is possible that Defendants may have had a good-faith belief that
they did not infringe. According to Telebrands, Battle Balloons was the result of redesign efforts
intented to avoid the “common face” and “second end” limitation of the ’066 Patent and Battle
Balloons was released before the ’749 Patent issued. See 6:15-cv-551, Docket No. 113 (Plaintiffs
first learned of Battle Balloons on January 11, 2016).
After the ’749 Patent issued, Dr. Kamrin examined the patent and determined that: (1) the
Battle Balloons did not infringe the ’749 Patent because it avoided the “common face” and “second
end” limitations and (2) the ’749 Patent was invalid because the claims were similar to those of

3

The PTAB instituted based on obviousness and indefiniteness.

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the ’066 Patent subject to PGR proceedings. See Docket No. 33-1. Thus, there is some evidence
to support Defendants’ assertion.
These arguments do not apply to the ’282 Patent because that patent does not contain the
terms “common face” or “second end.” As stated, Defendants conceded infringement of the ’282
Patent at trial. 11/14/17 P.M. Tr. at 57:5–12. However, Defendants argue that they had a goodfaith belief that the ’282 Patent was invalid for obviousness and lack of written description.
According to Defendants, Dr. Kamrin examined the patent and submitted a declaration in May
2016 explaining that he believed the patent was invalid, in part, based on the institution decision
of the ’066 Patent because the subject matter and prior art were similar. See Docket No. 33-1.
Thus, there is some evidence that Defendants investigated the ’282 Patent and believed that the
patent was invalid.
The operative question is whether Defendants’ beliefs were in “good-faith.” Dr. Kamrin
did not examine secondary considerations when developing his obviousness opinions. 11/17/17
P.M. Tr. at 126:3–19 & 128:14–18; see also Docket No. 33-1 (no discussion of secondary
considerations). Inventors had been trying to develop a better system for simultaneously inflating
multiple water balloons for as long as water balloons have been available, and that the productsat-issue experienced great commercial successful. On this record, the Court is not convinced that
Defendants’ formed a “good-faith” belief as to invalidity. Nonetheless, Defendants, at the very
least, did investigate Plaintiffs’ patents. For these reasons, the Court finds this factor is neutral.
C. Defendants’ Behavior as a Party to the Litigation
Plaintiffs argue that Defendants’ litigation tactics were designed to delay resolution of this
case, obstruct Plaintiffs, frustrate the Court and drive up litigation costs. Docket No. 578 at 13.
Specifically, Plaintiffs argue that Defendants filed numerous dilatory motions, attempted to

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reargue rulings previously made by the Court, took frivolous positions and engaged in
inappropriate discovery practices. Id. Defendants argue that there were few discovery disputes in
this case and that they worked with Plaintiffs to reach a number of agreements. Docket No. 598
at 21. Defendants further contend that their motives were not dilatory and that their arguments
were justified. Id. at 23–27. For the reasons discussed herein, the Court finds that this factor
favors enhanced damages.
a. Motions Practice
Early on in this case, the Court admonished the parties for excessive motion practice and
abuse of the Court’s emergency motion procedure. See, e.g., Docket No. 132. Specifically,
Telebrands filed an emergency motion to compel a response, which the Magistrate Judge deemed
a non-emergency. See id. at 2 (denying Telebrands’ motion as a non-emergency and explaining
that the Court had “already admonished the parties regarding their abuse of emergency motions”).
Telebrands proceeded to file several non-meritorious motions, thereby expending
significant resources of the parties and the Court. For example, after a full evidentiary hearing,
extensive briefing and consideration of objections to the Magistrate Judge’s Report and
Recommendation, Telebrands filed a motion to reconsider the Court’s preliminary injunction.
Docket No. 153. Telebrands’ motion to reconsider was denied as baseless (Docket No. 229), and
the preliminary injunction was ultimately upheld on appeal. Tinnus, Nos. 2017-1175, 2017-1760,
2017-1811. Telebrands simultaneously moved to stay the injunction. Docket No. 146. The Court
denied that motion as premature (Docket No. 157) and denied Telebrands’ subsequent motion reurging the Court to stay the injunction. Docket No. 229.4 Telebrands then filed a motion to stay

4

The motion to stay was nearly identical to a prior motion to stay pending appeal, which was denied by this Court
(Case No. 6:15-cv-551, Docket No. 123) and upheld by the Federal Circuit (Case No. 6:15-cv-551, Docket No. 154).
The Court’s denial of Telebrands’ motion to stay in this case was similarly upheld by the Federal Circuit under Federal

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this matter pending completion of PGR proceedings. Docket No. 239. Again, the Court denied
Telebrands’ motion and found that every factor weighed against a stay. Docket Nos. 262, 293. In
the end, the PTAB found the asserted claims were not invalid. Docket Nos. 626-1, 626-2; Docket
No. 543.5
After repeated motions to stay this action were denied by the Court, Telebrands filed a
motion to dismiss just a few months before trial but after the deadline for filing dispositive motions.
Docket No. 298. Once again, Defendants directed the resources of the parties and the Court to a
non-meritorious issue. Docket Nos. 359, 456. The excessive motions practice demonstrated an
intent to delay and obstruct this action. For these reasons, this factor weighs in favor of enhanced
damages.
b. Discovery Conduct
Telebrands’ discovery conduct weighs in favor of enhanced damages. The Court became
aware of this conduct when Plaintiffs filed a motion to compel production of documents related to
Telebrands’ third generation of water balloon products, Easy Einstein Balloons. Docket No. 219.
The Magistrate Judge found that Telebrands’ refusal to produce the requested discovery was not
justified. See Docket No. 223. The information was relevant to the Court’s ability to enforce the
injunction in this matter and the Protective Order provided sufficient means for the production. Id.
at 3–4 (“these products are indisputably relevant and Telebrands was not substantially justified in
refusing to produce the requested product samples. Telebrands provides no justification as to why
it could not accept Plaintiffs’ offer to designate the materials ‘Attorney’s Eyes Only’ and provide

Circuit Rule 36. Tinnus Enterprises, LLC v. Telebrands Corp., Nos. 2017-1175, 2017-1760, 2017-1811 (Fed. Cir.
Jan. 16, 2018).
5

The PTAB found that the asserted claims were not proven invalid by the “preponderance of the evidence” standard,
whereas the jury applied the higher “clear and convincing” standard. Docket Nos. 626-1, 626-2; Docket No. 543.

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a public release date.”). Moreover, Plaintiffs’ motion to compel was “a direct result of Telebrands’
failure to be forthright with Plaintiffs and engage in good faith negotiations.” Id. at 4. The
Magistrate Judge concluded that “[t]hese types of tactics waste resources and necessarily prolong
the resolution of discovery disputes” and awarded costs and fees under Federal Rule of Civil
Procedure 37. Id. at 4–5.
Later, Plaintiffs were forced to file a motion to compel or modify the Protective Order
because Telebrands’ refused to produce documents related to the PGR proceedings. Docket No.
272. This caused the Court to sift through numerous individual disputes, all of which resulted in
Defendants ultimately agreeing to de-designate material, the Court ordering material to be dedesignated or the Court modifying the Protective Order. Docket No. 275. These disputes would
have been avoided if Defendants had simply engaged in good-faith negotiations with Plaintiffs.
Thus, this factor favors enhanced damages.
c. Re-argument of Issues Already Decided by the Court
Perhaps the most needless effort expended concerned disputes over the meaning of the
“common face” and “second end.” The Court first construed these terms in April 2016 in Tinnus I.
Case No. 6:15-cv-551, Docket Nos. 181, 200. Despite the prior constructions, Telebrands and the
Retailers6 continued to dispute the meaning of these terms through the preliminary injunction
dispute and another full claim construction hearing.
At the preliminary injunction stage, the Court heard testimony from Dr. Kamrin, and found
that Dr. Kamrin’s proposal overstated the Court’s prior construction of “common face.” Docket
No. 99 at 12. The Court therefore maintained its constructions and rejected Defendants’ narrow
interpretation. Id. With respect to “second end,” the Court resolved a dispute between the experts

6

Of the Defendant Retailers, only Bulbhead was a party to Tinnus I.

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and clarified its prior construction. Id. at 13–14. Based on these constructions, the Court found a
likelihood of success on the merits as to infringement of claim 1 of the ’749 Patent. Id.
Thereafter, Defendants continued to dispute the meaning of these claims. Docket No. 200
at 10–14; Docket No. 225. The Court conducted another claim construction hearing and re-heard
arguments already considered. Docket No. 199. Ultimately, the Court maintained its prior
constructions. Docket No. 200 at 10–14; Docket No. 225.
Despite the prior rejections, Dr. Kamrin still advanced the same opinions. As a result,
Plaintiffs moved to strike Dr. Kamrin’s opinions (Docket No. 329). The Court agreed, and struck
numerous paragraphs of Dr. Kamrin’s report that contained irrelevant opinions on the meaning of
“common face” and “second end.” Id. The Court warned that “should Dr. Kamrin submit a
supplemental report that again so blatantly violates the Court’s claim construction order or
attempts to provide continued claim construction opinion, the Court will not hesitate to award
sanctions in the form of an adverse inference and/or attorney’s fees.” Id. at 7.
Rather than offering new argument or evidence, Defendants found creative ways to reassert
their rejected positions. The Magistrate Judge warned that Defendants’ positions were preserved
for appeal and that they need not continue to re-argue or disagree with the Court. See Docket No.
384 at 7 n.1 (“Dr. Kamrin may consider his claim construction arguments preserved for appellate
purposes without the need to further articulate those opinions in his supplemental report.”).
Because Defendants repeatedly attempted to circumvent the Court’s orders and drove up the
expense of litigation, this factor favors enhanced damages.
d. Continued Assertion of Claims and Defenses
Plaintiffs contend that Defendants consistently took untenable positions, such as noninfringement of the ’282 Patent and inequitable conduct by Plaintiffs. Docket No. 578 at 13.

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Defendants contend that their stipulation to infringement of the ’282 Patent was an effort to narrow
the case and that dropping the inequitable conduct claim did not burden Plaintiffs. Docket No.
589 at 21–22.
The Court appreciates parties’ efforts to streamline claims and defenses as cases approach
trial and such efforts should not normally form a basis for enhanced damages. However, the
circumstances were such that the belated disposal of issues led to a significant waste of resources.
Telebrands knew its inequitable conduct claim was weak because it barely survived Plaintiffs’
initial motion to dismiss. See Docket Nos. 55, 100 (“Nothing in the factual allegations infers the
omission of material information or the specific intent to deceive the PTO[;]” however, “[t]aking
the allegations to be true, Telebrands has alleged facts to infer the possibility of a failure to properly
notify the Examiner of the PGR decision” and “the Court finds that the counterclaim as to
inequitable conduct based on the notice of the PGR decision has been sufficiently pled and is
entitled to some discovery”); see also Docket No. 133 (Order adopting R&R (Docket No. 100)).
One year later, Plaintiffs filed a successful motion for summary judgment of no inequitable
conduct (Docket No. 332), and the Magistrate Judge found the claim to be baseless. Docket Nos.
386, 413. Defendants did not object. See Docket No. 386.
Finally, while Defendants’ only non-infringement defense was based on interpretations of
“common face” and “second end,” which were absent from the asserted claims of the ’282 Patent,
Defendants refused to stipulate to infringement of the ’282 Patent until trial. Indeed, this occurred
long after the Court granting its preliminary injunction. Docket Nos. 99, 142.
For these reasons, this factor weighs in favor of enhanced damages.

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e. Trial Conduct
On the eve of trial, Defendants filed four motions and trial briefs on issues already resolved
by the Court. See Docket Nos. 511, 512, 513, 514, 515, 547 (11/14/17 A.M. Tr.) at 23:3–8
(Plaintiffs’ counsel noted “Judge Love just dealt with this two weeks ago when the Defendants
filed an emergency motion to file another summary judgment . . . motion on this ruling[,]” and the
Court noted that it “was denied”).
Defendants then flagrantly ignored the Court’s repeated ruling that mention of the PTAB
or the PGR proceedings were excluded from evidence and not to be discussed in front of the jury.
See, e.g., Docket No. 453 (Granting Plaintiffs’ Motion in Limine No. 1, excluding reference to
administrative proceedings before the PTAB). Defendants violated this order during examination
of the first witness on the first afternoon of trial, questioning Mr. Malone on an article that was not
admitted into evidence. 11/14/17 P.M. Tr. at 127:15–130:20.

