throbber
TTAB
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`In the matter of Trademark Registration No. 2,390,719 for the trademark VASOPULSE
`Owned by E-MOS CIVIL UNLIMITED CORPORATION FED REP GERMANY, and
`registered October 3, 2000:
`
`AXIOM WORLDWIDE, INC,
`
`Petitioner,
`
`V.
`
`E-MOS CIVIL UNLIMITED CORPORATION
`
`FED REP GERMANY,
`
`Registrant.
`
`\/g/\/\/\./\./\J\/\/\/\./\./
`
`/23/=5(..r, /~/$>‘/
`
`,,
`
`/
`
`Cancellation No.:92045033
`
`REGISTRANT’S NOTICE OF OUTCOME OF ANOTHER PROCEEDING AND
`
`MOTION TO DISMISS PETITION TO CANCEL TRADEMARK AS MOOT OR
`
`ABANDONED
`
`Trademark Trial & Appeal Board
`P.O. Box 1451
`
`Alexandria, VA 22313-1451
`
`Pursuant to the August 20, 2009 directive from the Board, Registrant, E-MOS
`
`CIVIL UNLIMITED CORPORATION FED REP GERMANY, by and through its
`
`undersigned attorneys, hereby states as follows:
`
`Order dated December l9, 2006 granting Registrant’s Temporary Injunction
`1.
`against Petitioner for trademark infringement of the VASOPULSE registered mark, in
`Case No. 8:06-CV-1790-T-27EAJ in the United States District Court for the Middle
`
`District of Florida, Tampa Division, was converted to a Final Order granting permanent
`injunctive relief in favor of the Registrant and against the Petitioner and further found
`that the Petitioner’s actions in bringing this action before the Trademark Trial & Appeal
`Board was improper conduct resulting in exceptional circumstances.
`(See Order at
`Doc.#l86, 09/22/2009, Page 28 of 31 attached hereto)1 [Attachment 1]
`
`I The District Court stated, “In addition, the Court finds that Defendant’s attempt to cancel Plaintiffs’
`trademark with a filing of a petition to the Trademark Trial & Appeals Board after receiving Plaintiffs’
`cease and desist letter supports a finding that Defendant acted in bad faith.”
`
`1
`
`lllllllIlllllllllllllllllllllllllllllllllllllllll
`U7-15-2010
`
`

`
`On June 3, 2010 the Court entered an award of attorney’s fees against the
`2.
`Petitioner in the amount of $42,619.50 at 5.5% compounded annually from September
`25, 2005. (Doc.# 207) (Date this action was filed before the Trademark Trial & Appeal
`Board). [Attachment 2]
`
`A 5
`
`Additionally, on June 26, 2010, the Petitioner was declared by the Secretary of the
`.
`State of Florida to be dissolved. (See Attached Certificate of Dissolution). [Attachment 3]
`
`There is nothing left for the Trademark Trial & Appeal Board to adjudicate as the
`4.
`grounds raised in the Petition were heard by the United States District Court for the
`Middle District of Florida and were determined to be brought in bad faith.
`
`Based on the foregoing, pursuant to Trademark Rule § 2.127, the Registrant moves to
`
`dismiss the Petition to Cancel the Registrant’s trade mark on the grounds that this action
`
`is moot and that Petitioner now lacks standing or has otherwise abandoned these
`
`proceedings in light of the fact that the registration of the trademark at bar is Valid and
`
`failed by the preponderance of the evidence in presenting a defensive case before the
`
`federal court that the Petitioner’s trademark is misleading and misdescriptive. 15 U.S.C. §
`
`lO57(b); Cerveceria Centroamericang S.A. v. Cerveceria India, Inc., 892 F.2d 1021,
`
`1023 (Fed. Cir. 1989); W. Fla. Seafood V. Jet Rests., 31 F.3d 1122, 1125 (Fed. Cir.
`
`1994); Yamaha Int’l Corp. v. Hoshino Gakki Co.. Ltd., 840 F.2d 1572 (Fed. Cir. 1988).
`
`\2
`
`Dated: Ju1y,‘’201o.
`
`Respectfully submitted,
`
`
`%
`
`CRAIG M. RAPPEL, ESQ.
`Florida Bar No.: 0752428
`
`Rappel Health Law Group, P.L.
`Bridgewater
`1515 Indian River Boulevard
`Suite A210
`
`Vero Beach, Florida 32960-7103
`
`Telephone: 772.778.8885
`Facsimile: 772.778.8883
`
`Attorneys for Registrant
`
`

