Milwaukee Electric Tool Corporation et al v. Snap-On Incorporated
Filing
372
ORDER signed by Judge J.P. Stadtmueller on 12/29/2017. 347 Defendant's Renewed Motion for Judgment as a Matter of Law DENIED. 349 Defendant's Motion for New Trial DENIED. 341 Plaintiffs' Motion for Award of Enhanced Damages DE NIED. 343 Plaintiffs' Motion for Pre- and Post-Judgment Interest GRANTED in part and DENIED in part. 367 Parties' Joint Motion to Redact Portions of Trial Transcript DENIED. 340 , 346 , 353 , 356 , 359 and 368 Partie s' Motions to Restrict Documents GRANTED. Parties to FILE a joint notice by 1/5/2018 calculating pre-judgment interest to be awarded consistent with this Order. Clerk of Court DIRECTED to enter judgment in accordance with the 10/26/2017 jury verdict after receipt of the parties' pre-judgment interest calculation and action to be DISMISSED. See Order for further details. (cc: all counsel) (jm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MILWAUKEE ELECTRIC TOOL
CORPORATION, METCO BATTERY
TECHNOLOGIES LLC, AC (MACAO
COMMERCIAL OFFSHORE) LIMITED,
and TECHTRONIC INDUSTRIES CO.
LTD.,
Case No. 14-CV-1296-JPS
Plaintiffs,
v.
SNAP-ON INCORPORATED,
Defendant.
MILWAUKEE ELECTRIC TOOL
CORPORATION, METCO BATTERY
TECHNOLOGIES LLC, AC (MACAO
COMMERCIAL OFFSHORE) LIMITED,
and TECHTRONIC INDUSTRIES CO.
LTD.,
v.
Case No. 17-MC-49-JPS
Plaintiffs,
SHOOK HARDY & BACON and
MCDERMOTT, WILL & EMERY, LLP,
ORDER
Defendants.
This is a patent case about lithium-ion batteries used in power tools.
The case was tried to a jury in October 2017. The jury rendered a verdict in
favor of Plaintiffs and awarded nearly $28 million in damages. Before the
Court are the parties’ post-trial motions. For the reasons stated below, the
Court will deny post-trial relief to Defendant Snap-On Incorporated
(“Snap-On”), deny Plaintiffs’ motion for enhanced damages, and grant in
part Plaintiffs’ motion for pre-judgment interest.
1.
BACKGROUND
In the early 2000s, Plaintiff Milwaukee Electric Tool Corporation
(“Milwaukee”) teamed up with Canadian battery manufacturer E-One Moli
Energy (Canada) Ltd. (“Moli”) to develop a lithium-ion (“Li-ion”) battery
usable in a power tool. Cordless power tools were traditionally powered by
nickel-cadmium (“Ni-Cd”) or nickel-metal hydride batteries, as Li-ion
battery cells could not safely or reliably produce sufficient power output
for such high-power applications. In what was dubbed the “884 Project,” a
joint team of Milwaukee and Moli scientists labored for many months to
produce a working Li-ion battery pack, which was finally reduced to
practice in late 2002. Milwaukee’s first line of Li-ion powered tools, the V28,
was debuted in 2005 to great acclaim.
In June 2009, Plaintiffs obtained patents on the Li-ion battery pack
technology they developed with Moli. The critical independent claim found
in all three patents-in-suit recites:
a battery pack for powering a hand held power tool, the
battery pack comprising:
a housing connectable to and supportable by the hand
held power tool; and
a plurality of battery cells supported by the housing,
the battery cells being capable of producing an average
discharge current greater than or equal to approximately 20
amps, the battery cells having a lithium-based chemistry.
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The penultimate clause is known as the “20 Amp Limitation,” and it has
featured prominently in the parties’ legal and factual disputes in this case.
Snap-On developed its own line of Li-ion tools that was launched in
September 2009.
This infringement action was filed on October 16, 2014, and is well
past its third birthday. The case lived much of its life under a stay granted
at Snap-On’s request so that it and other accused infringers could seek inter
partes review (“IPR”) of the patents-in-suit before the United States Patent
and Trademark Office (“USPTO”). None of the IPRs was successful in
invalidating any part of the patents, although appeals of the IPR decisions
are still pending in the Court of Appeals for the Federal Circuit.
In December 2016, after the Patent Trial and Appeal Board (“PTAB”)
issued its decisions on the latest round of IPRs, the Court lifted the stay and
discovery proceeded apace. The Court addressed matters of claim
construction and the parties’ arguments on summary judgment in an order
dated September 22, 2017. Milwaukee Elec. Tool Corp. v. Snap-On Incorporated,
Case No. 14–CV–1296–JPS, 2017 WL 4220457 (E.D. Wis. Sept. 22, 2017).
The case was tried to a jury beginning on October 16, 2017. See
(Docket #313). During the course of the eight-day trial, the jury was shown
hundreds of documents, numerous physical exhibits, and heard testimony
from twenty-four witnesses, including seven experts. The jury returned a
verdict for Plaintiffs on October 26, 2017. See (Docket #316). The jury found
that Snap-On’s accused products infringed each asserted claim of the
patents-in-suit. Id. at 1–4. The jury further found that none of the subject
claims were invalid as obvious under 35 U.S.C. § 103 and that Snap-On’s
infringement of the patents was willful. Id. at 4–5. Finally, the jury awarded
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compensatory damages in the form of a lump-sum reasonable royalty in the
amount of $27.8 million. Id. at 5.
2.
ANALYSIS
The parties’ post-trial motions cover myriad issues pertaining to
liability and damages. Snap-On’s two motions seek judgment as a matter of
law and a new trial, respectively. Plaintiffs also filed two post-trial motions,
the first requesting treble damages and the second seeking pre- and postjudgment interest. The Court will address each motion in turn.
2.1
Snap-On’s Motion for Judgment as a Matter of Law
Federal Rule of Civil Procedure 50 provides that “[a] motion for
judgment as a matter of law may be made at any time before the case is
submitted to the jury.” Fed. R. Civ. P. 50(a). The Rule allows a party to move
for judgment on a particular claim when (1) “a party has been fully heard
on an issue during a jury trial,” and (2) “the court finds that a reasonable
jury would not have a legally sufficient evidentiary basis to find for the
[non-moving] party on that issue.” Fed. R. Civ. P. 50(a)(1). Rule 50(b) is used
to renew after trial a motion under Rule 50(a). Id. 50(b). In ruling on the
renewed motion, the court may uphold the jury’s verdict, order a new trial,
or direct entry of judgment as a matter of law. Id.
In patent cases, the law of the regional circuit sets the standard
applied to motions under Rule 50. Summit Tech. Inc. v. Nidek Co., 363 F.3d
1219, 1223 (Fed. Cir. 2004). The Seventh Circuit instructs that
[i]n deciding a Rule 50 motion, the court construes the
evidence strictly in favor of the party who prevailed before
the jury and examines the evidence only to determine
whether the jury’s verdict could reasonably be based on that
evidence. The court does not make credibility determinations
or weigh the evidence. Although the court reviews the entire
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record, the court must disregard all evidence favorable to the
moving party that the jury [was] not required to believe.
Passananti v. Cook Cnty., 689 F.3d 655, 659 (7th Cir. 2012) (internal citations
and quotations omitted).
In its renewed motion for judgment as a matter of law pursuant to
Rule 50(b), (Docket #347), Snap-On addresses three issues. First, it contends
that the evidence at trial proved its obviousness defense, contrary to the
jury’s verdict. Second, it challenges the finding of infringement as to two of
its packs that Plaintiffs’ battery expert, Dr. Mark Ehsani (“Ehsani”), could
not and did not test. Finally, Snap-On seeks reversal of the jury’s finding
that its infringement was done willfully.1
The bulk of Snap-On’s arguments ignore the standard of review,
which permits reversal of the verdict only if no reasonable jury could have
decided as this jury did. Snap-On seems to think it can succeed if it shows
merely that it could have convinced the jury to go its way, but this is no
reason to disturb the jury’s determinations. A brief examination of each
issue shows that the jury’s conclusions were supported by sufficient
evidence.
2.1.1
Obviousness
Snap-On first contends that the asserted claims were obvious in light
of the prior art. An obviousness challenge requires a showing that “the
differences between the subject matter sought to be patented and the prior
art are such that the subject matter as a whole would have been obvious at
Snap-On’s original motion for judgment as a matter of law included a
challenge to Plaintiffs’ product marking within the context of pre-suit damages.
(Docket #296-1 at 5–9). It did not renew that argument in the present motion.
Pursuant to a stipulation of the parties and the Court’s order, the marking issue
was withdrawn and will not be considered. See (Docket #325, #326).
1
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the time the invention was made to a person having ordinary skill in the art
to which said subject matter pertains.” 35 U.S.C. § 103(a) (2006).2 To prove
obviousness, one must show that a skilled artisan “would have found it
obvious to bridge the differences between the subject matter of the claims
and the prior art[.]” Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1343
(Fed. Cir. 2013). This entails consideration of several factors, including “(1)
the scope and content of the prior art, (2) the differences between the prior
art and the claims at issue, (3) the level of ordinary skill in the art, and (4)
any relevant secondary considerations, such as commercial success, long
felt but unsolved needs, and the failure of others.” Wyers v. Master Lock Co.,
616 F.3d 1231, 1237 (Fed. Cir. 2010); Graham v. John Deere Co., 383 U.S. 1, 17–
18 (1966). Patents are presumed valid, Microsoft Corp. v. i4i Ltd P’ship, 131 S.
Ct. 2238, 2243 (2011), so an invalidity defense like obviousness can only
succeed if proven by clear and convincing evidence, Procter & Gamble Co. v.
Teva Pharm. USA, Inc., 566 F.3d 989, 993 (Fed. Cir. 2009).
The thrust of Snap-On’s obviousness argument to the jury was that
Plaintiffs’ patents simply substituted Li-ion battery cells, created by Moli,
for the Ni-Cd cells used in existing battery packs. See (Docket #348 at 8);
(Docket #369 at 5). Everything else about the packs, including using the 20
Amp Limitation as an industry-standard performance benchmark,
remained the same. (Docket #348 at 8). Because of the simplicity of the
change introduced in the patents, Snap-On contended that a person of
ordinary skill in electronics and power tool design would have easily
The Leahy-Smith America Invents Act (“AIA”) made significant changes
to the structure of the Patent Act. However, because the applications resulting in
the patents-in-suit were all filed before the AIA’s effective date, the Court refers to
the pre-AIA version of the relevant statutory provisions. See Eli Lilly & Co. v. Teva
Parenteral Meds., Inc., 845 F.3d 1357, 1370 n.8 (Fed. Cir. 2017).
2
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arrived at the same invention. Id. at 14–15. The jury did not buy the
argument, and there was plenty of evidence introduced at trial to support
that finding.
First, the original prototype cells Moli provided to Milwaukee, with
a rated capacity of 15 amps, could not meet the 20 Amp Limitation. SnapOn’s own expert, Dr. Quinn Horn (“Horn”), conceded this. Second, the
later-developed cells, while more powerful, did not support an obviousness
claim. Those cells were developed jointly by Milwaukee and Moli,
suggesting that they were not prior art at all since they emanated in part
from Milwaukee’s own work.3 This is true even though Moli’s scientists
were certainly the battery experts; Milwaukee’s witnesses testified that they
contributed performance requirements and other information based on
their own expertise as battery pack designers, something Moli did not know
anything about. That the Moli contributors now believe they did the lion’s
share of the work is not conclusive on the point. The jury was entitled to
view such testimony with skepticism.
This fact distinguishes the instant case from Morgan v. Hirsch, 728
F.2d 1449, 1452 (Fed. Cir. 1984), cited by Snap-On, in which the parties
disputed who had invented a particular thermal fabric and a method for
manufacturing it. The plaintiff sought to show that he conceived of the
fabric before the defendant by pointing to his work with another fabric
In ruling on one of Plaintiffs’ motions in limine, the Court found that SnapOn could not be precluded from arguing that the Moli cells constituted prior art
under Section 102(f), which generally covers information communicated to the
patentee by non-inventors. Milwaukee Elec. Tool Corp. v. Snap-On Incorporated, Case
No. 14-CV-1296-JPS, 2017 WL 4570787, at *3 (E.D. Wis. Oct. 12, 2017). That issue
was contested throughout trial, however, (Docket #314 at 18–19), and so the jury
was allowed to find that the cells did not constitute prior art as a matter of fact.
3
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maker. Id. at 1451. The other maker sent successive samples of product to
the plaintiff and he rejected each one until he was happy with the result. Id.
The court found this insufficient to support the plaintiff’s conception of the
invention, since he did not actually invent anything: “[h]e only posed the
problem.” Id. at 1452. What the plaintiff did not contribute in that case were
any specific requirements for the fabric, only criticisms of the samples he
was sent. Id. Thus, said the Court of Appeals, he had not engaged in
invention. Id.
Unlike Morgan, here the evidence showed that Milwaukee and Moli
worked closely together to develop a working Li-ion battery pack for a
power tool. Moli knew battery chemistry, but did not understand how that
chemistry needed to work in a final battery pack. Conversely, while
Milwaukee could do little to suggest chemical changes to the battery cells,
it did not passively receive Moli’s samples. Rather, because Milwaukee
knew the ultimate performance requirements for the battery packs, it
ensured that Moli’s cells were tested in conformity with those standards
and relayed the deficiencies in the cells as they were developed over time.