At that time, the Court warned

Defendants’ counsel that use of the article was a violation of the Court’s ruling:
THE COURT: I’m troubled by this exhibit … this article is not about the PTO.
This article is about the PTAB. And when you get over here, all this information
that is highlighted relates to PTAB defects.
And so I don’t quite know how Mr. Dunlap was going to redirect his witness on
that. But I want you to know I understand what happened here. And if there’s an
explanation for what occurred, I’m – I’m more than happy to hear it now. But I
think this article clearly refers to what the PTAB does.
* **
Well, I guess my concern about it is, you know, I think everybody understands
PTAB proceedings are not going to come into this trial.
11/14/17 P.M. Tr. at 143:24–144:9; 144:25–145:2.
Two days later, Defendants’ counsel attempted to solicit testimony from Telebrands’ Chief
Operating Officer about a declaration he submitted in the PGR proceedings. 11/16/17 P.M. Tr. at

Page 17 of 64

11:24–18:9. The Court sustained Plaintiffs’ objection and reminded counsel that “[w]e’re not
going there,” but Defendants’ counsel proceeded to solicit similarly prohibited testimony. Id. at
18:15–19:5. Plaintiffs objected again, and the Court again sustained the objection, directing the
jury to disregard the statements. Id. at 19:6–11. Immediately thereafter, Defendants’ counsel
solicited testimony in further violation of the Court’s repeated rulings. Id. at 19:24–20:4. Once
again, Plaintiffs objected and the Court sustained the objection and ordered the jury to disregard
the testimony. Id. at 20: 5–8. Undeterred, Defendants’ counsel continued to solicit the same
prohibited testimony, and the Court sustained Plaintiffs’ objections three more times. 11/16/17
P.M. Tr. at 20:10–21:14. Defendants’ flagrant disregard for the Court’s rulings is inexcusable.
Defendants continued to open the door to prohibited issues throughout trial. On the
morning of November 17, 2017, Defendants raised several objections to Mr. Ratliff’s testimony
on lost profits. One objection pertained to his reliance on Dr. Perryman’s testimony for sales
during a time period when other balloon products were being sold.7 See 11/17/17 A.M. Tr. at
9:12–15 (“MR. UNDERHILL: Okay. And the -- the huge objection we have is that Perryman’s
testimony was based on price erosion that was occurring with respect to the Balloon Bonanza
product.”). After discussion, Plaintiffs’ counsel agreed to remove certain portions of Mr. Ratliff’s
slide deck. Defendants thus withdrew their objection. See Id. at 9:18–10:4.
However, on cross-examination, Defendants’ counsel violated their own objection and
purposely solicited testimony from Mr. Ratliff on the objected-to information. See id. at 79:15–
80:14 (“Q: You testified about Dr. Perryman’s analysis with respect to online sales; is that
correct?” … “So your testimony that you gave was not confined to his analysis with respect to
online sales in 2016; is that correct?” … “Okay. And so your testimony was referring to price

7

Dr. Perryman was a damages expert hired by Plaintiffs. While he did not testify at trial, Plaintiffs’ damages expert,
Mr. Ratliff, relied on some of Dr. Perryman’s analysis at trial.

Page 18 of 64

erosion with respect to a different Telebrands product?”). The Court admonished Defendants’
counsel for this behavior:
THE COURT: . . . I think if there was any door open on this issue, Mr. Underhill,
you opened the door, and now you’re complaining about it. …This did not come
up on direct. You opened the door, and now you’re complaining about it. … I do
want to let you know, Mr. Underhill, in light of this conduct and the previous
conduct that we’ve repeatedly discussed throughout this trial, I am on the verge of
reducing your closing argument by 20 minutes.
11/17/17 A.M. Tr. (Sealed Portion No. 4) at 90:10–22.
Defendants’ course of conduct throughout this case weighs in favor of enhancement. At
nearly every stage of this litigation, Defendants took untenable positions and created unnecessary
and wasteful work for the parties and the Court. This type of behavior is sanctionable and, indeed,
did result in sanctions by the Court. See i4i, 598 F.3d at 859 (Fed. Cir. 2010) (finding litigation
misconduct typically refers to “bringing vexatious or unjustified suits, discovery abuses, failure to
obey orders of the court, or acts that unnecessarily prolong litigation.”)
D. Defendants’ Size and Financial Condition
Plaintiffs argue that although Telebrands is a privately held company, discovery revealed
$

in revenue and $

in profit. Docket No. 578 at 16, citing November 9, 2017

Iyer Dep. Tr. at 19:7–20:17. Plaintiffs argue that Telebrands is a leader in the television
infomercial market and that the Retailer Defendants are all large corporations with substantial
revenue. Docket No. 578 at 16. Telebrands maintains that it is a small company with only 90
employees and that its gross margin as to the accused products was
Docket No. 589 at 24.
After considering the parties’ assertions, the Court finds that this factor is neutral.

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E. Closeness of the Case
Plaintiffs argue that this was not a close case because Defendants presented no legitimate
infringement defense for either of the patents-in-suit. Docket No. 578 at 17. For the same reasons
discussed with respect to their litigation conduct, Defendants argue that this case was close.
Docket No. 589 at 28.
This was not a close case. At the outset of this action, the Court held evidentiary
proceedings on Plaintiffs’ motion for a preliminary injunction and found that Plaintiffs had shown
a likelihood of success on the merits. Docket Nos. 99, 159. From that time until the time of trial,
Defendants did not pursue any new defenses. Rather, Defendants continued to re-argue claim
construction positions, which the Court repeatedly rejected.

Regardless, Defendants never

proffered a non-infringement position for the ’282 Patent and did not contest infringement at trial.
As to invalidity, Defendants only pursued defenses that the Court previously considered and found
unpersuasive. Docket Nos. 99, 159. Defendants relied on PGR petitions, but those petitions were
instituted on obviousness and were ultimately unsuccessful. Docket Nos. 626-1, 626-2.
At the end of the six-day trial, the jury deliberated for just two-and-a-half hours before
finding that Defendants infringed the patents-in-suit, that the patents-in-suit were valid and that
Defendants’ infringement was willful. Docket No. 544; 11/21/17 Tr. at 180:11–13. See SSL
Servs., LLC v. Citrix Sys., Inc., No. 08-CV-158-JRG, 2012 WL 4092449, at *5 (E.D. Tex. Sept.
17, 2012), vacated and remanded on other grounds, 769 F.3d 1073 (Fed. Cir. 2014) (finding this
factor favored enhancement where the jury found willful infringement, that the patent was not
invalid and awarded a $10 million lump-sum award).
For these reasons, the Court finds that this factor favors enhancement of damages.

Page 20 of 64

F. Duration of Defendants’ Misconduct
Plaintiffs argue that although the infringement period was shortened by the preliminary
injunction, the duration of infringement was significant.

Defendants continued selling the

infringing products from the time the Magistrate Judge recommended granting the preliminary
injunction in July 2016 (Docket No. 99) until the injunctions were entered in October 2016 (Docket
No. 159) and February 2017 (Docket No. 224). Docket No. 578 at 17. Defendants argue that
Telebrands’ infringement was only around nine months, and they attempted a design-around
during that time. Docket No. 589 at 28.
Although the period of infringement is nine months, the parties’ history leading up to this
point is relevant and significant. As discussed, Telebrands knew of Mr. Malone’s related ’066
Patent as early as June of 2015, when Plaintiffs first sued Telebrands. Case No. 6:15-cv-551,
Docket No. 1. The preliminary injunction in Tinnus I caused Telebrands to redesign the Balloon
Bonanza product and create the Battle Balloons product. 11/16/17 A.M. Tr. at 29:13–31:13.
The Court denied finding Telebrands in contempt based on the redesign efforts. Case No.
6:15-cv-551, Docket Nos. 144, 166. However, the redesign was superficial, and the Court
determined that such redesign was not likely to change the outcome. Docket Nos. 99, 159. The
Court determined that a subsequent redesign (resulting in the third generation of copycats, Easy
Einstein Balloons) was not likely to escape an infringement finding. Case No. 6:17-cv-170,
Docket No. 89. However, Telebrands continued selling the products even after the injunction
recommendations. 11/15/17 P.M. Tr. at 32:19–33:1. See PPC Broadband, Inc. v. Corning Optical
Commc’ns RF, LLC, No. 5:11-CV7-61 (GLS/DEP), 2016 WL 6537977, at *8 (N.D.N.Y. Nov. 3,
2016), appeal dismissed, No. 16-4106, 2016 WL 10655596 (2d Cir. Dec. 12, 2016) (“continuing

Page 21 of 64

to sell the infringing products after notice of infringement and during the course of litigation
supports enhancement.”).
On this record, the Court finds that this factor weighs slightly in favor of enhancement.
G. Remedial Action by Defendants
Plaintiffs argue that Defendants took no remedial action once they were on notice about
infringement. Docket No. 578 at 18. According to Plaintiffs, Telebrands made no effort to stop
selling the accused products after the Court’s rulings, and Telebrands attempted to conceal the
development of its Easy Einstein Balloon products. Id. Further, Plaintiffs argue that the designaround in this case was spurred only by the recommendation for a preliminary injunction. Id.
Defendants simply argue that they attempted design-arounds during the course of litigation.
Docket No. 589 at 28.
As discussed above, the design-arounds were still likely to infringe the relevant patents-insuit. Docket Nos. 99, 159; Case No. 6:17-cv-170, Docket No. 89. Telebrands’ CEO, Mr. Khubani,
admitted that the Battle Balloons design-around was not initiated by Telebrands’ knowledge of
Mr. Malone’s original invention but rather spurred by the injunction recommended in Tinnus I.
See 11/16/17 A.M. Tr. at 31:8–13 (“Q. Okay. Isn’t it true, Mr. Khubani, that Telebrands didn’t
begin to develop Battle Balloons, the second product, until after a Court order recommended to
the District Judge that told you to stop selling Balloon Bonanza; isn’t that true? A. Yes.”).
Moreover, Telebrands attempted to conceal its redesign efforts—conduct for which it was
sanctioned, as discussed above. Docket No. 223. Again, the Court found that this redesign was
likely to infringe the patents-in-suit. Case No. 6:17-cv-170, Docket No. 89. Because Defendants
failed to take remedial action and only took preventative action when forced by Court order, the
Court finds this factor weighs in favor of enhancement.

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H. Defendants’ Motivation for Harm
Plaintiffs argue that Telebrands’ copying of their product and repeated attempts to
introduce new infringing products in the face of injunctions show that Telebrands undertook these
measures to harm Plaintiffs. Docket No. 578 at 19. Defendants argue that they were only
motivated to sell the accused products to help their own businesses. Docket No. 589 at 29.
Defendants certainly had a profit-based motivation to continue selling the infringing
products. However, because Telebrands and Zuru were the only two competitors in the market,
any gain by Defendants necessarily came at Plaintiffs’ expense. Moreover, the jury found that the
infringing acts were willfully committed.

For these reasons, this factor slightly favors

enhancement of damages.
I. Whether Defendants Attempted to Conceal Their Misconduct
As previously noted, Plaintiffs argue that Defendants attempted to conceal Easy Einstein
products and the development of their Battle Balloons products. Docket No. 578 at 19. Defendants
contend that they disclosed their Battle Balloons products prior to the issuance of the patents-insuit and that they properly disclosed their motivations to design-around. Docket No. 589 at 29.
While the circumstances regarding the development of the infringing Battle Balloons
products are not clear,8 Telebrands was not forthright in its development of its Easy Einstein
product as a design-around. As discussed above, Plaintiffs had to move to compel the production
of this information. Docket No. 219. Despite the injunction, Telebrands refused to produce any
information or a prototype. Docket No. 223. Telebrands argued that the Easy Einstein balloons
were not relevant and had not yet been publicly released. The Magistrate Judge rejected those

8

The parties dispute Dr. Kamrin’s involvement in the development of the Battle Balloons products and whether
Defendants concealed this development under the guise of attorney-client privilege. Docket No. 578 at 19; Docket
No. 589 at 29.

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arguments and awarded fees and costs. Docket No. 223 at 4–5. This Court has since enjoined
sales of the Easy Einstein balloons. Case No. 6:17-cv-170, Docket No. 89.
Given the unjustified withholding of relevant information, the Court finds this factor
weighs in favor of enhancement.
J. The Retailer Defendants
While the majority of the foregoing discussion focuses on Telebrands’ conduct, the
Retailers were either directly involved or complicit in a number of Telebrands’ actions. The
Retailers joined in a number of the motions discussed above; shared defense counsel throughout
this litigation and at trial; shared experts with Telebrands (including Dr. Kamrin); and asserted the
same claims and defenses. All Retailers are also indemnified by Telebrands.
The Retailers took additional actions that warrant enhanced damages. At the injunction
hearing in this matter, the Court inquired whether the Retailers would agree to be bound by any
injunction issued against Telebrands. See June 17, 2016 Preliminary Injunction Tr. at 8:12–20.
The Court indicated that the appropriate course would be for the Retailers to abide by any rulings
made as to Telebrands and counsel for the Retailers indicated they would discuss that matter. See
id. at 9:1–7. The Retailers refused to be bound by the injunction. As a result, the Court conducted
additional injunction proceedings and issued a separate injunction against Retailers. Docket No.
224.9

The Retailers unnecessarily prolonged these proceedings, which only concerned

approximately 200,000 units of remaining balloon inventory. Docket No. 224 at 3.
The Retailers continued selling inventory after Telebrands was enjoined and after the
Magistrate Judge recommended an injunction as to the Retailers. Id. The Retailers never gave a
definitive inventory account and refused to produce discovery on the same. See id. (“the Retailer

9

This injunction was later upheld by the Federal Circuit. Tinnus Enterprises, LLC et al. v. Telebrands Corp. et al,
Nos. 2017-1175, 2017-1760, 2017-1811 (Fed. Cir. Jan. 16, 2018).

