Ecoservices, LLC v. Certified Aviation Servs., LLC
Opinion
RONALD S.W. LEW, Senior U.S. District Judge
Currently before the Court is Defendant Certified Aviation Services, LLC's ("Defendant") Motion for Judgment of Patent Ineligibility of the '262 Patent [271]; Defendant's Motion for Judgment of Patent Indefiniteness of the '860 Patent [273]; Plaintiff EcoServices, LLC's ("Plaintiff") Motion for Permanent Injunction [275]; Plaintiff's Motion for Attorneys' Fees [272]; and Plaintiff's Motion for Prejudgment Interest, Post-Judgment Interest, Supplemental Damages, and Costs [274]. Having considered all papers submitted pertaining to the Motions, the Court NOW FINDS AND RULES AS FOLLOWS: the Court DENIES Defendant's Motions for Ineligibility and Indefiniteness; DENIES Plaintiff's Motion for Permanent Injunction; DENIES Plaintiff's Motion for Attorneys' Fees; and GRANTS Plaintiff's Motion for Prejudgment Interest, Post-Judgment *1012Interest, Supplemental Damages, and Costs.
I. BACKGROUND
A. Factual Background
Plaintiff provides on-wing aircraft engine washing using its EcoPower Engine Wash System ("EcoPower"). Def.'s Statement of Uncontroverted Facts in Supp. of Mot. for Partial Summ. J. as to '860 Patent ( '860 SUF) ¶¶ 2, ECF No. 128-1. Defendant also provides engine wash services in the United States. '860 SUF ¶ 3. Prior to 2010, representatives for Defendant met with Plaintiff's parent companies regarding the possible purchase of EcoPower equipment, but did not reach an agreement. Pl.'s Statement of Facts in Supp. of Opp'n to Mot. for Partial Summ. J. as to '860 Patent ¶¶ 5-6, ECF No. 134-1. Defendant then entered into discussions with non-party Lufthansa Technik AG ("Lufthansa") for use of the Cyclean Engine Wash ("Cyclean"). Id. ¶ 6. Defendant leases Cyclean equipment from Lufthansa to provide on-wing aircraft engine washing. '860 SUF ¶¶ 5-6.
Plaintiff asserted two patents in connection with EcoPower against Defendants' Cyclean for infringement. First,
A system for washing turbine engines comprising: a washing unit for providing a washing liquid to the turbine engines; an information detector configured to gather information related to engine type; and a control unit configured to accept the information related to engine type from the information detector and to determine a washing program to be used as a function of the information relating to engine type from a set of preprogrammed washing programs, and further configured to regulate the washing unit according to washing parameters associated with the washing program used.
Decl. of Gregory Apgar in Supp. of Def.'s Mot. for Partial Summ. J. as to '262 Patent ("Apgar '262 Decl."), Ex. 1 (" '262 Patent") 8:36-47, ECF No. 126-3. Claim 9 states, "The system of claim 1 wherein the information provided by the information detector is used by the control unit to regulate a washing time." '262 Patent at 9:11-13. Claim 14 states,
A system for washing turbine engines comprising: a washing unit for providing a washing liquid to the turbine engines; an information detector for providing information identifying at least one of washing unit and engine type; and a control unit configured to regulate the washing unit according to washing parameters associated to a particular engine based upon preprogrammed control data relating to information provided by the information detector, wherein the preprogrammed control data comprises a washing program from a set of available washing programs.
'262 Patent at 10:14-26.
Second,
*1013No. 134-15. At trial, the jury found that Defendant infringed Claims 1 and 2 of the '860 Patent. Claim 1 is directed to a method of washing turbine compressors:
wherein small quantities of finely-divided liquid are sprayed onto and through the turbine compressors, characterized by running the turbine compressors and spraying the finely-divided liquid quantities through at least one nozzle towards and through the turbine compressor at an overpressure within the range of 50-80 bars and at a liquid particle size in the range of 250-120 microns, and with a total volumetric flow through the nozzle or nozzles within the range of 0.5-60 l/min., and with a liquid particle velocity of 100-126 m/sec.
The particle size recited in the claims is "a liquid particle size in the range of 250-120 µm." '860 Patent at 4:8-9. Both parties' experts agreed at trial that particles smaller than 120 µm or bigger than 250 µm would not overcome the centrifugal effect and would provide a less effective cleaning. See Trial Tr. 6/27/2018 at 183:7-23; Trial Tr.
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RONALD S.W. LEW, Senior U.S. District Judge
Currently before the Court is Defendant Certified Aviation Services, LLC's ("Defendant") Motion for Judgment of Patent Ineligibility of the '262 Patent [271]; Defendant's Motion for Judgment of Patent Indefiniteness of the '860 Patent [273]; Plaintiff EcoServices, LLC's ("Plaintiff") Motion for Permanent Injunction [275]; Plaintiff's Motion for Attorneys' Fees [272]; and Plaintiff's Motion for Prejudgment Interest, Post-Judgment Interest, Supplemental Damages, and Costs [274]. Having considered all papers submitted pertaining to the Motions, the Court NOW FINDS AND RULES AS FOLLOWS: the Court DENIES Defendant's Motions for Ineligibility and Indefiniteness; DENIES Plaintiff's Motion for Permanent Injunction; DENIES Plaintiff's Motion for Attorneys' Fees; and GRANTS Plaintiff's Motion for Prejudgment Interest, Post-Judgment *1012Interest, Supplemental Damages, and Costs.