If this case concerned only the development of battery cells, Morgan might
be an apt analogy. Yet because Milwaukee made important inventive
contributions to the development of the battery pack that is the subject of
the patents-in-suit, the analogy fails.
Moreover, the jury apparently believed the testimony from
Plaintiffs’ experts that testing of individual Moli cells, which is all Horn
offered, could not be extrapolated to arrive at what a battery pack
containing those cells could do. Either way, the jury was not required to
conclude that the Moli cells rendered the patented invention obvious. The
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jury was well within its province to find Plaintiffs’ experts and their
opinions more credible.4
Similarly, the jury was permitted to disbelieve Horn’s assertion that
the Saft battery cells, another component of the prior art, could be combined
into a hypothetical pack that would meet the 20 Amp Limitation. No test
results confirmed his opinion. Further, one of Plaintiffs’ experts, Dr.
Jonathan Wood, opined that the Saft brochure introduced at trial did not
disclose use of those cells in a handheld power tool, further undermining
the notion that a skilled artisan would make that leap.
The addition of the Moli Powerpoint presentations does not alter the
analysis. Those presentations showed a Moli employee using a battery pack
with Li-ion cells installed to cut wood. The revelations in the presentations,
though exciting, did not entice any tool manufacturer except Milwaukee to
invest in further development. The jury did not believe that the
presentations offered a sufficient motivation to combine the prior art
references, and it was entitled to reject Horn’s hindsight deduction that
combining the prior art references was elementary. On the state of the
Snap-On says that the jury could not have discounted Horn’s reliance on
cell data when the date of reduction to practice was fixed by Plaintiffs based on
cell data and when Ehsani used cell data to conclude that several of the accused
packs were infringing. (Docket #348 at 11); see infra Part 2.1.2. Such views might be
inconsistent, but the date of reduction to practice and whether certain packs
infringed were not a part of the obviousness analysis. Potential factual
inconsistencies across distinct issues in the case do not concern the Court during
the post-trial phase. Lowe v. Consol. Freightways of Del., 177 F.3d 640, 642–43 (7th
Cir. 1999) (“The fact that [the defendant] presented evidence that is inconsistent
with the jury’s verdict does not mean that the verdict should be reversed. . . . The
jury was there; it weighed the witnesses’ credibility, considered the evidence, and
reached a supportable conclusion.”).
4
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record, the Court cannot say that the jury erred in concluding that Snap-On
failed to provide clear and convincing evidence of obviousness.
Finally, secondary considerations of non-obviousness significantly
undercut whatever prima facie case Snap-On managed to make. Neither
Horn nor any other Snap-On witness addressed these considerations in
earnest. What the jury heard, then, was Plaintiffs’ evidence that industry
analysts saw a need for higher power, lighter cordless tools, that the V28
product line received overwhelming industry accolades, and that the
patented technology led to explosive growth of Milwaukee’s Li-ion tool
sales and lucrative licensing arrangements with competitors. See Stratoflex,
Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538–39 (Fed. Cir. 1983) (“[E]vidence of
secondary considerations may often be the most probative and cogent
evidence in the record. It may often establish that an invention appearing
to have been obvious in light of the prior art was not.”).5
Snap-On attempts to downplay these secondary considerations by
attributing Milwaukee’s commercial success to non-patented aspects of the
V28 products. Snap-On is correct that there must be a nexus between the
commercial success of a product and the claimed invention, not the
product’s unpatented or unclaimed features. Ormco Corp. v. Align Tech., Inc.,
Snap-On protests that the licenses are not determinative as a secondary
consideration, (Docket #348 at 20–22), and the Court agrees. Licenses cannot
overcome “a convincing case of invalidity,” ABT Sys., LLC v. Emerson Elec. Co., 797
F.3d 1350, 1361 (Fed. Cir. 2015), but Snap-On’s case for obviousness was not
convincing. To the contrary, the secondary considerations Plaintiffs presented to
the jury bolstered the existing evidence that showed that the claimed invention
was not obvious. To the extent Snap-On believes the licenses were entitled to little
weight because they resulted from litigation settlements and were negotiated
without knowledge of the Moli cells, (Docket #348 at 19–22), it had the opportunity
to argue as much at trial.
5
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463 F.3d 1229, 1311–12 (Fed. Cir. 2006); In re Huang, 100 F.3d 135, 140 (Fed.
Cir. 1996). But in making this argument, Snap-On impermissibly isolates
the 20 Amp Limitation and asserts that it is the sole inventive aspect of the
patent. (Docket #348 at 17). Snap-On claims that Plaintiffs’ secondary
considerations expert, Allan Shampine (“Shampine”), never established
that the 20 Amp Limitation, which it derides as a “laboratory capability,”
was the moving force behind the success of Milwaukee’s products. (Docket
#351-1 at 9).
This strawman argument did not convince the jury and does not
convince this Court. The law looks to the invention as a whole—here, a Liion battery pack used in a power tool. See Huang, 100 F.3d at 140; WBIP, LLC
v. Kohler Co., 829 F.3d 1317, 1329–30 (Fed. Cir. 2016). The jury was permitted
to conclude that there existed a nexus between the objective considerations
of non-obviousness and the entire patented invention. Granting that the 20
Amp Limitation does not represent how tools are used in the real world,
the fact remains that it is a minimum performance characteristic, a baseline
that tools performing in high-power situations must meet in order to be
reliable. But at a minimum, the 20 Amp Limitation is not the sole inventive
aspect of the patent.
It is no wonder, then, that Shampine openly admitted that the 20
Amp Limitation, standing alone, did not lead to Milwaukee’s commercial
success in the Li-ion market. Instead, he far more reasonably concluded that
products embodying the totality of the patented technology enjoyed
unbridled success after their introduction. He both controlled for other
important product features, such as brushless motors, and reviewed sales
of products containing the patented technology versus those that did not.
Shampine found that the patented technology carried with it a huge
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increase in commercial success. Contrast that with a case like Huang, relied
upon by Snap-On, where the inventor offered only his own sworn
statement that his product was successful, without any meaningful analysis
connecting his invention to that success. Huang, 100 F.3d at 140. As
Shampine’s testimony and the corroborating documentary evidence
reveals, it was the power and reliability of lithium technology that drove
the V28’s explosive growth. See Rambus Inc. v. Rea, 731 F.3d 1248, 1257 (Fed.
Cir. 2013). Thus, Shampine’s testimony “concerning the advantages of a
patented feature in a multi-featured product is sufficient to support the
inference of a nexus between the patented feature and the commercial
success.” Rambus Inc. v. Hynix Semiconductor Inc., 254 F.R.D. 597, 603 (N.D.
Cal. 2008). There was no shortage of cross-examination and argument by
Snap-On that he was mistaken and that the V28 product line had many
other features that led to its success. The jury simply did not agree.
For the reasons stated above, the trial record contains sufficient
evidence to support the jury’s finding that Snap-On did not prove clearly
and convincingly that the patents-in-suit were obvious.
2.1.2
The Untested Packs
Ehsani, Plaintiffs’ battery expert, tested all of the accused packs save
two, CTB6185 and CTB6187, the samples of which were defective. (Docket
#348 at 22–23). Snap-On contends that in the absence of test data
substantiating a claim that the packs met the 20 Amp Limitation, the jury’s
finding of infringement is unsupported. Id. But Ehsani testified at trial that
despite the lack of testing, he believed that the two packs in question met
the 20 Amp Limitation because Snap-On assigned them a “maximum
continuous discharge current” of 30 amps. (Docket #354 at 24–25). To be
sure, Ehsani’s reading of the product specification as evidence of the packs’
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capabilities was not as strong as actual test data. But the jury nevertheless
believed him, and Snap-On offers no reason that his testimony was totally
unworthy of belief. The finding of infringement as to these two packs will
stand.
2.1.3
Willfulness
Lastly, Snap-On requests that the Court overturn the jury’s finding
that it infringed the patents willfully. The evidence on this issue will be
covered more comprehensively below in the Court’s analysis of whether
enhanced damages are appropriate under 35 U.S.C. § 284. See infra Part 2.3.
A short summary of the facts supporting the jury’s determination is
sufficient for present purposes. It should be remembered that in the posture
of Snap-On’s request for judgment as a matter of law, the Court construes
all evidence in Plaintiffs’ favor and disregards contrary evidence.
Passananti, 689 F.3d at 659. Consequently, its recitation of the evidence here
is more generous to Plaintiffs than in the Section 284 context, where the
Court is permitted to take its own view of the facts.
With that caveat in place, the Court turns to the jury’s willfulness
finding. The Supreme Court held in Halo Electronics, Inc. v. Pulse Electronics,
Inc., 136 S. Ct. 1923 (2016)—which will be reviewed in greater detail
below—that willfulness is subjective. A finding of willful infringement is
permissible on proof that the defendant acted despite a risk of infringement
that was “‘either known or so obvious that it should have been known to
the accused infringer.’” Id. at 1390 (quoting In re Seagate, LLC, 497 F.3d 1360,
1371 (Fed. Cir. 2007) (en banc)); see also Arctic Cat Inc. v. Bombardier
Recreational Prods. Inc., 2017-1475, 2017 WL 6044237, at *13 (Fed. Cir. Dec. 7,
2017) (observing that the standard for subjective willfulness was not altered
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by Halo). This must be shown by a preponderance of the evidence. Halo, 136
S. Ct. at 1934.
The Court finds sufficient evidence in the trial record to support the
jury’s willfulness determination. For purposes of this analysis, the Court
takes as true that Snap-On did not know of the patents-in-suit prior to
October 2011. In that month, Milwaukee sent Snap-On a letter offering to
discuss license agreements for sixty-one patents, including the three subject
patents in this case. Of course, Snap-On had developed and launched its
own Li-ion product years earlier, in September 2009.6
Despite this delay in awareness of the patents, the trial testimony
showed that Snap-On did not perform adequate research in response to the
letter to determine whether its products might infringe the patents-in-suit.
Its head engineer for power tools, John Fuhreck (“Fuhreck”), performed a
To support the willfulness finding, Plaintiffs point to evidence that SnapOn sought to copy its V28 product line. (Docket #354 at 27–28). That evidence
showed that Snap-On was keen to work with Moli to develop its own Li-ion
products after Moli’s exclusivity period with Milwaukee ended in 2006. The
inference that it was looking to copy Milwaukee’s work with Moli was bolstered
by internal documents showing Snap-On’s interest in replicating certain
performance requirements found in Milwaukee’s V28 line. The jury also heard
testimony that Snap-On was motivated to develop infringing products because it
needed to quickly adapt to market demands.
6
However, Plaintiffs do not adequately address the principle that willful
infringement cannot occur unless the infringer knows of the patent. Apple Inc. v.
Samsung Elecs. Co., Ltd., 258 F. Supp. 3d 1013, 1029–30 (N.D. Cal. 2017); WBIP, 829
F.3d at 1341. As explained further below, copying another’s ideas rather than his
patent can be considered when awarding enhanced damages, but the predicate
finding of willfulness is constrained to the latter circumstance. Barry v. Medtronic,
Inc., 250 F. Supp. 3d 107, 111 (E.D. Tex. 2017); infra Part 2.3.1. Snap-On protests that
it reviewed Milwaukee’s V28 products and developed its competing Li-ion
products years before it was apprised of the patents’ existence. This conduct
cannot, therefore, directly establish willfulness.
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cursory study of the patents that was not corroborated by a prior art search
or an infringement analysis. He concluded that the patents were related to
Snap-On’s business, but no one took the matter under further
consideration. Snap-On declined to take a license and made no changes to
its product offerings to accommodate the possibility of infringement.7
Snap-On makes much of Plaintiffs’ decision not to accuse it of
infringement prior to filing the instant suit in October 2014. Although this
decision affects other matters before the Court, including the availability of
enhanced damages and pre-judgment interest, it does not fatally
undermine the jury’s willfulness determination. The course of Snap-On’s
pre-suit conduct revealed an ongoing lack of concern about the potential
for infringement. This was particularly reprehensible in light of the
decisions of so many others, including major players in the industry, to pay
for a license to the revolutionary Li-ion technology Milwaukee had
developed. On that basis, the Court finds that the jury’s finding of
willfulness cannot be overturned. See WBIP, 829 F.3d at 1340 (ultimately
unmeritorious non-infringement defenses, developed during litigation,
cannot protect years of culpable pre-suit conduct).
Snap-On’s cited cases do not suggest a different result. In this case,
as in Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., Case No. 2:15-CV1202-WCB, 2017 WL 2190055, at *2–3 (E.D. Tex. May 18, 2017), the finder of
fact did not penalize Snap-On for failing to obtain the advice of counsel as
to the potential for infringement. That is prohibited by the Patent Act under
Of course, he planned to opine as to the precise nature of his examination
and that of other Snap-On employees and consultants, (Docket #348 at 25), but that
testimony was properly excluded for other reasons, as explained below. See infra
Part 2.2.3.