Page 24 of 64

Defendants have produced no discovery to date on the state of their inventory . . . none of the
Retailers’ submissions include accounts for the inventory, documents that should exist in the
ordinary course of business.”).
The Court denied a separate motion to stay the case as to the Retailers. See Docket No.
198 at 2–3 (reasoning that “[t]he fact that the Court was required to consider whether injunctive
relief was appropriate as to the Retailers’ stocked inventory—an issue separately raised by the
Retailers in their disagreement to be bound by the injunction against Telebrands—demonstrates
that the claims against the Retailers are not merely peripheral” and finding that “[t]he refusal to
cooperate in forthright discovery shows that justice would be better served by permitting Plaintiffs
to seek appropriate relief against the Retailers.”).
After the injunction against the Retailers, at least one Retailer continued to sell the accused
products. See, e.g., Docket No. 323. While the Court commends the parties for resolving this
matter without further Court intervention, communication breakdown between the parties caused
the Court to facilitate the in-person meet and confer that resolved the issue. See Docket No. 344
(“[t]his motion is similar to other recent motions before the Court insomuch as a proper meet and
confer would likely avoid unnecessary court intervention on this matter” . . . “the Court will
undertake the consideration of whether any sanction may be appropriately awarded for a party’s
unreasonable tactics in attempting to resolve this matter.”).
K. Conclusion
The Court has discretion to “increase the damages up to three times the amount found or
assessed.” 35 U.S.C. § 284. This case was initiated by an attempt to design around Plaintiffs’
invention. However, the “design-around” was not a substantive alteration but a cosmetic change
to a product that was enjoined. Ultimately, although the Court finds that this conduct does not

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merit a full trebling of damages, given Defendants’ continued litigation misconduct and other
actions described herein, the Court finds a significant enhancement is appropriate. See Whirlpool
Corp., No. 2:15-cv-1528-JRG, 2018 WL 1536874, at *10 (enhancing damages in the amount of
$3.8 million after considering egregious infringement behavior); compare ReedHycalog UK, Ltd.
v. Diamond Innovations Inc., No. 6:08-CV-325, 2010 WL 3238312, at *9 (E.D. Tex. Aug. 12, 2010)
(trebling damages where the court found that seven of the nine Read factors weighed heavily in
favor of enhancement). Having reviewed the Read factors and having considered the totality of
the circumstances in this case, for the reasons discussed, the Court finds an enhancement of 100
percent is appropriate for both Telebrands and the Retailers.
Because the jury awarded $12,250,000 as a result of Telebrands’ infringement, this award
shall be increased to $24,500,000. As to the Retailers’ infringement, the jury awarded $67,000.
As explained below, the Court is granting the Defendants’ JMOL regarding the willfulness of
Defendant Retailer Fry’s. Since the Plaintiffs were seeking $13,756 for “unique” sales attributable
to Fry’s (Docket No. 579 at 6), the amount to be enhanced is $53,244. Accordingly, the final
damages awarded from the Retailers is $106,488.
II.

Plaintiffs’ Motion for Apportionment of Damages as to Retailer Defendants
(Docket No. 579)
Plaintiffs request that the Court re-apportion the damages attributed to the Retailers.

Docket No. 579. Specifically, Plaintiffs assert that a “disagreement” has arisen as to the amount
of reasonable royalties for which each Retailer is liable. Id. at 2. Plaintiffs contend that each
Retailer Defendant is liable for a reasonable royalty on every unit of the infringing products it sold,
which totals just under $1 million in the aggregate.

Id.

Plaintiffs cite testimony and a

demonstrative exhibit (PTX-254) to show that their damages expert presented a damages model
involving “overlapping” and “unique” sales. Id. at 5–6. Based on the evidence, Plaintiffs argue
Page 26 of 64

that the Court should “clarify” that the Retailers actually owe the “Total Adjusted Royalty,” which
would include “overlapping” sales in the amount of $981,623. Id. at 6–7. Lastly, Plaintiffs
contend they “anticipated” this concern and raised it with the Court. Id. at 4.
In response, Defendants argue that the jury determined that the Retailer defendants’
liability should be capped at $67,000, according to Question 4c of the verdict form. Docket No.
587 at 2. Defendants point out that PTX-254 never went back to the jury because it was a
demonstrative exhibit. Id. They also argue that Plaintiffs’ request amounts to asking the Court to
“act as a substitute for the jury” and award increased damages. Id. Finally, Defendants contend
that Plaintiffs did not raise this concern to the Court because they argued for a different format for
the verdict form during the jury charge conference. Docket No. 587 at 3.
The Court will not disturb the verdict form. Question 4(c) was unambiguous. See Verdict
Form, Docket No. 543 at 5. (“Question 4c: What sum of money do you find from a preponderance
of the evidence would fairly and reasonably compensate Plaintiffs for the Retailers’ infringement
through the time of trial? Answer in dollars and cents: $67,000”). Moreover, Plaintiffs have not
cited a case in which a court altered the jury’s final verdict form in the manner requested. The
Court will not assume that the jury intended something other than the number it listed.
In addition, Plaintiffs had every opportunity during the charge conference to ask the Court
to modify the verdict form but did not do so. Instead of asking the Court to break out the award
according to each individual retailer, Plaintiffs sought to combine the question of damages as to
Telebrands and the Retailers into a single question.10 See 11/20/17 P.M. Tr. at 145:1–3.

10

This request made little sense because the Court consolidated the case against Telebrands (6:16-cv-33) and the case
against the Retailers (6:16-cv-34) for trial, which requires a separate damages questions for each case.

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Regardless, the time to raise this issue was during the charge conference, not in post-trial briefing.11
See Flexuspine, Inc. v. Globus Med., Inc., 879 F.3d 1369, 1375 (Fed. Cir. 2018) (finding that
defendant’s lack of objection to the verdict form prior to the jury’s deliberations waived
submission of invalidity as a counterclaim).12
Thus, Plaintiffs’ Motion for Apportionment of Damages as to the Retailers (Docket No.
579) is DENIED.
III.

Defendants’ Renewed Motions for Judgment as a Matter of Law and for a New
Trial (Docket Nos. 582, 702)
Judgment as a matter of law is only appropriate when “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). “The
grant or denial of a motion for judgment as a matter of law is a procedural issue not unique to
patent law, reviewed under the law of the regional circuit in which the appeal from the district
court would usually lie.” Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1332 (Fed. Cir.
2008).
Under Fifth Circuit law, courts are “especially deferential” to a jury’s verdict and will not
reverse jury findings that are supported by substantial evidence. Baisden v. I’m Ready Prods.,
Inc., 693 F.3d 491, 499 (5th Cir. 2012). “Substantial evidence is defined as evidence of such
quality and weight that reasonable and fair-minded men in the exercise of impartial judgment
might reach different conclusions.” Threlkeld v. Total Petroleum, Inc., 211 F.3d 887, 891 (5th
Cir. 2000). The Court should “uphold a jury verdict unless the facts and inferences point so

11

Even after Plaintiffs’ comments during the Court’s charge conference on 11/20/17 described above, Plaintiffs again
sought the same relief in the form of a single damages question on the morning of 11/21/17. See 11/21/17 A.M. Tr.
at 177: 1–17.

12

Plaintiffs are in a more difficult position than the appellant in Flexuspine. Whereas in Flexuspine the appellant
failed to object, the Plaintiffs in this case argued the opposite of what they now seek. Flexuspine, 879 F.3d at 1375.

Page 28 of 64

strongly and so overwhelmingly in favor of one party that reasonable men could not arrive at any
verdict to the contrary.” Cousin v. Trans Union Corp., 246 F.3d 359, 366 (5th Cir. 2001); see also
Int’l Ins. Co. v. RSR Corp., 426 F.3d 281, 296 (5th Cir. 2005). However, “[t]here must be more
than a mere scintilla of evidence in the record to prevent judgment as a matter of law in favor of
the movant.” Arismendez v. Nightingale Home Health Care, Inc., 493 F.3d 602, 606 (5th Cir.
2007) (citing Laxton v. Gap, Inc., 333 F.3d 572, 577 (5th Cir. 2003)).
In evaluating a motion for judgment as a matter of law, a court must “draw all reasonable
inferences in the light most favorable to the verdict and cannot substitute other inferences that [the
court] might regard as more reasonable.” E.E.O.C. v. Boh Bros. Const. Co., L.L.C., 731 F.3d 444,
451 (5th Cir. 2013). Although a court must review the record as a whole, it must disregard all
evidence favorable to the moving party that the jury is not required to believe. Ellis v. Weasler
Eng’g Inc., 258 F.3d 326, 337 (5th Cir. 2001). However, a court may not make credibility
determinations or weigh the evidence, as those are solely functions of the jury. See id. (citing
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51 (2000)). The Court gives
“credence to evidence supporting the moving party that is uncontradicted and unimpeached if that
evidence comes from disinterested witnesses.” Arismendez, 493 F.3d at 606.
In Defendants’ Renewed Motions for Judgment as a Matter of Law, Defendants make four
main arguments. Docket Nos. 582, 702. First, Defendants argue that both patents-in-suit are
invalid as a matter of law. Id. at 8–23. Second, Defendants argue that no reasonable jury could
find infringement of the ’749 Patent. Id. at 23–28. Third, Defendants contend that no reasonable
jury could find willful infringement of either patent. Id. at 28–35. Fourth, Defendants assert that
Plaintiffs cannot recover lost profits, including price erosion damages and excess freight charges.

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Id. at 35–46; see also Docket No. 702 (supplemental JMOL specifically addressing the issue of
lost profits).
In response, Plaintiffs argue that the jury’s verdict as to invalidity for both patents should
stand. Docket No. 588 at 9–23. In addition, Plaintiffs argue that there was substantial evidence to
support the jury’s finding of infringement of the ’749 Patent. Id. at 23–27. Plaintiffs further argue
that the jury heard sufficient evidence to support its willfulness finding. Id. at 27–37. Lastly,
Plaintiffs assert that a reasonable jury could (and did) find that Zuru Ltd. incurred lost profits for
the sales it would have made. Id. at 38–51; see also Docket No. 709.
A. Invalidity 

a. Obviousness
A patent is obvious “if the differences between the claimed invention and the prior art are
such that the claimed invention as a whole would have been obvious before the effective filing
date of the claimed invention to a person having ordinary skill in the art to which the claimed
invention pertains.” 35 U.S.C.A. § 103. “Obviousness is a question of law based on underlying
factual findings: (1) the scope and content of the prior art; (2) the differences between the claims
and the prior art; (3) the level of ordinary skill in the art; and (4) objective indicia of
nonobviousness.” Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1360 (Fed. Cir.
2012) (citing Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 17–18 (1966)). “A party
seeking to invalidate a patent on the basis of obviousness must demonstrate by clear and
convincing evidence that a skilled artisan would have been motivated to combine the teachings of
the prior art references to achieve the claimed invention, and that the skilled artisan would have
had a reasonable expectation of success in doing so.” Id. (internal quotations omitted).
Defendants have not met their burden as to any of the claims because Plaintiffs provided
sufficient evidence for a reasonable jury to find that the claims were not obvious. For example, as
Page 30 of 64

to the differences between the claims and the prior art, Plaintiffs’ technical expert (Dr. Kudrowitz)
testified that the “sufficiently limited” limitation was lacking in all prior art references, including
a specific discussion about the Donaldson and Lee references. 11/20/17 P.M. Tr. at 17:3–20:3.
Dr. Kudrowitz also explained generally how the Donaldson and Lee references work. See id. In
addition, the jury also heard substantial evidence, including testimony from Dr. Kudrowitz, that a
motivation to combine was lacking. 11/20/17 P.M. Tr. at 20:11–21:23.
Plaintiffs also presented substantial evidence on objective indicia. “[O]bjective indicia
may often be the most probative and cogent evidence of nonobviousness in the record.” Gambro
Lundia AB v. Baxter Healthcare Corp., 110 F.3d 1573, 1579 (Fed. Cir. 1997). For example, the
jury heard substantial evidence on copying, including communications between Telebrands
employees and a contractor explaining how they copied Plaintiffs’ Bunch O Balloons product after
finding it on Kickstarter. See 11/15/17 P.M. Tr. at 11:13–26:18, 42:6–9; see also PTX 83, 87, and
137; see also Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272, 1285–86 (Fed Cir.
2000) (explaining how copying can help show an invention is nonobvious). As to commercial
success, there was substantial evidence as to the success of both the Plaintiffs’ Bunch O Balloons
product and the accused infringer, Battle Balloons. See PTX 46; 11/15/17 A.M. Tr. at 75:08–25,
76:01–25 (explaining success of Bunch O Balloons). See PTX 147, 149, 150, 171, 304; 11/16/17
A.M. (Sealed Portion No. 3) at 13:4–11, 14:25, 15:01–04, 16:04–08, 23:19–21, 24:14–19
(explaining success of Battle Balloons). The jury also heard substantial evidence as to industry
praise, including an appearance on the Today Show. 11/14/17 P.M. Tr. at 89:11–14, 134:15–24;
11/15/17 A.M. Tr. At 77:03–23. The jury heard substantial evidence regarding long-felt need,
including testimony that the invention solved the problem of how to fill and tie multiple balloons
at once. 11/14/17 P.M. Tr. at 85:24–86:12; 11/15/17 Tr. at 11:1–12; 11/16/17 P.M. Tr. at 129:14–