I. BACKGROUND
A. Factual Background
Plaintiff provides on-wing aircraft engine washing using its EcoPower Engine Wash System ("EcoPower"). Def.'s Statement of Uncontroverted Facts in Supp. of Mot. for Partial Summ. J. as to '860 Patent ( '860 SUF) ¶¶ 2, ECF No. 128-1. Defendant also provides engine wash services in the United States. '860 SUF ¶ 3. Prior to 2010, representatives for Defendant met with Plaintiff's parent companies regarding the possible purchase of EcoPower equipment, but did not reach an agreement. Pl.'s Statement of Facts in Supp. of Opp'n to Mot. for Partial Summ. J. as to '860 Patent ¶¶ 5-6, ECF No. 134-1. Defendant then entered into discussions with non-party Lufthansa Technik AG ("Lufthansa") for use of the Cyclean Engine Wash ("Cyclean"). Id. ¶ 6. Defendant leases Cyclean equipment from Lufthansa to provide on-wing aircraft engine washing. '860 SUF ¶¶ 5-6.
Plaintiff asserted two patents in connection with EcoPower against Defendants' Cyclean for infringement. First,
A system for washing turbine engines comprising: a washing unit for providing a washing liquid to the turbine engines; an information detector configured to gather information related to engine type; and a control unit configured to accept the information related to engine type from the information detector and to determine a washing program to be used as a function of the information relating to engine type from a set of preprogrammed washing programs, and further configured to regulate the washing unit according to washing parameters associated with the washing program used.
Decl. of Gregory Apgar in Supp. of Def.'s Mot. for Partial Summ. J. as to '262 Patent ("Apgar '262 Decl."), Ex. 1 (" '262 Patent") 8:36-47, ECF No. 126-3. Claim 9 states, "The system of claim 1 wherein the information provided by the information detector is used by the control unit to regulate a washing time." '262 Patent at 9:11-13. Claim 14 states,
A system for washing turbine engines comprising: a washing unit for providing a washing liquid to the turbine engines; an information detector for providing information identifying at least one of washing unit and engine type; and a control unit configured to regulate the washing unit according to washing parameters associated to a particular engine based upon preprogrammed control data relating to information provided by the information detector, wherein the preprogrammed control data comprises a washing program from a set of available washing programs.
'262 Patent at 10:14-26.
Second,
*1013No. 134-15. At trial, the jury found that Defendant infringed Claims 1 and 2 of the '860 Patent. Claim 1 is directed to a method of washing turbine compressors:
wherein small quantities of finely-divided liquid are sprayed onto and through the turbine compressors, characterized by running the turbine compressors and spraying the finely-divided liquid quantities through at least one nozzle towards and through the turbine compressor at an overpressure within the range of 50-80 bars and at a liquid particle size in the range of 250-120 microns, and with a total volumetric flow through the nozzle or nozzles within the range of 0.5-60 l/min., and with a liquid particle velocity of 100-126 m/sec.
The particle size recited in the claims is "a liquid particle size in the range of 250-120 µm." '860 Patent at 4:8-9. Both parties' experts agreed at trial that particles smaller than 120 µm or bigger than 250 µm would not overcome the centrifugal effect and would provide a less effective cleaning. See Trial Tr. 6/27/2018 at 183:7-23; Trial Tr. 6/29/2018 at 19:14-24.
On July 2, 2018, the jury returned a verdict in favor of Plaintiff in the amount of $1,949,600 based on a royalty rate of $400 per jet engine wash. Pl.'s Mot. re Interest & Costs 1:4-6, ECF No. 274. The verdict confirmed that Defendant's Cyclean infringes all claims of the '262 Patent, and willfully infringes the '860 Patent. Pl.'s Mot. re Permanent Injunction ("PI Mot.") 1:8-1, ECF No. 275. The '860 Patent expired in May of 2016. Plaintiff alleges that Defendant continues to knowingly and willfully infringe the '262 Patent.
B. Procedural Background
On June 26, 2018, the jury trial in this Action began [245]. On July 2, 2018, the jury reached a verdict [265] in favor of Plaintiff, finding that Defendant infringed the non-obvious '262 Patent. The parties filed the instant Motions [271, 272, 273, 274, 275] on July 25, 2018. The parties timely opposed [278, 279, 280, 281, 282], and timely replied [287, 288, 289, 290, 291].