7
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35 U.S.C. § 297, and the jury was expressly instructed to disregard such
matters. (Docket #314 at 23). Moreover, in Eli Lilly the jury had before it only
one piece of evidence to support a willfulness finding: a letter from the
patentee indicating that the infringer appeared to be in need of a license. Eli
Lilly, 2017 WL 2190055, at *2. Here, there was far more evidence that SnapOn carried on years of lucrative infringing sales after failing to respond to
the October 2011 licensing letter with a minimally adequate analysis of
whether a license would be necessary. Snap-On’s knowledge of the
existence of the patent was not the sole basis for the jury’s finding. See
(Docket #314 at 23).8
The same facts distinguish the present case from State Industries, Inc.
v. A.O. Smith Corp., 751 F.2d 1226, 1235 (Fed. Cir. 1985), where the infringer
developed its product without any knowledge of the patented technology
and did not know of the patent itself until less than a month before suit was
filed, and Gustafson, Inc. v. Intersystems Industrial Products, Inc., 897 F.2d 508,
511 (Fed. Cir. 1990), where the infringer learned of the accusations of
infringement only on the day suit was filed. By contrast, here the jury could
reasonably have inferred that while the 2011 letter might have been more
specific in alleging infringement of the patents-in-suit, the fact remains that
The Court notes that it would part ways with Eli Lilly to the extent that the
court required a willfulness finding to be predicated on egregious misconduct. Eli
Lilly, 2017 WL 2190055, at *1. As the Federal Circuit has emphasized post-Halo, the
willfulness threshold is crossed where the infringer acted despite a known or
obvious risk of infringement. See Arctic Cat, 2017 WL 6044237, at *13. Only after
that requirement is satisfied does the district court consider the flagrancy of the
infringer’s conduct in determining whether to enhance a compensatory damages
award. See Apple, 258 F. Supp. 3d at 1029–30. In any event, in this case the jury was
allowed to consider whether Snap-On’s conduct was malicious or wanton, (Docket
#314 at 23), so the doctrinal disagreement is immaterial.
8
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Snap-On’s response was inadequate and it continued to manufacture and
sell closely competing products for years afterward based on what
appeared to be a head-in-the-sand approach to infringement. Unlike its
cited cases, Snap-On undoubtedly was not “ambush[ed]” with the present
claims. Gustafson, 897 F.2d at 511.
Because Snap-On has provided no basis on which to question any of
the jury’s challenged findings, the Court is obliged to deny the renewed
motion for judgment as a matter of law in its entirety.
2.2
Snap-On’s Motion for New Trial
Under Federal Rule of Civil Procedure 59, a new trial may be granted
to any party on all or part of the issues tried “for any reason for which a
new trial has heretofore been granted in an action at law in federal court.”
Fed. R. Civ. P. 59(a). As with Rule 50(b) motions, the law of the regional
circuit applies to a Rule 59 motion when asserted in the context of a patent
suit. Callicrate v. Wadsworth Mfg., Inc., 427 F.3d 1361, 1366 (Fed. Cir. 2005).
In the Seventh Circuit, Rule 59 is construed to require a new trial where “the
jury’s verdict is against the manifest weight of the evidence or if the trial
was in some way unfair to the moving party.” Venson v. Altamirano, 749 F.3d
641, 656 (7th Cir. 2014).
When considering whether the jury’s verdict goes against the
manifest weight of the evidence, a court analyzes the “general sense of the
evidence, assessing the credibility of the witnesses and the comparative
strength of the facts put forth at trial.” Mejia v. Cook Cnty., 650 F.3d 631, 633
(7th Cir. 2011) (citations omitted). But “[a] verdict will be set aside as
contrary to the manifest weight of the evidence only if ‘no rational jury’
could have rendered the verdict.” Moore ex rel. Estate of Grady v. Tuelja, 546
F.3d 423, 427 (7th Cir. 2008) (quoting King v. Harrington, 447 F.3d 531, 534
Page 17 of 62
(7th Cir. 2006)). Similarly, an error in admitting or excluding evidence may
warrant a new trial, but only when there is a “significant chance” that the
error affected the jury’s verdict. Barber v. City of Chi., 725 F.3d 702, 715 (7th
Cir. 2013). That said, several errors, harmless on their own, can compound
to create a need for a new trial. Id.
Snap-On’s motion for a new trial incorporates, without additional
development, the arguments about the weight of the evidence it proffered
in its Rule 50(b) motion. See (Docket #351-1 at 8–9). Although the legal
standards applied under Rules 50 and 59 are different, see 11 Charles A.
Wright, Arthur R. Miller & Mary Kay Kane, Fed. Prac. & Proc. § 2806 (3d
ed. 2017), the reasons detailed above that judgment as a matter of law is
unwarranted apply with equal force to protect the jury’s determinations
from a Rule 59 challenge. The evidence was not close enough to warrant
retreading that ground here. See Lust v. Sealy, Inc., 277 F. Supp. 2d 973, 993
(W.D. Wis. 2003); Emmel v. Coca-Cola Bottling Co. of Chi., 95 F.3d 627, 636 (7th
Cir. 1996).
Worthier of consideration are Snap-On’s evidentiary complaints.
First, it challenges the jury’s finding of non-obviousness, claiming that the
jury was misled by evidence about confidentiality agreements and the
Court’s decision to admit expert testimony about secondary considerations.
Second, Snap-On asserts that it was improperly precluded from offering
Horn’s opinion about the allegedly unusual testing conditions Ehsani
employed. Third, Snap-On believes that the Court unduly limited
Fuhreck’s testimony about the scope of his response to Milwaukee’s
October 2011 letter. Finally, says Snap-On, the Court committed a series of
prejudicial errors during the damages phase of the evidence that prevented
it from fairly presenting its contentions to the jury. For the reasons stated
Page 18 of 62
below, none of these asserted errors were, in fact, erroneous, nor do they
warrant a new trial.
2.2.1
Obviousness
Snap-On asserts two purported errors in the Court’s evidentiary
rulings relating to obviousness. First, it says that the Court should have
excluded Shampine’s testimony on secondary considerations because he
“failed to link the inventive aspect of the claims, the 20 Amp Limitation as
construed by the Court, to any alleged commercial success, industry praise
or long-felt need.” (Docket #351-1 at 9). As explained above, Shampine was
not required to do more than he did. His testimony showed that the Li-ion
technology in the V28 product line drove its massive commercial success
and garnered wide praise for achieving a long-sought innovation. Snap-On
artificially cabins the scope of the invention in order to state that the nexus
requirement has not been met. See supra Part 2.1.1.
Snap-On’s other objection is directed at the letters of intent between
Milwaukee and Moli executed during the 884 Project and the eventual
assignment of Moli’s rights in the patents to Milwaukee in 2006. According
to Snap-On, this evidence misled the jury into believing that the Moli cells
provided to Milwaukee during the 884 Project were not prior art at all
because the rights to them were somehow owned by Milwaukee. (Docket
#351-1 at 11). Snap-On sought a curative instruction explaining that these
documents did not affect the prior-art status of the Moli cells. Id. at 12.
The Court declined to issue that instruction because the inference
Snap-On feared could not reasonably be drawn from the evidence. First, the
letters of intent and assignment were not introduced for purposes of the
prior art question. See (Docket #357-1 at 10–11). More importantly, to the
extent the letters or assignment affected the prior-art status of the cells, they
Page 19 of 62
were properly used as circumstantial evidence of Milwaukee and Moli’s
joint development efforts.
As a definitional matter, prior art under 35 U.S.C. § 102(f) must be
something created by another and communicated to the patentee. See 35
U.S.C. § 102(f); Eaton Corp. v. Rockwell Int'l Corp., 323 F.3d 1332, 1334 (Fed.
Cir. 2003). Plaintiffs were within their rights to argue to the jury that
because Milwaukee and Moli worked together on them, the Moli cells could
not be considered prior art in the first place. The jury was not required to
believe them, see Milwaukee Elec. Tool, 2017 WL 4570787, at *4, but it did.
And the jury was properly instructed that Section 102(f) prior art must be
“information from non-inventors communicated to inventors.” (Docket
#314 at 16). Rightfully, there was no suggestion by either party or in the
Court’s instructions that the mere existence of the confidentiality
agreements or assignment disqualified the Moli cells as Section 102(f) prior
art. See Milwaukee Elec. Tool, 2017 WL 4570787, at *4.
2.2.2
Infringement
Snap-On’s evidentiary challenge to the infringement case is that the
Court improperly excluded Horn’s testimony about the purportedly
unusual testing conditions to which Ehsani subjected the accused packs.
(Docket #351-1 at 13–14). Specifically, Horn thinks it was inappropriate for
Ehsani to test the packs without connecting them to a tool, as Snap-On
specially designs its tools with protective circuitry installed in the tool itself
that works in conjunction with similar circuitry in the pack. Id. Horn opined
that testing a pack alone would skew the test results. Id.
This was the subject of one of Snap-On’s motions in limine that the
Court addressed in a written pre-trial decision. Milwaukee Elec. Tool, 2017
WL 4570787, at *8–9. The Court considered and rejected Snap-On’s position.
Page 20 of 62
Apparently in recognition of this reality, Snap-On devotes barely more than
a page to this argument in the instant motion. The issue has been preserved
for appeal, but no more need be said of it here.
2.2.3
Willfulness
Next, Snap-On asserts that, for purposes of combating an inference
of willfulness, it was prejudiced by the erroneous exclusion of certain
testimony about its employees’ views on the validity of the patents, which
it believes would have explained why it declined to take a license to them.
At trial, Snap-On’s head engineer for power tools, Fuhreck, testified that he
was assigned to review the October 2011 letter from Milwaukee that has
already been discussed above. Fuhreck planned to further opine that he
analyzed the patents-in-suit and found that they were not valid because
their only innovation was to replace Ni-Cd battery cells with Li-ion battery
cells in power tool battery packs. (Docket #351-1 at 15). This opinion was
bolstered in his mind by Milwaukee’s failure to actually accuse Snap-On of
infringement in the letter. Id. He also claims that he discussed his invalidity
opinion with two colleagues, who agreed with him and communicated
their belief to Snap-On’s in-house counsel. Id. Finally, two other witnesses,
a Snap-On consultant engineer and a former Moli employee, also planned
to opine about the lack of innovation in the patents. Id. at 16.
The Court excluded this testimony because the witnesses’ lay
invalidity opinions were not admissible. SSL Servs., LLC v. Citrix Sys., Inc.,
769 F.3d 1073, 1092 (Fed. Cir. 2014). In SSL Services, the district court
excluded the opinion of the defendant’s chief engineer that its products
were non-infringing as outside the scope of his role as a fact witness and
potentially in conflict with the court’s claim construction. Id. The defendant
asked for a new trial, claiming this evidence was key to establishing that it
Page 21 of 62
had a good-faith, if mistaken, belief of non-infringement. Id. The Federal
Circuit affirmed, noting that the engineer’s “personal beliefs regarding noninfringement,” which were “formed by a lay person without the benefit of
the court’s claim construction determinations,” had “little probative value
and [were] potentially prejudicial.” Id.9
So too, here, although Fuhreck and the other witnesses might have
offered a limited window into Snap-On’s subjective beliefs regarding
invalidity, the danger of juror confusion was too high. The opinions were
not from experts and pre-dated the Court’s claim construction by several
years. As a result, considerations under Federal Rule of Evidence 403
obliged the Court to exclude the testimony.
Neither of Snap-On’s cited cases involved the grant of a new trial to
hear testimony of this sort. See Sociedad Espanola de Electromedicina y Calidad,
S.A. v. Blue Ridge X-Ray Co, Inc., 226 F. Supp. 3d 520, 532 (W.D.N.C. 2016);
Halo Elecs., Inc. v. Pulse Elecs., Inc., No. 2:07-cv-00331-APG-PAL, 2017 WL
3896672, at *6 (D. Nev. Sept. 6, 2017). Rather, in those cases the court
considered testimony by the infringer’s employees pertaining to a belief of
non-infringement in deciding whether to enhance damages. See Sociedad
Snap-On attempts to distinguish SSL Services on the ground that it was
handed down before Halo and therefore lacks the required emphasis on the
infringer’s subjective state of mind. (Docket #351-1 at 16). This is incorrect; the
Federal Circuit has taken pains to observe that the standard for subjective
willfulness was not altered by Halo. Arctic Cat, 2017 WL 6044237, at *13. Halo
abrogated the objective prong of the analysis but left untouched the “‘sound legal
principles’ developed over nearly two centuries of application and interpretation
of the Patent Act.” Halo, 136 S. Ct. at 1935 (quoting Martin, 546 U.S. at 139). This
includes cases like SSL Services insofar as they analyze the subjective component
of willfulness. Notably, the testimony of the infringer’s engineer formed part of
the Federal Circuit’s discussion of the subjective, not objective, prong of
willfulness. SSL Servs., 769 F.3d at 1092. Halo thus affords no basis on which to
reject the reasoning of SSL Services.
9
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Espanola, 226 F. Supp. 3d at 53; Halo, 2017 WL 3896672, at *6. That context
demands that the district court engage in a wide-ranging review of the
totality of the circumstances. See infra Part 2.3. This is a far cry from trial,
where the jury’s attention and its ability to separate reliable from unreliable
opinion testimony must be considered. The evidence was properly
excluded.
2.2.4
Damages
In the portion of its motion for new trial directed at damages, SnapOn offers a host of alleged evidentiary errors that prejudiced its ability to
present its damages arguments. (Docket #351-1 at 17–36). Each one can be
readily addressed and dismissed.