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17; see also 131:05–06 (Defendants conceded all non-infringing alternatives at a bench
conference).
The Court also notes that Defendants’ expert, Dr. Kamrin, seemingly did not account for
objective indicia before reaching his ultimate conclusion on obviousness. For example, Dr.
Kamrin testified that “secondary considerations were not discussed today” and disclaimed any
analysis of specific objective indicia. 11/17/17 P.M. Tr. at 126:3–19 & 128:14–18. There is at
least some Federal Circuit case law suggesting that it may be inappropriate to grant Defendants’
JMOL for obviousness since Dr. Kamrin’s testimony did not evaluate these objective factors. See
InTouch Techs., Inc. v. VGO Commc’ns, Inc., 751 F.3d 1327, 1352 n.8 (Fed. Cir. 2014) (explaining
that when “an expert purports to testify, not just to certain factual components underlying the
obviousness inquiry, but to the ultimate question of obviousness, the expert must consider all
factors relevant to that ultimate question”).
Accordingly, for the reasons above, Defendants’ JMOL for invalidity based on obviousness
is DENIED.13 Defendants have not shown by clear and convincing evidence that any of the claims
are obvious.
b. Written Description
Under 35 U.S.C. § 112(a), a patentee satisfies the written description requirement by
“convey[ing] with reasonable clarity to [a POSA] that, as of the filing date sought, he or she was
in possession of the invention.” Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1563–64 (Fed. Cir.
1991). Whether the written description requirement has been satisfied is a question of fact. Tronzo
v. Biomet, Inc., 156 F.3d 1154, 1158 (Fed. Cir. 1998). A district court “must accord deference to

13

Before the briefing completed, the PTAB issued final written decisions upholding the validity of the patents-in-suit.
Docket No. 626. The parties then submitted additional briefing on whether PGR estoppel should apply. Docket Nos.
645, 649. Given the Court’s ruling that Defendants have not met their burden on JMOL, it is not necessary to reach
the PGR estoppel issue at this time.

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the jury findings on written description” and “not substitute its judgment for that of the fact finder.”
Union Oil Co. of Cal. v. Atl. Richfield Co., 208 F.3d 989, 997 (Fed. Cir. 2000). Finally, “under
proper circumstances, drawings alone may provide a ‘written description’ of an invention as
required by § 112.” Vas-Cath, 935 F.2d at 1565.
Defendants contend that claims 1–3 of the ’282 Patent are invalid because the patent’s
written description does not support the requirement that two or more of the containers press
together when unfilled. Docket No. 582 at 21. Plaintiffs respond that the jury heard substantial
evidence to support its finding that the patent was valid. Docket No. 588 at 21–23.
Here, a reasonable jury could find that the claims are not invalid for written description.
Dr. Kudrowitz, testified that Figure 1 of the ’282 Patent expressly shows containers in an unfilled
state. 11/20/17 P.M. Tr. at 64:20–23, 65:15–20. Moreover, the jury heard evidence that the
depicted containers touch in the unfilled state. Dr. Kudrowitz testified at trial that a POSITA
looking at Figure 1 would “assume” that the unfilled containers are touching and it would have to
be an “optical illusion” for them to not touch. 11/20/17 P.M. Tr. at 35:24–36:4. Dr. Kudrowitz
also testified that Figure 2 further supports an adequate written description. 11/20/17 P.M. Tr. at
36:5–37:20.
Accordingly, for the reasons above, Defendants’ JMOL for invalidity based on adequate
written description is DENIED.
B. Non-infringement
Next, Defendants argue that no reasonable jury could find infringement of the ’749 Patent.
Docket No. 582 at 23. Defendants argue that the accused products have neither (1) a “plurality of
holes extending through a common face of the housing at a second end,” nor (2) a “plurality of
flexible tubes, each hollow tube attached to the housing at a respective one of the holes at the

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second end of the housing.” Docket No. 582 at 23 (citing ’749 Patent at 6:36–42). In response,
Plaintiffs argue the motion should be denied because the jury heard substantial evidence to support
its infringement finding. Docket No. 588 at 23.
There is sufficient evidence to support the jury’s infringement finding as to the ’749 Patent,
including testimony by Dr. Kudrowitz, the ’749 Patent itself and the accused products. 11/16/17
P.M. Tr. at 87:8-120:2; PTX 2, PTX 40. Applying the Court’s claim construction, Dr. Kudrowitz
testified how each element of claim 1 was present in the accused products and concluded by
providing his opinion that the accused products infringe. 11/16/17 P.M. Tr. at 104:11–1120:2. Dr.
Kudrowitz testified on both direct and cross that the claim language requires a “plurality of holes
extending through a common face of the housing.” PTX 2 at 6:37–39; 11/16/17 P.M. Tr. at
111:13–112:19 (“And by the Court’s definition, a shared outer surface through which a plurality
of holes extend, all of these holes are extending through a shared outer surface of the housing.
There’s—there’s really no debate about that.”); 143:3–4 (clarifying on cross that two or more holes
must extend through the “common face of the housing” not just any common face); 143:8–11
(same). Dr. Kudrowitz also testified that he disagreed with Dr. Kamrin as to the “second end.”
11/16/17 P.M. Tr. at 112:20–24 (explaining Defendants’ position as “arguing that the second end
is only this flat surface right here, that flat tip”). Dr. Kudrowitz went on to explain why—under
the Court’s construction—he believed Dr. Kamrin’s argument was incorrect. Id. at 113:10–15
(“the Court defined second end as, an outer limit of the housing distinct from the first end. There’s
nothing in that about linear opposites in the definition.”). The jury heard substantial evidence on
the issue to support its finding.
Accordingly, for the reasons above, Defendants’ JMOL for non-infringement of the ’749
Patent is DENIED.

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C. Willfulness
For the reasons stated with respect to Plaintiffs’ Motion for Enhanced Damages (Docket
No. 578), the Court DENIES the JMOL as to willfulness for Telebrands and all Retailers except
Fry’s Electronics. As detailed above, the jury heard sufficient evidence of Telebrands’ willful
infringement, including emails between Telebrands employees and an outside consultant
describing how Telebrands planned to copy Plaintiffs’ product. See 11/15/17 P.M. Tr. at 11:13–
26:18, 42:6–9; see also PTX 83, PTX 87, PTX 137. As to the Retailers, the jury heard sufficient
evidence to support a willfulness finding: (1) the Retailers, like Telebrands, admitted at trial that
Battle Balloons infringes the ’282 Patent;14 (2) the Retailers continued selling Battle Balloons after
the lawsuit was filed (and did not stop until the Court entered a preliminary injunction)15; and (3)
all Retailers are indemnified by Telebrands.16
However, as to Fry’s Electronics, the JMOL for willfulness is GRANTED. While the jury
heard from a representative from every other Retailer, the jury never heard any testimony from
any witness from Fry’s Electronics. Therefore, the jury did not hear sufficient evidence to find
willfulness. As detailed in the enhanced damages section, the damages as a result of Fry’s
Electronics’ infringement must be excluded from the enhancement.
D. Lost Profits
35 U.S.C. § 284 sets the floor for “damages adequate to compensate for [patent]
infringement” at “a reasonable royalty for the use made of the invention by the infringer.” The

14

See 11/16/17 A.M. Tr. at 53:06–54:21; 11/16/17 P.M. Tr. at 41:03–19; 11/16/17 P.M. Tr. at 62:17–64:21; 11/16/17
P.M. Tr. at 72:09–73:07.

15
See 11/16/17 A.M. Tr. at 61:25–63:01, 76:22–23, 80:12–21; 11/16/17 P.M. Tr. at 48:07–16; 11/16/17 P.M. Tr. at
62:10–16, 66:06–15; 11/16/17 P.M. Tr. at 75:05–10.
16

See 11/16/17 A.M. Tr. at 59:14–23; 11/16/17 P.M. Tr. at 54:09–55:12; 11/16/17 P.M. Tr. at 66:19–24; 11/16/17
P.M. Tr. at 75:11–20.

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burden of proving damages falls on the patentee. Dow Chem. Co. v. Mee Indus., Inc., 341 F.3d
1370, 1381 (Fed. Cir. 2003). Section 284 has been interpreted as “expansive” in what may be
recovered to compensate for infringement. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1544 (Fed.
Cir. 1995). “[T]he general rule for determining actual damages to a patentee that is itself producing
the patented item is to determine the sales and profits lost to the patentee because of the
infringement.” Id. at 1545. “To recover lost profits damages, the patentee must show a reasonable
probability that, ‘but for’ the infringement, it would have made the sales that were made by the
infringer.” Id.
a. Background
The parties have a long history of disputing damages in this action. Prior to trial, the parties
filed numerous motions regarding lost profits. See Docket Nos. 334, 335, 372, 395, 422, 423, 515.
Both the Magistrate Judge and the undersigned dealt with these motions extensively through
multiple orders and hearings. See Docket Nos. 403, 405, 406, 470, 483, 484, 485, 496.
The dispute with respect to lost profits first arose late in the case when Defendants filed a
motion for summary judgment that Plaintiffs were not entitled to lost profits damages. See Docket
No. 334. Defendants argued that Plaintiffs’ Bunch O Balloons products were actually sold by
Zuru Inc., which was not a party to the suit, and that the named Plaintiff Zuru Ltd. could not
recover from those sales. Id. Plaintiffs responded and filed a motion to join all Zuru entities. See
Docket No. 372. The Zuru entities also filed a motion to intervene. See Docket No. 395.
The Magistrate Judge concluded, and the Court agreed, that Zuru Ltd. should not recover
lost profits for sales made by other Zuru entities, such as its parent company Zuru Inc. See Docket
No. 406, 484. This recommendation eliminated many of the sales Plaintiffs planned to argue at
trial, but left intact those sales made to Wal-Mart as the evidence presented suggested a question
of fact remained with respect to those sales. See id. at 8 (finding that the “evidence, which includes
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purchase orders and invoices by ZURU Ltd., raises a material factual dispute regarding whether
ZURU Ltd. made sales to retailers in the United States.”). The Magistrate Judge also ordered that
the motion to join Zuru Inc. and the motion for Zuru Inc. to intervene be denied. See Docket No.
407. Plaintiffs then filed a Motion to Reconsider but the Court denied the motion and found that
Zuru Inc. did not have exclusive rights to collect damages. Docket No. 485.
Defendants continued to reargue the issue of lost profits and filed an emergency motion
and time-barred “trial motion” on the eve of trial. See Docket Nos. 492, 515. The Court denied
both motions because the issues had already been decided and permitted testimony regarding Zuru
Ltd.’s sales at trial. Docket No. 496. After trial, Defendants filed their Renewed Motion for
Judgment as a Matter of Law arguing that no reasonable jury could find that Zuru Ltd. is entitled
to lost profits. Docket No. 582 at 36. Defendants also filed a Renewed Supplemental Motion for
Judgment as Matter of Law or Alternatively a New Trial based on alleged new evidence pertaining
to the sales of Zuru Ltd. Docket No. 702.
b. Zuru Ltd.’s Sales
In their original motion for a new trial, Defendants argued that no reasonable jury could
find that Zuru Ltd. is entitled to lost profits because Defendants argued that Zuru Ltd. never took
title to any of the Bunch O Balloons products or sold them to Wal-Mart. Docket No. 582 at 36–
37. After the post-trial briefing was completed, Defendants requested leave of court to file a
supplemental motion on damages and re-open discovery in this matter due to the production of
new evidence related to the issue of Zuru Ltd.’s sales in related Case No. 6:17-cv-170 (“Tinnus
IV”). Docket No. 590. On October 22, 2018, the Court determined that the issue required further
factual development; therefore, the Court re-opened discovery for a period of 60 days with respect
to lost profits. Docket No. 671. During this time, a series of discovery disputes regarding the
conduct of counsel and the scope of the Court’s order arose. The Magistrate Judge resolved the
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discovery disputes, ordering discovery to be completed by January 4, 2019, and any supplemental
motion for judgment as a matter of law or a new trial to be filed by January 11, 2019. Docket Nos.
694, 697. The Court overruled objections to the Magistrate Judge’s order. Docket No. 718.
Thereafter, Defendants filed their supplemental motion requesting that the Court set aside the
jury’s damages award as a matter of law or grant a new trial. Defendants argued that the new
evidence obtained during this late period of discovery warrants such an outcome. As both motions
present an evidentiary issue with respect to Zuru Ltd.’s sales, the Court takes them up in tandem,
focusing on the newly presented evidence.
Determining whether the newly discovered evidence warrants a new trial requires a threeprong analysis: (1) the probability that the evidence would have changed the outcome of the trial;
(2) whether the evidence could have been discovered earlier through the moving party’s due
diligence; and (3) whether the evidence is merely cumulative or impeaching. See Advanced
Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272, 1284 (Fed. Cir. 2000), citing Farm Credit
Bank v. Guidry, 110 F.3d 1147, 1155 (5th Cir. 1997); Diaz v. Methodist Hosp., 46 F.3d 492, 495
(5th Cir. 1995).
Defendants contend that the following new evidence contradicts the sales theory Plaintiffs
presented at trial:
(1) Emails from Christian Pellone, Zuru Ltd.’s CFO, stating to auditors that sales
were “not sales of Zuru Limited, but Zuru Inc,” (Docket No. 702-3); calling
Zuru Ltd. “an ‘undisclosed agent’ of Zuru Inc.” that “does not have any stock
of its own that it can sell” (Docket No. 702-4); identifying Zuru Ltd. as “a sales
support company, which as a stand alone company books no sales” (Docket No.
702-6); and stating that “all rights and responsibilities attached to these sales
imbue in Zuru Inc” (Docket No. 702-5);
(2) Ltd. Board Resolutions from October 18, 2016 stating an agency intention with
respect to Ltd. and Inc. (Docket No. 702-7);

