Electro-Mechanical Corp. v. Power Distribution Products, Inc.

970 F. Supp. 2d 485, 2013 WL 4816944, 2013 U.S. Dist. LEXIS 128871
Procedural entryThis page is a short order in Electro-Mechanical Corp. v. Power Distribution Products, Inc.. Read the opinion of the Court — 894 F. Supp. 2d 798
District Court, W.D. Virginia·Decided September 10, 2013·No. Case No. 1:11CV00071·Published

Opinion

OPINION AND ORDER

JAMES P. JONES, District Judge.

In this patent infringement case, a jury found that the defendants, Power Distribution Products, Inc., Becker Mining America, Inc., and SMC Electrical Products, Inc., willfully infringed five claims of U.S. Patent No. 7,277,294 (“the '294 patent”), which is owned by the plaintiff, ElectroMechanical Corporation (“EMC”), and that none of the five infringed claims were invalid. The defendants have filed renewed motions for judgment as a matter of law and have also moved for a new trial on the issue of damages or remittitur. EMC has moved for a permanent injunction and has also moved for an award of attorneys’ fees, enhanced damages, and taxation of costs. Because I find that the defendants did not properly preserve the grounds they assert in their renewed motions for judgment as a matter of law, I will deny those motions. However, I find that the defendants are entitled to a new trial nisi remittitur because there was insufficient evidence to support the jury’s award of lost profits based upon the so-called entire market value rule.

Because the parties disagree about the appropriate scope of an injunction and have offered additional evidence in support of their respective positions, I will reserve [488]*488ruling on the plaintiffs motion for a permanent injunction pending further proceedings in the case. I will deny EMC’s motions for attorneys’ fees and enhanced damages because I find that this case was not exceptional and that the evidence presented at trial does not warrant these forms of relief. Finally, I will reserve ruling on EMC’s motion for taxation of costs until final resolution of the remaining issues in the case.

I

The relevant facts of the case, as presented at trial and viewed in the light most favorable to EMC, the recipient of the jury’s verdict, are as follows.

The '294 patent is entitled “Contactor Draw-Out Tray,” and it sets forth inventions relating to a contactor draw-out tray typically used as part of a power distribution system for longwall underground coal mining. Longwall mining involves the extraction of coal contained in large rectangular blocks. A cutting machine runs back and forth along the coal face, working under a canopy of movable roof supports. A shearer motor cuts the coal; there are conveyor motors at the head gate and'tail gate of the machine; and a crusher removes coal from the shearer and crushes the coal so it can be transported to the surface. After a section of coal from the block has been mined and removed, the roof supports are moved closer to the newly cut face and the roof in the mined out area is allowed to collapse.

The cutting machine is powered by a large electrical distribution system that is approximately the size of a train car. This longwall power system feeds power to motors that operate the cutting machine. As long as the power distribution system and mining equipment are fully functional, excavation of coal from the mine can be continuous. When an electrical component or other piece of equipment fails, however, mining must be suspended temporarily until the problem is repaired. The speed with which repairs are made is of some economic consequence, since the mine is unproductive while it is shut down for equipment repairs. Evidence at trial established that in the past, the cost of suspending longwall mining to repair electrical equipment ranged from $30,000 to $48,000 per hour, and repairs sometimes took several hours to complete.

EMC and the defendants are direct competitors in the market for power distribution systems used in underground coal mining. EMC’s commercial product that embodies the '294 patent is called the Down-Time Saver (“DTS”). Before EMC’s development of the DTS, when an electrical component failed, an electrician had to shut down the power distribution system, climb into.the system through the top to access the circuitry, disassemble parts of the machine until the electrician could locate the problem, fix the problem, and then reassemble the machine. If repairs could not be performed in the confined quarters of the mine, the power distribution center would have to be removed from the mine so that repairs could be made. Kurt Carlson, a former EMC employee, designed the DTS to allow for quicker, easier repairs and enhanced safety. Carlson gathered the essential electrical components of the longwall power system and put them in a feeder circuit on a draw-out tray that an electrician could slide out of the longwall power system to make repairs. The feeder circuit contains a contactor, which is essentially a large on/off switch; a disconnect mechanism; and a series of relays, ground fault monitors, and safety devices. The draw-out tray allows for easy access to the electrical components, and if a malfunction is not immediately fixable, the draw-out tray can [489]*489be removed and quickly replaced with a spare tray. The replacement of the draw-out tray would require the power distribution system to be shut down for- no more than fifteen minutes. The DTS was also designed to meet all requirements of industry safety regulations. Thus, Carlson intended that the DTS would maintain safety while reducing downtime and minimizing losses when repairs were necessary. Carlson applied for a patent in .2006, and the '294 patent was issued in 2007; Carlson assigned the '294 patent to EMC. Between 2006 and the time of the trial, EMC sold 28 longwall power systems that incorporated the DTS, which sales generated more than $40,000,000 in revenue.

Shortly after EMC began offering the DTS to its customers, the defendants’ customers (several of which were also EMC’s customers) began to request drawout trays similar to the DTS. The defendants believed they were losing sales to EMC because they did not offer a draw-out tray product. Sam Handshoe, an employee of the defendants, set out to design a product similar to the DTS and sought to borrow a DTS to assist in his effort. The defendants’ final commercial draw-out tray product was called the- Circuit-Saver 5 (“CS-5”). The defendants made two sales of longwall power systems containing the CS-5.

Thomas Novak, Ph.D., an expert witness for EMC, opined that the CS-5 infringed claims 4, 14, 17, 22, and 27 of the '294 patent. The plaintiffs damages expert, Graham Rogers, opined that EMC had suffered $624,494 in lost profits on the defendants’ two sales of the infringing product. Rogers applied the entire market value rule to calculate lost profits based on the sales of the entire longwall power distribution systems because, in his opinion, the draw-out tray was the basis for the customers’ purchase of the entire power distribution system, and the infringing and noninfringing components were sold together and operated as a single functioning unit. Alternatively, Rogers opined that if lost profits were not an appropriate measure of damages, then EMC would be entitled to a reasonable royalty of $200,824. The defendants’ expert witness, David Podobinski, Ph.D., opined that the CS-5 did not infringe the '294 patent. The defendants’ damages expert, Keith Hock, opined that even if EMC were entitled to damages, the evidence was insufficient to support application of the entire market value rule, and EMC could not prove that it was entitled to recover lost profits.

The defendants also asserted that the '294 patent was invalid and unenforceable due to anticipation and obviousness. In 1993, SMC Electrical ■ Products, Inc. (“SMC”), one of the defendants, had built a piece-of equipment that was similar to the DTS (the “1993 SMC Unit”).

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Electro-Mechanical Corp. v. Power Distribution Products, Inc., 970 F. Supp. 2d 485, 2013 WL 4816944, 2013 U.S. Dist. LEXIS 128871 (W.D. Va. 2013).

970 F. Supp. 2d 485 (Electro-Mechanical Corp. v. Power Distribution Products, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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