2.2.4.1 The Makita Emails
First, Snap-On contends that the Court inappropriately limited
questioning of its damages expert, Thomas Becker (“Becker”), on the
Makita license agreement that formed the foundation for the opinions of his
opposite number, James Malackowski (“Malackowski”). Snap-On hoped to
show, through contemporaneous emails, that Malackowski over-valued the
license. Id. at 18–19. The emails purportedly revealed that a third of the $30
million cash payment that was part of the Makita agreement was
attributable to patents other than the patents-in-suit, and that the crosslicense was given in consideration for anticipated future sales in Japan,
having nothing to do with the patents-in-suit, which are U.S. patents only.
Id. Snap-On suggests that these facts call for a dramatically larger
downward adjustment from Makita than Malackowski actually made as
part of the hypothetical license negotiation between the parties. Id. at 19.
The Court excluded the emails in part because of the merger clause
in the Makita agreement, finding that the agreement spoke for itself and
Page 23 of 62
could not be modified by the proffered emails, which predated it. The terms
described in those emails never made it into the final agreement. As such,
the parol evidence rule would not allow them to be considered in the
ordinary case. See Town Bank v. City Real Estate Dev., LLC, 793 N.W.2d 476,
484–85 (Wis. 2010).
Snap-On counters that it is a stranger to the Makita agreement and
is not bound by the parol evidence rule. (Docket #351-1 at 20). Further,
Snap-On maintains that it needed to explore the underlying negotiations to
give the jury the best possible sense of the comparability of the Makita
agreement. Id. at 21. Especially important to Snap-On was demonstrating
that something less than all of the consideration in the Makita agreement
could be attributed to the patents-in-suit. Id.
Assuming for a moment that Snap-On could sidestep the parol
evidence rule, the Court’s decision to exclude the emails was nevertheless
correct. The point in all this was to avoid taking the jury down another of
the parties’ rabbit-holes, especially when the rabbit-hole was filled with the
dizzying nuances of contract interpretation. Snap-On was entitled to argue
how to value the Makita license, and it did so. Confusing and contested
interpretation of the Makita agreement in light of the emails, however, was
a matter properly excluded from the jury’s deliberation. Fed. R. Evid. 403.
Snap-On’s cited cases deal with a variety of situations having
nothing to do with the Court’s evidentiary ruling in this case, including the
discoverability of parol evidence to resolve ambiguities in comparator
license agreements, Clear with Computers, LLC v. Bergdorf Goodman, Inc., 753
F. Supp. 2d 662, 664 (E.D. Tex. 2010), and the generalized need for
comparator license or settlement agreements to actually be comparable, see
AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1335–36 (Fed. Cir. 2015);
Page 24 of 62
LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 77 (Fed. Cir. 2012).
An infringer’s attempt to vary the terms of a comparator agreement using
parol communications was not presented in either AstraZeneca or
LaserDynamics, and to the extent the district court in Clear with Computers
would have admitted such evidence at trial, this Court respectfully
disagrees that the same approach was appropriate in the context of this
case.
The Court’s ruling did not contravene Snap-On’s ability to argue that
the Makita agreement was not comparable. It merely confined Snap-On to
arguing the viability of the comparison based on the actual, not
aspirational, terms of that agreement. Indeed, In re MSTG, Inc., 675 F.3d
1337 (Fed. Cir. 2012), cited by Snap-On, supports this Court’s exercise of its
discretion. There, the plaintiff’s expert speculated, based on parol evidence,
at how the final royalty rates were calculated in his chosen comparator
agreement. Id. at 1348. It was only fair, then, to permit the opposing party
to review the other relevant parol evidence, including the details of
settlement negotiations underlying the agreement. Id.
Here, however, the Court’s view of the interaction between the parol
evidence rule and Rule 403 was not one-sided, as Snap-On protests. See
(Docket #351-1 at 22–23). For instance, Plaintiffs were permitted to put on
evidence regarding the value of some of the cross-licenses they received by
virtue of the Makita agreement, but this was post-agreement evidence that
did not affect the terms of the agreement itself. The analogy between that
evidence and Snap-On’s proffered emails is unavailing.
2.2.4.2 Johnson Transfer Pricing Study
Next, Snap-On says the Court should have admitted evidence and
testimony regarding a document dubbed the “Johnson Transfer Pricing
Page 25 of 62
Study” (the “Study”). (Docket #351-1 at 23). It was created by Milwaukee
and purportedly contained admissions harmful to its damages contentions.
First, the Study showed that certain technological improvements other than
those embodied in the patents-in-suit were primarily responsible for
Milwaukee’s sales growth. Id. The Study demonstrated that sales were flat
from 2005, when the V28 was released, until these new features were rolled
out in 2009. Id. Second, the Study suggested that Snap-On was not a major
competitor, as Milwaukee’s products were geared toward home contractors
and not automotive technicians, which comprise the vast bulk of Snap-On’s
market. Id. at 24. Third, the Study reflected criticisms of the V28 line as
bulky and cumbersome that were only overcome by improvements to the
tools and battery chemistry, not the patented technology. Id. Finally, the
Study concluded that non-patented technology, not Milwaukee’s
marketing efforts, contributed to the product’s success. Id.
These considerations, in Snap-On’s view, undermine Plaintiffs’
contentions that the patents-in-suit were the driving force behind the
success of its Li-ion power tools and that Snap-On was an important
competitor. Id. at 24–25. They would also dampen Milwaukee’s leverage
during the parties’ hypothetical negotiation, which was to occur in 2009
while sales were still allegedly flat. Id.
The Court excluded the Study as irrelevant, cumulative, confusing,
and a waste of time. Fed. R. Evid. 403. Snap-On seizes upon the Court’s
comment at trial that the Study’s criticisms of the V28 product line were
inconsistent with every other toolmaker’s decision to take a license and the
explosive growth Li-ion tool sales. (Docket #351-1 at 25). But Snap-On
ignores the fact that the Study was barely worth the paper it was printed
on. The data and conclusions in it were hard to understand and inconsistent
Page 26 of 62
with the existing, stipulated sales data, the underlying reasoning was
absent and predicated on hearsay,10 and crawling through the document
would have consumed vast amounts of the jury’s time to make points
already gleaned through examination of other witnesses. The Court, in the
interest of keeping the jurors focused on the facts and not empty, authorless
speculation, found the dangers inherent in the document outweighed
whatever probative value it may have had.
2.2.4.3 Court Questioning
Third on Snap-On’s list of errors relating to damages is the Court’s
questioning of its witnesses during trial. Snap-On believes that the Court
expressed disdain for its positions in front of the jury, coloring their
evaluation of the evidence despite an instruction not to take anything from
the Court’s comments during trial. (Docket #351-1 at 26).
Federal Rule of Evidence 614(b) allows a judge to question witnesses
directly. “A district judge is free to interject during a direct or crossexamination to clarify an issue, to require an attorney to lay a foundation,
or to encourage an examining attorney to get to the point.” United States v.
Washington, 417 F.3d 780, 784 (7th Cir. 2005). The judge may not assume the
role of advocate, however. Id. The court cannot signal through its questions
Snap-On strenuously protests that the Study was produced by Plaintiffs
in discovery, was “worked on” by a Milwaukee employee, and therefore
constitutes an admission, circumventing the rule against hearsay. See (Docket #370
at 15–16); (Docket #312-2 at 6); Fed. R. Evid. 801(d)(2)(A). But who produced the
document is not the same who authored it. Further, Snap-On could not attribute
any of the statements in the Study to the one employee whom Plaintiffs’ CFO
remembered had worked on it at some point. And even if this slender reed could
support a finding that the Study qualified as an admission, concerns about the
document’s provenance formed a part of the Court’s Rule 403 assessment. See
Mister v. N.E. Ill. Commuter R.R. Corp., 571 F.3d 696, 699 (7th Cir. 2009).
10
Page 27 of 62
that it thinks a witness is not credible or that it does not buy a party’s theory
of the case. See United States v. Barnhart, 599 F.3d 737, 743 (7th Cir. 2010). To
sustain a claim of judge-induced bias, Snap-On must show that the Court
in fact conveyed a bias through its questioning and comments and that
“serious prejudice” resulted. United States v. McCray, 437 F.3d 639, 643 (7th
Cir. 2006).
Snap-On’s bias theory does not hold water. It claims that the Court
unfairly accused its witnesses of lacking documentary support for their
testimony, such as when the Court questioned Snap-On’s corporate
representative, Dave Manka (“Manka”), regarding the company’s sales
estimates. But the record shows that the Court sought to clarify, in response
to Milwaukee’s objection to foundation, that Manka’s figures needed
documentary support and that Plaintiffs’ damages expert, Malackowski,
predicated his comparisons between Snap-On’s competitors on Snap-on’s
own documents. The Court’s clarification was not done in aid of Snap-On’s
argument, but that does not make it unfair or prejudicial.
Likewise, there was no error in the Court’s questioning of Mark
Lehnert (“Lehnert”), Snap-On’s tool expert, about the interchangeability of
its battery packs. The Court expressed the view outside the jury’s hearing
that how the tools are used in real life has nothing to do with Plaintiffs’
patents, which pertain to a battery pack’s capabilities. Yet the only words
the jury heard from this Court were whether differing load requirements
from different tools necessitated use of the 20 Amp Limitation as the
benchmark. Lehnert said yes, but reiterated that the 20 Amp Limitation is
“just a test specification. No tool actually does that.” (Docket #350-1
1375:13–18). The Court responded, “Understood, but that’s what patents
are all about.” Id. This lone comment, even if it could be seen as disparaging
Page 28 of 62
Lehnert’s opinion, was not prejudicial. The Court’s one-liner did not
unravel the prior thirty minutes of questioning.
Additionally,
Snap-on
asserts
that
the
Court
improperly
admonished Becker, its damages expert, for attempting to opine about the
circumstances of the Hitachi settlement agreement. The Court dealt with
this problem carefully and clearly before trial, ordering the parties to make
no mention of the IPR proceedings or reexaminations. Milwaukee Elec. Tool,
2017 WL 4570787, at *7. Reproving Becker to avoid reference of the Hitachi
reexamination was both well within the Court’s discretion to prevent a
violation of its ruling, and understandable in light of the repeated
admonishments the Court had already been forced to make on the issue.
Over and over again, the parties wanted to make the IPR ruling complicated
when it was blindingly simple. The Court’s patience was, therefore, already
at its end when Becker spoke. Moreover, the Court instructed the jury that
it should not infer the Court’s views of the evidence from admonishments
issued or testimony stricken during trial. (Docket #314 at 3).
Finally, Snap-on complains that the Court was overly harsh in
chiding its questioning of Shampine, Plaintiffs’ secondary considerations
expert. The Court did accuse Snap-On of “flailing in the wind,” (Docket
#350-1 1676:19—1677:4), but this was no more than the Court’s suggestion
that the point had been made and it was time to move forward. The jury
had well in hand the idea that commercial success must have a nexus with
the patented features of the product, not unpatented or unclaimed features.
Moreover, Snap-On was allowed to proceed with its line of questioning
once it established that it was trying to show a disconnect between the Liion patents and commercial success. See id. 1676:1–1678:16. The Court’s
warning that the questioning was becoming cumulative was, therefore, not
Page 29 of 62
prejudicial, and it in fact helped clarify the purpose of the testimony to the
jury.
Even putting all these asserted prejudicial comments together, there
is no reason to believe that the Court’s instruction to disregard any views it
might have expressed was inadequate to ensure the jury was not
influenced. McCray, 437 F.3d at 644 (holding that “such instructions reduce
the risk of any prejudice resulting from the court’s questioning”); Barnhart,
599 F.3d at 746 & n.8 (noting that jurors are presumed to follow limiting or
curative instructions). Nor has Snap-On, aside from pointing out the errors,
evinced a coherent narrative as to why they fundamentally undermined its
ability to try the case it wanted to try. See Barnhart, 599 F.3d at 745 (prejudice
requires a showing that but for the judge’s questioning, the result probably
would have been different). The trial record was replete with evidence
supporting the jury’s damages determination, and the Court’s few
comments and questions had little, if any, effect in the grand scheme.
2.2.4.4 The Gut Check
Lastly, Snap-On asserts that the Court erroneously permitted
Plaintiffs’ counsel during closing argument to compare the parties’
competing lump-sum royalty figures using a running royalty method. This
was counsel’s “gut check” for the lump-sum payment Plaintiffs were
requesting. (Docket #351-1 at 29). Snap-On’s objection is without merit, but
to arrive at that conclusion requires a close review of what counsel actually
did during closing.
Plaintiffs’ counsel attempted to compare Malackowski’s lump-sum
royalty, between $27.8 and $33.1 million, with Becker’s far smaller amount,
$1.3 million. The experts agreed that during the hypothetical negotiation,
the parties would be aware of the total sales of products under the license
Page 30 of 62
by Snap-On—i.e., the total sales through the expiration of the patents in
2023. The parties had stipulated to the admission of certain of Snap-On’s
existing sales data. Counsel’s first move, as he explained to the jury, was to
extrapolate Snap-On’s existing sales data out to 2023, which resulted in total
anticipated sales of 8.4 million units amounting to $1.2 billion in revenue.11
Notably, he did not increase the number of sales from 2016, the most recent
year in the data, through 2023, although the growth of the market has been
astronomical. (Docket #338 1911:21–1912:4).
Next, counsel compared anticipated total product sales under the
Makita license (relied upon by Malackowski), the Hitachi license (relied
upon by Becker), and Snap-On. Counsel argued that Hitachi’s anticipated
sales were less than half of Snap-On’s, weakening Becker’s analogy. By
contrast, the total estimated Makita sales, 12.14 million, were closer to SnapOn’s, bolstering Malackowski’s position.
