Opinion
Case No. 19-C-1562
2023-03-30
WASH WORLD INC., Plaintiff, v. BELANGER INC., et al., Defendants.
Joseph S. Heino, Amundsen Davis SC, Milwaukee, WI, Tiffany E. Woelfel, Sherry D. Coley, Amundsen Davis LLC, Green Bay, WI, for Plaintiff. Christopher Dillon, Whitney Reichel, Fish & Richardson PC, Boston, MA, for Defendants.
Joseph S. Heino, Amundsen Davis SC, Milwaukee, WI, Tiffany E. Woelfel, Sherry D. Coley, Amundsen Davis LLC, Green Bay, WI, for Plaintiff. Christopher Dillon, Whitney Reichel, Fish & Richardson PC, Boston, MA, for Defendants.
DECISION AND ORDER
William C. Griesbach, United States District Judge
Plaintiff Wash World Inc. brought this action for declaratory relief against Defendant Belanger Inc., seeking a determination that Wash World's car wash systems do not infringe U.S. Patent No. 8,602,041 (the '041 Patent). After a four-day trial, the jury returned a verdict on August 4, 2022, finding that Wash World's product infringes the '041 Patent and that the infringement was willful. The jury awarded Belanger $9,800,000 in lost profits and $260,000 in royalties for a total award amount of $10,060,000. The court entered judgment on August 9, 2022.
Belanger filed motions for enhanced damages, attorney fees, and prejudgment interest on August 23, 2022. On September 6, 2022, Wash World filed a renewed Rule 50 motion for judgment as a matter of law and Rule 59 motion for reduced damages and other post-trial legal and equitable relief, and Belanger filed a motion to amend the judgment and a motion for judgment as a matter of law or for a new trial. This decision will address those motions.
BACKGROUND
The '041 Patent, entitled "Vehicle Spray Washer with Lighted Spray Arm," issued on December 10, 2013. The claimed invention generally relates to an in-bay automatic car wash with a lighted spray system. More specifically, the abstract of the '041 Patent defines the claimed invention as follows:
A spray-type car wash system includes an overhead carriage which can move longitudinally the length of a wash bay. A pair of laterally opposed spray arms depend from the carriage. During vehicle entry into the bay, LED-based lights running down the length of each arm
are caused to flash to help the driver center a vehicle between the arms. Cushioning and breakaway features protect the arms from damage. A singlearm system is also disclosed. A double-light, stationary support system is also disclosed.'041 Patent, Dkt. No. 1-1 at 1. Belanger claimed Wash World infringed the '041 Patent by making, selling, and offering for sale the Razor EDGE package with the Razor car wash system or the LumenArch for use with a Razor or Razor XR-7 car wash system. Wash World's Razor product is a touch-free, in-bay automatic car wash system. The Razor EDGE package includes the LumenArch, the SpectraRay, and the Hyperflex.
Image materials not available for display. Trial Ex. 33. The LumenArch is shown below.
Image materials not available for display. Trial Ex. 70.
LEGAL STANDARDS
"The grant or denial of [judgment as a matter of law] is a procedural issue not unique to patent law; therefore, [courts] apply the law of the relevant regional circuit." Synthes USA, LLC v. Spinal Kinetics, Inc., 734 F.3d 1332, 1340 (Fed. Cir. 2013) (citations omitted). Rule 50 "allows a district court to enter judgment against a party who has been fully heard on an issue during a jury trial if 'a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.' " Passananti v. Cook Cty., 689 F.3d 655, 659 (7th Cir. 2012) (citation omitted). The court is to decide "whether a highly charitable assessment of the evidence supports the jury's verdict or if, instead, the jury was irrational to reach its conclusion." Thorne v. Member Select Ins. Co., 882 F.3d 642, 644 (7th Cir. 2018) (internal quotation marks omitted). The court must view the evidence presented at trial in the light most favorable to the party that prevailed before the jury and draw all reasonable inferences in that party's favor. Martin v. Milwaukee Cty., 904 F.3d 544, 550 (7th Cir. 2018). The court may not weigh the evidence or make credibility determinations. Martinez v. City of Chicago, 900 F.3d 838, 844 (7th Cir. 2018). Although the court reviews the entire record, "it must disregard all evidence favorable to the moving party that the jury [was] not required to believe." Reeves v. Sanderson Plumbing Prods. Inc., 530 U.S. 133, 150-51, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000); Tart v. Ill. Power Co., 366 F.3d 461, 478 (7th Cir. 2004). Overturning a jury verdict is not something that courts do lightly. Massey v. Blue Cross-Blue Shield of Ill., 226 F.3d 922, 925 (7th Cir. 2000). A jury verdict will be overturned only if "the moving party can show that no rational jury could have brought in a verdict against it." Hossack v. Floor Covering Assocs. of Joliet, Inc., 492 F.3d 853, 859 (7th Cir. 2007) (internal citations and quotation marks omitted).
Rule 59 allows a trial court to grant a motion for a new trial "on all or some of the issues . . . after a jury trial, 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)(1). "A new trial is appropriate if 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." Bowers v. Dart, 1 F.4th 513, 521 (7th Cir. 2021) (internal quotation marks and citation omitted). "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." Willis v. Lepine, 687 F.3d 826, 836 (7th Cir. 2012) (internal quotation marks and citation omitted). A court may alter or amend a judgment where there is evidence of manifest error of law or fact. Fed. R. Civ. P. 59(e).
ANALYSIS
A. Wash World's motion for judgment as a matter of law and motion for reduced damages and other post-trial legal and equitable relief
The court will first address Wash World's motion for judgment as a matter of law pursuant to Rule 50(b) and motion for reduced damages and other post-trial legal and equitable relief under Rule 59. Wash World argues that the court should grant judgment as a matter of law that the LumenArch does not infringe claim 7 of the '041 Patent. It also asserts that the jury's damages award must be overturned and that there is no evidence to support the jury's finding of willful infringement. The court will address each argument in turn.
