Illinois Federal Judge Awards Treble Damages and Attorneys’ Fees in Kurt Vonnegut-Fueled Opinion
On February 10, 2017, an Illinois federal judge determined that R-Boc Representatives violated an injunction issued following a jury trial on their alleged patent infringement. In a unique opinion replete with quotations from, and references to, literary works written by Kurt Vonnegut Jr., U.S. Magistrate Judge Jeffrey Cole addressed the current standards for determining willfulness under 35 U.S.C. § 284 and finding a case “exceptional” under 35 U.S.C. § 285 en route to awarding the patentee enhanced damages as well as attorneys’ fees.
The case—R-Boc Representatives, Inc. v. Minemyer—arose in 2007, when plaintiff John Minemyer filed suit against R-Boc for allegedly infringing his patent—U.S. Patent No. 6,851,726—directed to a radial conduit coupler that may be used to link together plastic pipes that are conduits for communications lines. In early 2012, a jury found in Mr. Minemyer’s favor, awarding him $1.5 million in damages. The United States Court of Appeals for the Federal Circuit affirmed without opinion, and the United States Supreme Court denied applications for certiorari from both sides.
At the conclusion of the jury trial in 2012, the judge issued a permanent injunction barring R-Boc from selling the infringing products and requiring R-Boc to turn over for destruction all molds utilized in the production of the infringing products. In the instant memorandum opinion, the judge determined that there was clear and convincing evidence R-Boc willfully violated the injunction by producing couplers “that were no more than colorably different” from the infringing products and for failing to turn over the molds used to produce the infringing products. R-Boc argued that they redesigned the couplers to avoid infringing the ‘726 patent, but the judge determined that there was no evidence of such redesign. Accordingly, the judge moved on to determine Mr. Minemyer’s entitlement to an enhancement of the damages and an award of attorneys’ fees from the defendants, which have “shown a shameless propensity to infringe, and to be very cavalier about it, despite a jury verdict and a Federal Circuit ruling.”
Enhanced damages under the Patent Act are governed by 35 U.S.C. § 284, which states that “the court may increase the damages up to three times the amount found or assessed.” Shortly after Minemyer filed the original patent infringement suit, the Federal Circuit decided In re Seagate Tech., LLC, setting forth a two-part test for awarding enhanced damages based on willful infringement. That test required the patentee to show by clear and convincing evidence that (i) the infringer acted despite an objectively high likelihood that its actions constituted infringement, and (ii) that the risk of infringement was either known or so obvious that it should have been known to the accused infringer. Seagate, 497 F.3d 1360, 1371 (Fed. Cir. 2007).
In 2016, the Supreme Court in Halo Electronics, Inc. v. Pulse Electronics, Inc. rejected this “unduly rigid” test, eliminating the objective recklessness prong, and focusing instead on a subjective basis for awarding enhanced damages due to the infringer’s egregious conduct. Halo Electronics, 136 S. Ct. 1923, 1933 (2016) (“The subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.”). The Supreme Court also lowered the burden of proof from “clear and convincing evidence” to the lower “preponderance of the evidence” standard typically applied to patent infringement.
Applying this relaxed standard, the judge determined that, given the defendants’ conduct (i.e., “the deliberate and slavish copying, the intentional passing off, the mold metaphysics, the indifference to thread angles, the admissions of the most knowledgeable people on the defense side, the phantom and missing ‘mold fairy,’ and all the rest”), there is a preponderance of evidence (and even clear and convincing evidence) that the likelihood of infringement was objectively high and known to R-Boc. The judge went further stating that, even under the “unduly rigid” standard from Seagate, R-Boc’s continued infringement was willful and enhanced damages are clearly appropriate. Accordingly, the judge awarded Mr. Minemyer enhanced damages under § 284 in the form of treble damages.
The judge also awarded Mr. Minemyer attorneys’ fees under the standard promulgated by the Supreme Court in Octane Fitness, LLC v. ICON Health & Fitness, Inc. Under 35 U.S.C. § 285, “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” In the past, the Federal Circuit followed the standard set forth in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., which required clear and convincing evidence of “material inappropriate misconduct related to the matter in litigation” or that the litigation was both brought in “subjective bad faith” and was “objectively baseless.” Brooks Furniture, 393 F.3d 1378, 1382 (Fed. Cir. 2005). This “overly rigid” test was rejected by the Supreme Court in Octane Fitness.
Following Octane Fitness, an “exceptional” case is simply one that stands out from others with respect to (i) the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or (ii) the unreasonable manner in which the case was litigated. Octane Fitness, 134 S. Ct. 1749, 1756 (2014). En route to finding the case “exceptional” under the Octane Fitness standard, the judge considered the defendants’ aforementioned conduct and stated that “if [that conduct] doesn’t make it exceptional, we aren’t sure what would qualify.”
In the opinion’s “Epilogue,” the judge ends the latest chapter in a case he describes as a “Vonnegut-style absurdity” in a unique fashion:
“Life is not over, but the story is.” Vonnegut, Deadeye Dick, (1982). Still, the fear is that, like Kilgore Trout in Breakfast of Champions, we are trapped in the middle of some work of fiction but, unlike Kilgore, we are not “close to the end, actually.” So it goes.