Counsel then sought to compare dollar amounts. He divided each of
the experts’ lump-sum royalties into Snap-On’s projected sales of $1.2
billion through 2023. That arithmetic showed that Becker’s lump sum
would result in a royalty rate of about one-tenth of one percent, while
Malackowski’s would be between 2.3–2.7%. In counsel’s view, Becker’s
effective royalty rate was far too low, as it would value the Li-ion
technology less than some accompanying “feature” patents, like the
twilight patents.
Snap-On rightly notes that counsel misstated once during the argument
that Snap-On’s sales would be 8.4 billion units, not 8.4 million. See (Docket #338
1915:1). Yet counsel’s calculations were based on the lower figure and there is no
suggestion in the jury’s verdict that they awarded a sum based on 8.4 billion unit
sales. Counsel’s passing flub is not a reason for a new trial.
11
Page 31 of 62
Finally, counsel calculated the effective royalty per pack by dividing
the experts’ lump sums by the total estimated unit sales. Counsel
commented that
Dr. Becker’s number is about 15 cents a pack over that time.
Packs that can sell for $150, 15 cents. Mr. Malackowski’s
number, three and a half to four dollars a pack, still for $150
packs.
Id. 1915:2–5. He presented no evidence that Snap-On’s battery packs
routinely sell for $150 each, but Snap-On’s counsel did not object to the
statement at the time. The aim of Plaintiffs’ counsel was to set in context the
relatively small effective royalty rate that either party’s proposed lump sum
represented, while continuing to advocate for Malackowski’s.
Snap-On’s objection rests on the Federal Circuit’s decision in Uniloc
USA Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011). There, the Court
of Appeals found that the district court erred in allowing a damages expert
to apply a “25 percent rule of thumb” check to his reasonable royalty
calculation. Id. at 1312. “The 25 percent rule of thumb is a tool that has been
used to approximate the reasonable royalty rate that the manufacturer of a
patented product would be willing to offer to pay to the patentee during a
hypothetical negotiation.” Id. The expert used this long-standing method to
check his calculation of a lump-sum royalty against what a running royalty
might be. Id. To do so, he assumed 25 percent of the end product’s value
would go to the patent owner and 75 percent would remain with the
infringer. Id. at 1311. Multiplying 25 percent of the product’s value by the
number of products sold resulted in the “rule of thumb” calculation. Id.
Uniloc prohibited this practice. Id. The court was centrally concerned
with the idea that patentees bear the burden to prove damages, including
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drawing a sufficient connection between the proposed royalty and the
evidence. Id. at 1315. Picking 25 percent of a product’s value out of thin air
as the value of the patented component was not a choice constrained by the
facts of the individual case and was therefore indefensible. Id.; see also
AstraZeneca, 782 F.3d at 1338 (“[T]he patentee ‘must do more to estimate
what portion of the value of [a] product is attributable to the patented
technology’ if the accused unit is ‘a multi-component product containing
several noninfringing features with no relation to the patented feature.’”).
Put differently, “[w]here small elements of multi-component products are
accused of infringement, calculating a royalty on the entire product carries
a considerable risk that the patentee will be improperly compensated for
non-infringing components of that product.” LaserDynamics, 694 F.3d at 67.
Indeed, even if one picked a properly tailored royalty rate, showing the jury
the entire market value of the product would itself “skew the damages
horizon for the jury, regardless of the contribution of the patented
component to this revenue.” Uniloc, 632 F.3d at 1320.
As a consequence, utilizing the entire market value of a product
containing patented elements is narrowly confined to instances in which
“the patented feature drives the demand for an entire multi-component
product.” Id.; Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1329 (Fed. Cir.
2014). However, it is not enough to show that the patented invention is
“viewed as valuable, important, or even essential to the use of the [entire
product].” LaserDynamics, 694 F.3d at 68. Instead, a patentee may invoke the
entire market value rule only where the patented feature “alone” drives the
market. Id.
Snap-On says that the evidence did not place this case within this
narrow exception to the entire market value prohibition. (Docket #351-1 at
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33–36). In essence, Snap-On accuses counsel of attempting to put in through
closing what his expert could not during the trial’s evidentiary phase. Id.
The Court finds that the extension of Uniloc to closing argument does not
work.
In closing argument counsel is afforded wide latitude to suggest
inferences to be drawn from the evidence. Soltys v. Costello, 250 F.3d 737,
745 (7th Cir. 2008); Verizon Servs. Corp. v. Cox Fibernet Va., Inc., 603 F.3d 1325,
1334 (Fed. Cir. 2010) (regional Circuit law controls whether attorney
argument requires a new trial). Snap-On stipulated to the data underlying
counsel’s calculations, and he showed his work to the jury. Moreover, both
sides’ experts relied heavily on that data to argue that Snap-On was
comparable in sales volume and revenue to either Makita or Hitachi.
Neither expert disputed that data, and neither used the entire market value
approach as proscribed by Uniloc.
Uniloc, by contrast, involved an expert’s use of the infringer’s
revenue figures to craft a reasonableness check, which was then
emphasized again and again by counsel in cross-examination of the
opposing side’s expert. Uniloc, 632 F.3d at 1319–20. The situation here was
entirely distinct: it was not the testimony of a damages expert during the
evidentiary phase of trial; it was simply counsel’s advocacy in the form of
an alternative view of the evidence. The jury was instructed that counsel’s
arguments were not evidence. (Docket #314 at 2–3). And it should be
remembered that in a day-long series of closing arguments by both sides,
counsel’s “gut check” represented only a few minutes’ time. A fleeting
comparison like this, even if it skirted the admonition of Uniloc, is no basis
for a new trial. Valbert v. Pass, 866 F.2d 237, 241 (7th Cir. 1989) (a “brief and
unrepeated part of a lengthy [closing] argument” is not a basis for reversal).
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Nor is the Court persuaded that Uniloc should extend to this case
merely because of the Federal Circuit’s concern for planting inflated figures
into the jurors’ minds. (Docket #370 at 19–20). Snap-On ignores two
fundamental defects in its argument, the first being that Plaintiffs’ figures
were not wrong—they were grounded in stipulated data. Additionally,
Snap-On was afforded ample opportunity to argue that counsel’s math
based on the stipulated data was incorrect. In the end, Snap-On’s objection
is all form and no substance.
2.2.4.5 Cumulative Effect
In closing, Snap-On suggests that even if the Court does not see any
of the above-discussed errors as it sees them, it should nevertheless be given
a new trial because the cumulative effect of each minor error was to deprive
it of a fair trial on damages. See (Docket #351-1 at 36–37); Christmas v. City of
Chi., 682 F.3d 632, 643 (7th Cir. 2012). Snap-On’s half-page gesture at this
rule does not carry its burden to show (1) that errors occurred or (2) that
such errors compounded to render the trial unfair. See Jordan v. Binns, 712
F.3d 1123, 1137 (7th Cir. 2013). Snap-On only points to the alleged errors
and claims that they worked in tandem to fundamentally undermine the
presentation of its case. (Docket #351-1 at 36–37). What the Court needs is
some logical bridge connecting the errors and an explanation as to how they
affected the verdict. This doctrine does not exist as a last-ditch, dump-truck
tactic to avoid an unfavorable verdict. Snap-On’s underdeveloped
argument on the matter is unavailing.
Because Snap-On’s allegations of error in evidentiary matters are
without merit, and because the jury’s verdict was not against the manifest
weight of the evidence, the Court is constrained to deny the motion for a
new trial.
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2.3
Plaintiffs’ Motion for Enhanced Damages
Plaintiffs’ first post-trial motion requests an award of treble damages
pursuant to 35 U.S.C. § 284. (Docket #341). That statute provides that after
a jury awards compensatory damages, the court “may increase the damages
up to three times the amount found[.]” 35 U.S.C. § 284. Whether to award
enhanced damages and the amount of any enhancement are committed to
the discretion of the trial court. Read Corp. v. Portec, Inc., 970 F.2d 816, 926
(Fed. Cir. 1992), abrogated in part on other grounds by Markman v. Westview
Instruments, Inc., 517 U.S. 370 (1996). There is no threshold or test set out in
the statute for such an award, but the Federal Circuit has traditionally
approved such awards “where the infringer acted in wanton disregard of
the patentee’s patent rights, that is, where the infringement was willful.” Id.
Because the jury found that all of Snap-On’s acts of infringement were
willful, (Docket #316 at 5), and because Plaintiffs believe that Snap-On acted
in the teeth of the patented technology, they ask that the Court exercise its
maximum authority and treble the compensatory damages award of $27.8
million. For the reasons stated below, the Court declines to do so.
The Supreme Court’s recent decision in Halo, 136 S. Ct. 1923, must be
the centerpiece of this analysis. There, the Court upended the existing legal
standard applicable to enhancing damages under Section 284. In In re
Seagate Technology, LLC, 497 F.3d 1360, 1368 (Fed. Cir. 2007) (en banc), the
Federal Circuit adopted a test for enhancing damages that contained both
objective and subjective components. First, the patentee had to “show by
clear and convincing evidence that the infringer acted despite an objectively
high likelihood that its actions constituted infringement of a valid patent.”
Id. at 1371. This is “objective recklessness,” since it does not turn on what
the infringer did or did not know. Id. at 1371. Second, the patentee was
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required to demonstrate, again by clear and convincing evidence, that the
risk of infringement “was either known or so obvious that it should have
been known to the accused infringer.” Id. This is the subjective component
of the test. Id. Only after both elements were satisfied could a district court
proceed to exercise its discretion whether to award enhanced damages. Id.
A unanimous Supreme Court abrogated that test as being
inconsistent with the statutory text. Halo, 136 S. Ct. at 1928. Section 284, the
Court noted, contains no textual limit on trial court discretion. Id. at 1931.
By the same token, however, “‘discretion is not whim.’” Id. (quoting Martin
v. Franklin Capital Corp., 546 U.S. 132, 139 (2005)). To guide district courts in
the exercise of the discretion granted them under Section 284, the Supreme
Court explained that
[a]wards of enhanced damages under the Patent Act over the
past 180 years establish that they are not to be meted out in a
typical infringement case, but are instead designed as a
“punitive” or “vindictive” sanction for egregious
infringement behavior. The sort of conduct warranting
enhanced damages has been variously described in our cases
as willful, wanton, malicious, bad-faith, deliberate,
consciously wrongful, flagrant, or—indeed—characteristic of
a pirate. See supra, at 1928–1930. District courts enjoy
discretion in deciding whether to award enhanced damages,
and in what amount. But through nearly two centuries of
discretionary awards and review by appellate tribunals, “the
channel of discretion ha[s] narrowed,” Friendly, Indiscretion
About Discretion, 31 Emory L.J. 747, 772 (1982), so that such
damages are generally reserved for egregious cases of
culpable behavior.
Id. at 1932. In the Court’s view, promoting innovation and invention
demands that district courts decline to award enhanced damages in
“garden-variety cases.” Id. at 1935.
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Against this backdrop, the Court held that the objective portion of
the Seagate test was too rigid. Id. at 1932. It led to both undue constraint on
trial court discretion and unjust results in cases where the objective element
could not be satisfied despite clear evidence of wanton or malicious
misconduct. See id. at 1932–33. In Octane Fitness, LLC v. ICON Health &
Fitness, Inc., 134 S. Ct. 1749, 1756 (2014), the Court had overturned a similar
dual standard that governed the award of attorney’s fees in patent cases.
There, the Court determined that a focus on subjective bad faith alone was
sufficient to separate “exceptional” cases, which warranted an award of
fees, from ordinary cases, which did not. Id. So too in Halo, the Court
concluded that the objective component of the Section 284 analysis in
Seagate was too mechanical and restrictive. Halo, 136 S. Ct. at 1933. The
Court held that going forward, “[t]he subjective willfulness of a patent
infringer, intentional or knowing, may warrant enhanced damages,
without regard to whether his infringement was objectively reckless.” Id. at
1932.12
The Court found it sufficient to commit the matter of enhancement
to the trial court’s discretion based on the facts of each case, along with the
admonition that, “[c]onsistent with nearly two centuries of enhanced
damages under patent law,. . .such punishment should generally be
reserved for egregious cases typified by willful misconduct” that goes
“beyond typical infringement.” Id. at 1934–35. The Federal Circuit later
confirmed this new standard, observing that “[e]nhanced damages are
The Seagate test also impermissibly required a patentee to cross the clearand-convincing-evidence threshold to obtain a damages enhancement. Halo, 136
S. Ct. at 1934. The Court rejected that heightened burden and held that entitlement
to enhanced damages must be proved merely by a preponderance of the evidence.
Id.
12
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generally only appropriate in egregious cases of misconduct, such as
willful, wanton, or malicious behavior,” and that “an award of enhanced
damages does not necessarily flow from a willfulness finding.” Presidio
Components, Inc. v. Am. Technical Ceramics Corp., 2016-2607, 2017 WL
5586049, at *9 (Fed. Cir. Nov. 21, 2017). Nor should Section 284 serve
purposes beyond punishment and deterrence, since other provisions of the
Patent Act already exist to ensure just compensation to the patentee for both
the cost of infringement and litigation expenses. Halo, 136 S. Ct. at 1937
(Breyer, J., concurring) (citing 35 U.S.C. §§ 284, 285).