1. Noninfringement
Wash World argues that the court should grant judgment as a matter of law that the LumenArch does not infringe claim 7 of the '041 Patent. As an initial matter, Belanger contends that Wash World has waived its noninfringement arguments because its Rule 50(a) motion was not sufficiently specific. Rule 50(a) requires that pre-verdict motions for judgment as a matter of law "specify the judgment sought and the law and facts that entitle the movant to the judgment." Fed. R. Civ. P. 50(a)(2). The purpose of Rule 50 is to "allow the responding party an opportunity to cure any defect in its case before it is submitted to the jury." Laborers' Pension Fund v. A & C Envtl., Inc., 301 F.3d 768, 777 (7th Cir. 2002) (citing Fed. R. Civ. P. 50, Advisory Committee Notes, 1991 Amendment). Belanger contends that Wash World did not identify any grounds for judgment as a matter of law at trial and instead noted "for the record" that it was making "a Rule 50 motion to find for noninfringement." Trial Tr. at 799:2-3. But Belanger was made aware of the bases of Wash World's Rule 50(b) motion for judgment as a matter of law by Wash World's various pre-trial motions. Because "the function of Rule 50 has been served," Wash World has not waived its noninfringement arguments. See Urso v. United States, 72 F.3d 59, 61 (7th Cir. 1995).
Wash World asserts that it is entitled to judgment as a matter of law because Belanger failed to present sufficient evidence to support the jury's finding that Wash World's LumenArch infringes claim 7 of the '041 Patent. Claim 7 reads:
A spray-type car wash system comprising:
a carriage for translating a vertically oriented spray arm relative to a predefined wash area;
wherein the vertically oriented spray arm is dependingly mounted from the
carriage so as to extend substantially vertically into the wash area for controlled travel relative to a vehicle in the area; said arm comprising a fluid conduit and a plurality of vertically spaced apart nozzles arranged along a vertical axis for directing fluids laterally of the arm toward a vehicle in the wash area; and'041 Patent, col. 5 ll. 24-41. "To establish literal infringement, every limitation set forth in a claim must be found in an accused product." Duncan Parking Techs., Inc. v. IPS Group, Inc., 914 F.3d 1347, 1360 (Fed. Cir. 2019) (internal quotation marks and citation omitted).
a lighting system comprising a plurality of light sources carried by the arm and distributed along substantially the entire vertical length of the arm so as to be capable of producing illumination along substantially the entire vertical length of the arm, wherein at least a portion of the light sources and at least a portion of the nozzles are partially enclosed within an outer cushioning sleeve that encloses the fluid conduit of the spray arm.
First, Wash World argues that Belanger has not presented any evidence that Wash World's LumenArch meets the "outer cushioning sleeve" limitation of claim 7. Belanger's expert, Dr. Charles Reinholtz, testified that the LumenArch's blue cover, which is made of a hard plastic, would meet the outer cushioning sleeve limitation of claim 7 as long as it served the purpose of enclosing and protecting. Trial Tr. at 294-95. Wash World argues that Belanger's argument that the "outer cushioning sleeve" is the same as a "protective sleeve" improperly reads "cushioning" out of the claims, ignores the claim language, disregards the teachings of the patent specification, and asserts a position contrary to Belanger's statements and positions made during prosecution of the '041 Patent and references to prior art.
Relying on the language in the '041 Patent specification and prosecution history, Wash World maintains that the claimed cushioning sleeve should be limited to "material that could be compressed and spring back into shape, like a cushion." Pl.'s Br. at 7, Dkt. No. 242. The court never construed "outer cushioning sleeve" to be a sleeve that acts like a cushion, however. In its claim construction order, the court determined that the phrase "outer cushioning sleeve" should be given its plain and ordinary meaning and did not warrant additional construction. Claim Construction Order at 9, Dkt. No. 109. As the court explained, "consulting the written description and prosecution history as a threshold step in the claim construction process, before any effort is made to discern the ordinary and customary meanings attributed to the words themselves, invites a violation of [the] precedent counseling against importing limitations into the claims." Id. (quoting Texas Digital Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193, 1202 (Fed. Cir. 2002) (internal quotation marks and citations omitted)). The file history and specification provide examples of outer cushioning sleeves; they do not limit the plain and ordinary meaning of "outer cushioning sleeve" to those illustrations. In short, the court will not narrow the plain and ordinary meaning of "outer cushioning sleeve" in the way that Wash World suggests.
In this case, Dr. Reinholtz testified as to how a person of ordinary skill in the art would understand the "outer cushioning sleeve" limitation of claim 7. He analyzed the material of the LumenArch cover and described how it functions in an impact. Trial Tr. at 294-301. Belanger also presented evidence relating to the material properties of the LumenArch cover, video evidence of the cover's behavior in a collision, and testimony from other witnesses. The jury was presented with the opportunity to physically examine the LumenArch cover. Wash World had the opportunity to challenge Dr. Reinholtz' testimony through cross-examination and present evidence that undermined his testimony. Indeed, Wash World presented testimony from its representative, Jeff Martin, who stated that the black cushioning foam insert for the LumenArch, and not the LumenArch's blue plastic cover, provides cushioning protection for a vehicle during a collision. See id. at 566-67. It was up to the jury to determine credibility and resolve conflicts in the evidence. The jury ultimately found the testimony of Dr. Reinholtz credible and concluded that the LumenArch cover was an outer cushioning sleeve. There is no basis to disturb the jury's finding.
Second, Wash World argues that Belanger did not present any evidence that the LumenArch moved relative to a predefined wash area as required by claim 7. Claim 7 teaches that the system must have a "carriage for translating a vertically oriented spray arm relative to a predefined wash area." '041 Patent, col. 5 ll. 25-26. Wash World asserts that, because its spray arm moves relative to the vehicle, and not a predefined wash area, it does not infringe claim 7 of the '041 Patent. In its claim construction order, the court applied the plain and ordinary meaning of the phrase "predefined wash area." Claim Construction Order at 7-9. The court explained that the wash area is predetermined by the location and operation of the equipment that performs the washing and that actual positions within the wash area may vary depending on the embodiment of the invention. Id. at 8. Dr. Reinholtz testified that the claims require movement relative to a car and to the predefined wash area and that Wash World's products do both. Trial Tr. at 276-77. Although Wash World's witnesses denied that Wash World's spray arm is translated relative to a predefined wash area, see id. at 563-65, the jury was free to credit Dr. Reinholtz' testimony. The jury had a sufficient evidentiary basis for its verdict.
