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

Filing 852

Opposition to 847 MOTION re 822 MOTION for an Award of Post-Judgment Royalties Motion To Postpone Briefing And Ruling On Plaintiffs Motion For Post-Judgment Royalties MOTION re 822 MOTION for an Award of Post-Judgment Royalties Motion To Postpone Briefing And Ruling On Plaintiffs Motion For Post-Judgment Royalties filed by I/P Engine, Inc.. (Sherwood, Jeffrey)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
NORFOLK DIVISION
__________________________________________
)
I/P ENGINE, INC.,
)
)
Plaintiff,
)
v.
)
Civ. Action No. 2:11-cv-512
)
AOL, INC. et al.,
)
)
Defendants.
)
__________________________________________)
OPPOSITION TO DEFENDANTS’ MOTION TO POSTPONE BRIEFING AND
RULING ON PLAINTIFF’S MOTION FOR POST-JUDGMENT ROYALTIES

In Defendants’ Motion to Postpone Briefing and Ruling on Plaintiff’s Motion for PostJudgment Royalties (“Postponement Motion”), Defendants demand that the briefing and
consideration of Plaintiff’s Motion for an Award of Post-Judgment Royalties (“Ongoing
Royalties Motion”) be either indefinitely delayed or, alternatively, delayed until
February 28, 2013. Their demand seeks a further delay beyond the already agreed-upon
extension between the parties of almost a month (now January 25, 2013). D.I. 846.
As discussed in its Ongoing Royalty Motion and supporting brief, I/P Engine is entitled
to receive ongoing royalties that adequately compensate it for the loss of its lawful right to
exclude others from profiting from its invention. See, e.g., Paice LLC v. Toyota Motor Corp.,
600 F. Supp. 2d 620, 630 (E.D. Tex. 2009); Paice LLC v. Toyota Motor Corp., 504 F.3d 1293,
1315 (Fed. Cir. 2007). Defendants do not dispute this. It is also proper for this Court to

determine ongoing royalties at this time.1 I/P Engine would be substantially prejudiced by an
indefinite delay, and Defendants provide no justification (other than their convenience) to extend
their opposition indefinitely or until February 28.
I/P Engine Would Be Substantially Prejudiced by an Indefinite Delay
Adhering to the Federal Rules of Civil Procedure, I/P Engine timely filed its post-trial
motions on December 18, 2012. Defendants are now seeking multiple motion phases, which will
not only unreasonably delay I/P Engine’s ability to license and enforce its patents, but may also
negatively impact any future appeal. See Bard Peripheral Vascular, Inc. v. W.L. Gore &
Associates, Inc., 346 Fed.Appx. 580 (Fed. Cir. 2009) (dismissing an appeal as premature because
proceedings concerning ongoing royalties were still pending before the district court).
Defendants’ assertions do not overcome or justify this prejudice. As discussed below, none of
the post-trial motions filed by the parties impacts the amount of ongoing royalties to be paid to
I/P Engine for Defendants’ ongoing infringement. This issue is ripe for determination. I/P
Engine has a verdict against Defendants in hand and is entitled to receive ongoing royalties that
adequately compensate it for Defendants’ ongoing willful infringement without undue delay.
Defendants Provide No Justification to Indefinitely Delay this Court’s Ruling on
I/P Engine’s Ongoing Royalties Motion
Defendants make three main arguments in support of their motion: 1) it would be more
efficient for this Court to deal with post-judgment royalties after it has ruled on the parties’ other
pending post-trial motions; 2) I/P Engine’s Ongoing Royalties Motion allegedly raises a new
damages theory; and 3) allowing this Court to first rule on the other pending post-trial motions

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Courts routinely decide the issue of ongoing royalties along with the resolution of the typical
post-trial motions. See, e.g., Soverain Software v. J.C. Penney Corp., 2012 WL 4903268, *10-12
(E.D. Tex. Aug. 9, 2012); Affinity Labs of Texas v. BMW North America, 783 F. Supp. 2d 891
(E.D. Tex. 2011).