`
`CERTIFICATE OF SERVICE
`
`I HEREBY CERTIFY that a true and correct copy of the foregoing (without
`attachments) was sent by U.S. Mail to:
`
`Patrick J. Arnold, J12, McAndrews,
`Held & Malloy
`500 West Madison Suite 3400
`
`Chicago, IL, 60661
`
`on this 12* day of July, 2010.
`
`CRAIG M. RAPPEL, ESQ.
`Florida Bar No: 0752428
`
`Attorneys for Registrant
`
`

`
`ATTACHMENT 1
`
`

`
`Case 8:06-cv-01790-VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page ‘I of 31
`
`UNITED STATES DISTRICT COURT
`
`MIDDLE DISTRICT OF FLORIDA
`
`TAMPA DIVISION
`
`HAKO-MED USA, Inc., et al.,
`
`Plaintiffs,
`
`VS.
`
`Case No.: 8:06-cv-1790—T-33AEP
`
`AXIOM WORLDWIDE, Inc.,
`
`Defendant.
`
`/
`
`ORDER
`
`This matter comes before the Court on Plaintiffs’ motion for enhanced
`
`damages and attorney's fees (Doc. 168). Plaintiffs ask the Court to uphold the jury’ s
`
`finding that Defendant willfully infringed Plaintiffs’ patent and award Plaintiffs
`
`enhanced damages by doubling the $450,000.00 royalty damages already provided
`
`to them by the jury.
`
`In addition, Plaintiffs seek their attorney’s fees for the
`
`prosecution of the patent and trademark infringement claims and to be awarded
`
`prejudgment interest. The Court reached its decision after reviewing Defendant’s
`
`response in opposition (Doc. 170), and the transcripts of the proceedings (Docs. 17 l-
`
`l74).1
`
`For the reasons that follow, the Motion is GRANTED in PART and
`
`1 Also before the Court are Defendant’s Motions for Judgment as a Matter of Law
`on the issues of Infringement and Reasonable Royalty damages. (the “Motions,” Docs. 178
`and 179). The Court will address the Motions by separate Order. The parties should be
`aware that the relief provided in this Order is subject to the C ourt’s ultimate disposition of
`the Motions.
`
`

`
`Case 8:06-cv—01790-VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 2 of 31
`
`DENIED in PART.
`
`1.
`
`Brief Pertinent Procedural and Factual Background
`
`On September 28, 2006, Plaintiffs filed a motion for injunctive relief and
`
`requested that this Court enjoin Defendant, Axiom Worldwide, Inc., from continuing
`
`to market and/or sell Defendant’s electrical nerve stimulation medical device entitled
`
`EPS8000/NVP8500 (Doc. 2). Simultaneously with the motion for a preliminary
`
`injunction, Plaintiffs filed a complaint and asserted claims against Defendants that
`
`included patent infringement in violation of United States Patent Laws, 35 U.S.C. §
`
`271, et seq., and trademark infringement arising under the Lanham Act, 15 U.S.C. §
`
`1114 (Doc. 6).
`
`Prior to transferring this case to the undersigned, Judge James Whittemore
`
`adopted, with slight modifications 030C. 63), Magistrate Judge Elizabeth Jenkins’
`
`Report and Recommendation (Doc. 50) granting Plaintiffs’ request for a preliminary
`
`injunction on its trademark infringement claim only.
`
`Plaintiff, Dr. Achim Hansjurgens, a resident of Germany, is the holder of
`
`United States Patent No. 5,573,552 (the “‘552 patent”) which was issued by the
`
`United States Patent Office on November 12, 1996. The ‘552 patent is for an
`
`electrotherapeutic apparatus that “operates in the medium frequency range between
`
`1000 Hz and 100,000 Hz, with paired, diametrically opposed electrodes applied in
`
`