Finally, Wash World maintains that Belanger has not presented sufficient evidence to support the jury's conclusion that the LumenArch is dependingly mounted from the carriage. Claim 7 provides that "the vertically oriented spray arm is dependingly mounted from the carriage." '041 Patent, col. 5 ll. 27-28. Wash World asserts that the spray arm should be mounted directly from the carriage and that it does not infringe claim 7 because the LumenArch is connected to a trolley assembly, not the carriage. But there is no requirement in the claim limitations or the '041 Patent that the spray arm must be directly mounted to the carriage. Dr. Reinholtz testified that Wash World's spray arm is mounted from the carriage because the trolley is part of the carriage. Trial Tr. at 280-81. He testified further that, even if the trolley was not considered part of the carriage, the LumenArch was dependingly mounted from the carriage. Id. Though Wash World's witness testified that the trolley component was separate from the carriage and independently moved the LumenArch, id. at 561-62, the jury was entitled to reject that evidence.
When viewed in the light most favorable to Belanger, the totality of the evidence presented at trial, combined with all reasonable inferences permissibly drawn therefrom, was sufficient to support the jury's verdict. The court will not disturb the jury's finding. Accordingly, Wash World's motion for judgment as a matter of law is denied.
2. Damages
Wash World also moves to remit the jury award or, alternatively, for a new trial to determine damages. In deciding whether a damages award is excessive, the court considers whether the award is "monstrously excessive," whether there is a rational connection between the evidence and the award, and whether the award is roughly comparable to awards made in similar cases. Adams v. City of Chicago, 798 F.3d 539, 543 (7th Cir. 2015) (citing G.G. v. Grindle, 665 F.3d 795, 798 (7th Cir. 2011)). Wash World argues that the evidence does not support the jury's award of lost profits and that the court should reduce Belanger's damages to only reasonable royalties. More specifically, Wash World asserts that the award of lost profits was unreasonable because Belanger's expert, Dr. DeForest McDuff, failed to properly apportion Belanger's damages. It contends that Dr. McDuff did not attempt to apportion the lost profits between the patented lighted spray arm and the conventional aspects of the car wash system. Wash World argues that, as a result, Dr. McDuff provided evidence of lost profits for the entire car wash system—which included non-patented components, such as the dryers and additional components—and "overinflated" lost profits by $14,164 per unit. Pl.'s Br. at 41.
Apportionment of damages is required where an infringing product is a multi-component product with patented and unpatented components. See Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc., 809 F.3d 1295, 1301 (Fed. Cir. 2015) ("[D]amages awarded for patent infringement 'must reflect the value attributable to the infringing features of the product, and no more.' " (quoting Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014))). If a patentee can show that the patented feature drives the demand for an entire multi-component product, however, damages for patent infringement may be based on the value of the entire infringing product. See LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 67 (Fed. Cir. 2012). The Federal Circuit has recognized that apportionment can be incorporated into a lost profits analysis through the Panduit factors. See Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275, 1288 (Fed. Cir. 2017).
Under the Panduit framework, "a patentee is entitled to lost profits if it can establish four things: (1) demand for the patented product, (2) absence of acceptable, non-infringing alternatives to the patented product, (3) manufacturing and marketing capability to exploit the demand for the patented product, and (4) that the patentee would have made a profit if it had made the infringer's sales." TEK Global, S.R.L. v. Sealant Syst. Int'l, Inc., 920 F.3d 777, 790 (Fed. Cir. 2019) (citing Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978)). The Federal Circuit has explained the relationship between the first two Panduit factors in the context of apportioning damages:
The first factor—demand for the patented product—considers demand for the product as a whole. The second factor—the absence of non-infringing alternatives—considers demand for particular limitations or features of the claimed invention. Together, requiring patentees to prove demand for the product as a whole and the absence of non-infringing alternatives ties lost profit damages to specific claim limitations and ensures that damages are commensurate with the value of the patented features.Mentor Graphics, 851 F.3d at 1285 (citations omitted). On the question of lost profits in this case, the jury was instructed to consider the Panduit factors, including that "[t]here was a demand for the patented competing product" and that "[t]here was no acceptable, non-infringing substitute for the patented product." See Jury Instructions at 21, Dkt. No. 222.
Wash World argues that Belanger did not present evidence to support lost profits under the Panduit factors. Dr. McDuff concluded that lost profit damages were appropriate in this case and testified as to each Panduit factor. Wash World does not challenge McDuff's conclusion that there was demand for the patented product (Panduit factor one) or that Belanger had adequate manufacturing and marketing capacity to make additional sales (Panduit factor three). Instead, Wash World argues that Belanger did not establish the absence of acceptable, noninfringing alternatives to the patented product and failed to present evidence regarding the amount of profit that Belanger would have made.
In this case, Dr. McDuff testified that there were no acceptable noninfringing alternatives that would make lost profits inapplicable. He considered whether other types of lights could be acceptable for a noninfringing system and concluded they were not. Dr. McDuff noted the importance of the lighted spray arm to the customers' decision to purchase the wash system. Belanger also presented evidence that both Belanger and Wash World placed great value on the lighted spray arm because it attracted more customers, improved navigation into and out of the wash bay, and improved the overall customer experience. See Trial Tr. at 424-29.
