I/P Engine, Inc. v. AOL, Inc. et al

Filing 1081

MEMORANDUM OPINION AND ORDER. Signed by District Judge Raymond A. Jackson on 1/3/14. (tbro)

FILED
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division

('! I HK, i .; nisi mi;; COURT
I/P ENGINE, INC.,
Plaintiff,
CIVIL ACTION NO. 2:llcv512

V.

AOL INC., et al.,
Defendants.

MEMORANDUM OPINION & ORDER

Before the Court is Plaintiff's Notice of Calculation of Supplemental Damages,
Prejudgment Interest, and Post-Judgment Interest, Dkt. No. 968, and Defendants' Opposition.
Dkt. No. 973. The Court has carefully considered the parties' pleadings and finds it appropriate

to enter judgments of supplemental damages and prejudgment interest, and to defer a ruling on
post-judgment interest.
I. BACKGROUND

On September 15, 2011, Plaintiff I/P Engine, Inc. filed a complaint against Defendants
AOL, Inc., Google, Inc., IAC Search & Media, Inc., Gannett Company, Inc. and Target
Corporation in which I/P Engine alleged that the Defendants had infringed several of its patents.
On November 6, 2012, a jury reached a verdict finding that the Defendants had infringed the
asserted claims of two of I/P Engine's patents. See Verdict Form, Nov. 6, 2012, Dkt. No. 789.
The jury awarded I/P Engine damages in the amount of $30,496,155, which did not include
interest. Id. The jury also awarded I/P Engine a running royalty rate of 3.5%. Id. On
November 20, 2012, the formal judgment of the Court was entered into the record. See

Judgment of the Court, November 20, 2012, Dkt. No. 801. As a result of this favorable verdict,
I/P Engine asked this Court for an award of prejudgment interest, post-judgment interest, and

supplemental damages for Defendants' post-discovery and pre-verdict infringement. Dkt. No.
792. On August 1, 2013, the Court entered an Order finding that all three forms of relief were
warranted, and ordered further discovery and briefing to facilitate calculation of the relevant
amounts. Dkt. No. 960. On August 21, 2013, I/P Engine filed is Notice of Calculation. Dkt.

No. 968. On August 26, 2013, Defendants filed their Opposition. Dkt. No. 973.
II. DISCUSSION

A. Supplemental Damages for Infringement Not Covered by the Jury's Verdict

In its August 1, 2013 Order, the Court concluded that I/P Engine is entitled to

supplemental damages for the period of October 1, 2012 to November 20, 2012. Defendants
have provided an accounting of revenue for the accused products for the relevant time period,
Dkt. No. 969-2 (sealed), and I/P Engine and Defendants have submitted competing calculations

of damages based on those revenues. Despite the widely differing amounts that the parties have
concluded are warranted (Defendants estimate supplemental damages at $2,249,778, Dkt. No.
973, at 5, and I/P Engine at $16,792,982, Dkt. No. 968, at 2), the parties agree on most of the
relevant factors. First, they agree that the proper calculation method is to apply the royalty

apportionment factor, or royalty base, to the revenues, and then to apply the royalty rate to that
figure. Second, they agree that it is proper to use the royalty rate explicitly found by the jury in
an interrogatory on the verdict form: 3.5%. The parties disagree principally on the royalty
apportionment factor to be used: I/P Engine contends it should be 20.9%, the figure its expert

presented at trial, and Defendants contend it should be 2.8%. Defendants arrived at this figure
by hypothesizing how the jury might have arrived at its ultimate damages calculation for

Defendant Google, extrapolating from that hypothesis, and applying the resulting figure to all
Defendants. Their second disagreement is to the underlying revenues: Defendants contend that
I/P Engine based its calculations on revenues through November 30, 2012, rather than through
November 20, 2013.