While Halo ultimately controls this Court’s decision, the Federal
Circuit’s opinion in Read offers a non-exclusive list of factors that can help
guide an analysis of the relevant facts. Read, 970 F.2d at 926; Georgetown Rail
Equip. Co. v. Holland L.P., 867 F.3d 1229, 1244 (Fed. Cir. 2017); Power
Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., Case No. 09-cv-05235MMC, 2017 WL 130236, at *4 (N.D. Cal. Jan. 13, 2017). Those factors are: (1)
“whether the infringer deliberately copied the ideas of another”; (2)
“whether the infringer, when he knew of the other’s patent protection,
investigated the scope of the patent and formed a good-faith belief that it
was invalid or that it was not infringed”; (3) “the infringer’s behavior as a
party to the litigation”; (4) the “[d]efendant’s size and financial condition”;
(5) the “[c]loseness of the case”; (6) the “[d]uration of the defendant’s
misconduct”; (7) “[r]emedial action by the defendant”; (8) the
“[d]efendant’s motivation for harm”; and (9) “[w]hether the defendant
attempted to conceal its misconduct.” Read, 970 F.2d at 827 (footnote and
citations omitted).
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The parties structure their arguments around the Read factors, and
so too will the Court. The Court will then return to the overarching
principles enunciated in Halo to arrive at a final determination.
2.3.1
The Read Factors
Copying. The first factor focuses on copying the ideas or design of the
patentee. Id. This includes not only copying strictly the elements of a patent
claim but also any commercial embodiment. Id. Thus, although the
threshold finding of willful infringement relies upon knowledge of the
patent’s existence, Word to Info., Inc. v. Google Inc., 140 F. Supp. 3d 986, 989
(N.D. Cal. 2015), courts deciding whether to enhance damages may
consider copying even if done before the patents have issued, Barry v.
Medtronic, Inc., 250 F. Supp. 3d 107, 111 (E.D. Tex. 2017).
This factor is neutral, as substantial factual disputes weaken
Plaintiffs’ allegations of copying. Plaintiffs say their release of the
revolutionary V28 product line in 2005 spurred Snap-On to seek to work
with Moli in 2006 after its exclusivity period with Milwaukee ended.
Plaintiffs believe that the evidence, including testimony and emails
showing that Snap-On analyzed Milwaukee battery packs, establishes that
Snap-On actively attempted to copy the battery pack designs and
capabilities that Moli and Milwaukee had developed.
Snap-On counters that while the designs both companies created
with Moli involved the use of Li-ion technology, there the similarities end,
since, for instance, Snap-On’s products have special features (such as
protective circuitry built into the battery packs themselves) that required
unique engineering solutions, and Snap-On’s battery packs ultimately used
different cell sizes and configurations. To the Court, it is an open question
whether Snap-On sought to simply reverse engineer the Milwaukee
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invention, or whether it chose to work with a knowledgeable firm to
quickly make efforts to compete in the new Li-ion marketplace. There is no
need for a “smoking gun” to prove copying, id. at 112, but there should be
more than the conjecture Plaintiffs offer here.
The Court does not find a clear answer to the copying issue in the
evidence presented, making this case unlike Apple Inc. v. Samsung
Electronics Co., Ltd., 258 F. Supp. 3d 1013, 1027 (N.D. Cal. 2017), where
Samsung openly admitted copying Apple’s slide-to-unlock feature. Nor is
this case similar to Polara Engineering, Inc. v. Campbell Co., 237 F. Supp. 3d
956, 992 (C.D. Cal. 2017), where the infringer ignored counsel’s suggestion
to avoid infringement by implementing a different solution. Undoubtedly
Snap-On perceived that the market would move toward lithium, and that
it needed to adapt accordingly, but it is harder to say that it did so simply
by copying Milwaukee’s work. Additionally, the trial record reveals that
toolmakers often had similar output requirements for their battery packs
used in high-power cordless tools, rendering it unsurprising that Snap-On’s
goals in working with Moli were in many ways similar to Milwaukee’s. It
is not conclusive proof of copying. See Stryker Corp. v. Zimmer, Inc., No. 1:10CV-1223, 2017 WL 4286412, at *3 (W.D. Mich. July 12, 2017) (finding copying
supported enhancement where infringer’s lead engineer was instructed to
model its design off of the patentee’s). Thus, this factor becomes largely
neutral.
Good-Faith Belief of Invalidity or Non-Infringement. The second factor
assesses the extent of the infringer’s efforts to determine whether the patent
was valid and whether his product infringed upon it. This factor favors
Plaintiffs. As noted above, Snap-On assigned Fuhreck to review the October
2011 licensing letter from Milwaukee. He, in consultation with some of his
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colleagues, decided that the patents were related to Snap-On’s business but
were not sufficiently groundbreaking to be valid. Snap-On therefore made
no alterations to its products and did not take a license.
Yet Fuhreck’s review of the patents was cursory and did not include
a prior art search or any meaningful invalidity analysis. See Arctic Cat Inc.
v. Bombardier Recreational Prods., Inc., 198 F. Supp. 3d 1343, 1348 (S.D. Fla.
2016). Snap-On recognized that the patents-in-suit were relevant, yet it
went no further in its analysis at that time. “The absence of evidence of an
adequate investigation” means that Snap-On likely did not hold a
reasonable belief that the patents were invalid. Apple, 258 F. Supp. 3d at
1032; Barry, 250 F. Supp. 3d at 116. It was simply not enough for Snap-On
to bury its head in the sand after Fuhreck told them the patents were not
innovative; though the willfulness inquiry post-Halo focuses on subjective
knowledge, failing to conduct a reasonable investigation to inform oneself
about the issues cannot be tolerated. Thus, Snap-On’s citation to decisions
such as the remand in Halo are unavailing, for there, the engineer’s belief as
to invalidity was backed up by other investigations by counsel. Halo, 2017
WL 3896672, at *3–4.
The fact that Snap-On may have developed some colorable
invalidity or non-infringement theories during litigation—but years after
infringement began—cannot remedy that initial oversight. WBIP, 829 F.3d
at 1340. Additionally, while Snap-On’s failure to obtain the opinion of
counsel could not be admitted at trial to support the threshold finding of
willfulness, 35 U.S.C. § 298, it can be relevant to enhancement, see Halo, 2017
WL 3896672, at *3–4 (distinguishing between advice-of-counsel defense at
trial and evidence of counsel’s opinions during enhanced damages phase).
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Nonetheless, it is important to appreciate that Milwaukee’s 2011
letter did not actually accuse Snap-On of infringing the three patents-insuit. It generally referenced a large number of patents for potential
licensure. The first unequivocal allegation of infringement did not come
until the complaint in this case was served on Snap-On in late 2014. Thus,
just as Snap-On’s efforts to avoid infringement and determine invalidity
could have been more thorough, Plaintiffs could have been more direct in
making an early accusation of infringement. This same circumstance led the
district court on remand in Halo to observe that, after receipt of a letter
merely opening the possibility of license negotiations, “it [was] hard to
claim that [the defendant] subjectively knew it was infringing at that time.”
Halo, 2017 WL 3896672, at *3–4. Plaintiffs lean heavily on Snap-On’s
concession that the patents-in-suit were recognized in 2012 as “related to”
its business and “of interest” to it. (Docket #342-1 at 8). Yet the urgency of
the matter could have been more clearly laid before Snap-On prior to this
lawsuit. See Innovention Toys, LLC v. MGA Entm’t, No. 07-6510, 2017 WL
3206687, at *3 (E.D. La. Mar. 8, 2017) (patentee sent a notice of infringement
with a copy of the published patent application); Church & Dwight Co., Inc.
v. Abbott Labs., Civ. No. 05–2142 (GEB)(JJH), 2008 WL 2565349, at *10 (D.N.J.
June 24, 2008) (infringement could be found willful where infringer “knew
that its infringement was an issue” but refused to change its behavior).
Litigation Behavior. The third factor looks at the infringer’s litigation
behavior to see whether it needlessly obstructed the claims or sought
obfuscation as a way to avoid liability. The parties treat this factor as an
inroad to air grievances about alleged litigation misconduct. See (Docket
#342-1 at 11–14); (Docket #360 at 19–24). In the main, their disputes about
whether a particular witness was prepared, whether an expert should have
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disclosed more information, or whether a party’s theories were sufficiently
defined prior to trial, are all sideshows. The Court will not delve into such
minutiae. After reviewing the parties’ disagreements about each other’s
litigation choices, the most it can say is that the case was hard-fought and
involved no more than ordinary strategic decisions (and blunders) on both
sides. Plaintiffs have uncovered no egregious misconduct. See i4i Ltd. P'ship
v. Microsoft Corp., 598 F.3d 831, 859 (Fed. Cir. 2010) (defining litigation
misconduct as including “bringing vexatious or unjustified suits, discovery
abuses, failure to obey orders of the court, or acts that unnecessarily prolong
litigation”); Powell v. Home Depot U.S.A., Inc., 715 F. Supp. 2d 1285, 1297
(S.D. Fla. 2010) (“[H]ard-fought, zealous advocacy does not necessarily
amount to vexatious or bad faith litigation[.]”).
By way of example, both parties accuse their opponent of hiding the
ball on their infringement contentions. Courts no longer countenance trial
by ambush, but that does not stop litigants from delaying whenever
possible the day when they must finally stake their legal positions.
Certainly, Snap-On could have narrowed its obviousness combinations or
said more about its non-infringement theories, but so too could Plaintiffs
have culled the asserted patent claims and their own infringement theories.
To punish Snap-On and not Plaintiffs for similar litigation behavior simply
because it lost at trial would be unfair. Polara, 237 F. Supp. 3d at 993 (finding
that although “[b]oth sides assail[ed] their opponent’s litigation
tactics,. . .the record reveals little behavior by either side that cannot be
fairly characterized as zealous and aggressive advocacy”); Barry, 250 F.
Supp. 3d at 117 (“Enhancement analysis is not an opportunity for this court
to penalize a zealous trial team that engaged in hard-fought battles but
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ultimately lost the war. Neither party here refrained from delivering hard
blows or from attempts to hide the ball.”).
Size and Financial Condition. The fourth factor is used to ensure that
any damages enhancement is not out of proportion with the defendant’s
size and the scope of its infringing versus non-infringing sales. The
maximum potential enhancement, $83.4 million, would amount to about a
tenth of Snap-On’s total operating earnings. (Docket #360-2 at 29). This is
not a small figure, but neither is it out of proportion with the hundreds of
millions of dollars Snap-On has earned from sales of Li-ion products.
Powell, 715 F. Supp. 2d at 1298 (financial condition is used as a check “to
ensure that enhanced damages would not prejudice defendant’s noninfringing business”). Snap-On is capable of paying an enhanced damages
award. Of course, it should also be noted that Snap-On is a far smaller
player in the market in comparison to Plaintiffs, a fact that was thoroughly
covered at trial. Artic Cat, 198 F. Supp. 3d at 1352 (finding that enhanced
damages were warranted where the infringer was the far larger company
and the market leader).
Closeness of the Case. The fifth factor examines whether the case
involved a meaningful defense to the claims or whether it was easily
decided against the infringer. It ties in closely with the second factor, which
looked to whether the infringer had some good-faith basis on which to
defend itself. See Arctic Cat, 198 F. Supp. 3d at 1352. Here, the Court finds
that the case, if not close, was not so one-sided as to favor a damages
enhancement.
Plaintiffs make much of the resilience of their patents against
reexaminations and IPRs, saying that Snap-On should not have persisted in
fighting the claims when the USPTO refused to invalidate the patents.
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(Docket #342-1 at 10). But Plaintiffs fail to appreciate (as they have done
many times before in this case) that, at least for the IPRs, the PTAB’s review
was narrowly circumscribed. As far as the Court is aware, the recent trial
was the first time any accused infringer of the patents-in-suit was able to
make a case for obviousness based on the prototype Moli cells. The
argument was not successful, but there were no definitive indications in the
record that it was doomed to failure. The speed of the jury’s deliberations
alone is of little moment in this regard. PPC Broadband, Inc. v. Corning
Optical Comm’ns RF, LLC, 5:11-cv-761 (GLS/DEP), 2016 WL 6537977, at *7
(N.D.N.Y. Nov. 3, 2016).
Contrast this case with Artic Cat, where the infringer raised
invalidity defenses based solely on prior art the USPTO considered and
rejected. Arctic Cat, 198 F. Supp. 3d at 1349. While Snap-On placed a bad bet
on the Moli cells, it is hard to say that it should have known that this was a
poor gamble from the start. Likewise, although Snap-On relied too much
on the invalidation of Plaintiffs’ patents in the Hitachi reexamination, a
contested reexamination cannot in every case serve as a warning shot that
all other potential challenges must be abandoned.
Finally, Plaintiffs say that many of Snap-On’s defenses did not pass
the crucible of summary judgment, (Docket #342-1 at 16–17), but the Court
recalls dismissing several of Plaintiffs’ major arguments, too, including
assignor estoppel, as scarcely founded in fact. See Milwaukee Elec. Tool, 2017
WL 4220457, at *21–23. If Snap-On advanced some positions that it should
not have, Plaintiffs did the same. Notably, Plaintiffs did not seek summary
disposition of the obviousness defense. A claim that proceeds to trial is not
strong per se, PPC Broadband, 2016 WL 6537977, at *7, yet there is no clear
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sign that the jury summarily dismissed the defense. This factor weighs
against a damages enhancement.
