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Godo Kaisha IP Bridge 1 v. TCL Communication Technology Holdings Limited

United States District Court, D. Delaware

April 24, 2019

TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED, A Chinese Corporation, TCT MOBILE LIMITED, a Hong Kong Corporation, TCT MOBILE US, INC., A Delaware Corporation, and TCT MOBILE, INC., A Delaware Corporation, Defendants.


          Joseph F. Bataillon, Senior United States District Judge.

         This matter is before the Court on a motion for post-trial relief filed by plaintiff Godo Kaisha IP Bridge 1 (“IP Bridge”) (D.I. 504). This action was tried to a jury from October 30, 2018, to November 8, 2018, on IP Bridge's claim that TCL's accused mobile phone devices infringed claims 9 and 12 of U.S. Patent No. 8, 385, 239 (“the '239 patent”) and claims 15 and 16 of U.S. Patent No. 8, 351, 538 (“the '538 patent”).

         I. BACKGROUND

         The jury found that TCL infringes all four asserted claims, found all four claims valid, and awarded damages in the amount of $950, 000 for both patents.[1] D.I. 487, Verdict (sealed) at 4. The jury rejected IP Bridge's willfulness claim. Id. at 2.

         The parties agree that each of the accused products is capable of connecting to a LTE network in the United States. D.I. 430, PTO, Ex. 1, Joint Statement of Uncontested Facts ¶ 20. Evidence adduced at trial, apparently credited by the jury, established that without practicing the asserted patent claims, an LTE phone will not work. The jury's verdict in favor of IP Bridge reflects a finding that products that are capable of using and communicating over LTE networks infringe the asserted claims because the asserted claims have been found to be essential to mandatory portions of the LTE standard. Thus, the evidence establishes that there is no colorable difference between other TCL LTE products and the accused products as they relate to the patent claims at issue.

         The record shows that IP Bridge sought damages in the form of a reasonable royalty based on sales data disclosed during discovery and sought ongoing royalties absent an injunction. The experts expressed opinions on reasonable royalty rates as applied to revenue from infringing sales up to March 31, 2018. The jury was instructed: “[i]f you find that IP Bridge has established infringement, IP Bridge is entitled to at least a reasonable royalty to compensate it for that infringement.” D.I. 481, Initial Jury Instructions at 45, Instruction No. 36. The Court further instructed the jury:

A royalty is a payment made to a patent holder in exchange for the right to make, use, or sell the claimed invention. A reasonable royalty is the amount of royalty payment that a patent holder and the alleged infringer would have agreed to in a hypothetical negotiation taking place at a time prior to when the infringement first began.

Id., Instruction No. 37. The jury was also instructed, in determining damages to consider whether the asserted patent “is a standard essential patent, that is, the LTE wireless communications standard cannot be practiced without infringing the patent.” D.I. 483, closing Jury Instructions at 4, Instruction No. 46. The verdict form asked: “What has IP Bridge proven, by a preponderance of the evidence, to be a fair, reasonable, and non-discriminatory (‘FRAND') royalty for use of the invention covered by all of the infringed and valid Asserted Patent(s)?” D.I. 512, Verdict at 4. The verdict form, without objection from either party, did not require the jury to determine a per unit royalty rate.

         In its motion for post-trial relief, IP Bridge moves to amend the judgment under Federal Rule of Civil Procedure 59(e). IP Bridge seeks: (1) supplemental damages and an accounting of infringing sales of all adjudicated products through the date of the verdict; (2) prejudgment interest calculated at the prime rate, compounded quarterly, and postjudgment interest at the legal rate on sales of adjudicated products;[2] (3) ongoing royalties, at three times the rate found by the jury, for all TCL LTE products, both adjudicated and non-adjudicated;[3] (4) enhanced (trebled) past damages due to exceptional circumstances including litigation misconduct; and (5) fees and costs to make IP Bridge whole.

         IP Bridge argues that it is entitled to supplemental damages to cover sales between the date of the last produced sales data (on which the jury based its determination) and the date of the verdict. It seeks prejudgment interest at the prime rate as a more appropriate measure of the harm it suffered as a result of the infringement. Further, it contends it is entitled to ongoing royalties to account for TCL's continued infringement of the asserted patents for both the adjudicated products and other TCL LTE products.[4] It also argues royalty rate should be trebled with respect to post-verdict damages to account for changed circumstances, TCL's pre-complaint “hold-out, ” and the ongoing infringement. Also, IP Bridge argues that enhanced (trebled) past damages are warranted, despite the jury's finding of no willful infringement, due to TCL conduct in failing to negotiate a license to SEPs subject to FRAND obligations. Last, IP Bridge contends that the exceptional nature of this case warrants the award of attorneys' fees, and nontaxable costs and expenses under 35 U.S.C. § 285.

