Oxbo International Corporation v. H&S Manufacturing Company, Inc.

Filing 486

ORDER distributing draft damages instructions. Signed by District Judge James D. Peterson on 06/13/2017. (Attachments: # 1 Draft Damages Instructions) (ejt)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

OXBO INTERNATIONAL CORPORATION,
Plaintiff,
v.
H&S MANUFACTURING COMPANY, INC.,

[DRAFT]
JURY INSTRUCTIONS:
DAMAGES
15-cv-292-jdp

Defendant.
Pretrial Instructions
Ladies and Gentlemen of the Jury:
We are about to begin the damages phase of the trial. This part of the trial
will, in general, follow the same pattern as the liability phase. Counsel will make
opening statements, we will hear the evidence, and then I will instruct you on the law
applicable to damages. Counsel will make closing arguments, and you will deliberate.
For this phase of the trial, it is now established that defendant has infringed
the ’929 patent, the ’739 patent, the ’488 patent, and a fourth patent that you have
not heard about yet, United States Patent number 8,511,052. We may refer to this
fourth patent-in-suit as the ’052 patent, or the “trough patent.” It claims an
improvement to the triple head mergers that you have heard about. [Adjust as needed
for jury verdict.]
You must now decide what amount of money damages would compensate
plaintiff for defendant’s infringement of the patents. Plaintiff must prove their

damages by a preponderance of the evidence. Plaintiff’s claim for damages must be
supported by evidence, but plaintiff is not require to prove damages with the same
level of precision as was required to prove the elements of liability. Your decision on
damages will require reasonable estimates based on the evidence.
I will instruct you in more detail about the law you will apply after you hear
the evidence. But my general instructions about evaluating evidence and your
conduct as jurors still apply.
Post-trial Introduction
Ladies and Gentlemen of the Jury:
Now that you have heard the evidence, I will give you the instructions that will
govern your deliberations in the jury room. It is my job to decide what rules of law
apply to the case and to explain those rules to you.
You have two duties as a jury. Your first duty is to decide the facts from the
evidence in the case. This is your job, and yours alone.
Your second duty is to apply the law that I give you to the facts. You must
follow these instructions, even if you disagree with them. Each of the instructions is
important, and you must follow all of them.

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DAMAGES — GENERAL
You must now consider what amount of damages to award to plaintiff. You are
to award plaintiff damages adequate to compensate plaintiff for infringement. The
damages you award are to compensate the patent holder, not to punish the infringer.
Plaintiff has the burden to prove its damages by a preponderance of the
evidence. Your verdict must not be based on guesswork. But plaintiff need not prove
the amount of its damages with mathematical precision. Your damages determination
will necessarily involve estimates and approximations.
In determining plaintiff’s damages, you may consider all the evidence
presented in the case, including the evidence presented in the first phase of the trial,
as well as the evidence presented in the damages phase.
The damages case will be submitted to you in the form of a special verdict on
damages, consisting of __ questions.

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TWO TYPES OF DAMAGES — LOST PROFITS & REASONABLE ROYALTY
There are two types of damages that plaintiff may be entitled to recover: lost
profits or a reasonable royalty.
Lost profits consist of any actual reduction in business profits that plaintiff
suffered as a result of defendant’s infringement. A reasonable royalty is the amount
the patent owner and someone wanting to use the patented invention would agree
upon as a fee for use of the invention. I will describe shortly what plaintiff must prove
to recover either type of damages.
Plaintiff is entitled to recover at least a reasonable royalty for each infringing
sale, even if plaintiff cannot prove that it suffered lost profits in connection with that
sale.

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LOST PROFITS
To recover lost profits, plaintiff must prove two things:
1. A reasonable probability that, if defendant had not infringed, plaintiff
would have made additional sales of the patented product that defendant
made.
2. The amount of profit plaintiff would have made on those sales. Plaintiff
does not need to prove this amount with precision, and if there are
uncertainties regarding the specific amount of lost profits, you may resolve
those uncertainties against defendant.
There are alternative ways for plaintiff to establish an entitlement to recover
lost profits. I will discuss these in the following instructions.

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LOST PROFITS — PANDUIT TEST
One way that plaintiff may establish that it is reasonably probable that it
would have made additional sales of the patented product is by proving three things:
1. There was a demand for the patented product;
2. There was no acceptable, non-infringing substitute for the patented
product; and
3. Plaintiff was capable of satisfying the demand.
An “acceptable, non-infringing substitute” is a product that has the advantages
of the patented invention that were important to the purchasers of defendant’s
product. If purchasers of the defendant’s product were motivated to purchase that
product because of features that were available only from that product and the
plaintiff’s patented product, then other products are not acceptable substitutes, even
if they otherwise competed with plaintiff’s and defendant’s products.

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LOST PROFITS — MARKET SHARE METHOD
An alternative way that plaintiff may establish that it is reasonably probable
that it would have made additional sales of the patented product is by proving two
things:
1. Plaintiff would have made some portion of defendant’s infringing sales if
defendant’s infringing product had not been available; and
2. Plaintiff was capable of making those additional sales.
If plaintiff proves these things, it is entitled to recover its lost profits on the
percentage of defendant’s sales that reflects what plaintiff proves was its share of the
market. You may reach this conclusion even if acceptable, non-infringing substitute
products were available from others.