"The amount of supplemental damages following a jury verdict 'is a matter committed to
the sound discretion of the district court.' Amado v. Microsoft Corp., 517 F.3d 1353, 1362 n. 2
(Fed.Cir.2008)." SynQor, Inc. v. Artesyn Technologies, Inc., 709 F.3d 1365, 1384 (Fed. Cir.
2013). The Court has already concluded that 20.9% is the proper apportionment factor to use to

determine the royalty base for the infringing systems. Dkt. No. 963, at 6. This figure was

presented by I/P Engine's expert at the trial in this case, and the Court found his testimony

credible and persuasive. By contrast, the Court finds Defendants' calculation overly speculative
and therefore inappropriate to rely upon. Accordingly, the Court will award supplemental

damages to I/P Engine by applying a 20.9% apportionment to the revenues for the relevant time
period, and then a 3.5% royalty rate.
However, the Court cannot fully adopt I/P Engine's calculations because Defendants
have shown that as to the non-Google Defendants, I/P Engine relied upon revenue figures for the
entire month of November 2012, rather than through November 20, 2012. Compare Dkt. No.
969-2 (sealed) with Dkt. Nos. 976, 977 (sealed). However, Defendants and I/P Engine agree as
to the total revenues for all Defendants, meaning that the total supplemental damages to be
awarded is the same as that requested by I/P Engine but will be apportioned somewhat
differently among the Defendants. Utilizing the pro-rated total revenue figures provided by
Defendants, Dkt. No. 976 (sealed) with a 20.9%o apportionment rate and 3.5% royalty rate results

in $16,784,491 total, apportioned as follows: $316,408 for AOL, $137 for Gannett, $629,891 for

IAC, $6,760 for Target, and $15,831,295 for Google.1
B. Prejudgment & Post-Judgment Interest
In its August 1, 2013 Order, the Court also found that I/P Engine should receive an

award of prejudgment interest, calculated by applying the prime rate compounded quarterly to
the damages from September 15, 2011 to November 20, 2012. Applying those directions, the

parties have accordingly arrived at very similar figures for the damages awarded by the jury. See
Dkt. No. 968, at 3; Dkt. No. 973, at 5. Accordingly, the Court will adopt I/P Engine's (slightly

lower) figures, and will award prejudgment interest to I/P Engine as follows: $278,067 from

Google, $139,790 from AOL, $76 from Gannett, $117,035 from IAC, and $1,739 from Target.
The parties agree, however, that because prejudgment interest is to be compounded

quarterly, the intereston supplemental damages, which began on October 1, 2012, will not
accrue until the end of this year and should be included in post-judgment interest. See Dkt. No.

973, at 5; Dkt. No. 969-3 (sealed). Finally, although the Court directed the parties to submit their

calculations on post-judgment interest, this amount will not be finally known until payment of
the judgment is made in full. Accordingly, the parties are DIRECTED to submit their
calculations of post-judgment interest, incorporating the supplemental damages and prejudgment
interest awarded in this Order, when Defendants have satisfied the judgment.

1Both Defendants and Plaintiffinclude calculations for "AOL Search Marketplace," which they both name as a
"Defendant." Dkt. No. 968, at 2; Dkt. No. 973, at 4. AOL Search Marketplace is not a named Defendant in the case
and was not part of the jury's verdict. Accordingly, the Court declines to enter an award against it.
4

III. CONCLUSION

For the reasons stated above:

IT IS ORDERED AND ADJUDGED that Plaintiff, I/P Engine, Inc., recover of
Defendant, Google, Inc., the sum of Sixteen Million One Hundred Nine Thousand Three
Hundred Sixty-Two Dollars and 00/100 ($16,109,362).

IT IS FURTHER ORDERED AND ADJUDGED that Plaintiff, I/P Engine, Inc.,

recover of Defendant AOL, Inc., the sum of Four Hundred Fifty-Six Thousand One Hundred
Ninety-Eight Dollars ($456,198).
IT IS FURTHER ORDERED AND ADJUDGED that Plaintiff, I/P Engine, Inc.,

recover of Defendant IAC Search & Media, Inc., the sum of Seven Hundred Forty-Six Thousand

Nine Hundred Twenty-Six Dollars ($746,926).
IT IS FURTHER ORDERED AND ADJUDGED that Plaintiff, I/P Engine, Inc.,
recover of Defendant Gannett Co., Inc., the sum of Two Hundred Thirteen Dollars ($213).
IT IS FURTHER ORDERED AND ADJUDGED that Plaintiff, I/P Engine, Inc.,

recover of Defendant Target Corp., the sum of Eight Thousand Four Hundred Ninety-Nine
Dollars ($8,499).
The parties are DIRECTED to submit their calculations of post-judgment interest once
Defendants have satisfied the judgments against them.

The Clerk is DIRECTED to send a copy of this Order to counsel and parties of record.
IT IS SO ORDERED.

Norfolk, Virginia

January £ ,2014

V

Raymond LJackson

United States D«tnct Judge