Often, an award of prejudgment interest is necessary to ensure that the plaintiff is placed in the same position as he would have been in if the defendant had entered into a reasonable royalty agreement. Id. at 655, 103 S.Ct. at 2062; see also Beatrice Foods v. New England Printing, 923 F.2d 1576, 1580 (Fed. Cir. 1991); Bio-Rad Laboratories v. Nicolet Instrument Corp., 807 F.2d 964, 967 (Fed. Cir. 1986), cert. denied, 482 U.S. 915, 107 S.Ct. 3187, 96 L.Ed.2d 675 (1987); Paper Converting Machine v. Magna-Graphics Corp., 745 F.2d 11, 23 (Fed. Cir. 1984) (citing Central Soya Co. v. Geo. A. Hormel Co., 723 F.2d 1573, 1578 (Fed. Cir. 1983) (award of prejudgment interest compensates for the delay the plaintiff experiences in obtaining money he would have received sooner if no infringement had occurred)); Valmet Paper Machinery, Inc. v. Beloit Corp., 895 F. Supp. 1158, 1176-77 (W.D.Wis. 1995). In light of that purpose, the Court concluded that prejudgment interest should ordinarily be awarded, "absent some justification for withholding such an award."
According to the Federal Circuit, prejudgment interest is designed to compensate for the delay a patentee experiences in obtaining money he, she or it would have received sooner if no infringement occurred, while enhanced damages, on the other hand, are in nature a punishment. Beatrice Foods Co. v. New England Printing and Lithographing Co., 923 F.2d 1576, 1580 (Fed. Cir. 1991) (quotations omitted, citing Paper Converting Machine Co. v. Magna-Graphics Corp., 745 F.2d 11, 23 (Fed. Cir. 1984)). As a result, prejudgment interest can only be applied to the primary or actual damage portion and not to the punitive or enhanced portion of a damage award.
Absent a statutory guide, we have held that an award of enhanced damages requires a showing of willful infringement. Beatrice Foods Co. v. New England Printing Lithographing Co., 923 F.2d 1576, 1578 (Fed. Cir.1991); see also Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 (Fed. Cir.1996) (holding that bad faith infringement, which is a type of willful infringement, is required for enhanced damages). This well-established standard accords with Supreme Court precedent.
Hopkins then moved for enhanced damages pursuant to 35 U.S.C. § 284. The court, noting that enhanced damages under section 284 are punitive in nature, see, e.g., Beatrice Foods Co. v. New England Printing Lithographing Co., 923 F.2d 1576, 1580, 17 USPQ2d 1553, 1556 (Fed. Cir. 1991), applied the factors enumerated in Read Corp. v. Portec, Inc., 970 F.2d 816, 827, 23 USPQ2d 1426, 1435-36 (Fed. Cir. 1992), to determine the extent to which enhancement was appropriate. Central to the court's decision to treble damages, the maximum enhancement permissible under the statute, was its conclusion that Bloomberg's opinion letters were:
See Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613, 628, 225 USPQ 634, 644 (Fed. Cir.), cert. dismissed, 474 U.S. 976 (1985) (absent willful infringement, enhanced damages are usually not warranted). As elaborated in Beatrice Foods Co. v. New England Printing and Lithographing Co., 923 F.2d 1576, 1580, 17 USPQ2d 1553, 1556 (1991), enhanced damages are punitive, not compensatory. Enhancement is not a substitute for perceived inadequacies in the calculation of actual damages, but depends on a showing of willful infringement or other indicium of bad faith warranting punitive damages.
However, when exercising that discretion, the Court recognizes the purpose of prejudgment interest, which is to compensate the patent owner for infringement. Prejudgment interest applies to actual damages and not punitive or enhanced damages. Beatrice Foods Co. v. New Eng. Printing & Lithographing Co., 923 F.2d 1576, 1580 (Fed. Cir. 1991). The Court determines that Plaintiff has not unreasonably delayed filing suit against Defendants such that prejudgment interest should be withheld.
"[P]rejudgment interest may be based only on the compensatory portion of the damages award ... and not on the enhanced additional damages." Beatrice Foods Co. v. New England Printing & Lithographing Co., 923 F.2d 1576, 1580-81 (Fed. Cir. 1991). Plaintiff has failed to establish he is entitled to any actual damages.
Moreover, a contrary finding would have the bizarre effect of encouraging alleged infringers to file declaratory actions immediately after the issuance of a patent so that they could infringe on valid patents with no fear of a willfulness claim. This result is inconsistent with the damages scheme the Federal Circuit established in Beatrice Foods Co. v. New England Printing & Lithographing Co., 923 F.2d 1576 (Fed.Cir.1991) and clarified in Seagate.
The purpose of prejudgment interest is to place the patentee in as good a position as he would have been had the infringer paid a reasonable royalty instead of infringing. Beatrice Foods v. New England Printing, 923 F.2d 1576, 1580 (Fed.Cir.1991). Prejudgment interest should be awarded unless there is a significant justification for withholding such an award, such as a delay in bringing suit against the infringer.
The purpose of prejudgment interest is to place the patentee in as good a position as he would have been had the infringer paid a reasonable royalty instead of infringing. Beatrice Foods v. New England Printing, 923 F.2d 1576, 1580 (Fed. Cir. 1991). Prejudgment interest should be awarded unless there is a significant justification for withholding such an award, such as a delay in bringing suit against the infringer.