United States District Court, D. Delaware
Rodger D. Smith, II, Esq., MORRIS NICHOLS ARSHT & TUNNELL, LLP, Wilmington, DE
Harry J. Roper, Esq., Paul D. Margolis, Esq., Jamie Keating Lord, and Aaron A. Barlow, Esq., JENNER & BLOCK, LLP, Chicago, IL, Raymond N. Nimrod, Esq., and Joshua S. Reisberg, Esq., QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP, New York, NY, Attorneys for Plaintiff The Dow Chemical Company.
David E. Moore, Esq., POTTER ANDERSON & CORROON, LLP, Wilmington, DE, Ford F. Farabow, Jr., Esq., Mark J. Feldstein, Esq., Sulay D. Jhaveri, Esq., Eric J. Fues, Esq., Ronald A. Bleeker., Esq., and Pier D. DeRoo, Esq., FINNEGAN HENDERSON FARABOW GARRETT & DUNNER, LLP, Washington, DC Attorneys for Defendants Nova Chemicals Corporation and Nova Chemicals, Inc.
LEONARD P. STARK, District Judge.
Pending before the Court is the issue of post-trial damages for the period of continued infringement from January 1, 2010 through October 15, 2011 ("Supplemental Damages Period") by Defendants, NOVA Chemicals Corporation (Canada) and NOVA Chemicals Inc. (Delaware) (together, "NOVA" or "Defendant"), of two of Plaintiff Dow Chemical Company's ("Dow" or "Plaintiff') patents. The Court held a two-day bench trial on this issue in April and May, 2013. Also pending is NOVA's motion for stay of entry and execution of judgment. (D.I. 746) For the reasons explained below, the Court finds that Dow is entitled to lost profits and reasonable royalties for the Supplemental Damages period, but is not entitled to enhanced damages. The Court also denies NOVA's motion for a stay of entry and execution of judgment.
A. The Parties, their Products, and the Patents
1. Plaintiff Dow is a chemicals company that manufactures plastics, including polyethylene ("PE") products, which it then sells to customers who convert the PE product into items such as stretch film or shampoo bottles. (D.I. 749 at 3)
2. Plaintiff is the owner of the patents-in-suit: U.S. Patent Nos. 5, 847, 053 and 6, 111, 023. (D.I. 1) The patents-in-suit expired on October 15, 2011. (D.I. 731 at 2, ¶ 1)
3. Dow manufactures and sells ELITE, a type of plastic product that is both stronger and thinner than other types of plastic, and is also an embodiment of the patents-in-suit. (D.I. 573 at 114-15)
4. Defendant NOVA manufactures chemicals, including PE and other products. (D.I. 14 at 2)
5. NOVA manufactures and sells SURPASS, a PE product that competes directly with Dow's ELITE. (D.I. 748 at 2; D.I. 573 at 179) NOVA also manufactures and sells XJS, an off-grade product that does not meet the target grade specifications, which has to be sold for a lower price. (D.I. 578 at 99)