         In response, TCL concedes that IP Bridge is entitled to post judgment interest at the legal rate under 28 U.S.C. § 1961, but opposes IP Bridge's motion in all other respects. It challenges IP Bridge's interest arguments, contending that any award of prejudgment interest should use the T-bill rate compounded annually, rather than the prime rate compounded quarterly. It also argues that there is no legal support for ongoing royalties' damages for unadjudicated products or for an award of enhanced damages in the absence of a finding of willful infringement. In its Answering Brief, TCL includes a request for fees and costs for preparing its opposition to IP Bridge's motion, under either 35 U.S.C. § 285 or the Court's inherent authority. D.I. 514, Brief at 20. TCL contends that IP Bridge's motion is “exceptional” because it is meritless and vexatious.

         II. LAW

         A. Standard of review

         Federal Rule of Civil Procedure 59(e) expressly recognizes a court's authority to alter or amend its judgments. Fed.R.Civ.P. 59(e). “Consistently with this original understanding, the federal courts generally have invoked Rule 59(e) only to support reconsideration of matters properly encompassed in a decision on the merits[, ]” and legal issues collateral to the main cause of action. White v. New Hampshire Dep't of Emp't Sec., 455 U.S. 445, 451 (1982). The principal limitation on that discretion is that a motion to amend “may not be granted where to do so would undermine the jury's fact-finding role and trample on the defendant's Seventh Amendment right to a jury trial.” Robinson v. Watts Detective Agency, Inc., 685 F.2d 729, 742 (1st Cir. 1982).

         Specifically, Rule 59(e) has been invoked to correct damage awards that were improperly calculated, and to include prejudgment interest to which a party was entitled. See Lubecki v. Omega Logging, Inc., 674 F.Supp. 501 (W.D. Pa. 1987), aff'd, 865 F.2d 251 (3d Cir. 1988); 11 Wright and Miller, Federal Practice and Procedure, § 2817 n. 28- 29.

         The rule governing motions to alter or amend judgment is the proper basis for bringing a request for prejudgment interest. J.A. McDonald, Inc. v. Waste Sys. Int'l Moretown Landfill, Inc., 247 F.Supp.2d 542, 546 (D. Vt. 2002). The method used to calculate amount of judgment and prejudgment interest involves matters of law and is based on undisputed facts, and therefore is appropriately resolved by way of a motion to amend judgment. Commercial Assocs. v. Tilcon Gammino, Inc., 801 F.Supp. 939, 942 (D. R. I. 1992), aff'd998 F.2d 1092 (1st Cir. 1993).

         B. Interest

         “Prejudgment interest on a damages award for patent infringement ‘is the rule' under 35 U.S.C. § 284[.]” Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1574 (Fed. Cir. 1996). The purpose of prejudgment interest “to ensure that the patent owner is placed in as good a position as he would have been had the infringer entered into a reasonable royalty agreement.” Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 655 (1983). An award of interest from the time that the royalty payments would have been received merely serves to make the patent owner whole, since the damages consist not only of the value of the royalty payments but also of the foregone use of the money between the time of infringement and the date of the judgment. Id. at 655-56. “The rate of prejudgment interest and whether it should be compounded or uncompounded are matters left largely to the discretion of the district court” and “must be guided by the purpose of prejudgment interest, which is to ensure that the patent owner is placed in as good a position as he would have been had the infringer entered into a reasonable royalty agreement.” Bio-Rad Labs., Inc. v. Nicolet Instrument Corp., 807 F.2d 964, 969 (Fed. Cir. 1986) (internal quotation marks and citations omitted). “Courts have recognized that the prime rate best compensate[s] a patentee for lost revenues during the period of infringement because the prime rate represents the cost of borrowing money, which is ‘a better measure of the harm suffered as a result of the loss of the use of money over time.'” IMX, Inc. v. LendingTree, LLC, 469 F.Supp.2d 203, 227 (D. Del.) on reconsideration in part, No. CIV. 03 1067 SLR, 2007 WL 1232184 (D. Del. Apr. 25, 2007) (quoting Mars, Inc. v. Conlux USA Corp., 818 F.Supp. 707, 720-21 (D. Del.), aff'd, 16 F.3d 421 (Fed. Cir. 1993); see also Amgen Inc. v. Hospira, Inc., 336 F.Supp.3d 333, 364 (D. Del. 2018). “[I]t is not necessary that a patentee demonstrate that it borrowed at the prime rate in order to be entitled to prejudgment interest at that rate.” Uniroyal, Inc. v. Rudkin-Wiley Corp., 939 F.2d 1540, 1545 (Fed.Cir.1991) (citation omitted).

         Post-judgment interest should accrue at the statutory rate as specified in 28 U.S.C. § 1961(a). Amgen Inc., 336 F.Supp.3d at 364. Section 1961(a) provides, “Interest shall be allowed on any money judgment in a civil case recovered in a district court. . . . Such interest shall be calculated from the date of the entry of the judgment . . . .” 28 U.S.C. § 1961(a). Section 1961(a) does not provide for interest until a money judgment fixing the amount owed to the prevailing party. Eaves v. Cty. of Cape May, 239 F.3d 527, 534 (3d Cir. 2001). “The statute does not, by its terms, mandate that the judgment from which interest is calculated must be a final judgment.” In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1177-78 (3d Cir. 1993); see alsoSkretvedt v. E.I. DuPont De Nemours, 372 F.3d ...

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