Dr. McDuff testified that the amount of lost profit per wash system was $53,866 and explained how he calculated that amount. Id. at 432-33; 469-73. He also testified about the number of infringing wash systems. Id. at 433-34. David Dougherty, Belanger's corporate representative, testified about the amount of profits Belanger made on each wash system sale and stated that 75% of customers purchased a wash system with a dryer. Id. at 199; 790. Dr. McDuff indicated that an unlit wash system would not be an acceptable option for at least 20% of customers who purchased a Wash World wash system with a lighted spray arm and that between 20 and 60 percent of Wash World customers would have purchased a Belanger wash system if they could not buy the infringing Wash World system. Id. at 429-30. He presented three different economic models to analyze the percentage of customers who would purchase a wash system with a lighted spray arm from Belanger and the percentage that would purchase a Razor product without a LumenArch or some other wash system. Dr. McDuff ultimately concluded that an award of lost profit damages between $9.8 and $29.3 million was economically justified and explained how he arrived at this range.
Belanger accounted for apportionment of lost profits between the patented and unpatented features of the infringing product by satisfying the Panduit factors. Although Wash World presents contrary evidence on damages, the jury accepted Dr. McDuff's opinions and had ample evidence from which to reach its decision. It assessed the evidence and adopted an amount of lost profit damages at the low end of the range Dr. McDuff presented as part of his analysis and opinions in this case. There is no reason to disturb the jury's damages award of lost profits.
Finally, Wash World argues that Belanger did not properly mark its products in accordance with 35 U.S.C. § 287(a) and that, as a result, there is insufficient evidence to support an award of damages prior to the July 18, 2018 notice of infringement letter Belanger sent to Wash World. Belanger argues that Wash World waived this argument because Wash World did not argue that the amount of damages should be reduced on this basis at trial. Wash World counters that it did not waive the argument because it put forth evidence at trial to show that Belanger did not comply with the marking statute. But the fact that Wash World asked certain questions on cross-examination about marking did not sufficiently raise the issue. Wash World did not request a jury instruction about determining the time period for damages or that the special verdict specify that time period. Wash World waived this issue. Therefore, the court will not consider it.
3. Willfulness
Wash World also challenges the jury's finding that it willfully infringed and requests a new trial on the issue. A party seeking a willfulness finding must prove by a preponderance of the evidence that "the risk of infringement was either known or so obvious that it should have been known" to the alleged infringer. Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 97, 136 S.Ct. 1923, 195 L.Ed.2d 278 (2016) (internal quotation marks and citation omitted). A willfulness determination is a highly fact-intensive endeavor that focuses on the "subjective willfulness" of the infringer. Zimmer Surgical, Inc. v. Stryker Corp., 365 F. Supp. 3d 466, 492 (D. Del. 2019); Sociedad Espanola De Electro-medicina Y Calidad, S.A. v. Blue Ridge X-Ray Co., Inc., No. 1:10-cv-00159-MR, 2016 WL 3661784, at *2 (W.D.N.C. July 8, 2016) (explaining that the issue of willfulness is "solely a factual issue which can be readily addressed by a jury"). The court considers whether substantial evidence, that is, "relevant evidence that a reasonable mind would accept as adequate to support a conclusion," supports the jury's finding of subjective willfulness. Callicrate v. Wadsworth Mfg., Inc., 427 F.3d 1361, 1366 (Fed. Cir. 2005) (citation omitted).
Wash World asserts that there is no evidence to support the jury's willfulness finding. At trial, Belanger presented evidence that Wash World's witnesses knew that Belanger had patents covering the lighting for Belanger's Kondor and Saber products, had patents covering its illuminated spray arm, and had enforced its patent related to the illuminated spray arm against Oasis. Trial Tr. at 398-400. Wash World's witnesses also testified that Wash World considered a Belanger product with a lighted spray arm when discussing how to add lights to the Razor product and that Wash World did not ask patent counsel to conduct a patent search before launching the LumenArch. See id. at 580-81. In addition, Belanger argued at trial that Wash World's reliance on the opinion of counsel letter it received was not reasonable.
Conversely, Wash World presented evidence and witness testimony to support its argument that it did not have knowledge of the '041 Patent until July 2018 when it received the first cease and desist letter from Belanger, it did not intentionally copy Belanger's Saber or Kondor spray arms, and it reasonably relied on the opinion of counsel letter it received. See Pl.'s Br. at 45-55. But the jury was not required to credit such evidence or testimony. A reasonable jury could find, based on the evidence in the record, that Wash World willfully infringed. Therefore, a new trial is not warranted on this basis.
B. Belanger's motion for judgment as a matter of law or a new trial
Belanger has filed a renewed motion for judgment as a matter of law, or in the alternative, for a new trial on infringement of claim 15 of the '041 Patent to preserve issues for appeal. Claim 15 reads:
A spray-type washer for vehicle comprising:'041 Patent, col. 6 ll. 24-45.
a rail system extending longitudinally over a wash area;
a carriage mounted on the rail system for longitudinal travel therealong;
an elongate spray arm dependingly mounted from the carriage so as to extend substantially vertically into the wash area for controlled travel relative to a vehicle in the area; said arm comprising a fluid conduit and a plurality of vertically spaced apart nozzles arranged along a vertical axis for directing fluids laterally of the arm toward a vehicle in the wash area;
a lighting system comprising a plurality of series connected light sources extending along a substantial majority of the vertical length of the arm so as to be capable of illuminating substantially the vertical length of the arm, wherein the light sources are arranged along a first line and the spaced apart nozzles are arranged along a second line; and wherein the first and second lines do not intersect; and
a control system for activating the lighting system to illuminate the sources such that the illumination is visible to a vehicle driver entering said spray type washer.
Wash World advanced two arguments unique to claim 15 as to why it did not infringe that claim: (1) the accused products do not have "series connected" light sources and (2) the accused products do not have a "control system for activating the lighting system to illuminate the sources." Though Wash World raised other noninfringement arguments related to both claims 7 and 15, the jury rejected these arguments when it found infringement of claim 7.
Belanger asserts that there is insufficient evidence in the record for a reasonable jury to find that the accused products do not have "series connected" light sources. The court finds no need to address this argument, however, because the jury's verdict can be sustained on its finding that the accused products did not have a control system for activating the lighting system to illuminate the sources. The evidence at trial showed that Wash World's lighting system was activated by the main power switch. Trial Tr. at 559-61; 612; 616-17. The jury was not required to find that a simple switch constituted a control system.