II. DISCUSSION
A. Legal Standard
1. Patent Eligibility
Patent eligibility is a question of law. OIP Techs., Inc. v. Amazon.com, Inc.,
Under the two-step framework established in Alice and Mayo, the court first asks "whether the claims at issue are directed to one of those patent-ineligible concepts," as opposed to "patent eligible applications of those concepts." Id. at 2354-55. If so, the court then "consider[s] the elements of each claim both individually and 'as an ordered combination' to determine whether the additional elements 'transform the nature of the claim' into a patent-eligible application." Id. at 2355 (quoting Mayo,
This standard is easier to articulate than it is to apply. Modern Telecom Sys. v. Earthlink, Inc., No. SA CV 14-0357-DOC,
2. Indefiniteness
In order to be valid, a patent claim must "particularly point [ ] out and distinctly claim[ ] the subject matter which the applicant regards as his invention."
3. Permanent Injunction
To be entitled to a permanent injunction, a plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate; (3) that the balance of hardships justify a remedy in equity; and (4) that the public interest would not be disserved by a permanent injunction." Apple Inc. v. Samsung Elecs. Co. (Apple III),
*10154. Attorneys' Fees
The Patent Act provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party."
B. Analysis
1. Patent Eligibility of the '262 Patent
a. Waiver
Plaintiff argues that Defendant has waived any invalidity argument under
As to summary judgment, Plaintiff fails to cite any authority that a § 101 argument is waived unless raised at summary judgment stage. Cf. Move, Inc. v. Real Estate All. Ltd.,
b. Ineligibility Under Section 101
Defendant argues the claims of the '262 Patent are ineligible because (1) they are directed to the abstract idea of automating a conventional engine washing process, and (2) they fail to recite any specific method or machine that could constitute an "inventive concept" for achieving automation.
Under the first step of the Alice inquiry, the Court must determine whether the patent claims at issue are directed to an abstract idea. Alice, 134 S.Ct. at 2354. There is no definitive rule to determine what constitutes an "abstract idea." Enfish, LLC v. Microsoft Corp.,
Defendant argues that the '262 Patent is ineligible because the bare idea of automating a process is abstract. However, the use of computers or automation itself is not necessarily an abstract idea. Rather, courts look at whether the process being automated is an abstract idea. See Research Corp. Techs., Inc. v. Microsoft Corp.,
In some instances, abstract ideas are "plainly identifiable and divisible from the generic computer limitations" recited by the claim. DDR Holdings,
On the other hand, the Federal Circuit has found several software-based claims to be patent-eligible, noting that "[s]oftware can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route." Enfish,
Here, while it is undisputed there is some level of automation in the '262 Patent, Pl.'s Opp'n re Ineligibility at 6:4-5, the claimed process does not use a computer to implement an abstract idea, but rather it uses technology to improve the narrow industry of turbine engine wash systems to ensure quality, performance, and safety. The claims do not fit squarely within abstract ideas found in previous cases, as they do not recite a mathematical algorithm,2 nor do they recite a fundamental economic practice as in Alice,3 Ultramercial, buySAFE, and OIP.4
The question then becomes whether the automation goes beyond merely "organizing [existing] information into a new form" to "focus on a specific means or method that improves the relevant technology," or are "directed to a result or effect that itself is the abstract idea." Apple, Inc. v. Ameranth, Inc.,
Defendant argues the '262 Patent only claims the result of a more efficient wash by using a computer to automate a conventional process. Because the '262 Patent is directed at improving efficiency by eliminating human error, it is most similar in fact to McRO, Inc. v. Bandai Namco Games Am. Inc.,
Here, like in McRO, the claims seek to automate a task previously done by humans. Following McRO then, the question is whether the automation provides an improvement *1018to the relevant technology used in airline engine wash systems. The Patent's background section describes three steps performed by human operators: (1) "an operator is provided with information regarding the engine type," (2) "[t]he operator is further provided with information regarding the requirements for washing that particular engine type," and (3) "[t]he operator then manually sets the valves to the manifold nozzles in order to obtain the appropriate pressure and flow and keeps track of washing time." '262 Patent at 3:44-55. Essentially, the conventional washing process required a human operator to manually select a "specific design washing configuration ... for each specific engine." '262 Patent at 2:46-49. To compare, claim 1 states the claimed invention comprises: (1) a washing unit for providing liquid, (2) an "information detector configured to gather information related to engine type" and (3) a control unit configured to accept information related to the engine type and determine which washing program to use "from a set of preprogrammed washing programs," and further "regulate the washing unit according to washing parameters associated with the washing program used." '262 Patent at 8:35-57.
Defendant argues the only difference is that the claimed system, rather than the human operator, selects which washing program to use based on the engine it identifies. However, courts " 'must be careful to avoid oversimplifying the claims' by looking at them generally and failing to account for the specific requirements of the claims." McRO,
While Defendant is correct that the overall general process is similar in selecting a wash program based on engine type, the claimed invention is distinct. Like how the claims in McRO focused on specific rules, claim 1 recites that the control unit has specific configurations to regulate the washing unit. The claim's specifications are instructive as they provide examples of how the control unit can be configured to improve the prior art process. See Enfish,
Additionally, in McRO the Federal Circuit found persuasive that in prior art, animators used subjective determinations on which process to implement, rather than specific rules.