Duration of Infringement. Next, the sixth factor analyzes the duration
of the infringement, particularly in light of what the infringer knew about
the patents. Snap-On’s infringement began in 2009, when the hypothetical
license negotiation between Milwaukee and Snap-On was to have taken
place. That leaves a lengthy period, five years pre-suit and three post,
during which infringement has continued. Snap-On contends that it knew
of the patents-in-suit only as early as the October 2011 letter from
Milwaukee. But even then, infringement has continued for a substantial
length of time. See Polara, 237 F. Supp. 3d at 993. Moreover, the Court rejects
Snap-On’s assertion that its period of infringement is “zero” simply because
it thinks its actions were non-infringing. (Docket #360-2 at 31). That is one
consideration that can color this analysis, see Read, 970 F.2d at 827 (noting
that a damages enhancement may ramp up if sales are made after a finding
of liability), but it does not forgive every transgression. This factor supports
an enhancement.
Remedial Actions. The seventh factor asks whether Snap-On took
action to avoid or remediate infringement once it was a real danger. Unlike
the previous factor, the emphasis here is whether conduct during the
pendency of the suit evinces an unrepentant defendant. Polara, 237 F. Supp.
3d at 993. Whereas Snap-On’s pre-suit conduct could be characterized as
less than well informed as to whether it was infringing, the Court cannot
say that its conduct during this case shows a failure to remediate. Snap-On
developed several vigorous non-infringement and invalidity defenses
which it pursued here and in the USPTO. Unlike Polara, where the infringer
ignored clear advice that its chosen course would be infringing and even
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lost at summary judgment on infringement, here Snap-On did not act
vexatiously in fighting the case to its conclusion. Id. at 993. Additionally,
Plaintiffs do not assert that Snap-On has continued to infringe since the trial
concluded. Novozymes A/S v. Genencor Int’l, Inc., 474 F. Supp. 2d 592, 611 (D.
Del. 2007) (“That Defendants failed to take remedial action and continued
to infringe until after the liability trial also supports an enhanced award.”);
Stryker, 2017 WL 4286412, at *5 (infringer continued to manufacture and sell
products “even after the jury returned its verdict”).
Motivation to Harm. The eighth factor is difficult to assess in this case.
Here, the Court must discern whether Snap-On’s infringement was done
with a “pernicious” intent to harm Plaintiffs. Read, 970 F.2 at 827. On the
one hand, Snap-On’s conduct could be justified by market pressures. See id.
(citing Am. Safety Table Co. v. Schreiber, 415 F.2d 373, 379 (2d Cir. 1969)). On
the other, Snap-On chose to make aggressive moves against a direct
competitor, including teaming up with its former battery supplier at the
earliest opportunity, notwithstanding its later-conceived invalidity
arguments. Polara, 237 F. Supp. 3d at 993–94; Stryker, 2017 WL 4286412, at
*6. In the end, the factor is fairly neutral, since the evidence does not
demonstrate to any compelling degree that Snap-On was motivated by
“greed,” PPC Broadband, 2016 WL 6537977, at *8, and because Snap-On and
Milwaukee are not the only two players in the power-tool market, Stryker,
2017 WL 4286412, at *6.
Concealment. Finally, the ninth factor asks whether the infringer
sought to conceal its misconduct. This normally involves either a prelitigation cover-up, Arctic Cat, 198 F. Supp. 3d at 1353, or failure to disclose
material information in discovery, Stryker, 2017 WL 4286412, at *6. For this
factor, Plaintiffs accuse Snap-On of being “less than forthcoming” about its
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efforts to reverse engineer the patented battery packs and in its discovery
disclosures. (Docket #342-1 at 20). Such vague allegations cannot and
should not support enhancement. In the Court’s view, this factor is limited
to instances of overt misconduct, which may not exist in every case. Such
circumstances did not arise here. Consequently, this factor does not support
enhancement.
2.3.2
The Halo Standard Revisited
On balance, the Read factors suggest an enhancement in this case
would not be outside the bounds of the Court’s discretion. Yet, when one
places those factors within the context of the Supreme Court’s teachings in
Halo, it becomes clear that an enhancement is not warranted here. If the
Patent Act permits enhanced damages in egregious cases only, then there
must be a set of cases—indeed, a sizable set—in which the defendant loses
but is not deserving of a damages enhancement. The latter does not follow
from the former.
Recall Chief Justice Roberts’ emphasis on the notion that punishing
true pirates is the aim of Section 284. Courts imposing enhanced damages
have faced infringers of the most nefarious sort, who accuse the patentee of
criminal conduct, secretly try to buy the asserted patents, advance frivolous
defenses, or falsely represent the facts. See SRI Int’l, Inc. v. Cisco Sys., Inc.,
254 F. Supp. 3d 680, 723–24 (D. Del. 2017); Imperium IP Holdings (Cayman),
Ltd. v. Samsung Elecs. Co., Ltd., 203 F. Supp. 3d 755, 764 (E.D. Tex. 2016);
Arctic Cat, 198 F. Supp. 3d 1343. Snap-On’s defeat at trial is no indication
that it acted as a pirate, even when one factors in the jury’s finding that the
infringement was willful. See Jurgens v. CBK, Ltd., 80 F.3d 1566, 1572 (Fed.
Cir. 1996) (trial court must explain reasons for not enhancing damages after
a finding of willfulness).
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The case was hard-fought, and both sides presented good and bad
arguments. Snap-On’s defense was vigorous but not out of the ordinary. In
the words of Judge Clark in Barry, “perhaps the actions of both sides at
times may have approached those of a privateer, but they did not sink to
the level of a ‘pirate.’” Barry, 250 F. Supp. 3d at 118 (quoting Halo, 136 S. Ct.
at 1932).
As the above discussion shows, the worst that can be said of SnapOn’s entire course of conduct is that it did not sufficiently research at the
outset whether it needed to take a license to the patents-in-suit. The jury’s
verdict reflects that Snap-On should have taken a license like every other
competitor. But there is no reason to layer additional punishment atop this
error. The jury’s verdict is enough. Sociedad Espanola, 226 F. Supp. 3d at 532
(finding enhancement unwarranted in part because “[plaintiff] received a
significant damages award for the Defendants’ culpable conduct”). The
Court appreciates that with punishment comes deterrence, see Modine Mfg.
Co. v. Allen Grp., Inc., 917 F.2d 538, 543 (Fed. Cir. 1990); Applera Corp. v. MJ
Research Inc., 372 F. Supp. 2d 233, 247 (D. Conn. 2005), but because Snap-On
is the lone holdout in an industry of toolmakers who took a license, little
general deterrence will be achieved by a punitive wallop in addition to the
compensatory award that has been made.
For the reasons stated above, after considering the pertinent
authorities and the record in this case as a whole, the Court declines to
enhance the jury’s compensatory damages award under Section 284.
2.4
Plaintiffs’ Motion for Pre- and Post-Judgment Interest
Plaintiffs’ other motion seeks an order from the Court awarding
them both pre- and post-judgment interest. (Docket #343). The Court need
not discuss the latter request; post-judgment interest accrues by operation
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of 28 U.S.C. § 1961(a) on any civil judgment, although the Court’s
judgments typically note that post-judgment interest shall accrue as
provided for by law. Post-judgment interest will accrue automatically from
the date of the Court’s judgment in this case. Pace Commc’ns, Inc. v.
Moonlight Design, Inc., 31 F.3d 587, 591 (7th Cir. 1994); Student Loan Mktg.
Ass’n v. Lipman, 45 F.3d 173, 176 (7th Cir. 1995).
The parties’ dispute focuses on pre-judgment interest, which is
allowed under 35 U.S.C. § 284. That statute states, in relevant part, that
“[u]pon finding for the claimant the court shall award the claimant
damages adequate to compensate for the infringement, but in no event less
than a reasonable royalty for the use made of the invention by the infringer,
together with interest and costs as fixed by the court.” 35 U.S.C. § 284.
Under this provision, in “the typical [patent infringement] case an award of
prejudgment interest is necessary to ensure that the patent owner is placed
in as good a position as he would have been in had the infringer entered
into a reasonable royalty agreement.” General Motors Corp. v. Devex Corp.,
461 U.S. 648, 655 (1983). In other words, “prejudgment interest should
ordinarily be awarded absent some justification for withholding such an
award, [and] a decision to award prejudgment interest will only be set aside
if it constitutes an abuse of discretion.” Id. at 657; Energy Transp. Grp., Inc. v.
William Demant Holding A/S, 697 F.3d 1342, 1358 (Fed. Cir. 2012) (“The
award of pre-judgment interest is the rule, not the exception.”).
When awarding pre-judgment interest, “[t]he rate of prejudgment
interest and whether it should be compounded or uncompounded are
matters left largely to the discretion of the district court.” Bio-Rad Labs., Inc.
v. Nicolet Instrument Corp., 807 F.2d 964, 969 (Fed. Cir. 1986). “In exercising
that discretion, however, the district court must be guided by the purpose
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of prejudgment interest,” which is to compensate the patent holder for use
of funds it would have had but for the defendant’s infringement. Id.
Two issues arise regarding the calculation of pre-judgment interest
in this case, which Plaintiffs argue should run from June 2009, the date of
the hypothetical negotiation between the parties and thus the beginning of
the infringement period, to the date the Court enters judgment on the jury’s
verdict. Nickson Indus. Inc. v. Rol Mfg. Co. Ltd., 847 F.2d 795, 800 (Fed. Cir.
1988) (“Generally, prejudgment interest should be awarded from the date
of infringement to the date of judgment.”). The first is whether the Court
should allow such interest at all, and the second is how it should be
calculated. The Court will address each issue below.
2.4.1
Availability of Pre-Judgment Interest
Snap-On asks the Court to deny pre-judgment interest entirely, or at
least during the pre-suit period from June 2009 until October 2014, based
on Plaintiffs’ undue delay in bringing suit. (Docket #361 at 6). According to
Snap-On, Plaintiffs do not have a viable excuse for waiting over five years
to file the instant suit. Id. In its view, Plaintiffs made a strategic decision to
sue larger competitors first and then turn on smaller operators like SnapOn, but this should not inure to Plaintiffs’ benefit. Id. Indeed, Plaintiffs did
not even send Snap-On a letter asserting their infringement claims in the
years before filing suit, thereby depriving Snap-On of the ability to seek a
declaration of rights. Id. at 7–8.
Plaintiffs contend that the delay was justified. Between June 2009
and October 2014, Plaintiffs were involved in other litigation, settlement
negotiations, reexaminations, and other post-issuance proceedings relating
to the patents-in-suit. (Docket #344 at 3). Of particular note was the
favorable end result in the Hitachi reexamination in July 2014, after which
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Plaintiffs quickly moved to enforce their rights against Snap-On and other
competitors. Id. at 3–4. Plaintiffs assert that they were not required to sue
every potential infringer simultaneously and cannot be said to have
unfairly sat on their rights to inflate their pre-judgment interest. Id. at 4.
Further, say Plaintiffs, the delay in judgment from the institution of this
case in October 2014 until the verdict in October 2017 was largely due to
Snap-On’s filing of IPRs and its request for a stay. Id. Consequently,
Plaintiffs believe that they are entitled to pre-judgment interest during the
pendency of suit as well. Id.
The Court finds that Plaintiffs are entitled to pre-judgment interest
only from the institution of suit until the entry of judgment. Pre-judgment
interest must be the rule, rather than the exception, Crystal, 246 F.3d at 1361,
but a district court retains discretion to deny pre-judgment interest based
on undue delay in filing suit, General Motors, 461 U.S. at 657, although the
Federal Circuit instructs that the infringer must show some prejudice,
Crystal, 246 F.3d at 1361.
Such a showing has been made here. Plaintiffs argue that they were
busy pursuing other litigation during the five-year period before they sued
Snap-On, including fighting the Hitachi reexamination in which their
patents were initially invalidated. It may have saved the parties and the
courts a great deal of time to resolve the Hitachi reexamination before
attending to other cases. But the fact that Plaintiffs were busy with other
matters is not carte blanche to ignore their potential dispute with Snap-On.
Noticeably absent from Plaintiffs’ presentation is any affirmative
reason that they could not have filed suit before October 2014, or at the least
informed Snap-On of the infringement allegations. Even the critical letter of
October 2011 makes no mention of the idea that Snap-On’s products were
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infringing. (Docket #345-8). It appears to be a letter disseminated en masse
to competitors seeking to open license negotiations—and with good reason,
in light of the value of Plaintiffs’ Li-ion innovation. But it is hardly notice to
Snap-On that it should capitulate against claims of infringement, and it
therefore carries little weight in determining whether Snap-On unduly
delayed the day of judgment.
Perhaps trying out their claims against the bigger industry players
was a smart tactical decision on Plaintiffs’ part, but that decision had
consequences. The Court will not be left to speculate as to the business
rationale where Plaintiffs’ delay needlessly inflated the potential prejudgment interest sum by nearly $5.5 million. Crystal, 246 F.3d 1362 (a “selfserving” two-year delay warranted denial of pre-judgment interest); Kaneka
Corp. v. SKC Kolon PI, Inc., 198 F. Supp. 3d 1089, 1124 (C.D. Cal. 2016)
(denying pre-judgment interest where patentee delayed filing suit for four
years despite awareness that defendant was infringing); Saint-Gobain
Autover USA, Inc. v. Xinyi Glass N.A., Inc., 707 F. Supp. 2d 737, 766 (N.D.