Belanger also challenges the court's conclusion that the "lighting system" requirement of claim 15 is limited to the lights on the spray arm. It maintains that the court's ruling is significant because claim 15 requires a "control system for activating the lighting system." Belanger asserts that it intended to introduce evidence and argue that the SpectraRay is part of the lighting system and that, as a result, the accused products have a control system for activating the SpectraRay, but the court's ruling precluded it from doing so. For the reasons set forth on the record, Belanger's motion for judgment as a matter of law, or in the alternative, for a new trial is denied. C. Belanger's motions for enhanced damages, attorney fees, and prejudgment interest
1. Enhanced Damages
Belanger moves the court to treble damages pursuant to 35 U.S.C. § 284. The Patent Act gives district courts discretion to "increase the damages up to three times the amount found or assessed." 35 U.S.C. § 284. Enhanced damages "are generally reserved for egregious cases of culpable behavior." Halo, 579 U.S. at 104, 136 S.Ct. 1923. As the Supreme Court explained:
Awards 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, or—indeed—characteristic of a pirate.Id. at 103-04, 136 S.Ct. 1923. None of these behaviors are prerequisites to enhanced damages; courts should "take into account the particular circumstances of each case in deciding whether to award damages, and in what amount." Id. at 106, 136 S.Ct. 1923.
The Federal Circuit established a list of factors to assist a district court in evaluating whether an infringer's behavior warrants enhanced damages. See Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992). Those factors are (1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when it 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 infringer's size and financial condition; (5) the closeness of the case; (6) the duration of the infringer's misconduct; (7) remedial action by the infringer; (8) the infringer's motivation to harm; and (9) whether the infringer attempted to conceal its misconduct. Id. at 827. While the Read factors serve as useful guideposts, the court is not required to rely on them. See Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1382 (Fed. Cir. 2017); see also Halo, 579 U.S. at 103, 136 S.Ct. 1923 (noting that "there is no precise rule or formula for awarding damages under § 284 . . . ." (internal quotation marks and citation omitted)). Instead, the district court must simply "consider the particular circumstances of the case to determine whether it is egregious." Presidio, 875 F.3d at 1383. A movant must establish its entitlement to enhanced damages by a preponderance of the evidence. Halo, 579 U.S. at 107, 136 S.Ct. 1923. After considering the totality of the circumstances, as well as the Read factors, the court concludes that an award of enhanced damages is not appropriate in this case.
The first Read factor asks whether the infringer deliberately copied the ideas or designs of another. Wash World's witnesses testified that they knew about Belanger's patented products, including the Kondor and Saber spray arms, saw them at trade shows, and considered them while designing the LumenArch. Trial Tr. at 398, 580. One of Wash World's witnesses testified that Wash World designed the LumenArch to have more lighting in the wash bay based on "what other customers have asked for and what we've seen some competitors do as well." Id. at 576; 579. But Wash World's LumenArch is not identical to Belanger's products. The Kondor and Saber spray arms change color via LED lights under a translucent tube and help guide the vehicle, while the LumenArch only has single-colored blue LED lights. Wash World apparently attempted to design around Belanger's product; it did not simply copy it. There is nothing wrong with recognizing an attractive feature of a competitor's product and attempting to lawfully incorporate it into one's own products. This is often how innovation and improvements occur. The fact that Wash World's LumenArch was ultimately found to infringe Belanger's patent does not mean that Wash World simply copied Belanger's product. In short, this factor does not weigh in favor of enhanced damages.
The second Read factor assesses the extent of the infringer's efforts to determine whether the patent was valid and whether its product infringed. Belanger argues that the court can "infer" from the jury's willful infringement finding that Wash World acted "maliciously, deliberately, and/or in bad faith." Defs.' Br. at 10, Dkt. No. 234-1. Wash World argues that it possessed a good-faith belief of noninfringement because it relied on the opinion of counsel letter from its patent attorney. While reliance on advice of counsel may be evidence of good faith, the jury found that Wash World willfully infringed the '041 Patent.
The evidence at trial showed that Wash World knew of Belanger's products when it was designing the LumenArch and that Belanger had patented technology. Trial Tr. at 398-99. Yet, Wash World did not request that its patent attorneys conduct a patent search prior to the LumenArch's launch. Id. at 581. It was only after Wash World received the July 18, 2018 notice of infringement letter from Belanger that Wash World contacted counsel to conduct an infringement and invalidity analysis. Wash World's counsel completed his opinion of counsel letter on August 15, 2018, concluding that "a well-informed court would find that '041 patent is not infringed by the product and/or that the '041 patent is invalid." Trial Ex. 2016. The lengthy letter primarily focused on the '041 Patent's prosecution history and invalidity arguments, which Wash World ultimately abandoned. The letter contains two pages of noninfringement analysis. Belanger asserts that the opinion of counsel letter Wash World received was not an objective assessment of the client's risk of infringing a patent. It maintains that the letter was an "after-the-fact advocacy piece sent to convince Belanger to go away" and did not adequately explain the strengths and weaknesses of Belanger's assertion that Wash World infringed the '041 Patent. Defs.' Br. at 14. Indeed, Wash World's patent attorneys noted that Belanger was "litigation adverse."
In the end, the jury did not credit Wash World's argument that it had a good-faith belief that it did not infringe the '041 Patent. The jury was properly instructed on the governing law for willfulness and that it "must evaluate whether the opinion was of a quality that reliance on its conclusions was reasonable." Jury Instructions at 17. The court must accept the jury's finding as reasonable and well-supported by the record. See Liquid Dynamics Corp. v. Vaughan Co., No. 01-C-6934, 2005 WL 711993, at *2 (N.D. Ill. Mar. 22, 2005). This factor weighs in favor of enhancement.
The third Read factor concerns the infringer's behavior as a party to the litigation. Belanger contends that this case was badly handled and that Wash World took unreasonable positions that increased the costs to litigate. It contends that Wash World repeatedly changed its noninfringement arguments. But whether a party improperly shifted positions during litigation is difficult to assess. Throughout the litigation, both parties changed their litigation positions and strategies based on the court's rulings and the discovery produced.