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would give the parties an opportunity to negotiate post-judgment royalties themselves. D.I. 848
at 1-2. These reasons are meritless.
First, the parties’ respective post-trial motions are not a proper reason to defer the
resolution of I/P Engine’s Ongoing Royalties Motion. Voda v. Cordis Corp., 2006 WL 2570614,
*6 (W.D. Okla. Sept. 5, 2006) (denying a motion for severance of a cause of action for the postverdict damages, finding that there were no reasons to delay because there would be no new
issues for decision except simple mathematical calculations based on defendant’s sales). The
analysis of a post-judgment royalty in this case is not impacted by any of the issues or arguments
presented by either party in their post-trial motions. Here, post-judgment royalties depend solely
on settled issues: 1) the jury’s determination of a running royalty, and 2) the jury’s determination
that the reasonable royalty rate is 3.5%. See D.I. 789 (special interrogatories III.A and III.B from
the verdict form). A “special verdict enables errors to be localized so that the sound portions of
the verdict may be saved and only the unsound portions be subject to redeterminations through a
new trial.” Richardson-Vicks, Inc. v. Upjohn Co., 122 F.3d 1476, 1484-85 (Fed. Cir. 1997).
I/P Engine’s post-trial motions relate to the dollar amount of past damages calculated
with respect to special interrogatory III.C, and the issue of laches. See D.I. 825 and 835. Neither
of those motions impacts the jury’s determination of a running royalty and a reasonable royalty
rate of 3.5%. And, both are supported by substantial evidence on the record. There were no
defects in any aspect of the trial or jury verdict regarding the running royalty finding or the 3.5%
running royalty rate. See also, e.g., Johnson v. Ablt Trucking Co., Inc., 412 F.3d 1138, 1144
(10th Cir. 2005) (a reviewing court must affirm the judgment if there is any plausible theory that
supports a special verdict).

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Second, I/P Engine’s Ongoing Royalties Motion does not raise a new damages theory. It
requests that this Court rightfully enforce an ongoing royalty that is based on the uncontroverted
jury verdict of a running royalty and a reasonable royalty rate of 3.5%. Defendants contend that
because I/P Engine’s Ongoing Royalties Motion requests an ongoing royalty rate of more than
3.5%, a new damages theory must exist – untrue. I/P Engine’s Ongoing Royalties Motion
simply requests that this Court follow the Federal Circuit’s guidance that post-verdict
infringement should entail a higher royalty rate than the reasonable royalty found at trial. See
Amado v. Microsoft Corp., 517 F.3d 1353, 1362, fn. 2 (Fed. Cir. 2008). Nothing about that
request entails a new damages theory. This post-trial procedure is routine. See Soverain
Software, 2012 WL 4903268, *10-12; Affinity Labs, 783 F. Supp. 2d 891.
The determination of a post-verdict ongoing royalty rate is an equitable determination
that is “committed to the sound discretion of the district court” and does not require a trial by
jury or reopening discovery. Amado, 517 F.3d at 1362, n.2; Paice, 504 F.3d at 1315-16. “[T]he
trial testimony and jury findings with respect to past damages can provide a basis for calculating
a market royalty for any ongoing infringement.” Affinity Labs, 783 F.Supp.2d at 898. The only
inquiry currently before this Court is what royalty would reasonably compensate I/P Engine for
Defendants’ ongoing willful infringement. Paice, 600 F. Supp. 2d at 624. Defendants fail to
identify what further determinations are required – Defendants really are seeking to reargue
damages, something already decided by the jury. Indeed, Defendants failed to rebut I/P Engine’s
evidence at trial relating to a running royalty and rate. D.I. 789 and 801. Instead, they are now