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(3) Inc. Board Minutes from October 18, 2016 stating that “since the incorporation
of [Ltd.]… [Ltd.] has been acting as an undisclosed agent of the Company, and
has entered into contracts with customers for on [sic] behalf of the Company”
and it would enter a “written undisclosed agency agreement with [Ltd.],” to
memorialize the long-standing agency relationship. (Docket No. 702-9);
(4) Audited financials showing “service income” that Inc. paid Ltd. DTX-224;
DTX-225;
(5) Inc. invoices for a service fee. (Docket Nos. 702-11, 702-12, 702-13, 702-14,
702-15.); and
(6) A statement by Mr. Pellone that “Zuru Inc. is the parent company. It derives
all the sales income.” (Docket No. 702-10.)
Turning to the first prong, it is unlikely that such evidence would have changed the outcome
of the trial on damages. The outcome of the trial would have only been changed if Defendants
established that Zuru Ltd. did not make any sales to Wal-Mart, thereby leaving no sales for the
basis of a lost profits award. The only direct evidence that Defendants provide on this point is a
statement in an email from Zuru Ltd.’s CFO, Mr. Pellone, stating that certain sales were “not sales
of Zuru Limited, but Zuru Inc.” Docket No. 702-3 at 5. As an initial matter, Defendants do not
provide any context for these statements. However, even assuming the statement pertains directly
to the Wal-Mart sales at issue in this case, it appears to be a single out-of-court statement provided
via email to an auditor for tax purposes. Id. That single statement is not likely to overcome the
substantial evidence considered by the jury evidencing Zuru Ltd.’s sales of Bunch O Balloons to
Wal-Mart. See, e.g., PTX 293, PTX 294, PTX 295; 11/15/17 A.M. Tr. (Sealed Portion Nos. 1 and
2) at 10:18–10:25, 21:19–21, 24:2–3, 24:12–14; 11/17/17 A.M. Tr. (Sealed Portion No. 4) at 25:6–
30:13.
For example, Plaintiffs presented evidence that the language of the Zuru Ltd./Wal-Mart
supplier agreements specifically describes Zuru Ltd.’s activities as “sales.” See PTX 293 at 1
(providing that “[a]ll sales and deliveries of Merchandise (as defined below) by Supplier [ Zuru
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Ltd.] to Company [Wal-Mart] will be covered by and subject to the terms of this Agreement”).
Furthermore, Zuru Ltd.’s COO, Anna Mowbray, testified that purchase orders to Zuru Ltd. and
corresponding invoices issued by Zuru Ltd. established that Zuru Ltd. was the seller of those
products. PTX 295; 11/15/17 A.M. Tr. (Sealed Portions Nos. 1 and 2) at 6:24–10:25. In addition,
Plaintiffs’ damages expert went through the supplier agreement, the Wal-Mart purchase orders and
invoices (which all reflected Bunch O Balloons sales to Wal-Mart) as well as Zuru Ltd.’s bank
statements which showed money paid by Wal-Mart for Bunch O Balloons purchases. 11/17/17
A.M. Tr. (Sealed Portion No. 4) at 25:6– 30:13; PTX-293, PTX-294, PTX-295. At most,
presentation of Mr. Pellone’s email statement may have undermined the credibility of Ms.
Mowbray, who testified to these sales. 11/15/17 A.M. Tr. (Sealed Portions Nos. 1 and 2) at 6:24–
10:25. But the jury was still able to consider the supplier agreement between Zuru Ltd. and WalMart, the Wal-Mart purchase orders and the invoices to Zuru Ltd. PTX-293, PTX-294, PTX-295.
The remainder of Defendants’ new evidence is circumstantial evidence relating to an
agency relationship between Zuru Ltd. and Zuru Inc., a service income paid to Ltd. by Inc.,
invoices for a service fee and other evidence suggesting that Zuru Ltd. earned no profits. See
Docket No. 702 at 7–10. This circumstantial evidence is cited to support an argument that the
Court has already rejected—that Zuru Ltd. may not recover lost profits for its sales of Bunch O
Balloons. See Docket No. 406, at 8–9. The Court already found that “Defendants cite no authority
that this specific arrangement would prevent a recovery of lost profits under the Patent Act.” Id.
at 9, n. 1. Thus, Defendants’ arguments regarding corporate structure and the booking of actual
profits made from Zuru Ltd.’s sales is merely cumulative. To date, Defendants have presented no
further authority on this issue. The probability that this evidence would have changed the outcome
of the trial is low.

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Moreover, this evidence could have been discovered much earlier had Defendants been
diligent. Defendants did not raise any defense with respect to lost profits until July 7, 2017, when
they filed their lost profits motion for summary judgment and a Daubert motion related to Dr.
Ratliff’s opinions. Docket Nos. 334, 335. Notably, on August 2, 2017, Plaintiffs submitted an
Addendum to the Second Amended License Agreement, which was signed by Christian Pellone
as Chief Financial Officer of Zuru Ltd. Docket No. 364-7. Mr. Pellone’s existence and role at
Zuru Ltd. was therefore indisputably known to Defendants before the Court re-opened discovery
on the issue of lost profits on September 11, 2017. Docket No. 405.
Aware of Mr. Pellone’s role at Zuru Ltd., Defendants were given the opportunity to seek
additional discovery regarding damages prior to trial, but they failed to seek out this information.
See Docket No. 405 at 4 (the Court reopening discovery). Although Defendants did take a
supplemental 30(b)(6) deposition of Zuru Ltd., they did not ask any questions about Mr. Pellone
or seek to depose him or call him at trial. As the Court previously discussed, nothing suggests that
Plaintiffs or Plaintiffs’ counsel improperly withheld documents to present a misleading picture to
the jury. See Docket No. 694. Rather, it appears that Defendants were not diligent and only
discovered this information when new counsel for Defendants took over discovery in
contemporaneous litigation. The evidence could have been discovered earlier had Defendants
been diligent.
Finally, the evidence presented in Defendants’ supplemental motion is primarily
cumulative and/or impeaching. As discussed, Defendants’ arguments with respect to the corporate
structure of the Zuru entities, the booking of profits and the receipt of service income were all
presented at trial. Indeed, Defendants cite to two of their own exhibits admitted at trial in support
of their motion. See Docket No. 702, citing DTX-224, DTX-225. While Mr. Pellone’s statements

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were not presented at trial, at best they would attack the credibility of Plaintiffs’ corporate
representative, Ms. Mowbray, who testified to Zuru Ltd.’s sales. 11/15/17 A.M. Tr. (Sealed
Portions Nos. 1 and 2) at 6:24–10:25.
In sum, the newly discovered evidence does not warrant a new trial. Accordingly,
Defendants’ Renewed Supplemental Motion for Judgment as a Matter of Law or Alternatively a
New Trial (Docket No. 702) is DENIED.
As to Defendants’ argument regarding the passing of title of the Bunch O Balloons
products (Docket No. 582), Defendants fail to cite any supporting Federal Circuit case law on this
issue. Instead, Defendants cite generally to other courts’ statements about what defines a “sale.”
See Docket No. 582 at 37. The Court finds no precedent to grant a JMOL on this basis. The
Uniform Commercial Code (UCC) states “title passes to the buyer at the time and place at which
the seller completes his performance with reference to the physical delivery of the goods,”17
U.C.C. § 2-401. Here, as discussed, the jury heard substantial evidence that Zuru Ltd., not Zuru
Inc., made the sales in question. PTX 293, PTX 294, PTX 295; 11/15/17 A.M. Tr. (Sealed Portion
Nos. 1 and 2) at 10:18–10:25, 21:19–21, 24:2–3, 24:12–14; 11/17/17 A.M. Tr. (Sealed Portion No.
4) at 25:6– 30:13. Accordingly, Defendants’ JMOL as to lost profits on the basis of the passing of
title is DENIED.
c. Cost-Plus-Ten Percent
Defendants argue that even if Zuru Ltd. did make sales, there is no evidence that Zuru Ltd.
would have profited from additional sales of Bunch O Balloons. Docket No. 582 at 38–42.
Defendants assert that the evidence showed that Zuru Ltd. was a sales agent of Zuru Inc., and Zuru
Ltd.’s revenue was determined on a cost-plus-ten-percent basis. Id. Defendants’ argument boils

17

The UCC further defines a seller as “a person who sells or contracts to sell goods.” UCC § 2-103.

