Opinion
Case No. 99 C 0626
August 4, 2003
Interestingly, at the outset of this trial, Microsoft argued that Plaintiffs had waived their rights to include the additional sales information on Windows and Internet Explorer that Microsoft provided shortly before trial in any damages recovery. Having lost that argument, Microsoft now argues that this information must be included at trial under the guise that Microsoft's Seventh Amendment rights will be violated. Microsoft's newest attempt, now at the close of trial, to force Plaintiffs to include this late-produced information should also be rejected. The Seventh Amendment right to a jury trial does not support Microsoft's latest attempt.
This situation is completely unlike that contemplated by the United States Supreme Court in Dairy Queen. Inc. v. Wood, 369 U.S. 469 (1962). In that case, the Court held that a plaintiff, asking in a complaint for an equitable accounting for trademark infringement, could not deprive defendant of a jury trial on contract claims subsumed within the accounting. Id. at 478-79. The Court held that a jury was readily able to determine any recovery in the case "whether the theory finally settled upon is that of breach of contract, that of trademark infringement, or any combination of the two." Id. at 479. As a result, the Court determined that the case should have been tried to a jury and that the defendant's Seventh Amendment right to a jury trial had been violated.
In contrast, there is no dispute in the instant case that a jury trial has been granted and that the jury has been considering the damages information provided by Microsoft through the end of discovery and analyzed by the parties' damages' experts under the pretrial guidelines set forth by this Court. The Dairy Queen decision is wholly inapplicable in such a situation.
Instead, long-standing statutory authority makes clear that a post-judgment accounting in the absence of a jury does not violate the Seventh Amendment. Federal Rule of Civil Procedure 62(a) specifically contemplates an accounting in patent infringement cases in the absence of a jury. See Fed.R.Civ.P. 62(a) ("a judgment or order directing an accounting in an action for infringement of letters patent" shall not be stayed pending appeal). Moreover, 28 U.s.c. § 1292 also allows for an accounting in patent cases after a final decision. See 28 U.S.C. § 1292(c)(2) (conferring exclusive jurisdiction to Federal Circuit for appeals from patent infringement cases that are "final except for an accounting"). Plaintiffs have been unable to find any authority even hinting at a Seventh Amendment accusation directed at Fed.R.Civ.P. 62(a) or 28 U.S.C. § 1292(c)(2), despite the fact that such accountings are not decided by juries and may include damages information that is available, but not necessarily included, in trial.
It is undisputed that the full amount of damages in this case is determined through an accounting under Fed.R.Civ.P. 62(a) and 28 U.S.C. § 1292(c)(2), and Microsoft's attempt to limit the accounting solely to sales information occurring post-judgment is to no avail. Microsoft cites Syndia Corp. v. The Gillette Co., No. 01 C 2485, 2002 WL 2012473 (N.D. Ill. Aug. 30, 2002), for the proposition that an accounting is limited to infringing sales occurring "after the entry of judgment and before the entry of the permanent injunction." However, the court in Syndia was simply commenting on the factual situations of other accounting cases, which were being distinguished:
In Plaintiffs' Opposition to Microsoft's Bench Memorandum that Plaintiffs Must Present All Updated Financial Information to the Jury or Waive the Right to Rely on That Information During a Post-Trial Accounting filed July 8, 2003, Plaintiffs set forth the law that allows accountings under Rule 62(a) and section 1292, and for brevity that law will not be restated here.
In those cases, the accounting was granted as a final windup of damages either after or at the same time as the ruling on the post-trial motions. The limited purposes of the accounting was to calculate the sales of the product utilizing the infringing process after the entry of the judgment and before the entry of the permanent injunction. In this case, the post-trial motions are still pending and have not even been fully briefed as of this date.Id. More significantly, an accounting in the Syndia case was inappropriate because the plaintiff was not simply seeking to calculate additional damages on the products that had been found infringing but was rather attempting to obtain new discovery on unaccused products through a post-judgment accounting. Id. at *3-4. Such a situation does not apply in the instant case. Rather, Plaintiffs will seek an accounting as a "final windup of damages" on the infringing products at issue under Rule 62(a) and section 1292(c)(2).
None of the other cases cited by Microsoft are instructive on Microsoft's main complaint of a Seventh Amendment violation. The case ofZell v. Jacoby-Bender, Inc., 542 F.2d 34 (7th Cir. 1976), involved a question on appeal of "whether the district court properly granted defendant's motion to stay the proceedings pending arbitration." Id. at 35. The Seventh Circuit cited Dairy Queen with approval in concluding that the case on appeal was not "truly one for an equitable accounting."Id. at 36. As a result, since the case was an action at law rather than an equitable action, the Seventh Circuit held that it was appealable as an interlocutory injunction under 28 U.S.C. § 1292(a)(1). Id. The other case cited by Microsoft in support of its Seventh Amendment argument, Oil Express National v. Latos, 966 F. Supp. 650 (N.D. Ill. 1997), is similarly far afield from the issue at hand. The district court in Oil Express National was deciding motions to dismiss the defendants' counterclaims in a lawsuit involving various federal and state law claims relating to franchise agreements and use of the plaintiffs service marks. The district court dismissed the defendants' equitable accounting counterclaim because such a claim could only be maintained in "the absence of an adequate remedy at law." Id. (quoting Dairy Queen v. Wood, 369 U.S. 469, 478 (1962)). Since the defendants were also pursuing a breach of contract counterclaim, and the parties' transactions were not so complicated that only a court could understand them, the equitable accounting counterclaim was dismissed. 966 F. Supp. at 652.
Finally, Microsoft's additional argument that omitting the additional sales information will somehow mislead the jury and violate Microsoft's Seventh Amendment right to a jury trial is also without merit. Plaintiffs have presented a damages case based on a per unit reasonable royalty rate, i.e., $3.50 per unit of Windows. The widespread use of the `906 technology in Windows with Internet Explorer is a fact bearing on the per unit rate rather than simply on the total damages amount. This is in complete accord with Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970) (Factor 11 "the extent to which the infringer has made use of the invention"). Accordingly, Microsoft's complaint that the absence of the additional sales information will mislead the jury into awarding a greater damages amount number than intended is unfounded and does not implicate the Seventh Amendment.
With respect to the post-September 2001 sales, it bears repeating that Microsoft let the final date for supplementation of expert reports lapse without providing any of the additional sales information to the Plaintiffs. Microsoft produced the additional sales information in June 2003, over a month after the final pretrial submissions were due which included identification of all exhibits to be used at trial. If Microsoft had wanted these additional sales information to be included at trial, then it had a number of opportunities to timely raise the issue.
CONCLUSION
For the foregoing reasons, Plaintiffs respectfully request that the Court deny Microsoft's argument that Microsoft's Seventh Amendment right to trial by jury will be violated if all sales information now in Plaintiffs' possession is not submitted to the jury.