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attempting to correct that failure by suggesting (without authority) that it would be appropriate to
reopen discovery to address I/P Engine’s allegedly “new” damages theory.2
Third, Defendants’ claim that a delay is necessary for the parties to negotiate postjudgment royalties themselves is disingenuous. Defendants have not contacted I/P Engine at all
since the jury’s verdict to convene any such negotiations. While I/P Engine remains available –
no matter the briefing schedule – to negotiate a resolution to this litigation in good faith, there is
no justification to delay this Court’s determination of what is inevitable (the awarding of postjudgment royalties based on an in-hand verdict). Such a delay would likely achieve the opposite,
allowing Defendants to postpone any meaningful discussions given that there are no imminent
rulings or deadlines looming over them.
Finally, whether Defendants plan to design around the patents-in-suit to alleviate future
infringement has no effect on this Court’s enforcement of a jury verdict post-judgment.
Defendants state that “[t]he question of designing around the patents-in-suit may also be at issue,
and Defendants are entitled to a reasonable amount of time to investigate, including time to
consult with technical experts.” D.I. 848 at 5. Defendants have had ample opportunity and time
to consult with their technical experts regarding potential design arounds. Indeed, although they
made such arguments during trial, in their Postponement Motion they merely indicate that they
need an unidentified amount of time to investigate and consult with experts. Defendants cite to
no authority that their potential future consideration possibly finding a design around for their

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Defendants’ alternative request that the deadline for their opposition to I/P Engine’s Ongoing
Royalties Motion be extended to February 28 shows the deficiency of their motion. Other than
making this request in the alternative, Defendants do not explain why they could not respond to
I/P Engine’s motion by January 25. For example, they do not claim that Dr. Ugone, their
damages expert, is unavailable. Nor do they claim that they do not have sufficient time or
resources to respond by January 25, or explain why they would be able to respond by
February 28.

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infringing system justifies delaying a finding of ongoing royalties for the infringing system. This
is because there is no such authority.
Accordingly, the resolution of all pending post-trial motions concurrently is the most
efficient and least prejudicial use of the judicial resources of this Court and any potential appeal
before the Court of Appeals for the Federal Circuit. For these reasons, I/P Engine respectfully
requests that Defendants’ Postponement Motion be denied and that they be ordered to file any
opposition to I/P Engine’s Ongoing Royalty Motion by January 25, 2013.
Dated: December 31, 2012

By: /s/ Jeffrey K. Sherwood
Donald C. Schultz (Virginia Bar No. 30531)
W. Ryan Snow (Virginia Bar No. 47423)
CRENSHAW, WARE & MARTIN PLC
150 West Main Street
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
Jeffrey K. Sherwood (Virginia Bar No. 19222)
Frank C. Cimino, Jr.
Kenneth W. Brothers
Dawn Rudenko Albert
Charles J. Monterio, Jr.
DICKSTEIN SHAPIRO LLP
1825 Eye Street, NW
Washington, DC 20006
Telephone: [phone]
Facsimile: [phone]
Counsel for Plaintiff I/P Engine, Inc.

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CERTIFICATE OF SERVICE
I hereby certify that on this 31st day of December, 2012, the foregoing OPPOSITION
TO DEFENDANTS’ MOTION TO POSTPONE BRIEFING AND RULING ON
PLAINTIFF’S MOTION FOR POST-JUDGMENT ROYALTIES, was served via the
Court’s CM/ECF system, on the following:

Stephen Edward Noona
Kaufman & Canoles, P.C.
150 W Main St
Suite 2100
Norfolk, VA 23510
[e-mail]
David Bilsker
David Perlson
Quinn Emanuel Urquhart & Sullivan LLP
50 California Street, 22nd Floor
San Francisco, CA 94111
[e-mail]
[e-mail]
Robert L. Burns
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Two Freedom Square
11955 Freedom Drive
Reston, VA 20190
[e-mail]
Cortney S. Alexander
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
3500 SunTrust Plaza
303 Peachtree Street, NE
Atlanta, GA 94111
[e-mail]
/s/ Jeffrey K. Sherwood

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