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down to this: there is a lack of causation between the amount of Bunch O Balloons sales and Zuru
Ltd.’s lost profits. Plaintiffs contend that Defendants’ arguments ignore that Zuru Ltd. made the
sales and earned revenue from them. Docket No. 588 at 44–48.
Defendants’ argument is not persuasive. The evidence at trial showed that all proceeds
from Zuru Ltd.’s sales to Wal-Mart were paid to Zuru Ltd. and were deposited into Zuru Ltd.’s
bank account. PTX 294; 11/15/17 A.M. Tr. (Sealed Portion Nos. 1 and 2) at 9:13–10:17; 11/17/17
A.M. Tr. at 28:13–29:5. Thus, Zuru Ltd. profited from such sales. Because Zuru Ltd. generated
revenue from these sales, it has a claim for lost profits. 11/17/17 P.M. Tr. at 20:23–21:3; RiteHite, 56 F.3d at 1545.
The fact that the Mowbray siblings made internal decisions on where to book Zuru Ltd.’s
profits does not alter or erase the fact that Zuru Ltd. earned revenue in the first instance. See PTX
250; 11/17/17 A.M. Tr. at 13:18–14:16; 30:1–13.
Lastly, none of the cases Defendants cite hold that lost profits must be booked on a financial
statement in order to be recoverable as lost profit damages. See Docket No. 582 at 39–41. Even
if it mattered, it is impossible to know where Zuru Ltd.’s additional sales would have been booked
or whether the Mowbrays would have altered the cost-plus-ten-percent model. See 11/15/17 A.M.
Tr. (Sealed Portions Nos. 1 and 2) at 28:16–23 (Ms. Mowbray testifying that as to the cost-plusten-percent model, “we could have changed that at any time since it’s such a close group.”). Thus,
the jury heard substantial evidence to support its verdict on lost profits.
Accordingly, Defendants’ JMOL as to lost profits on this basis is DENIED.
d. Price Erosion
Defendants next argue that no reasonable juror could find price erosion for three principal
reasons. Docket No. 582 at 42. First, Defendants assert that Plaintiffs have not shown any “but
for” causation resulting from the infringing sales. Id. at 42–44. Second, Defendants argue that
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Plaintiffs’ damages testimony regarding price erosion was legally insufficient because Plaintiffs’
expert failed to consider price elasticity. Finally, Defendants contend that Plaintiffs’ damages
expert improperly assumed that Telebrands infringed in 2015. Id. at 45. Plaintiffs argue that they
presented sufficient evidence of price erosion from which a reasonable jury could find lost profit
damages. Docket No. 588 at 48–51.
First, Defendants’ “but for” causation argument is unpersuasive. Defendants mainly rely
on testimony by Ms. Mowbray during a hearing in 2015 when she stated it would be difficult to
in the toy industry. See 11/15/17 A.M. Tr. (Sealed Portion Nos. 1 and 2) 16:17–24.
However, Ms. Mowbray explained that her testimony was given with the understanding that
Telebrands has always been in the market with an infringing product. 11/15/17 A.M. Tr. at 134:4–
12. Thus, the testimony did not relate to the but-for world, which is the correct setting for a price
erosion analysis. See Ericsson, Inc. v. Harris Corp., 352 F.3d 1369, 1378 (Fed. Cir. 2003) (“To
recover lost profits on a theory of price erosion, a patentee must show that “but for” infringement,
it would have sold its product at a higher price.”).
Moreover, the jury also heard evidence that

was willing and able to pay higher

prices for Bunch O Balloons. 11/17/17 A.M. Tr. at 24:22–25; 11/20/17 A.M. Tr. at 74:17–25,
76:5–10. Even Defendants’ expert conceded that Zuru Ltd. was able to raise the price of Bunch
O Balloons charged to

from 2014 to 2015. 11/20/17 A.M. Tr. at 74:17–25; 76:5–10.

Thus, this basis for JMOL is without merit.
Second, Defendants’ argument about price elasticity is also unpersuasive. Defendants
argue that under Crystal Semiconductor Corp. v. Tritech Microelectronics Int’l, Inc., 246 F.3d
1336 (Fed. Cir. 2001), Mr. Ratliff’s testimony was “legally insufficient” because “Mr. Ratliff
simply pretended no sales would have been lost if Wal-Mart’s price went up.” Docket No. 582 at

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44. But Mr. Ratliff did consider what effect higher prices would have on demand but concluded
that in this case, the relevant market was inelastic. 11/17/17 A.M. Tr. at 23:11–24:22; 11/17/17
A.M. Tr. (Sealed Portion No. 4) at 21:1–26:10, 92:7–95:8. In supporting his opinion, he explained
that price inelasticity is not a perfectly linear evaluation and that there are numerous factors that
can contribute to price inelasticity as to any given product. 11/17/17 A.M. Tr. (Sealed Portion No.
4) at 21:1–24:18.
Since Crystal Semiconductor, the Federal Circuit has clarified that a theory of an inelastic
market does not automatically preclude recovering price erosion damages. Ericsson, Inc. v. Harris
Corp., 352 F.3d 1369, 1379 (Fed. Cir. 2003). As in Ericsson, Plaintiffs in this case did not even
get the full amount they sought in lost profit damages. Docket No. 543 at 4. To the extent the jury
accepted Plaintiffs’ price erosion theory, the award is supported by substantial evidence.
Third, Defendants contend that Mr. Ratliff’s damages analysis improperly assumed that
Telebrands infringed in 2015, even though no such finding has been made. Docket No. 582 at 45.
Yet Mr. Ratliff explained time and again that his analysis rested on infringement beginning when
the ’749 Patent first issued in January 2016. 11/17/17 P.M. Tr. (Sealed Portion No. 4) at 5:12–15,
15:23–25. Specifically, Mr. Ratliff testified that
beginning in January 2016 “but for” infringing competition from Battle Balloons. 11/17/17
A.M. Tr. (Sealed Portion No. 4) at 93:6-12. Thus, this argument is meritless.
Accordingly, Defendants’ JMOL as to price erosion is DENIED.
e. Excess Freight Expenses
As to Defendants’ argument regarding the inclusion of excess freight expenses, there is no
indication that the jury awarded excess freight charges as part of its damages verdict. Even if it
did, the jury heard substantial evidence that Zuru Ltd. paid excess freight charges as a result of
Defendants’ infringement. 11/17/17 A.M. Tr. at 42:20–43:8.
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Accordingly, Defendants’ JMOL as to excess freight expenses is DENIED.
E. Motion for New Trial
Under Federal Rule of Civil Procedure 59(a), a new trial may be granted on any or all
issues “for any reason for which a new trial has heretofore been granted in an action at law in
federal court.” Rule 59(a)(1)(A). The Federal Circuit reviews the question of a new trial under
the law of the regional circuit. Z4 Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1347 (Fed. Cir.
2007). The court can grant a new trial “based on its appraisal of the fairness of the trial and the
reliability of the jury’s verdict.” Smith v. Transworld Drilling Co., 773 F.2d 610, 612–13 (5th Cir.
1985). “Courts grant a new trial when it is reasonably clear that prejudicial error has crept into the
record or that substantial justice has not been done, and the burden of showing harmful error rests
on the party seeking the new trial.” Sibley v. Lemaire, 184 F.3d 481, 487 (5th Cir. 1999) (quoting
Del Rio Distributing, Inc. v. Adolph Coors Co., 589 F.2d 176, 179 n. 3 (5th Cir. 1979)). “A new
trial may be granted, for example, if the district court finds the verdict is against the weight of the
evidence, the damages awarded are excessive, the trial was unfair, or prejudicial error was
committed in its course.” Smith, 773 F.2d at 612–13. The decision to grant or deny a new trial is
committed to the sound discretion of the district court. See Allied Chem. Corp. v. Daiflon, Inc.,
449 U.S. 33, 36 (1980).
Defendants seek a new trial on infringement, invalidity, willful infringement and lost
profits. Docket No. 582 at 46. Defendants assert that the verdict is contrary to the weight of the
evidence. Id. at 48. Defendants also argue that the willfulness, liability and lost profits verdicts
were unfairly tainted by Plaintiffs’ focus on Telebrands’ pre-lawsuit conduct. Id. at 48–56.
Defendants further contend that Plaintiffs’ damages presentation provides an additional basis for
a new trial. Id. at 56. Defendants also assert that Plaintiffs improperly influenced the jury with

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emotion and prejudice. Id. at 59. Finally, Defendants argue that a new trial on invalidity is
warranted for additional reasons. Docket No. 582 at 61.
In response, Plaintiffs argue that Defendants fail to demonstrate any unfairness, prejudice
or jury confusion. Docket No. 588 at 53. They contend that Telebrands’ pre-lawsuit conduct was
relevant to this case. Id. Plaintiffs further contend that Defendants fail to show that Plaintiffs’
damages presentation justifies a new trial. Id. at 57. Finally, Plaintiffs assert that Defendants fail
to demonstrate any improper influence. Id. at 59.
a. Weight of the Evidence
Defendants first assert that “[f]or the reasons described in Defendants’ motions for renewed
JMOL of noninfringement, no willful infringement, invalidity and no lost profits, a new trial
should be granted.” Docket No. 582 at 48. As explained in the section on Defendants’ JMOLs,
supra at 28–53, there was substantial evidence in the record to support the jury’s findings on these
issues. Consequently, Defendants again fail to demonstrate an “absolute absence of evidence to
support the jury’s verdict.” See Seibert v. Jackson Cnty., 851 F.3d 430, 439 (5th Cir. 2017) (new
trial granted only when verdict is against the great weight of the evidence, meaning “an absolute
absence of evidence to support the jury’s verdict.”). For the same reasons explained with respect
to Defendants’ JMOL motions, the weight of the evidence does not justify a new trial.
Accordingly, Defendants’ Motion for a New Trial on this basis is DENIED.
b. Telebrands’ Pre-Lawsuit Conduct
As to Defendants’ argument that the willfulness, liability and lost profits verdicts were
unfairly tainted by Plaintiffs’ focus on Telebrands’ pre-lawsuit conduct, the Court finds this
argument to be without merit.

Defendants’ argument mainly concerns Plaintiffs’ pre-trial

presentation on Balloon Bonanza and how that product was created.

Page 47 of 64

These concerns were raised before the Magistrate Judge during pretrial proceedings. At
the pre-trial hearing, the Magistrate Judge explained that he had to come up with some way to
allow the parties to refer generally to the facts of that case, so that Plaintiffs could tell their story
to the jury. The Magistrate Judge recognized Defendants’ concerns and decided that Plaintiffs
would be permitted to tell their story in a limited way:
This has to boil down, as far as willfulness, is this is the way it’s going to be
presented. Mr. Malone developed an invention and he patented it. He got the ’066
patent. Mr. Malone, Ms. Mowbray, Tinnus, however you want to say it, believes
Telebrands infringed that patent, and they pursued legal action on that patent. Then
Telebrands developed another product, and in the meantime, we got another patent,
and we believe they’re still infringing, and they’re infringing this patent with this
product. That’s the way it’s going to have to be presented.
Docket No. 522 at 87:14–23.
The trial generally went according to that plan.18 Plaintiffs were able to show the jury the
emails about copying as evidence of willfulness and non-obviousness. The evidence presented
focused on Battle Balloons and the ’282 and ’749 Patents. The jury was informed multiple times,
both by counsel for the parties and in the jury instructions themselves, which products were tied
to the verdict and which were not. See Jury Instructions, Docket No. 540 at 6 (“The Balloon
Bonanza is not an accused product in this case.”); see also 11/14/17 P.M. Tr. at 47:16–21, 50:2–
5, 52:13–14. Thus, the jury was not confused as to which products were at issue.
Accordingly, Defendants’ Motion for a New Trial on this basis is DENIED.

18

Defendants argue that Plaintiffs violated this plan during both Plaintiffs’ opening argument and during Ms.
Mowbray’s testimony. During opening, Plaintiffs’ counsel stated that Plaintiffs were forced to bring a “second
lawsuit” to enforce its patents. 11/14/17 A.M Tr. at 38:16. Yet this does not violate the Magistrate Judge’s ruling, as
the Magistrate Judge stated Plaintiffs could explain they pursued “legal action” against Balloon Bonanza. Moreover,
Defendants did not timely object, as Defendants did not raise this issue until after opening statements were completed.
See 11/14/17 P.M. Tr. at 66:4–67:9. As to Ms. Mowbray’s testimony, as explained further in Section VI (Attorneys’
Fees), Ms. Mowbray’s comments were immediately corrected on the record by Plaintiffs’ counsel and thus did not
warrant a curative instruction. See 11/15/17 A.M. Tr. at 40:19–42:14.

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c. PTAB Proceedings
Defendants next argue that the willfulness verdict was tainted because they were not
allowed to show the jury the PTAB’s institution decisions as to the ’066, ’749, and ’282 Patents.
Defendants again argue they had a good-faith belief that the patents were invalid and that those
PTAB decisions should have been shown to the jury as evidence of Defendants’ good-faith belief.
This argument was raised before the trial, but the Magistrate Judge precluded any “references,
argument, or evidence regarding any order from or proceeding before the PTAB.” Docket No.
477 at 1. The Magistrate Judge found that this evidence would be substantially more prejudicial
than probative and would likely confuse the jury. Because the ’066 Patent was not at issue in this
case, it made little sense to allow references to those proceedings.19 In addition, the institution
decisions for the patents-in-suit issued on February 21, 2017, well after this lawsuit was first filed
in January 2016. Lastly, in early 2018, both patents-in-suit were found valid in final written
decisions by the PTAB. Docket No. 626. Thus, it is even more clear now than at the time of trial
that allowing the PTAB evidence in would have been substantially more prejudicial than probative.
Defendants still argued at trial that their good-faith belief that the patents were invalid was
based on the advice of Dr. Kamrin. See, e.g., 11/15/17 P.M. Tr. at 136:6–22. Any claim that
Telebrands was unable to explain itself fully at trial is more likely due to its repeated attempts to
elicit expert testimony from its fact witnesses. See id. at 13:3–9, 18:19–19:8, 19:24–21:14, 26:1–
31:19.
The verdict was not tainted by keeping the PTAB proceedings out of the case. Defendants’
Motion for a New Trial on this basis is DENIED.

19

Moreover, the ’066 Patent was invalidated for indefiniteness based on language not contained in the patents-in-suit
in this case. And as explained above, that indefiniteness decision was later reversed by the Federal Circuit.