Belanger also maintains that it was required to file multiple motions to compel regarding financial and technical documents and source code that were unreasonably withheld by Wash World. Although the court partially granted Belanger's motions to compel, they were not granted in full. In particular, the court concluded that Wash World's source code did not need to be produced because it was irrelevant to the infringement analysis; though, in hindsight, it may have been relevant to copying, an argument not made to the court. When the court directed Wash World to consult with Belanger and produce more of its financial information, Wash World attempted to meet the court's instruction and provide the documents. Wash World was respectful to the other side and to the court. Despite Belanger's arguments, none of Wash World's actions during the course of the litigation rise to the level of misconduct warranting the imposition of enhanced damages. Instead, Wash World's litigation conduct was typical of a hard-fought patent infringement case. Though the trial was rescheduled multiple times, COVID-19 played a role in delaying the resolution of the case. For these reasons, the court does not find Wash World's behavior to be improper. This factor weighs against enhancement.
The fourth factor considers the infringer's size and financial condition. Wash World's size and financial condition, "while sufficient to weather an award" of an enhanced damages, does not by itself support an enhanced damages award. See Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No. 15-C-1202, 2017 WL 3034655, at *10 (E.D. Tex. July 18, 2017). Accordingly, the court finds that this factor is neutral.
The fifth factor concerns the closeness of the case. The case lacked closeness in the jury's eyes. The case came down to the issue of whether the LumenArch had an outer cushioning sleeve. Wash World did not present an expert to testify to any of its noninfringement defenses. The jury reached a verdict relatively quickly; it deliberated for less than two hours. Although the jury found that Wash World did not infringe claim 15, the jury emphatically rejected Wash World's noninfringement arguments and returned a verdict of willful infringement. The court finds that this factor weighs in favor of enhanced damages.
The sixth factor considers the duration of the infringer's misconduct. Belanger asserts that when it notified Wash World of its patent in 2018, Wash World refused to stop selling the LumenArch and sold it for four years. The length of time the infringement occurred is entitled to less weight when the infringer has an arguable defense. Belanger also presented evidence that it was harmed by Wash World's infringement and argued that the market share changed substantially after Wash World began selling the LumenArch. In the four years before 2018, Belanger had a 45% market share and Wash World had 55%. Trial Tr. at 423. By 2021, Wash World's market share rose to 76% and Belanger's fell to 24%. Id. But the jury considered this evidence in determining the amount of damages to award. If the evidence of the parties' market share was considered by the jury in its award of damages, it is not a legitimate basis to enhance damages. The court finds that this factor is neutral.
The seventh factor concerns whether the infringer took any remedial action to address its infringement. Belanger argues that Wash World took no remedial measures until after the court indicated it would issue an injunction. But once the jury found infringement, Wash World stopped selling the LumenArch. Wash World asserts that, although it shipped out six LumenArch units between August 4 and August 9, 2022, these were shipments for sales made in July 2022 that could not be pulled from the manufacturing process and were accounted for in the jury's damage award. The court finds that Wash World's conduct amounts to appropriate remedial action under the circumstances and that this factor weighs against enhancing damages.
The eighth factor concerns the infringer's motivation to harm. The court considers whether the "infringement was done with a 'pernicious' intent to harm" the patentee. Milwaukee Elec. Tool Corp. v. Snap-On Inc., 288 F. Supp. 3d 872, 904 (E.D. Wis. 2017) (quoting Read, 970 F.2d at 827). Belanger concedes that Wash World was not motivated to harm Belanger. The court finds that this factor weighs against enhancement.
The ninth and final Read factor considers whether the infringer sought to conceal its infringement. Belanger asserts that Wash World attempted to conceal its misconduct because Wash World's counsel's internal correspondence shows that the opinion of counsel letter was intended to intimidate Belanger and was not objective. But Attorney Heino's position in his letter to Belanger was not inconsistent with the conversations he had with Wash World. And even though Attorney Heino had concerns about Claim 15 and advised Wash World that the claim gives him "a little heartburn," Ex. 1639, the jury ultimately found that Wash World did not infringe that claim. The court finds that this factor does not favor enhancing damages.
After analyzing the Read factors, the court finds the question of enhanced damages to be close. But upon consideration of the totality of the circumstances, the court finds that enhancement is not appropriate here. The jury awarded Belanger a total amount of $10,060,000 in damages, which is a substantial amount considering the limited nature of the improvement claimed in the patent. Further punishment is neither necessary nor justified. The court exercises its sound discretion and declines to award enhanced damages in this case.
2. Attorney Fees
Belanger also asks for an award of attorney fees in the amount of $2,044,399. Under 35 U.S.C. § 285, the district court may award reasonable attorney fees to the prevailing party in "exceptional" cases. "[A]n 'exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigation position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554, 134 S.Ct. 1749, 188 L.Ed.2d 816 (2014). Exceptional cases are, by definition, "uncommon," "rare," or "not ordinary." Id. "District courts may determine whether a case is 'exceptional' in a case-by-case exercise of their discretion, considering the totality of the circumstances." Id. In assessing the totality of the circumstances, courts consider "frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Id. at 554, 134 S.Ct. 1749 n.6 (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994)). The movant must prove exceptionality by a preponderance of the evidence. Id. at 557, 134 S.Ct. 1749.
To determine a reasonable fee, the court must use the lodestar method, "multiplying the 'number of hours reasonably expended on the litigation . . . by a reasonable hourly rate.' " Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 639 (7th Cir. 2011) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)). The court may then adjust the figure depending on a variety of factors, including the time and labor required, the novelty and difficulty of the issue, the degree of the success achieved, the experience and ability of the attorneys, the amount involved and the results obtained, and awards in similar cases. Hensley, 461 U.S. at 429-30 n.3, 103 S.Ct. 1933. A district court has significant discretion in determining the reasonableness of fees. See Sottoriva v. Claps, 617 F.3d 971, 975 (7th Cir. 2010) (noting that because "determining what qualifies as a 'reasonable' use of a lawyer's time is a highly contextual and fact-specific enterprise, we have granted wide latitude to district courts in setting awards of attorney's fees, for neither the stakes nor the interest in uniform determination are so great as to justify microscopic appellate scrutiny" (internal quotation marks and citation omitted)). The party seeking an award of attorney fees bears the burden of proving the reasonableness of the fees. Spegon v. Catholic Bishop, 175 F.3d 544, 550 (7th Cir. 1999) (citation omitted).
