Sociedad Espanola de Electromedicina y Calidad, S.A. v. Blue Ridge X-Ray Co.

226 F. Supp. 3d 520, 2016 WL 7473422, 2016 U.S. Dist. LEXIS 179224
CourtDistrict Court, W.D. North Carolina
DecidedDecember 28, 2016
DocketCivil Case No.: 1:10-cv-00159-MR
StatusPublished
Cited by8 cases

This text of 226 F. Supp. 3d 520 (Sociedad Espanola de Electromedicina y Calidad, S.A. v. Blue Ridge X-Ray Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Sociedad Espanola de Electromedicina y Calidad, S.A. v. Blue Ridge X-Ray Co., 226 F. Supp. 3d 520, 2016 WL 7473422, 2016 U.S. Dist. LEXIS 179224 (W.D.N.C. 2016).

Opinion

MEMORANDUM OF DECISION AND ORDER

Martin Reidinger, United States District Judge

THIS MATTER is before the Court on the Plaintiffs Motion for Attorney’s Fees [Doc. 225]; the Defendants’ Renewed Motion for Judgment as a Matter of Law on Damages, or for a New Trial on Damages, or for a Remittitur [Doc. 236]; the Plaintiffs Motion for Enhanced Damages [Doc. 250]; and the Plaintiffs Motion for Prejudgment Interest and Post-Judgment Interest [Doc. 256].

I. FACTUAL AND PROCEDURAL BACKGROUND

This is an action for patent infringement brought by Sociedad Española de Electro-medicina y Calidad, S.A. (“Sedecal”) against the Defendants Blue Ridge X-Ray Company, Inc. (“Blue Ridge X-Ray”), DRGEM USA, Inc. (“DRGEM USA”), and DRGEM Corporation (“DRGEM Corp.”).1 [Doc. 1]. Sedecal is a Spanish corporation which designs and sells X-ray and digital radiography equipment for use in the medical industry. [Doc. 49 at 3]. DRGEM USA is a Florida corporation and a subsidiary of DRGEM Corp., a South Korean corporation. [Id. at 2]. Blue Ridge X-Ray is a North Carolina corporation doing business in Arden, North Carolina, which sells X-ray and digital radiography equipment, including Sedecal and DRGEM products. [Id.].

In its First Amended Complaint, Sedecal asserted one claim for infringement of U.S. Patent No. 6,642,829 (“the ’829 Patent”), a patent for a high voltage transformer owned by Sedecal pursuant to assignment from the inventor, a Sedecal [525]*525employee. [Doc. 21 at 4]. Specifically, Se-decal alleged that DRGEM Corp. manufactured, sold, and exported for sale X-ray generator products which infringed one or more claims of the ’829 Patent. [Id.]. Sedecal further alleged that DRGEM USA infringed the ’829 Patent by selling these allegedly infringing DRGEM products to Blue Ridge X-Ray, and that Blue Ridge X-Ray in turn infringed the ’829 Patent by selling and importing for sale the allegedly infringing DRGEM products. [Id. at 4-5].

In their Answer and Counterclaims, the Defendants raised numerous affirmative defenses, including the defenses of patent invalidity and failure to mark the products with the patent number. [Doc. 27]. They also counterclaimed for declarations of non-infringement and invalidity. [Id.].

The parties proceeded in accord with all stages of the Amended Utility Patent Claim Construction Scheduling Order. [Doc. 37]. A Markman2 hearing was conducted on February 21, 2012, and the Court entered a Claim Construction Order on August 15, 2013 [Doc. 62]. Thereafter, the Court entered a Utility Patent Pretrial Order and Case Management Plan, setting deadlines for the completion of discovery and the filing of dispositive motions. [Doc. 66]. Upon the close of discovery, the Defendants moved for summary judgment on the issues of infringement and willfulness. [Doc. 86]. The Plaintiff, in turn, moved for summary judgment on the issue of validity. [Doc. 91]. On September 22, 2014, the Court entered an Order granting the Defendant’s motion for summary judgment and denying the Plaintiffs motion for partial summary judgment on the grounds that the transformer claimed in the ’829 Patent does not function and thus fails to comply with 35 U.S.C. §§ 101 and 112, thereby rendering the patent invalid. [Doc. 105].

