Ultratec, Inc. v. Sorenson Commc'ns, Inc.

323 F. Supp. 3d 1071
CourtDistrict Court, W.D. Wisconsin
DecidedAugust 31, 2018
Docket14-cv-66-jdp
StatusPublished
Cited by2 cases

This text of 323 F. Supp. 3d 1071 (Ultratec, Inc. v. Sorenson Commc'ns, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ultratec, Inc. v. Sorenson Commc'ns, Inc., 323 F. Supp. 3d 1071 (W.D. Wis. 2018).

Opinion

JAMES D. PETERSON, District Judge

Plaintiffs accused defendants of infringing U.S. Patent No. 7,660,398 (the '398 patent), which relates to captioned telephone service for the deaf and hearing-impaired. Just before trial started on September 28, 2015, defendants stipulated to infringement, and the jury found the '398 patent not invalid and awarded damages to plaintiffs. The parties made the numerous post-trial filings typical of a patent case. The court granted defendants' motion for judgment as a matter of law that the '398 patent was invalid and that any infringement was not willful, and it denied defendants' motion for a new trial on damages. Dkt. 706. Plaintiffs' post-trial filings, predicated on the idea that they were prevailing parties, were denied as moot. Both sides appealed.

The Federal Circuit affirmed this court's denial of defendants' request for a new trial on damages and its determination that defendants' infringement was not willful. Dkt. 777-1. But the Federal Circuit *1075reversed this court's determination that the patent was invalid. So plaintiffs ask to renew their post-trial motions and filings. Dkt. 779. Defendants agree that the court should now take up plaintiffs' motions, but they oppose them on the merits. Dkt. 783. In this opinion and order, the court decides plaintiffs' pending motions. The court will assume familiarity with the technology and background to the case, which is set out in the court's decision on summary judgment, Dkt. 478, and elaborated in the court's decision on the post-trial motions, Dkt. 706.

A. Motion for a permanent injunction

Plaintiffs seek a permanent injunction, or in the alternative an ongoing royalty at a rate higher than that found by the jury. Dkt. 609. To get an injunction, plaintiffs must demonstrate that (1) they have suffered an irreparable injury; (2) remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) considering the balance of hardships between plaintiffs and defendants, a remedy in equity is warranted; and (4) the public interest would not be disserved by a permanent injunction. eBay Inc. v. MercExchange, L.L.C. , 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). If a permanent injunction is not appropriate, the court may allow the parties to negotiate a license, or it may "step in to assess a reasonable royalty in light of the ongoing infringement." Paice LLC v. Toyota Motor Corp. , 504 F.3d 1293, 1315 (Fed. Cir. 2007).

1. Irreparable injury and an inadequate remedy at law

An irreparable injury is one that cannot be redressed by the available legal remedies, such as an award of money damages. The first two injunction factors tend to coalesce when the question is whether a prevailing party is entitled to permanent injunction at the close of a case. But, critically, any purported irreparable injury must have been caused by the infringement, rather than by lawful competition or other market factors. Apple Inc. v. Samsung Elecs. Co. , 809 F.3d 633, 639 (Fed. Cir. 2015).

Plaintiffs here assert essentially two forms of irreparable injury: loss of market share and reputational damage. Both of these have been recognized as irreparable harms because they have long-term effects that cannot readily be quantified, and they would not completely be remedied by the payment of royalties on the infringing products actually sold. Douglas Dynamics, LLC v. Buyers Prods. Co. , 717 F.3d 1336, 1345 (Fed. Cir. 2013).

The evidence at trial amply establishes that defendants gained market share during the period of infringement. Dkt. 611-25 (Tr. Ex. 1331). Defendants entered the market in 2011 with less than two percent market share in terms of call minutes, garnering more than 50 percent of call minutes the next year, and holding at least 40 percent through mid-2014. It does not matter that plaintiffs' call volume also grew in absolute terms during this time. Douglas Dynamics, 717 F.3d at 1344. The market for captioned calls was growing, so plaintiffs' call volume could have increased even while it lost market share to defendants.

The more difficult question is whether plaintiffs' lost market share was caused by defendants' infringement of the '398 patent. This court previously determined, in the opinion on defendants' motion for judgment as a matter of law, that "[p]laintiffs failed to demonstrate how their commercial success and licensing was attributable to the invention of the '398 patent." Dkt. 706 at 11. But this earlier determination is not conclusive here for two reasons. First, even in the earlier decision, the court held that the jury's implicit finding that secondary *1076considerations supported the non-obviousness of the patent was supported by substantial evidence. Id. at 12. Second, the Federal Circuit's holding that the jury's finding that patent was not invalid is supported by substantial evidence also affects the analysis, even though the Federal Circuit did not expressly address the nexus between the '398 patent and either party's market success.

At trial, plaintiffs adduced evidence that the invention, which combined the two-line captioned phone with echo cancellation, had several benefits. (See, particularly, the testimony of Katie Kretschman, CapTel manager of quality and training, and Brenda Battat, former director of the Hearing Loss Association of America.) Suppression of the voice of the assisted user increased the speed and accuracy of transcription because the relay operator could transcribe all the words that he or she heard. It also provided increased privacy because the relay operator would not hear what the assisted user said. The two-line configuration had other benefits, including allowing captions to be turned on or off as needed, and allowing access to 911 emergency services. The evidence at trial was unequivocal that the two-line captioned phone with echo cancellation was enormously popular.

But still, the '398 patent does not claim every two-line captioned phone that suppresses the voice of the assisted user for the relay operator.

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Bluebook (online)
323 F. Supp. 3d 1071, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ultratec-inc-v-sorenson-commcns-inc-wiwd-2018.