Belanger asserts that this is an exceptional case that warrants an award of attorney fees. It maintains that the jury found the case to be "exceptional" and that the jury's finding of willfulness warrants an award of attorney fees. During deliberations, the jury submitted a question to the court asking whether a "cease and desist" occurs after the jury returns a verdict and how the jury can add "additional charges to Wash World," such as "lawyer fees, court costs, professional witness fees, and consultants." Dkt. No. 223-1. Belanger argues that this case stands out from others because the jury, unsolicited, believed that Wash World should pay Belanger's attorney fees and costs. Wash World counters that an award of attorney fees is an issue for the court, not the jury to decide. True, the jury was not instructed on the proper standard for awarding attorney fees, as that is a matter for the court to decide. But the court finds that the jury's inquiry supports its finding of willful infringement. While willfulness is not dispositive of the question of "exceptionality," see Stryker Corp v. Zimmer, Inc., 837 F.3d 1268, 1279 (Fed. Cir. 2016), it is certainly one of the factors a court can consider in determining whether a patent infringement case is exceptional. See SiOnyx LLC v. Hamamatsu Photonics K.K., 981 F.3d 1339, 1355 (Fed. Cir. 2020) (citation omitted).
The court has also considered Belanger's contention that Wash World's president, Pete Jensen, made a comment reflecting a callous disregard for Belanger's patent rights following the jury's verdict. According to David Dougherty, the general manager for the division of Belanger responsible for the in-bay automatic car washes, Jensen was whistling to himself as he was leaving the courtroom following the jury's verdict. Dougherty states that he overheard Jensen make the comment "no big deal," which he took to be Jensen's comment about the jury's verdict. Dougherty Decl., Dkt. No. 266. Wash World urges the court to disregard the comment since the context of the statement is unknown and unclear. Clearly Jensen would know the context and meaning of his comment, yet counsel for Wash World has made no effort to supplement the record or otherwise explain its client's behavior. The unrefuted statement shows a lack of remorse and suggests a need to send a message of deterrence.
After reviewing the totality of the circumstances, the court finds that this case is exceptional and warrants an award of attorney fees. The jury's finding of willfulness alone can justify an exceptional-case finding, and the weakness of Wash World's defense and the apparent need for deterrence here further supports that finding. Unfortunately, Belanger has not provided the court and Wash World with the information necessary to determine whether its requested fees are reasonable.
"A party seeking to recover attorneys' fees bears the burden of presenting sufficient evidence from which the trial court can render a decision as to their reasonableness." Fed. Deposit Ins. Corp. v. Lowis & Gellen LLP, No. 11-C-5902, 2014 WL 656660, at *7 (N.D. Ill. Feb. 20, 2014) (citation omitted). In this case, Belanger submitted information regarding the hourly rates of its attorneys and paralegals and the amount of time each individual spent on the case. But it entirely redacted the "description" column detailing the work performed for every time entry.
Belanger maintains that the descriptions of the work performed are not necessary to determine reasonableness when the court considers evidence that Belanger's overall attorney fees were 40% lower than similar patent cases based on the 2021 AIPLA survey; evidence that Fish & Richardson's rates are reasonable and comparable to its peer firms; the list of each of the four attorney's and paralegal's general roles in the case and the major projects they worked on; and evidence that Belanger has paid the invoiced amounts. Defs.' Reply Br. at 18-19, Dkt. No. 264. While these factors are relevant and indicators of reasonableness, the court must also guard against awarding fees that are excessive, duplicative, or unnecessary.
Belanger indicates that it would be willing to submit its daily narrative descriptions for the court's in camera review but will not provide the descriptions of work performed for Wash World's review because that information is privileged. Though some redaction might be appropriate to protect certain privileged information, attorney fee information generally "falls outside the scope of the privilege because fees are incidental to the substance of representation." United States v. Leonard-Allen, 739 F.3d 948, 953 (7th Cir. 2013), as amended on denial of reh'g and reh'g en banc (Aug. 29, 2013); see also Towne Place Condominium Assoc. v. Philadelphia Indemnity Ins. Co., 284 F. Supp. 3d 889, 895 (N.D. Ill. 2018) ("[N]ot all communications between an attorney and client are privileged. Information such as the identity of the client, the amount of the fee, the identification of payment by case file name, the general purpose of the work performed, and whether an attorney coached a client in his testimony is not privileged." (citation omitted)). The reasonableness and necessity of the task and time allotted in this case cannot be determined when all descriptions of the work have been redacted wholesale. By putting its fees at issue, Belanger must provide the descriptions of the work performed for every time entry. Belanger must supplement its request for attorney fees within 30 days. The parties may attempt to come to an agreement on reasonable fees to avoid further briefing on the issue. If such agreement cannot be reached, Wash World may file a brief in response 30 days after Belanger files its supplemental submission.
3. Prejudgment Interest
Belanger moves for an award of prejudgment interest based on the prime rate. Under 35 U.S.C. § 284, Belanger, as the prevailing party, is entitled to "damages adequate to compensate for the infringement . . . together with interest and costs as fixed by the court." Belanger has provided a declaration from its damages expert, Dr. McDuff, who calculates prejudgment interest at the prime rate of $702,317.