In sum, when looked at as a whole, the claims are patent eligible because they are directed to improving the process of washing turbine engines. The use of the computer does not render the claims ineligible. See Enfish,
For these reasons, the Court DENIES Defendant's Motion for Judgment of Patent Ineligibility of the '262 Patent.
2. Indefiniteness of the '860 Patent
Plaintiff argues as an initial matter that Defendant waived its indefiniteness argument for various reasons, including that Defendant failed to raise it during claim construction, on summary judgment, in its jury instructions, or as part of a Rule 50(a) motion. With regard to the claim construction phase, the parties agreed that the claim term "a liquid particle size in the range of 250-120 µm" did not require construction. Order re Claim Construction 7:14-17, ECF No. 80. Plaintiff argues Defendant cannot now contest the indefiniteness of this claim term. However, stipulating to a certain claim construction term does not automatically become an admission that the claim term is not indefinite. MeadWestVaco Corp. v. Rexam Beauty and Closures, Inc.,
*1020As to summary judgment, Plaintiff is correct that Defendant did not raise the indefiniteness issue for this claim term, as it only raised indefiniteness for the different claim term "small quantities" in the '860 Patent. Defs.' Mot. for Summ. J. 1:20-22, ECF No. 145. While an indefiniteness determination is an issue of law, it can involve underlying questions of fact. E.g., UltimatePointer, LLC v. Nintendo Co.,
Central to the issue of waiver is whether Plaintiff had been on notice of Defendant's indefiniteness claim. Defendant has consistently maintained its indefiniteness claim throughout this litigation. Compare Apple,
b. Indefiniteness
When read in light of the specification and the prosecution history, claims "must provide objective boundaries for those of skill in the art." Dow Chem. Co v. Nova Chemicals Corp. (Canada),
Defendant challenges the validity of the '860 Patent by arguing that the claim term "at a liquid particle size in the range of 250-120 µm" does not with reasonable certainty inform a person skilled in the art of the scope of the claim. Def.'s Mot. re Indefiniteness 6:5-7, ECF No. 273. According to the '860 Patent's specification, its novel method gives particles a size and velocity within the claimed range of 120 to 250 µm, causing it overcome the centrifugal effect resulting in a more effective and efficient wash. '860 Patent at 2:14-18. To compare, prior art systems used particle sizes ranging 150 to 950 µm. '860 Patent at 2:10-13. It is undisputed that particles either smaller than 120 µm or larger than 250 µm do not overcome the centrifugal effect, and are thus ineffective at cleaning the compressor. Trial Tr. 6/27/18 at 183:7-23; Trial Tr. 6/29/18 at 19:14-24.
The Court first looks to the language of the claim to determine whether the meaning is reasonably clear. Defendant argues that a person skilled in the art would not understand what the particle size limitation requires. Defendant relies on Berkheimer v. HP Inc.,
Next, because the claimed range of 120 to 250 µm overlaps with the prior art range of 150 to 950 µm, Defendant argues the '860 Patent fails to identify how many particles must fall within the claimed range to infringe. Neither party contends 100% of the particles must be within the claimed range, but Defendant argues one skilled in the art is not informed whether some, a majority, or more particles must be within the range to infringe. Mot. at 6:10-16. Defendant relies on Halliburton, in which the claim "fragile gels" in a patent related to oil field drilling was found to be indefinite for failure to distinguish from prior art fluids.
The Court also looks to prosecution history. At trial, Mr. Kushnick testified, and the jury unanimously found, that enough of Cyclean's particles fell within the claimed range to infringe the '860 Patent.7 See Trial Tr. 6/27/18 at 136:16-21, 137:9-13. Mr. Kushnick performed 84 tests using Defendant's Cyclean system, and while the tests produced a varied range of droplet sizes, at least 35% of the liquid particles fell within Plaintiff's claimed range of sizes. See Trial Tr. 6/27/28 at 134:17-24; Pl.'s Mot. Ex. A, 169:18-23. The fact that Mr. Kushnick was able to come to a determination that the Cyclean infringes the '860 Patent demonstrates that he was able to understand its objective boundaries.8
On the other hand, Defendant's expert Dr. Micklow did not perform any tests or testify as to the subject of indefiniteness. The only indefiniteness argument Dr. Micklow put forth was in his invalidity report, which Defendant later abandoned before trial, stating that the particle size term is indefinite because it does not describe the way to measure the diameter of the particles. See Def.'s Reply Ex. C, Micklow Report 172-72, ECF No. 291-3. Defendant has not put forth any expert testimony or evidence, let alone clear and convincing evidence, that one skilled in the art would not know the boundaries of the claim. See Berkheimer,
As an initial matter, Defendant argues that Plaintiff waived its claim for injunctive relief. Federal Rule of Civil Procedure 26(e) requires a party to supplement interrogatory responses "in a timely *1023manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Where a party fails to disclose information required by Rule 26, "the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at trial, unless the failure was substantially justified or is harmless." Fed. R. Civ. P. 37(c)(1).