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d. Plaintiffs’ Damages Presentation
Defendants next contend that the exclusion of the PTAB evidence precluded them from
cross-examining Mr. Ratliff on his alleged assumption that “Telebrands was illegally on the market
after June 2015 due to the ’066 Patent” because “when the ’066 Patent issued, but before the ’749
and ’282 patents issued Telebrands would have been required to take a license or be enjoined.”
Docket No. 582 at 56–57. However, Mr. Ratliff explained to the jury that his analysis was not
dependent on infringement before the first patents-in-suit issued in January 2016. 11/17/17 P.M.
Tr. (Sealed Portion No. 4) at 5:12–15, 15:23–25. Moreover, defense counsel brought this issue to
the Court’s attention during a lengthy bench conference. Id. at 81:16–91:9. Defense counsel then
directly asked Mr. Ratliff about this issue, and Mr. Ratliff again affirmed that his analysis was
“solely” based on conduct beginning in 2016. Id. at 94:1–9. Thus, the PTAB evidence about the
’066 Patent had little relevance to Mr. Ratliff’s testimony.
Because Defendants have not shown that this justifies a new trial, Defendants’ Motion for a
New Trial on this basis is DENIED.
e. Plaintiffs’ Closing Argument
Defendants argue that the damages number presented by Plaintiffs during the rebuttal
portion of their closing argument misstated the testimony of Defendants’ expert, Dr. Hatch.
Docket No. 582 at 58. Specifically, Defendants argue that Plaintiffs stated Dr. Hatch had
advocated for a reasonable royalty number of $16 million, when he actually advocated for $1.67
million. Id. at 58–59. After reviewing the transcript, Plaintiffs’ statement about Dr. Hatch’s
testimony does not reach the high bar needed to warrant a new trial.
During Dr. Hatch’s direct testimony, Defendants’ counsel asked him how his math would
differ if he used Ms. Mowbray’s number of $ /unit. See 11/20/17 P.M. Tr. (Sealed Portion No. 5)

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at 62:20–63:7. He responded that because there were almost

units, it would be about

$16 million. Id. He then opined that Telebrands would not pay that number. Id. at 63:11–13.
During closing, Plaintiffs characterized this testimony as follows:
And then Dr. Hatch talked about this testimony as well, and these were questions
by Telebrands’ own counsel. You were in court and you heard Ms. Mowbray’s
testimony, and she indicated that it would be $ a unit was her number. And then
he was asking: How much would that work out to if you multiplied $ a unit times
the number of Battle -- Battle Balloons units? That would be about 16 million in
reasonable royalty. That’s Dr. Hatch’s testimony through direct examination with
their own lawyers. And you didn’t hear any of that in [Defense counsel’s] closing.
11/21/17 Tr. at 153:2–12. Nothing in this statement is demonstrably false. Plaintiffs explained
that the $16 million number was based on Ms. Mowbray’s own number at $ /unit. The jury was
aware of the number Dr. Hatch advocated because Defendants had just argued their own damages
number during their closing. Thus, Defendants were not unfairly prejudiced by this statement.
Moreover, the jury did not award Plaintiffs their full request (over $20 million) or even the $16
million mentioned here.
Accordingly, Defendants’ Motion for a New Trial on this basis is DENIED.
f. Improper Influence
Defendants next argue that Plaintiffs “improperly influenced the jury with emotion and
prejudice.” Docket No. 582 at 59. Defendants argue that Plaintiffs appealed to “sectionalism,”
focusing on things like: Plaintiffs’ counsel’s small law practice in Tyler, Texas; Defendants’ “big
firm” from Washington D.C.; Mr. Malone’s local roots and large family; and that one of
Defendants’ counsel is a “big shot” who “was just in the Tyler paper last week.” Docket No. 582
at 59–60.
As an initial matter, Defendants did not timely object to many of the things they now
complain about. Moreover, Defendants’ counsel made similar statements during voir dire. See
11/14/17 A.M. Tr. at 98:7–9 (“I practice law in Henderson. I grew up in Henderson. I raised three
Page 51 of 64

kids in Henderson.”). As to Defendants’ argument about Mr. Malone’s local roots and large
family, it is only fair to allow each side to tell their story to the jury. Here again, Defendants did
the same thing, and the jury heard extensive testimony from Telebrands’ CEO about how he came
to America and how he created his company. See 11/15/17 P.M. Tr. at 91:22–101:10. Lastly,
Defendants employed their own fair share of “sectionalism.” See, e.g., 11/14/17 P.M. Tr. at 46:14–
17 (“There’s Telebrands, an American company in New Jersey, and ZURU Ltd, which we were
told started in New Zealand and is now headquartered in China. It’s a conglomerate, actually.”).
Lastly, the comments about one of Defendants’ counsel, David Boies, were a non-issue.20
During voir dire, not a single juror acknowledged having ever heard his name. 11/14/17 A.M. Tr.
at 74:16–19. Moreover, the Court instructed Plaintiffs not to mention his name again, and
Plaintiffs complied. 11/15/17 A.M. Tr. at 19:14–19. It was appropriate for the parties to ask the
jurors about him during voir dire. Once no juror acknowledged knowing who he was, no further
mention was made.
Defendants’ arguments do not meet the high bar required for a new trial. Defendants’ Motion
for a New Trial on this basis is DENIED.
g. “Red Zone” Analogy
Defendants’ final argument for a new trial on invalidity hinges on an analogy Plaintiffs’
counsel made during opening and closing arguments. Docket No. 582 at 61. Plaintiffs’ counsel
analogized the clear and convincing evidence standard for invalidity to the “red zone” in football.
See 11/14/17 P.M. Tr. at 42:21–43:1; see also 11/21/17 A.M. Tr. at 92:17–21.

20

For context, Mr. Boies was in the news shortly before trial started in late November related to his former
representation of a different client. While he filed a notice of appearance in this case and attended the pre-trial hearing
before the Magistrate Judge, he did not appear at trial.

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On this record, this is not enough to warrant a new trial. The Court heard Defendants’
objection at trial and specifically included the following clause in the jury instructions: “You may
have heard counsel argue or a witness testify regarding the burden of proof in this case. The only
consideration of the burdens of proof you should make in this case are the ones I am providing you
today in these instructions.” Docket No. 540 at 7. Moreover, as discussed above, Defendants’
invalidity expert failed to even account for secondary considerations. Thus, the jury’s finding on
invalidity was supported by the evidence, and the jury instructions properly instructed them on the
law.
Accordingly, Defendants’ Motion for a New Trial on this basis is DENIED.21
h. Conclusion

In sum, none of these arguments for a new trial, either alone or taken together, reach the
high bar required for a new trial. Accordingly, Defendants’ Motion for a New Trial (Docket No.
582) is DENIED.
IV.

Plaintiffs’ Motion for Permanent Injunction (Docket No. 580)
Plaintiffs argue that under eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), the

Court should grant permanent injunctive relief. Docket No. 580. Plaintiffs further request a return
of the cash bond of $4,825,000 that was posted with the Court to secure the preliminary injunction.
Id. at 2. Defendants do not dispute Plaintiffs’ analysis under the eBay factors. Rather, Defendants
sole contention is that the Court should grant JMOL for Defendants or grant their motion for a new
trial. Docket No. 586 at 2. Defendants further contend that the Court should not release the bond
until the appeal process is complete. Id.

21

Defendants also make vague references to some of their proposed jury instructions that the Court did not adopt and
argue that these also warrant a new trial on invalidity. Docket No. 582 at 55. However, they do not argue what
prejudice they suffered. These arguments do not warrant a new trial.

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A permanent injunction is appropriate. Defendants’ entire response turns on its Motion for
JMOL or New Trial (Docket No. 582). As described above, every JMOL has been denied with
the exception of the willfulness finding as to Fry’s. The Court also declined to grant a new trial.
Since Defendants did not dispute Plaintiffs’ analysis under the eBay factors as to whether a
permanent injunction is necessary, this motion is essentially unopposed.
Under the eBay factors, a permanent injunction is appropriate.

“A plaintiff must

demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such
as monetary damages, are inadequate to compensate for that injury; (3) that, considering the
balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4)
that the public interest would not be disserved by a permanent injunction.” eBay, 547 U.S. at 391.
The Court has issued a preliminary injunction in this case, and the jury found that every
Defendant willfully infringed.22,23 See Docket Nos. 99, 142, 159, 543. Furthermore, because
Zuru’s Bunch O Balloons and Telebrands’ Battle Balloons are direct competitors, Defendants’
infringement would cause irreparable injury to Plaintiffs. See Presidio Components, Inc. v. Am.
Tech. Ceramics Corp., 702 F.3d 1351, 1363 (Fed. Cir. 2012) (“Direct competition in the same
market is certainly one factor suggesting strongly the potential for irreparable harm without
enforcement of the right to exclude.”). Money damages are also inadequate to compensate
Plaintiffs because Zuru was concerned about its loss of brand recognition and loss of customer
goodwill. See 11/15/17 A.M. Tr. at 69:9–22; 70:3–15. For all the reasons laid out by the
Magistrate Judge in recommending the preliminary injunction, the balance of hardships favors an
injunction. See Docket No. 99 at 27–28 (explaining that Telebrands has lots of other products but

22

The preliminary injunction was also affirmed by the Federal Circuit. See Docket No. 593.

23

The Court entered judgment as a matter of law that Defendant Retailer Fry’s did not willfully infringe. See supra
at 35.

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Plaintiffs rely on this product more heavily). At trial, Mr. Iyer confirmed that Telebrands had
“way more products that sold much more than the Battle Balloons product.” 11/16/17 P.M. Tr. at
22:22–23:22. As explained previously by the Magistrate Judge, the public interest is best served
by enforcing patents that are valid and infringed. See Docket No. 99 at 29.
Lastly, as to Defendants’ contention that the Court should decline to release the bond, this
argument is not supported by Federal Circuit law. See Glaxo Grp. Ltd. v. Apotex, Inc., 376 F.3d
1339, 1349 (Fed. Cir. 2004) (“Apotex additionally asserted that the district court improperly
ordered the release of Glaxo’s preliminary injunction bond. Because the entry of a permanent
injunction obviates the need for a preliminary injunction bond, we find this issue to be moot.”).
Thus, the bond should be released.
Accordingly, Plaintiffs’ Motion for Permanent Injunction (Docket No. 580) is
GRANTED. It is hereby ORDERED as follows:


The Court FINDS that Plaintiffs have carried their burden of showing that: (a) they have
suffered irreparable injury; (b) remedies at law, such as money damages, are inadequate;
(c) the balance of hardships warrants injunctive relief; and (d) the public interest would not
be disserved by a permanent injunction.



Pursuant to Federal Rule of Civil Procedure 65, 35 U.S.C. § 271, 35 U.S.C. § 283, and the
inherent equitable powers of the Court, the Court hereby PERMANENTLY
RESTRAINS AND ENJOINS all Defendants (inclusive of Telebrands Corp.;
Bulbhead.com, LLC; Bed Bath & Beyond Inc.; Fry’s Electronics; The Kroger Company;
Sears Holdings Corporation; and Walgreens Boots Alliance, Inc.), their officers, agents,
servants, employees, attorneys and all other persons who are in active concert or
participation with the Defendants who receive actual notice of this Order by personal

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service or otherwise, from making, using, importing, marketing, advertising, offering to
sell, or selling in the United States the Battle Balloons product or any colorable imitation
of the same that infringes either U.S. Patent No. 9,242,749 (“’749 Patent”) or U.S. Patent
No. 9,315,282 (“’282 Patent”).


This permanent injunction shall remain in effect until the expiration of the ’749 Patent
and the ’282 Patent.



The Clerk of Court is hereby directed to return to Plaintiffs the cash bonds in the amount
of $4,825,000 that Plaintiffs previously posted with the Court in compliance with the
Court’s prior preliminary injunction orders. Docket Nos. 159, 167, 224, 235.

V.

Plaintiffs’ Motion for Prejudgment and Post-judgment Interest (Docket No. 581)
Plaintiffs request that the Court award prejudgment interest at the prime rate compounded

annually from January 2016 through December 31, 2017. Docket No. 581. Defendants argue that
if the Court awards prejudgment interest it should use the weekly average 52-week Treasury Bill
rate compounded annually. Docket No. 585. In keeping with the standard practice of this District,
the Court ORDERS Defendants to pay Plaintiffs prejudgment interest at the prime rate
compounded quarterly from January 2016 through the date on which the Court enters final
judgment. See VirnetX, Inc. v. Apple Inc., No. 6:10-cv-417, Docket No. 732 at 35 (listing a sample
of cases where the Court awarded prejudgment interest on the damages at the prime rate
compounded quarterly). Further, the Court ORDERS Defendants to pay Plaintiffs post-judgment
interest at the statutory rate upon entry of judgment as prescribed by 28 U.S.C. § 1961.
Accordingly, Plaintiffs’ Motion for Prejudgment and Post-Judgment Interest (Docket No.
581) is GRANTED.