Ohio 2010) (same). That massive amount of potential pre-judgment interest
is prejudice enough for Snap-On.
Plaintiffs’ cited cases do not help their argument. First is
Studiengesellschaft Kohle mbH v. Dart Industries, Inc., 549 F. Supp. 716 (D. Del.
1982), which has nothing to say about pre-judgment interest. There, the
court considered whether the equitable doctrine of laches precluded an
award of damages. Id. at 754. Plaintiffs do not explain the connection
between laches and Section 284, and the Court is not satisfied that they have
much to do with each other. While laches is applied to preclude an award
of damages entirely, here the Court considers only whether pre-judgment
interest is appropriate. See Humanscale Corp. v. CompX Int’l, Inc., No. 3:09–
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CV–86, 2010 WL 3397455, at *2 (E.D. Va. Aug. 23, 2010). Nothing about this
decision will disturb the jury’s damages award.
Second, Plaintiffs cite Kalman v. Berlyn Corp., 914 F.2d 1473 (Fed. Cir.
1990), but the facts of that case are distinguishable. There, the Federal
Circuit forgave a delay of eight years in filing suit because the plaintiff had
in the interim pursued litigation against another entity. Id. at 1486. Crucial
to that decision, however, was the fact that the defendant both knew of the
prior case and “controlled and financed” the defense of that case. Id. No
such connection exists between this litigation and the Hitachi
reexamination or the prior lawsuits between Plaintiffs and other
toolmakers. In the end, all the Court is left with is the general rule that prejudgment interest should normally be awarded, but the facts of this case
oblige the Court to exercise its discretion and deny such interest for the presuit period.
That said, Snap-On offers no viable reason why pre-judgment
interest should be denied for the period of delay it caused by its IPRs during
the pendency of this action. Snap-On seems to believe that Plaintiffs’ delay
in filing suit taints the entire proceeding, but the Court can readily
differentiate the period of delay occasioned by Plaintiffs, June 2009 to
October 2014, and the delay caused in primary part by Snap-On, from
October 2014 until the present. Plaintiffs did not agree to a stay of
proceedings during the IPRs, so the significant delay caused thereby cannot
be attributed to them. As such, the Court believes that the general rule in
favor of pre-judgment interest should apply for the period since suit was
instituted on October 16, 2014, until the entry of judgment.
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2.4.2
Calculation of Pre-Judgment Interest
Having determined the proper period for an award of pre-judgment
interest, the Court must now calculate the amount using the appropriate
rate and method of compounding. Plaintiffs ask for the calculation to be
done using the prime rate and quarterly compounding. (Docket #344 at 4–
5). Snap-On counters that the Court should use the much lower Treasury
Bill rate, and although it does not actually propose a method of
compounding, it suggests that the Court should structure the accrual of
interest in line with the Makita license agreement that Plaintiffs relied upon
during trial. (Docket #361 at 11–12).
First, the Court finds that the prime rate should be used in this case.
Snap-On argues that Plaintiffs must justify resort to the prime rate, perhaps
by showing that Snap-On is a default risk or that they borrowed at the
prime rate, (Docket #361 at 9), but this is inconsistent with Seventh Circuit
decisions on pre-judgment interest, which control in this instance, see
Transmatic, Inc. v. Gulton Indus., Inc., 180 F.3d 1343, 1347 (Fed. Cir. 1999).
The prime rate is in this Circuit the “benchmark for prejudgment interest”
and may be departed from only if the district court “engages in ‘refined
rate-setting’ directed at determining a more accurate market rate for
interest.” First Nat. Bank of Chi. v. Standard Bank & Trust, 172 F.3d 472, 480
(7th Cir. 1999) (quoting Cement Div., Nat’l Gypsum Co. v. City of Milwaukee,
144 F.3d 1111, 1114 (7th Cir. 1998)). True, the Seventh Circuit applied the
prime rate to account for a risk of default in Gorenstein Enterprises, Inc. v.
Quality Care-USA, Inc., 874 F.2d 431, 436 (7th Cir. 1989), but that risk is not
a prerequisite to adopting the prime rate. Likewise, while Plaintiffs could
offer evidence that they borrowed at the prime rate or higher, they were not
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required to do so. Uniroyal, Inc. v. Rudkin-Wiley Corp., 939 F.2d 1540, 1545
(Fed. Cir. 1991).
The parties have not supplied authorities, evidence, or argument
that equips the Court to engage in the nuanced rate-setting analysis needed
to depart from the prime rate. Though other courts in other Circuits may
have been within their discretion to do so based on the evidence before
them, see, e.g., Mars, Inc. v. Coin Acceptors, Inc., 513 F. Supp. 2d 128, 132–137
(D.N.J. 2007); Laitram Corp. v. NEC Corp., 115 F.3d 947, 955 (Fed. Cir. 1997),
this Court is also within its discretion to rely upon the prime rate here, see
IMX, Inc. v. LendingTree, LLC, 469 F. Supp. 2d 203, 227 (D. Del. 2007)
(“Courts have recognized that the prime rate best compensate[s] a patentee
for lost revenues during the period of infringement because the prime rate
represents the cost of borrowing money, which is ‘a better measure of the
harm suffered as a result of the loss of the use of money over time.’”)
(quoting Mars, Inc. v. Conlux USA Corp., 818 F. Supp. 707, 720–21 (D. Del.
1993), aff’d, 16 F.3d 421 (Fed. Cir. 1993)). Moreover, because the Court has
already accounted for Plaintiffs’ delay in bringing suit, see supra Part 2.4.1,
it will not further penalize Plaintiffs for that delay by selecting Snap-On’s
proposed interest rate, see (Docket #361 at 11).
Second, the Court will apply quarterly compounding, as suggested
by Plaintiffs. Snap-On does not directly oppose this proposal. Rather, it
offers its own unique approach, arguing that the Court should model
interest accrual in this case on the Makita license agreement’s installment
payment structure. Id. at 12. No doubt the Court has wide discretion to
determine the method of calculating interest that fits the case before it. But
discretion can be abused when untethered to the law and facts, and thus the
Court declines to venture out on the limb offered by Snap-On. Snap-On
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cites not a single case espousing anything like its proposal. Because of this,
the Court concludes that this case demands no more than the ordinary
approach to interest calculation, and finds Plaintiffs’ middle ground
between continuous and annual compounding to be reasonable. See Matter
of Oil Spill by Amoco Cadiz Off Coast of France on Mar. 16, 1978, 954 F.2d 1279,
1332 (7th Cir. 1992) (“[C]ompound interest is the norm in federal
litigation.”); Studiengesellschaft Kohle, m.b.H. v. Dart Indus., Inc., 862 F.2d
1564, 1579–80 (Fed. Cir. 1988) (affirming award of prejudgment interest at
prime rate compounded quarterly).
2.4.3
Pre-Judgment Interest Calculation
Neither party has supplied a calculation for pre-judgment consistent
with the legal rulings made above, perhaps because the Court did not adopt
either party’s position in full. The Court is no accountant, however, and it
leaves to the parties the actual calculation of the pre-judgment interest
award in this case. That number will be proposed in a joint notice to be filed
no later than Friday, January 5, 2018.
2.5
Subpoena Enforcement Proceeding
On September 11, 2017, a month before trial, Plaintiffs filed a
miscellaneous action in this Court, designated Case No. 17-MC-49-JPS (E.D.
Wis.), seeking to enforce compliance with a subpoena issued to counsel for
Snap-On. The subpoena requested information relevant to Plaintiffs’
contention that Snap-On had colluded with Moli, thereby warranting the
application of assignor estoppel against Snap-On. Plaintiffs hoped the
documents from Snap-On’s lawyers might show a privity relationship
between Snap-On and Moli.
The Court dismissed the assignor estoppel defense in its summary
judgment order. Milwaukee Elec. Tool, 2017 WL 4220457, at *21–23. It
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appeared, then, that the subpoena enforcement proceeding had been
rendered moot. Plaintiffs maintained their request, however, on the theory
that the documents sought would reveal witness bias even if they fell short
of demonstrating privity. The Court disagrees. The only conceivable use for
a subpoena directed at Snap-On’s counsel was to establish assignor
estoppel. Documents tending to show witness bias could be sought from
the witnesses themselves without intruding upon the files of opposing
counsel. Moreover, as Plaintiffs did not request a ruling on their motion
either before or during trial, the Court now considers the matter to be fully
mooted by its summary judgment order and Plaintiffs’ opportunity to
probe witness bias through cross-examination at trial. The motion to
enforce the subpoena will be denied and that proceeding will be closed.
2.6
Motion to Redact Trial Transcript
The final matter to be resolved before entry of judgment in this case
is the parties’ joint motion to redact portions of the trial transcript. (Docket
#367). The parties report that certain matters discussed at trial are deemed
confidential under the Court’s protective order. Disclosure would work a
competitive disadvantage to both sides. As a result, they ask that
designated portions of the trial transcript be redacted.
Although the parties reached an agreement as to redaction, the Court
is obliged to deny the request. The Court has an independent duty to review
requests for sealing in light of the public’s interest in open judicial
proceedings. Citizens First Nat’l Bank of Princeton v. Cincinnati Ins. Co., 178
F.3d 943, 944–45 (7th Cir. 1999). Redacting the record runs against the norm
that cases are litigated in public. Id. at 945. Not only has the public paid to
subsidize Plaintiffs’ and Snap-On’s dispute, it has an independent right to
inspect the proceedings of its judiciary. See id. As such, requests for
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redaction or sealing must be justified by a special need for confidentiality,
such as the disclosure of trade secrets or embarrassing details of a private
person’s life. Id. The trial judge may not “rubber stamp a stipulation to seal
the record.” Id.; Hicklin Eng’r, L.C. v. Bartell, 439 F.3d 346, 348 (7th Cir. 2006).
The Court, mindful of these principles, entered an order permitting
the parties to engage in fulsome pretrial discovery with the protection of
mutual confidentiality. (Docket #23). The Court also permitted the parties
to file certain materials under seal in connection with their motion practice.
Id. However, the Seventh Circuit in Citizens First admonished the district
court for permitting trial exhibits to be sealed, Citizens First, 178 F.3d at 945,
and the First Circuit case it cited noted the important distinction between
cause sufficient to merit sealing of discovery materials and that required to
support sealing the trial transcript, Polinquin v. Garden Way, Inc., 989 F.2d
527, 533 (1st Cir. 1993). The trial phase of a case is presumptively public,
while discovery is presumptively private. Id. As a consequence, a far greater
burden rests on the party seeking to seal portions of the trial transcript. Id.
The parties offer no such justification here, relying instead on
conclusory statements about protecting competitive data. This satisfied the
Court with respect to discovery and motion-related filings, but cannot with
respect to the trial transcript. That proceeding was held in public, and the
transcripts of the proceeding were made public for nearly a month before
the parties requested redaction. Whatever business interest they had in
keeping the confidential information secret is hard to square with that
delay, and post-hoc sealing cannot put the cat back in the bag. As such, the
Court must deny the motion.
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3.
CONCLUSION
This case took a great deal of effort from the parties, counsel, and the
Court to try to conclusion. The jury has rendered its verdict, and Snap-On
advances no viable reason to disturb it. By the same token, Plaintiffs largely
overreach in their requests to pile additional sums on top of the jury’s
substantial damages award in the form of enhanced damages and prejudgment interest. Thus, the Court must largely deny both parties’ posttrial motions.
Accordingly,
IT IS ORDERED that Plaintiffs’ motion to compel compliance with
a subpoena, filed in Case No. 17-MC-49-JPS (E.D. Wis.), be and the same is
hereby DENIED;
IT IS FURTHER ORDERED that the action bearing Case No. 17MC-49-JPS (E.D. Wis.) be and the same is hereby DISMISSED;
IT IS FURTHER ORDERED that Defendant’s renewed motion for
judgment as a matter of law (Docket #347) be and the same is hereby
DENIED;
IT IS FURTHER ORDERED that Defendant’s motion a new trial
(Docket #349) be and the same is hereby DENIED;
IT IS FURTHER ORDERED that Plaintiffs’ motion for an award of
enhanced damages (Docket #341) be and the same is hereby DENIED;
IT IS FURTHER ORDERED that Plaintiffs’ motion for an award of
pre- and post-judgment interest (Docket #343) be and the same is hereby
GRANTED in part and DENIED in part as stated herein;
IT IS FURTHER ORDERED that the parties shall file a joint notice
no later than Friday, January 5, 2018, containing the calculation of pre-
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judgment interest to be awarded in this case consistent with the Court’s
rulings herein;
IT IS FURTHER ORDERED that the parties’ joint motion to redact
portions of the trial transcript (Docket #367) be and the same is hereby
DENIED;
IT IS FURTHER ORDERED that the parties’ motions to restrict
certain documents filed in connection with the instant motions (Docket
#340, #346, #353, #356, #359, #368), which were designated confidential
pursuant to the Court’s protective order, be and the same are hereby
GRANTED; and
IT IS FURTHER ORDERED that, once the parties have supplied the
amount of the pre-judgment interest award, the Clerk of the Court shall
enter judgment in accordance with the jury verdict of October 26, 2017
(Docket #316) and DISMISS this action.
Dated at Milwaukee, Wisconsin, this 29th day of December, 2017.
BY THE COURT:
____________________________________
J. P. Stadtmueller
U.S. District Court
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