Here, Plaintiff requested a permanent injunction in its Complaint, but Defendant contends that during discovery Plaintiff refused to identify the factual basis for its claim in response to Defendant's interrogatories. See Opp'n Ex. 4, Interrog. No. 10. Plaintiff indicated it would produce documents "sufficient to prove its contentions," but never supplemented this response. Plaintiff's damages expert, Mr. Lettiere, did not offer an opinion as to injunctive relief at his deposition. Def.'s Opp'n Ex. 7, Lettiere Dep. Tr. 11:16-20, ECF No. 282-8. Defendant argues that as a result, it believed Plaintiff abandoned its injunction claim until shortly before trial when Plaintiff said it would seek an injunction based on "the testimony of the two parties' respective executives and employees." Pl.'s Mem. Fact & Law 14:10-12, ECF No. 160. Defendant argues it was prejudiced by having to address new arguments at the post-trial stage, pointing to the fact that Defendant did not know Plaintiff intended to use its Southwest agreements to support its injunction claim. However, Plaintiff's executive testified to the Southwest agreements at trial. See Pl.'s Mot. Ex. B at 48:25-49:14, 212:11-213:24. Plaintiff indicated before trial it would rely on this testimony, and Defendant had ample opportunity to cross-examine regarding the Southwest agreements. Moreover, Defendant has not cited to any authority showing a court refusing to consider the merits of an injunction on this basis.9 While Defendant argues Plaintiff never provided the factual basis during discovery, neither did Defendant move to compel additional answers to interrogatories or object to any of the evidence Plaintiff used. The Court thus finds Plaintiff has not waived its claim for injunctive relief.
b. Permanent Injunction
i. Irreparable Injury and Adequacy of Legal Remedies
The issues of irreparable harm and adequacy of remedies at law are "inextricably intertwined." ActiveVideo Networks, Inc. v. Verizon Commc'ns, Inc.,
As to the first eBay factor, there is no presumption of irreparable harm upon a finding of patent infringement. Robert Bosch LLC v. Pylon Mfg. Corp.,
*1024As to lost market share and sales, Plaintiff and Defendant are direct competitors in the jet engine washing industry. See, e.g., Ex. D, Trial Tr. 6/29/18 at 147:17-21. Defendant argues that Plaintiff has not shown lost market share caused directly by Defendant, as Plaintiff competes with several other engine washing providers. Plaintiff argues that while there are other competitors, the two parties provide the most efficient washes by using the atomization of water from the '860 Patent. However, Plaintiff's President, Mr. Welch, agreed that because the '860 Patent has expired, any competitor can use that technology to compete with Plaintiff. See Trial Tr. 6/27/18 at 57:9-14. Rochem, another competitor, has a system that already does some type of atomization. See id. at 58:1-3. Additionally, Mr. Welch testified that another competitor Arrow Jet, and airlines who use Arrow Jet's equipment, also take away business from Plaintiff. See id. at 58:4-17.
While Mr. Welch identifies Defendant as the only direct competitor successful in using atomized washing technology, id. at 58:17-19, this is not persuasive. First, it only indicates lost market share to the expired '860 Patent, and not the '262 Patent, for which Plaintiff is seeking an injunction. In short, a permanent injunction as to the '262 Patent will not prevent competitors from implementing the technology of the '860 Patent to atomize its water and compete with Plaintiff. Second, Plaintiff also loses business to its other competitors. Plaintiff only cites to losing one customer, Jet Blue, when it decided not to re-up its contract indicating it would "be testing the Cyclean system." See id. at 49:8-14. However, Mr. Welch testified that it lost United Airlines as a customer because it went back to using the Shepard's hook, a technique used by other competitors including Arrow Jet. Id. at 58:24-59:10. And Plaintiff also lost Spirit Airlines to a different competitor, Rochem. Id. at 59:11-12. Because Plaintiff has lost customers to competitors other than Defendant, this does not favor a finding of irreparable harm. See Belden Techs. Inc. v. Superior Essex Commc'ns LP,
As to price erosion, Plaintiff's damages expert testified that Plaintiff had to lower its per engine wash price by more than $800 per wash to keep Southwest as a client after Southwest said in negotiations that Plaintiff has competitors offering comparable wash results at lower prices. See Ex. B at 212:11-213:24, 225:6-226:12. As Defendant points out, there is no evidence of the substance of the negotiations, the state of the engine washing market in 2014 compared to other years, or whether Southwest actually received a lower offer from Defendant or any other competitor. This alone is insufficient to show irreparable harm by price erosion because there is no showing Plaintiff would have been able to retain its original price but for Defendant's use of Cyclean.10 See Ericsson, Inc. v. Harris Corp.,
Plaintiff must also show a causal nexus between the irreparable harm and Defendant's infringement. The patented feature does not need to be the "exclusive reason for consumer demand," but rather, Plaintiff need only show "some connection between the patented feature and demand for [Defendant's] products." Apple III,
Here, as Defendant points out, it is the expired '860 Patent's use of atomized water that has driven competition, and there is no evidence of a demand for the '262 Patent. Plaintiff argues that even if the claimed features of the '860 Patent are the primary draw for customers, those features are dependent on the features of the '262 Patent for using the Cyclean system. Plaintiff relies on TransPerfect Global, Inc. v. MotionPoint Corp., No. C 10-2590 CW,
As to the second eBay factor, Plaintiff provides few arguments as to why monetary damages are inadequate. First, Plaintiff argues there is a collectability-risk because Defendant is a smaller company. However, Plaintiff points to no evidence suggesting Defendant is unable or unwilling to pay, and even relies on the fact that engine washing is only a part of Defendant's revenue in arguing balance of the hardships below.12 Without any evidence, the Court cannot determine Defendant is unable to pay. Plaintiff also argues that monetary damages are difficult to quantify because of the financial arrangement between Defendant and Lufthansa, the developer of the Cyclean system. Defendant provided two agreements it had with Lufthansa: a lease agreement where Defendant pays Lufthansa $100/month for *1026each Cyclean unit, and an engine wash agreement where Defendant performs the washes for a set fee. See Def.'s Mot. re Partial Summ. J., Exs. 2-3, ECF Nos. 145-2, 145-3. Plaintiff argues that without more, there is not enough insight into the finances of Lufthansa. However, Mr. Lettiere, Plaintiff's damages expert, testified that he had "enough data" on Lufthansa's financials and explained how he accounted for Lufthansa in his determination of a reasonable royalty rate. See Trial Tr. 6/28/18 at 23:4-25:5.