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VI.

Plaintiffs’ Motion to Declare These Consolidated Cases as Exceptional and for
Attorneys’ Fees (Docket No. 583)
Plaintiffs request the Court declare these cases exceptional and award Plaintiffs

$5,003,016.58 in attorneys’ fees and $1,027,656.54 in expert fees. Docket No. 583 at 2.
The relevant statute, 35 U.S.C. § 285, provides that a “court in exceptional cases may
award reasonable attorney fees to the prevailing party.” A case is exceptional when it “stands out
from others with respect to the substantive strength of the 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.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).
Whether a case is deemed “exceptional” is a matter left to the Court’s discretion and must be made
on a case-by-case basis, with consideration of “the totality of the circumstances.” Id.; see also
Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1748 (2014) (“[T]he
determination of whether a case is ‘exceptional’ under § 285 is a matter of discretion.”); Eon-Net
LP v. Flagstar Bancorp, 653 F.3d 1314, 1324 (Fed. Cir. 2011) (“we are mindful that the district
court has lived with the case and the lawyers for an extended period.”).
Some factors the Court may consider in making its determination under § 285 are
“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.” Octane, 134 S. Ct at 1756 n.6. To be considered exceptional, conduct need not
be “independently sanctionable.” See id. Nor is a finding of bad faith required; “a case presenting
either subjective bad faith or exceptionally meritless claims” may warrant an award of fees. Id. at
1757. “After determining that a case is exceptional, the district court must determine whether
attorney fees are appropriate,” which is within the Court’s discretion. Cybor Corp. v. FAS Techs.,
Inc., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (citations omitted). Ultimately, a party must prove
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entitlement to attorney fees by a preponderance of the evidence. Octane Fitness, 134 S. Ct. at
1758.
“It is equally necessary for the trial court to explain why this is not an exceptional case in
the face of its express finding of willful infringement.” S.C. Johnson & Son, Inc. v. CarterWallace, Inc., 781 F.2d 198, 201 (Fed. Cir. 1986). Conversely, “[e]ven an exceptional case does
not require in all circumstances the award of attorney[’s] fees.” Id. Many factors can determine
whether fees are warranted in the finding of willfulness. Id. “The trial judge is in the best position
to weigh considerations such as the closeness of the case, the tactics of counsel, the conduct of the
parties, and any other factors that may contribute to a fair allocation of the burdens of litigation as
between winner and loser.” Id.
Plaintiffs argue that Defendants engaged in bad-faith litigation conduct that caused delay,
undue burden and significant expenses in this case. Docket No. 583 at 3. Plaintiffs argue that
Defendants took untenable positions with respect to infringement of the ’282 Patent, noninfringing alternatives and inequitable conduct. Id. at 4–5. Plaintiffs also argue that Defendants
took dilatory tactics to stay this case or transfer it and repeatedly interjected the PGR proceedings.
Id. at 5–6. Finally, Plaintiffs argue that Defendants attempted to re-litigate claim construction and
took unreasonable discovery positions. Id. at 7–8.
Defendants contend that they filed legitimate motions and that narrowing of issues for trial
is not litigation misconduct. Docket No. 590 at 11. Defendants argue that they handled the PGRs
properly, did not commit litigation misconduct with claim construction briefing, took reasonable
positions with their experts and did not take any unreasonable discovery positions. Id. at 13–15.
Finally, Defendants argue that Plaintiffs’ litigation misconduct does not justify an award of fees.
Id. at 17–18.

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For the reasons discussed herein, the Court finds this case is exceptional. Defendants’
motion practice in this case was excessive and seemingly conducted for no legitimate purpose
other than to burden Plaintiffs and cause delay. See supra at 12–16. Early on, the Court
admonished Defendants for abuse of the Court’s emergency motion practice, yet Defendants’
frivolous practices continued. See Docket No. 132 at 2 (denying Telebrands’ motion as a nonemergency and explaining that the Court had “already admonished the parties regarding their abuse
of emergency motions”).

Defendants brought numerous unmeritorious motions, thereby

unnecessarily expending significant resources of the parties and the Court. These included a
motion to reconsider the Court’s preliminary injunction (Docket No. 153), a premature motion to
stay the injunction (Docket No. 146), a re-urged motion to stay the injunction (Docket No. 168), a
motion to sever and stay the Retailers (Docket No. 178) and a motion to stay pending PGR
proceedings (Docket No. 239). Several the Court’s rulings were ultimately upheld by the Federal
Circuit. Docket Nos. 229, 157, 198, 262, 293; Tinnus Enterprises, LLC et al. v. Telebrands Corp.
et al, Nos. 2017-1175, 2017-1760, 2017-1811 (Fed. Cir. Jan. 16, 2018). Defendants also filed a
belated motion to dismiss this case just a few months before trial, which was ultimately denied and
never appealed. Docket Nos. 359, 456. Defendants also engaged in sanctionable discovery
misconduct in this matter. See supra at 13–14.
Perhaps the most common theme throughout this litigation, however, was Defendants’
constant re-urging of issues already decided by the Court. See supra 15–18. Defendants’
continued assertion of claims and defenses and belated streamlining of issues wasted significant
resources. Id. Defendants’ unacceptable trial conduct, described above, further highlights the
exceptional nature of this case. Despite clear rulings from the Court, Defendants flagrantly and
continuously violated motions in limine and sustained objections. See supra at 17–19; see also,

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e.g., Docket No. 453 (granting Plaintiffs’ Motion in Limine No. 1, excluding reference to
administrative proceedings before the PTAB). Defendants’ conduct was so egregious the Court
admonished Defendants on the record. 11/17/17 A.M. Tr. (Sealed Portion No. 4) at 90:10–22.
Moreover, the jury’s finding of willfulness further supports a finding that this case is exceptional.
See, e.g., S.C. Johnson & Son, 781 F.2d at 201 (finding it is “necessary for the trial court to explain
why this is not an exceptional case in the face of its express finding of willful infringement.”).
Defendants go beyond merely attempting to justify their own conduct and allege that
Plaintiffs’ misconduct makes an award of fees inappropriate. Docket No. 590 at 17. According
to Defendants, Plaintiffs substantially inflated their damages number, maintained inappropriate
discovery positions as to particular ZURU entities and interjected the ’066 Patent at trial. Docket
No. 590 at 17–20. In their Renewed Supplemental Motion for Judgment as a Matter of Law or
Alternatively a New Trial, Defendants argue that Plaintiffs’ withholding of evidence further means
that the case is not exceptional. Docket No. 702, at 18–19. The Court has already considered and
rejected this argument on the merits. See supra at 35–38.
In relative comparison, Plaintiffs’ conduct, although perhaps not immune from criticism,
does not alter the finding that this case is exceptional. Indeed, as to the issue of damages—the
main argument raised by Defendants—that issue was overlooked by both parties until the time of
dispositive motions. Moreover, as the Court noted in ruling on the issue, it appeared that “what
occurred here was perhaps an unintentional oversight in the licensing of the patents-in-suit and the
structuring of the ZURU entities.” Docket No. 485 at 12. As to the withholding of evidence on
this issue, as the Court explained above, that Defendants were not diligent in seeking out that
information.

See supra at 40–42.

Indeed, Defendants have not established any improper

withholding of information in this litigation. The emails in question were produced in a related

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action where different custodians were identified, different search terms were used and Defendants
were represented by new counsel. See Case No. 6:17-cv-170.
As to injecting the ’066 Patent into this trial, the Court has already considered and rejected
this argument on the merits. See supra at 48. This infraction pales in comparison to the testimony
purposefully solicited by Defendants’ counsel in the face of numerous and sustained objections.
11/16/17 P.M. Tr. at 11:24–21:14.
As discussed supra at 24–25, the Retailers were complicit in a number of the actions
described herein. The Retailers frivolously refused to be bound once the injunction as to
Telebrands issued, see supra at id., and continued selling inventory after Telebrands was enjoined
and after the Magistrate Judge recommended the injunction. See Docket No. 224 at 3. The
Retailers never provided definite accounts of their inventory and failed to produce discovery on
the same. See id. (“the Retailer Defendants have produced no discovery to date on the state of
their inventory… none of the Retailer’s submissions include accounts for the inventory, documents
that should exist in the ordinary course of business.”).
In sum, this case is exceptional. At nearly every stage of this litigation, Defendants took
untenable positions and created unnecessary hurdles for the parties and the Court. This conduct
continued throughout trial, giving rise to numerous sustained objections and admonishments on
the record. Having found that the case is exceptional, the only remaining issue is the amount of
fees to be awarded.
Plaintiffs submitted declarations from three of their attorneys in support of their request for
fees. Docket Nos. 583-1, 583-2, 583-3. Plaintiffs request a total of $4,634,775.45. Docket No.
583 at 11. Plaintiffs contend these fees are reasonable because the partners billed at a rate ranging
from $320 to $435, less than the average billing rate of $606 for intellectual property partners in

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Texas, and the associates billed at a rate ranging from $250 to $345, below the average rate of
$435 for intellectual property associates in Texas. Id. Adding the requested expenses, the total
attorneys’ fees requested are $5,003,016.58. Plaintiffs also seek an award of expert fees in this
case as a sanction for the abuse of the judicial process. Id. Plaintiffs request $1,027,656.54 for
expert fees.
Defendants argue that Plaintiffs have not shown the fraud or bad faith necessary to award
expert fees and that Plaintiffs attach no bills for their experts to indicate whether the amount is for
this case only or whether it includes other cases he worked on. Docket No. 590 at 21. Defendants
also argue that Plaintiffs’ attorney fee submissions are inadequate because they attach no actual
bills or invoices, include fees from other cases, and there are arbitrary reductions to the bills with
excessive percentages and noncompensable time that is not separated out. Id. at 21–24. Finally,
Defendants argue that even if the Court were to award fees, the request should be adjusted
downward by at least 25 percent due to duplicative overstaffing. Id. at 24.
The Court does not find that expert fees are warranted as an additional sanction. Plaintiffs
do not point to any conduct separate from their basis for attorneys’ fees to justify an award of
expert fees. Docket No. 583 at 12–13. Plaintiffs simply ask this Court to rely on its inherent
equitable power to impose sanctions for the bad faith conduct of Defendants. Id. While the Court
finds an award of attorneys’ fees appropriate based upon the conduct in this case described herein,
the Court does not find a basis to further sanction Defendants in the form of expert fees. See
Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381, 1392 (Fed. Cir. 2008) (“[w]here,
as here, the district court’s award of attorney fees under section 285 and expert witness fees under
its inherent authority are predicated on the same conduct, the district court must offer a reasoned

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explanation for why the award of attorney fees and expenses under section 285 is not a sufficient
sanction for the conduct in question.”).
As to the amount of attorneys’ fees to be awarded, the Court ORDERS the parties to meet
and confer regarding an appropriate amount for fees. The Court notes that it does not find
Plaintiffs’ requested fee amount objectively unreasonable. However, to the extent there are
disputes, the parties should submit an accounting of the disputes with attached support within
seven (7) days of this Order. Time billed and any invoices should, at a minimum, reflect the
number of hours worked and the rate at which those hours were billed.
Accordingly, the Motion for Attorneys’ Fees is GRANTED.
CONCLUSION
In sum, the Court ORDERS as follows:


Plaintiffs’ Motion for Enhanced Damages under 35 U.S.C. § 284 (Docket No. 578) is
GRANTED.



Plaintiffs’ Motion for Apportionment of Damages as to Retailer Defendants (Docket No.
579) is DENIED.



Plaintiffs’ Motion for a Permanent Injunction (Docket No. 580) is GRANTED.



Plaintiffs’ Motion for Prejudgment and Post-judgment Interest (Docket No. 581) is
GRANTED.



Defendants’ Renewed Motions for Judgment as a Matter of Law and for a New Trial
(Docket No. 582) are GRANTED-IN-PART and DENIED-IN-PART. All motions are
DENIED with the exception of Defendants’ JMOL for willfulness as to Fry’s Electronics,
which is GRANTED.

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

Defendants’ Renewed Supplemental Motion for Judgment as a Matter of Law or
Alternatively a New Trial (Docket No. 702) is DENIED.



Plaintiffs’ Motion to Declare These Consolidated Cases as Exceptional and for Attorneys’
Fees (Docket No. 583) is GRANTED.
SIGNED this 15th day of March, 2019.

____________________________________
ROBERT W. SCHROEDER III
UNITED STATES DISTRICT JUDGE

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