B. The Jury Trial
6. Dow filed suit against NOVA for infringement of the patents-in-suit on October 21, 2005. (D.I. 1)
7. The Court held a jury trial in June 2010.
8. On June 15, 2010, the jury returned a verdict finding that NOVA's SURPASS and XJS products infringed one or more claims of the patents-in-suit. (D.I. 526) The jury awarded Dow $61, 770, 994.60 in total damages: $57, 447, 024.98 for lost profits and $4, 323, 969.62 in reasonable royalties. These damages were for NOVA's infringement of the patents-in-suit from March 2002 through December 31, 2009. ( Id. )
9. The jury did not award Dow the full amount of damages it had sought. With respect to lost profits, Dow's expert, Creighton Hoffman, opined that Dow would have captured 80% of NOVA's sales, but the jury apparently applied only a 72% capture rate. (314-15, 377-78; see also 530, 536 (testimony of Dow expert Chelton Tanger)) As for a reasonable royalty, the jury rejected Dow's proposed rate of 10% and instead applied an effective royalty rate of 1.755%. (346)
C. Post-Trial Proceedings
10. On July 30, 2010, the Court denied NOVA's motions for judgment as a matter of law and a new trial related to the jury's lost profits award. (D.I. 609) Generally, the Court concluded that "the jury was entitled to credit Mr. Hoffman's testimony" and, in particular, that "Mr. Hoffman's testimony and the related evidence on lost profits [supported] the jury's lost profits award." ( Id. at 9) The Court further concluded that the evidence presented at the 2010 trial sufficiently established the absence of non-infringing alternatives that were acceptable to NOVA's customers who purchased NOVA's infringing SURPASS products. ( Id. )
11. Also on July 30, 2010, the Court denied Dow's motion for a permanent injunction (D.I. 556), thereby permitting NOVA to continue to sell SURPASS and XJS products (D.I. 603). Among other things, the Court found that there were "substantial issues for appeal" and that NOVA customers would be injured by an injunction. ( Id. at 2-3) After the denial of the permanent injunction, NOVA adopted and implemented a remedial policy not to sell the infringing SURPASS products to new accounts. (414)
12. NOVA filed an appeal. (D.I. 614, D.I. 617) On December 22, 2010, the Court stayed proceedings in this Court during the pendency of the appeal. (D.I. 634) On April 4, 2012, the Federal Circuit affirmed the judgment for Dow in all respects. (D.I. 637, D.I. 638) On June 7, 2012, the Court lifted its stay. (D.I. 652)
13. On August 20, 2012, the Court granted NOVA's motion for summary judgment of no willful infringement. (D.I. 674)
14. On October 29, 2012, the Supreme Court denied NOVA's petition for a writ of certiorari. See Nova Chemicals Corp. v. Dow Chem. Co., 133 S.Ct. 544 (2012).
D. Bench Trial
15. As the parties were unable to agree on the amount of supplemental damages to which Dow is entitled, the Court scheduled a bench trial. (D.I. 652, D.I. 711)
16. At the pretrial conference on April 12, 2013, the Court, among other things, denied NOVA's motion to stay the damages proceeding or, in the alternative, stay entry and execution of judgment during the pendency of ongoing reexamination proceedings of the patents-in-suit by the U.S. Patent and Trademark Office ("PTO"). (D.I. 727, D.I. 741, D.I. 759) The Court's denial was without prejudice to renew the stay request with respect to entry and execution of the judgment in connection with briefing that would follow the bench trial on damages. (D.I. 741)
17. The Court held a bench trial on supplemental damages on April 30 and May 1, 2013. The parties completed post-trial briefing on July 18, 2013. (D.I. 747-751, D.I. 754)
18. NOVA renewed its motion for a stay on June 3, 2013. (D.I. 746) After briefing was completed on NOVA's motion on July 18, 2013 (D.I. 747, D.I. 752), the parties advised the Court of subsequent developments on October 24, 2013, November 6, 2013, and February 12, 2013 (D.I. 755, D.I. 756, D.I. 758), including the PTO's issuance of Office Actions rejecting all claims of both patents-in-suit (D.I. 755).
FINDINGS OF FACT
A. Dow's Polyethylene Products and Manufacturing Processes
1. Dow sells a variety of polyethylene ("PE") products into the marketplace through direct transactions with customers and through distribution channels. (67-68) The direct customers, called converters, receive PE product from Dow and then convert the PE product into rigid items such as shampoo bottles, or flexible film items such as stretch film. (68-69)
2. Dow's PE products include high-density PE, also known as HDPE, and linear low density PE, also called LLDPE. (68-69) HDPE is used to manufacture rigid types of product such as buckets, pales, milk bottles, shampoo bottles, and butter tubs. ( Id. ) Because of the product's low density, LLDPE can be used in a ...