Plaintiff further argues monetary damages are inadequate because Defendant will "drag out this litigation as long as possible" and continue to infringe the '262 Patent in the meantime. Plaintiff points to an email exchange following trial, in which the parties' counsels disagreed over whether continued sale of the Cyclean constitutes willful infringement of the '262 Patent. See Pl.'s Mot. Ex. A, ECF No. 275-2. Defendant's response also indicates it intends to proceed through further post judgment motions and an appeal to the Federal Circuit. See
The facts weigh against Plaintiff on this factor. For example, Plaintiff has demonstrated a willingness to license its patents. Plaintiff tried to send two pre-suit licensing letters to Defendant to license its patents. See Order re Def,'s Mot. for Partial Summ. J., 25:6-15, ECF No. 177 ("In these letters ... Plaintiff discusses patents, including the '860 Patent, that are available for licensing."). While the letter did not list the '262 Patent, Plaintiff's President Mr. Welch testified that the '860 Patent is the most valuable, see Trial Tr. 6/27/18 at 71:13-16, thus a willingness to license the '860 Patent demonstrates Plaintiff finds monetary compensation adequate in comparison to its patent rights. Further, in a recent press release discussing the jury verdict in this case Mr. Welch stated that Plaintiff "welcome[s]... interested parties to discuss licensing opportunities" over the use of Plaintiff's patents. See Def.'s Opp'n, Ex. 3, ECF No. 282-4. Plaintiff's willingness to license its patents to both Defendant and other competitors supports a finding that monetary damages are adequate. See Cave Consulting Grp., LLC v. Optuminsight, Inc., No. 5:11-CV-00469-EJD,
Moreover, contrary to Plaintiff's arguments, the damages in this case are quantifiable. Mr. Lettiere stated in his expert report that "[i]f [Defendant] is found liable, reasonable royalty compensation would be the appropriate measure of damages in this matter." Def.'s Mot. to Exclude, Ex. D, Mr. Lettiere Expert Report, 2, ECF No. 144-4. See Conceptus, Inc. v. Hologic, Inc., No. 09-cv-02280,
Accordingly, the first two eBay factors weigh against granting a permanent injunction.
ii. Balance of Hardships
The balance of hardships assesses the "relative effect of granting or denying an injunction" by considering factors such as the "parties' sizes, products, and revenue sources." i4i Ltd. Partnership v. Microsoft Corp.,
On balance, this factor weighs in favor of granting a permanent injunction.
iii. Public Interest
In general, protecting the rights of patentees and enforcing the patent system serves the public interest. See ActiveVideo,
Defendant relies on Apple III to argue that the public interest does not favor an injunction when the patent covers only a "non-core" feature of a product having a large number of unpatented features. In Apple III, the concern was that while phones contained infringing features, they contained a "far greater number of non-infringing features to which consumers would no longer have access to" if an injunction were issued.
*1028In sum, while Plaintiff has shown that the balance of hardships and public interest weigh in favor of granting a permanent injunction, Plaintiff has not made a sufficient showing of irreparable harm, or that legal damages are inadequate. The jury adopted Plaintiff's own damages expert's reasonable royalty rate, and in light of Plaintiff's willingness to license, the Court finds Plaintiff will be adequately compensated with an ongoing royalty rate (discussed below) should Defendant continue infringe the '262 Patent.