Sedecal appealed to the Court of Appeals for the Federal Circuit. [Doc. 108]. On July 31, 2015, the Federal Circuit issued an opinion reversing this Court’s grant of summary judgment and remanding for further proceedings. [Doc. 121]. Upon remand, this matter proceeded to a jury trial beginning on January 11, 2016. The trial was bifurcated into two phases. After finding infringement in the first phase [Doc. 202], the same jury heard evidence on damages and willfulness during the second phase.

During the second phase of the trial, Sedecal presented the testimony of Manuel Martinez-Garcia, the president and founder of Sedecal. Mr. Martinez-Garcia testified that Sedecal is one of the few players in the U.S. x-ray generator market [TR23 at 98-99], and that prior to the Defendants’ infringement, Sedecal was unique in the market with a transformer of the combination of small size and high power enabled by the ’829 Patent [Id. at 31-32, 77-79]. Sedecal also presented the testimony of Angel Diaz-Carmena, the head of engineering at Sedecal and inventor of the ’829 Patent. Mr. Diaz-Carmena testified regarding his work in developing the compact, light-weight transformer that produced very high voltages, allowing for the reduction in size, cost and weight for Sedecal’s line of high frequency generators. [TR1 at 32-34],

[526]*526Sedecal’s technical expert, Melvin Sied-band, then explained the patented innovation, and the time and investment required to develop the transformer that is covered by the ’829 Patent. [TR1 at 129-30; TR2 at 192-94], Manuel Martinez-Alvarez, the marketing and sales manager of Sedecal, testified as to the profound impact Sedecal’s patented product had on the market. [TR2 at 377-80], Both Sedecal’s president, Mr. Martinez-Garcia, and Mr. Martinez-Alvarez testified that it was Sedecal’s policy to not license its ’829 Patent. [Id. at 80-81, 380-81].

Michael Jeffords, Sedecal’s damages expert, opined that, based on the cost savings in shipping and manufacturing resulting from use of the patented technology, an approximate reasonable royalty rate would be at least $500 per infringing unit. [TR2 at 427]. Mr. Jeffords also provided the jury with a calculation of the average profits realized by DRGEM Corp. and DRGEM USA for the sale of the infringing products, which was $3,340 per unit. [Id. at 436]. Finally, Mr. Jeffords discussed various factors for the jury to consider in determining an appropriate damages award. [Id. at 424-42].

After Sedecal rested its case, Defendants presented essentially the same arguments now made in the present motion, in the form of a Rule 50 motion. [TR2 at 493-98]. The Court denied that motion. [Id. at 511]. The Defendants then put on evidence, after which they again presented the same arguments in a second Rule 50 motion.4 [Id. at 885-86]. The Court denied this motion also. [Id. at 886]. During closing argument, the Defendants’ counsel argued that damages should be severely limited, urging the jury to award only $40,896 for the five-plus years of infringing sales, and characterizing the expert testimony of a minimum royalty as allegedly "pulled ... out of the air.” [Id. at 931-32],

The Court then delivered the jury instructions, including several specifically requested by Defendants. This included instructions on the Georgia Pacific factors5 for determining a reasonable royalty, instruction on the “apportionment” of damages, and consideration of the “smallest salable unit” and the “entire market value” rule. [TR2 at 940-46]. On January 19, 2016, the jury rendered its verdict, finding the Defendants liable for damages in the amount of $852,000 and further finding that the infringement committed by DRGEM USA and DRGEM Corp. was willful.6 [Doc. 206].

The Defendants now move pursuant to Rules 50 and 59 of the Federal Rules of Civil Procedure

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226 F. Supp. 3d 520, 2016 WL 7473422, 2016 U.S. Dist. LEXIS 179224, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sociedad-espanola-de-electromedicina-y-calidad-sa-v-blue-ridge-x-ray-ncwd-2016.