Wash World concedes that Belanger is entitled to an award of prejudgment interest. It argues, however, that the court should not calculate interest based on the prime rate but rather the borrowing rate of Belanger's parent company, Dover Corporation. Wash World has not cited any case supporting its position, and the court sees no reason to depart from the practice of the Federal and Seventh Circuits to award prejudgment interest based on the prime rate. See Uniroyal, Inc. v. Rudkin-Wiley Corp., 939 F.2d 1540, 1545 (Fed. Cir. 1991) (noting that district courts are "afforded wide latitude in the selection of interest rates" and "may award interest at or above the prime rate"); First Nat'l Bank of Chi. v. Standard Bank & Trust, 172 F.3d 472, 480 (7th Cir. 1999) (noting that, generally, to "award something other than the prime rate is an abuse of discretion"). Accordingly, the court awards Belanger prejudgment interest in the amount of $702,317.
D. Belanger's motion to amend judgment
Belanger requests that the court amend the judgment to include dismissal of Wash World's invalidity declaratory judgment claim with prejudice. Wash World does not oppose the motion. Accordingly, Belanger's motion to amend judgment is granted. The clerk is directed to amend the judgment to include dismissal of Wash World's invalidity declaratory judgment claim with prejudice.
E. Belanger's motions to restrict
Belanger has filed two motions to restrict certain filings. Under Federal Rule of Civil Procedure 5.2(e), the court may, for good cause, restrict access to court filings. "What happens in the federal courts is presumptively open to public scrutiny." Hicklin Eng'g L.C. v. Bartell, 439 F.3d 346, 348 (7th Cir. 2006). In order to show good cause to restrict a document, the party requesting protection must "analyze in detail, document by document, the propriety of secrecy, providing reasons and legal citations." Baxter Int'l, Inc. v. Abbott Labs., 297 F.3d 544, 548 (7th Cir. 2002). Neither bare assertions of confidentiality nor the agreement of the parties is sufficient to establish the good cause necessary to warrant restricting documents from the public. See Union Oil Co. of Cal. v. Leavell, 220 F.3d 562, 567 (7th Cir. 2000).
Belanger asserts that its consolidated memorandum discusses internal communications between Wash World and its counsel that Wash World produced in discovery and designated "Highly Confidential" pursuant to the protective order. Belanger redacted the information from the version of the consolidated memorandum that is publicly filed. See Dkt. No. 234. It also seeks to restrict access to Wash World's responses to Belanger's revised first set of requests for admission (Dkt. No. 235-2). Belanger asserts in its motion that it is requesting leave to file this document as restricted because it has been marked confidential by Wash World. The mere fact that Wash World designated the documents as confidential is insufficient to establish good cause to restrict public access to them, however. The parties have offered no reason why these filings warrant restriction.
Belanger has also requested to restrict access to certain information in the Declaration of Christopher R. Dillion in support of the motion for attorney fees (Dkt. No. 237-1); Exhibit A to the attorney fees declaration, a spreadsheet summarizing the number of hours billed by Belanger's attorneys and paralegals on certain days (Dkt. No. 237-2); the Supplemental Declaration of Christopher R. Dillon in support of the motion for attorney fees (Dkt. No. 265-1); and Revised Exhibit A to the supplemental declaration (Dkt. No. 265-2). Belanger has filed redacted versions of the consolidated memorandum and attorney fees declarations that redact only those portions that are subject to the restriction request.
Belanger asserts that these documents contain highly confidential information about Fish & Richardson's billing rates and business practices and are privileged information. Attorney fee information "falls outside the scope of the privilege because fees are incidental to the substance of representation." Leonard-Allen, 739 F.3d at 953, as amended on denial of reh'g and reh'g en banc (Aug. 29, 2013); see also Towne Place Condominium Assoc., 284 F. Supp. 3d at 895. "It is commonplace for the number of hours billed and the hourly rate of attorneys to be openly filed on court dockets; without this information the final fees award appears to be drawn from thin air." Linex Techs., Inc. v. Hewlett-Packard Co., No. C 13-159, 2014 WL 6901744, at *1 (N.D. Cal. Dec. 8, 2014) (citation omitted). Belanger has not established good cause to restrict public access to these filings.
CONCLUSION
For these reasons, Wash World's motion for judgment as a matter of law and motion for reduced damages and other post-trial legal and equitable relief (Dkt. No. 242) are DENIED. Wash World's motion for leave to file excess pages (Dkt. No. 241) is GRANTED.
Belanger's motion for judgment as a matter of law or a new trial (Dkt. No. 245) is DENIED.
Belanger's motion for enhanced damages (Dkt. No. 233) is DENIED.
Belanger's motion for attorney fees (Dkt. No. 236) is GRANTED, with the amount to be determined at a later date. Belanger must supplement its request for attorney fees within 30 days. The parties may attempt to come to an agreement on reasonable fees to avoid further briefing on the issue. If such agreement cannot be reached, Wash World may file a brief in response to Belanger's supplemental request 30 days after Belanger files its supplemental submission.
Belanger's motion for prejudgment interest (Dkt. No. 238) is GRANTED. Belanger is awarded prejudgment interest in the amount of $702,317.
Belanger's motion to amend judgment (Dkt. No. 244) is GRANTED. The clerk is directed to amend the judgment to include dismissal of Wash World's invalidity declaratory judgment claim with prejudice.
Belanger's motion to restrict (Dkt. No. 232) is DENIED. The clerk is directed to remove the restriction from Belanger's consolidated memorandum in support of its motion for enhanced damages, attorney fees, and prejudgment interest (Dkt. No. 234-1); Exhibit 2 to the Declaration of Christopher R. Dillion in support of Belanger's motion for enhanced damages, attorney fees, and prejudgment interest (Dkt. No. 235-2); the Declaration of Christopher R. Dillion in support of the motion for attorney fees (Dkt. No. 237-1); and Exhibit A to the attorney fees declaration (Dkt. No. 237-2).
Belanger's motion to restrict (Dkt. No. 263) is DENIED. The clerk is directed to remove the restriction from the Supplemental Declaration of Christopher R. Dillon in support of the motion for attorney fees (Dkt. No. 265-1) and Revised Exhibit A to the supplemental declaration (Dkt. No. 265-2).
SO ORDERED at Green Bay, Wisconsin this 30th day of March, 2023.