For these reasons, the Court DENIES Plaintiff's Motion for Permanent Injunction.
c. Royalty Rate
In the absence of a permanent injunction, a patentee may be entitled to receive ongoing royalties. Paice LLC v. Toyota Motor Corp.,
Here, Plaintiff acknowledges that following Paice, courts often conduct a " 'modified' Georgia-Pacific analysis that takes into account the traditional Georgia-Pacific factors,13 but also considers the new legal status quo between the parties," including "any continuing infringement [that] is willful by definition." Pl.'s Mot. 14:11-14 (citing Paice LLC v. Toyota Motor Corp.,
While the Court agrees with Plaintiff that any ongoing royalty rate should not be less than the $400 rate the jury awarded, Plaintiff has provided no evidence for *1029the Court to determine whether an increased rate is justified. Thus, the Court directs the parties to negotiate an ongoing royalty for the '262 Patent. See Paice,
4. Attorneys' Fees
As an initial matter, Plaintiff argues that the jury's verdict for willful infringement of the '860 Patent is an appropriate basis for attorneys' fees. District courts have in the past awarded attorneys' fees based upon willful infringement. S.C. Johnson & Son, Inc. v. Carter-Wallace, Inc.,
a. Substantive Strength of Defendant's Litigation Position
Plaintiff first argues that Defendant's expert, Dr. Micklow, premised his non-infringement theory on false "facts" and assumptions. First, Plaintiff argues Defendant did not inform Dr. Micklow what nozzles the Cyclean system uses, despite having received that information from Lufthansa. See Pl.'s Reply Ex. B, Trial Tr. 6/28/18 at 149:3-12 (Mr. Caban testifying that he was informed the Cyclean uses the Lechler 652 nozzle). However, Dr. Micklow testified that he did not test the Cyclean nozzles or ask about the nozzles used because he "didn't think it was pertinent to the engineering analysis," demonstrating he did not base his opinion on the type of nozzles used. See Trial Tr. 6/29/18 at 60:24-61:21-22.
Plaintiff then points to three instances where it claims Dr. Micklow based his non-infringement theory at trial on false assumptions, including: (1) that a 100-foot hose was used in the Cyclean system, (2) that the hose used in the Cyclean system had "50-60 bends", and (3) that the rotational velocity of the engine fan during a Cyclean wash was 2550 revolutions per minute. Defendant characterizes these as "minor factual dispute[s]" and "non-issue[s] with no bearing on the substantive strength of Defendant's non-infringement position." Indeed, Plaintiff picks out and mischaracterizes excerpts of Dr. Micklow's testimony from trial.15 Moreover, Defendant's *1030non-infringement position was not based solely on Dr. Micklow's testimony, let alone these four facts. See FPTC Order at 27-30 (identifying key evidence and arguments for the non-infringement position such as patent history, testimony of Melissa Bennis, discovery documents, videos and photos, testimony of CAS witnesses, and admissions made by Plaintiff's inventors). Nor was Defendant's entire litigation position based on Dr. Micklow's non-infringement analysis. See FPTC at 30-31 (identifying invalidity claims of both patents that rely on the patents themselves, prior art, publications, and admissions made by the inventors and Plaintiff's witnesses during depositions).
Second, Plaintiff argues Defendant's invalidity case was substantively weak. Plaintiff first claims that Dr. Micklow applied the wrong legal standard for written description, when he testified that it "needs to be explicitly defined." See Pl.'s Mot. Ex. C, Trial Tr. 6/29/18 63:1-3. However, Dr. Micklow testified he did not "consider that to be a standard," but an "approach." Id. at 62:24-25. The remainder of Dr. Micklow's opinions demonstrate he did not rely on this standard in forming his invalidity opinion.16 Plaintiff further claims Dr. Micklow did not know that the USPTO had addressed the written description requirement during prosecution, but the trial testimony directly contradicts this. Dr. Micklow answered that he did know the USPTO made a rejection for written description when asked at trial. Id. at 65:1-4. Finally, Plaintiff claims Dr. Micklow did not provide a motivation to combine references in his invalidity analysis of the '262 Patent. Again, this misconstrues the record because Dr. Micklow testified that an ordinary artisan would have been motivated to combine the prior art.17 See Trial Tr. 6/29/18 at 12:15-13:12. Plaintiff's counsel objected to Dr. Micklow's testimony acknowledging it was directed to motivation. Id. at 13:15 (Mr. Pabis objecting that "[a]ny testimony on motivation is brand new").