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LOST PROFITS — AMOUNT
If you conclude that plaintiff has proved that it lost profits because of
defendant’s infringement, the lost profits that you award should be the amount that
plaintiff would have made on any sales that plaintiff lost because of the infringement,
minus the additional costs that plaintiff would have incurred in making those sales.
Plaintiff is required to prove the amount of its lost profits to a reasonable
probability and may not recover amounts that are speculative. However,
mathematical certainty is not required, and if the reason plaintiff has difficulty
proving the amount of its lost profits is that defendant did not maintain adequate
records, then you should resolve any doubts as to the amount of lost profits in
plaintiff’s favor.

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REASONABLE ROYALTY
Plaintiff also seeks to recover a reasonable royalty.
Plaintiff is entitled to recover a reasonable royalty for any of defendant’s
infringing sales for which plaintiff did not prove lost profits.
A royalty is a payment made to the owner of a patent by someone else so that
he can use the patented invention. A “reasonable royalty” is the amount plaintiff and
defendant would have agreed upon as a royalty at the time defendant’s infringement
began.
In determining a reasonable royalty, you should assume that plaintiff would
have been willing to allow defendant to use the patented invention and that
defendant would have been willing to pay plaintiff to do so. You should take into
account what plaintiff’s and defendant’s expectations would have been if they had
negotiated a royalty and had acted reasonably in their negotiations. You should
assume that both plaintiff and defendant would have believed that plaintiff’s patents
were valid and infringed. You should also assume that defendant would have been
willing to pay, and plaintiff would have been willing to accept, the reasonable royalty
they negotiated. Your role is to determine what plaintiff and defendant would have
agreed upon if they had negotiated in this manner, not just what either plaintiff or
defendant would have preferred.
In determining a reasonable royalty, you may consider a number of factors,
including those factors that counsel and the witnesses referred to as the Georgia Pacific
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factors. You may consider any of these factors, which are summarized below, that are
supported by the evidence:
•

Royalties that others paid to plaintiff for the patented invention;

•

Royalties that defendant paid to others for comparable patents;

•

Whether plaintiff had a policy of licensing or not licensing the patents;

•

Whether plaintiff and defendant are competitors;

•

Whether use of the patented invention helps to make sales of other
products or services;

•

Whether the product made using the patent is commercially successful, as
well as its profitability;

•

The advantages of using the patented invention over methods not covered
by the patent;

•

The extent of defendant’s use of the patented invention and the value of
that use to defendant;

•

Any royalty amounts that are customary for similar or comparable patented
inventions;

•

The portion of the profit on sales that is due to the patented invention, as
opposed to other factors, such as unpatented elements or processes,
features, or improvements developed by defendants;

•

Expert opinions regarding what would be a reasonable royalty.

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REASONABLE ROYALTY — TIMING
The relevant date for the hypothetical reasonable royalty negotiation for each
patent-in-suit is as follows: [DATES FOR EACH PATENT—both parties agree?].
However, you may consider evidence relating to events after these dates in
determining the royalty that would have resulted from each hypothetical negotiation.

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REASONABLE ROYALTY —
AVAILABILITY OF NON-INFRINGING SUBSTITUTES
In determining a reasonable royalty, you may also consider available noninfringing alternatives to the patented invention. But the evidence must show that
any such alternative was: readily available to defendant at the time of the
hypothetical negotiation; acceptable as a substitute for the patented invention to
defendant and their customers; and could be used without infringing patents held by
others.
Although plaintiff bears the overall burden to prove damages, defendant bears
the burden to show that the proposed alternative was readily available to defendant
at the time of each hypothetical negotiation.

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REQUIREMENT OF NOTICE
Plaintiff can recover damages only for infringement that occurred after plaintiff
gave notice of its patent rights. Plaintiff must prove by a preponderance of the
evidence that it gave notice.
There are two ways a patent holder can give notice of its patent rights.
The first way is to give notice to the public in general, by placing the word
“patent” or the abbreviation “PAT.” with the number of the patent on substantially
all the products it sold that included the patented invention. Anyone that plaintiff
licensed to use the patented invention must also mark in the same manner
substantially all of its products that include the patented invention. This type of
notice is effective from the date plaintiff and its licensees began to mark in this
manner substantially all of their products that included the patented invention.
The second way to give notice of patent rights is by directly informing
defendant that it is infringing a particular patent and identifying the infringing
product. This type of notice is effective from the time it is given.
If plaintiff did not give notice in either of these ways before filing this lawsuit,
then plaintiff can recover damages only for infringement that occurred after it filed
the lawsuit, on May 15, 2015.

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WILLFUL INFRINGEMENT
Plaintiff contends that defendant’s infringement was willful. Plaintiff has the
burden to prove willfulness to a preponderance of the evidence. As a reminder,
“preponderance of the evidence” means that when you have considered all the
evidence in the case, you must be persuaded that plaintiff’s contention is more
probably true than not true.
Bear in mind that not all infringement is willful. It is not enough for plaintiff
to show that defendant knew of plaintiff’s patents and nevertheless infringed them.
Infringement is willful only if the infringement was, in some way, consciously or
recklessly wrongful. Defendant’s infringement was willful if it amounts to serious
misconduct significantly beyond the ordinary mistakes and errors of judgment that
might occur in the course of honest business competition. In determining whether
plaintiff has proven that defendant’s infringement was willful, you should consider all
the relevant circumstances that are shown by the evidence.
Defendant has no obligation to obtain the opinion of legal counsel to avoid
infringement. You may not consider defendant’s failure to get a legal opinion to be an
indication of willful infringement. However, if defendant relies on the opinion of legal
counsel in defense of a charge of willfulness, the opinion must be competent and well
supported, and the opinion must clearly advise defendant that its product did not
infringe the patents-in-suit or that the patents-in-suit were invalid.

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