While Plaintiff points to issues with Dr. Micklow's testimony, Plaintiff misconstrues parts of the record and has not shown they render Defendant's entire litigation position unreasonably weak. Notably, Plaintiff never throughout litigation filed motions to compel, motions for summary judgment, or motions to exclude Dr. Micklow's expert opinions. See Prism Techs. LLC v. T-Mobile USA, Inc.,
b. Manner of Litigation
Plaintiff first argues that Defendant did not act reasonably after receiving notice of the Complaint. Defendant's chairman, Mark Lee, testified that he did not read the asserted patents upon learning of the lawsuit, and still had not read them at the time of trial. See Pl.'s Mem., Ex. A, Trial Tr. 6/28/18, 78:12-18, ECF No. 272-2. Mr. Caban, Defendant's former president, testified that Defendant did not perform any testing to determine whether it infringed the asserted patents. See id. at 145:16-146:1. However, Plaintiff relies on cases where it was a failure on the plaintiff 's part to conduct proper pre-suit investigations before bringing an infringement action.18 Here, it was Plaintiff's burden to investigate and prove a valid infringement claim, and Defendant acted reasonably in defending it. See Finjan, Inc. v. Blue Coat Systems, Inc., No. 13-cv-03999-BLF,
Plaintiff also argues that Defendant's conduct during the litigation was unreasonable because Defendant dropped claims close to trial. Three days before trial, Defendant dropped its invalidity defense as to the '860 Patent. See Pl.'s Mem., Ex. B (Email from Defendant's counsel on June 22, 2018, indicating Defendant "is no longer intending to assert its defense of invalidity of the '860 Patent under
Plaintiff otherwise does not point to litigation misconduct. For instance, there is no indication Defendant refused to respond to interrogatories, discovery requests, or refused to provide witnesses for depositions. Courts have even denied attorneys' fees to parties that have acted in bad faith. See Lee v. Mike's Novelties, Inc., No. CV 10-2225-VBF (Jcx),
In sum, considering the totality of the circumstances, Plaintiff has failed to show that Defendant put forth its defense with either bad faith or exceptionally meritless claims. Because this case is not "exceptional" under
5. Prejudgment Interest
In patent litigation, prejudgment interest on damages is awarded pursuant to
Here, Defendant argues Plaintiff delayed assertion of the '860 Patent by nearly six years from when Defendant first announced it was using Cyclean. In General Motors, the Supreme Court specifically noted that a patentee's undue delay in prosecution could justify a denial of prejudgment interest. See Crystal Semiconductor Corp. v. TriTech Microelecs. Int'l, Inc.,
*1033The Court must next determine the proper rate to apply. Because there is no standard rate for calculating prejudgment interest provided in the statute, the district court has "substantial discretion" to determine the interest rate in patent infringement cases. See Gyromat Corp. v. Champion Spark Plug Co.,
It is also within the Court's discretion to choose the state statutory rate over the T-Bill rate specifically.20 See Bard Peripheral Vascular, Inc. v. W.L. Gore & Assoc., Inc., No. CV 03-0597,
Thus, the state statutory rate of seven percent is more likely to put Plaintiff in the position it would have been had Defendant entered into a reasonable royalty rate agreement. Accordingly, the Court GRANTS prejudgment interest at the rate of seven percent simple interest per annum.
6. Post-Judgment Interest
Under
7. Supplemental Damages
Plaintiff also seeks supplemental damages based on the infringing washes that occurred in the period from January 2018 through entry of final judgment. Under the Patent Act's damages provision, "the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court."
Here, although the jury's verdict was entered on July 2, 2018, the jury's damages award was limited to the period from April 2010 through December 2017. See Pl.'s Mot. Ex. B, Trial Tr. 6/28/18 at 17:17-18:17, ECF No. 274-4. Plaintiff requests the Court order Defendant to supplement its financial disclosure to show the number of washes it has performed from January of 2018 until entry of the final judgment, and award a royalty rate of $400 per wash. Defendant argues there is no evidence in the record from which the jury could have determined a reasonable royalty for any ongoing infringement of the '262 Patent. Defendant relies on Boston Scientific Corp. v. Johnson & Johnson,
Because the jury's damages award did not include the time from January 2018 to July 2, 2018, the Court GRANTS supplemental damages and orders Defendant to *1035supplement its financial disclosure for this time period and awards a royalty rate of $400 per wash for the infringing washes accounted for. See Asetek,
8. Costs
Federal Rule of Civil Procedure 54(d) provides that "unless a federal statute, these rules, or a court order provides otherwise, costs-other than attorney's fees-should be allowed to the prevailing party." See also Shum v. Intel Corp.,
Here, Defendant argues Plaintiff brought a baseless assertion of the '609 Patent only to lose at summary judgment, however Defendant also brought claims it dropped prior to trial, as discussed above in regard to attorneys' fees. Second, the closeness of the case is not supported by the fact that the jury rendered a unanimous verdict in favor of Plaintiff. Third, Defendant's reliance on Ass'n of Mexican-American Educators v. State of Cal.,
In sum, Defendant has not shown sufficient reasons to deny costs to Plaintiff. Because the jury unanimously entered a verdict for Plaintiff, the Court finds Plaintiff is the prevailing party entitled to statutory costs.21
III. CONCLUSION
Based on the foregoing, the Court DENIES (1) Defendant's Motion for Judgment of Ineligibility of the '262 Patent [271]; (2) Defendant's Motion for Judgment of Indefiniteness of the '860 Patent [273]; (3) Plaintiff's Motion for Permanent Injunction [275]; and Plaintiff's Motion for Attorneys' Fees [272]. The Court GRANTS Plaintiff's Motion for Prejudgment Interest, Post-Judgment Interest, Supplemental Damages, and Costs [274]. Within 60 days from the date of this Order, the parties shall meet and confer to *1036negotiate an on-going royalty rate and propose a final judgment in this matter.
IT IS SO ORDERED.
340 F. Supp. 3d 1004 (Ecoservices, LLC v. Certified Aviation Servs., LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.