`
`Case 8:06-cv-01790-VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 3 of 31
`
`relation to a body part to be treated.” (Trial Ex. 1).
`
`Physicians use electrotherapy machines such as the one described in the patent
`
`to treat patients with various medical infirmities; the primary market for these
`
`machines consists of medical doctors and chiropractors. The patent describes the
`
`effects of the electrical stimulation device as pain alleviation, stimulation of striated
`
`and nonstriated muscles, influencing perfusion, the detumescent mechanisms, the
`
`checking of inflammatory processes, and promoting regeneration of, for example,
`
`wounds and accelerated healing of bones. (Amended Compl., Ex. 1).
`
`Plaintiff, GMBH, is a privately owned German company established in 199]
`
`by Dr. Hansjurgens and his former partner, Koch GMBH (Doc. 4; Doc. 27 at p. 3).
`
`In 2002, Kai Hansjurgens established Hako-Med USA, an affiliate of GMBH, that
`
`markets and sells the electrotherapeutic apparatus in the United States (Doc. 5; Doc.
`
`27 at p. 3). Plaintiffs refer to the device’s technology as internationally patented
`
`“Horizontal Therapy,” which is the core of Plaintiffs’ product and what makes
`
`Plaintiffs’ product stand out in the niche industry of electromedicine. Plaintiffs
`
`market and sell
`
`this
`
`technology in the form of a machine called the
`
`ProElecDT2000/VasoPulse2000.
`
`On October 3, 2000, the United States Patent and Trademark Office provided
`
`Plaintiffs with a certificate ofregistration for the mark VASOPULSE®, United States
`
`

`
`Case 8:O6—cv-01790-VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 4 of 31
`
`Trademark Registration No. 2,390,719 (the “‘71 9 mark”). Hako-Med USA uses the
`
`VASOPULSE® name in marketing its electrotherapy product.
`
`Defendant competes with Plaintiffs in the electromedicine care market.
`
`Defendant began marketing and selling its EPS 8000/NVP8500 product on July 28,
`
`2005.
`
`It is undisputed that Defendant’s machine directly competes with Plaintiffs’
`
`machine for the same share of the electrotherapy market.
`
`Pursuant to the parties’ are terms renewed joint motion for bifurcation, the
`
`Court bifurcated the case - the jury considered Plaintiffs’ patent infringement claims
`
`and the Court considered their trademark infringement claim.
`
`The following Witnesses testified during the trial: Kai Hansjurgens, President
`
`ofHako-Med USA; James J. Gibson, President and CEO ofAxiom Worldwide; Scott
`
`Johnson, Defendant’s Chief of Engineering; Dr. Achim Hanjurgens; Barry N.
`
`Feinberg, Ph.D., P.E., expert witness for Defendant; Roger Bruce Fambro, Medical
`
`Device Distributor; and Stephen Thomas, attorney and expert witness for Plaintiffs.
`
`After hearing both testimony from witnesses and argument from counsel on
`
`the trademark infringement claim, the Court found that Defendant had infringed upon
`
`Plaintiffs’ trademark and ordered that the temporary injunction imposed earlier
`
`become permanent.
`
`At the conclusion of the trial on the patent infringement claims, the found
`
`that Defendant willfully infringed Plaintiffs’ patent under the “doctrine of
`
`4
`
`

`
`Case 8:O6—cv—O1790—VMC—EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 5 of 31
`
`equivalents.” The jury awarded Plaintiffs $450,000.00 as a reasonable royalty for
`
`Defendant’s sale of its infringing device. On the Verdict Form, the jury answered
`
`“yes” in response to Question No. 6, which read, “Do you find that the Plaintiffs
`
`proved by clear and convincing evidence that the Defendant willfully infringed the
`
`‘552 patent?” (Doc. 170, Ex. 3 at p. 3). Defendant made an are terms Motion for
`
`Judgment as a Matter of Law as to the issues of invalidity and the doctrine of
`
`equivalents, which the Court took under advisement. The Court also set the briefing
`
`schedule for arguments on the jury’s finding of willful infringement and Plaintiffs’
`
`request for enhanced damages and attorney’s fees on both the patent and trademark
`
`infringement claims. Those briefs were submitted timely.
`
`II.
`
`Applicable Law
`
`Upon a finding of infringement, 35 U.S.C. § 284 requires a court to award.
`
`“damages adequate to compensate for the infringement.” The same section gives a
`
`court discretion to increase the damages up to three times the amount found or
`
`assessed.
`
`Assessing enhanced damages is a two-step process: first, the fact finder must
`
`determine if an accused infringer is guilty of conduct, such as willfulness, upon which
`
`enhanced damages may be based, and, if so, the court then exercises its discretion to
`
`determine if the damages should be enhanced given the totality of the circumstances.
`
`

`
`Case 8:06-cv-01790-VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 6 of 31
`
`Mentor H/S Inc. V. Med. Device Alliance Inc., 244 F.3d 1365 (Fed. Cir. 2001)? A
`
`finding of willful infringement does not mandate enhanced damages; instead, the
`
`paramount determination is the egregiousness ofthe defendant’ s conduct based on all
`
`of the facts and circumstances. Electro Scientific Indus.. Inc. V. Gen. Scanning Inc.,
`
`247 F.3d 1341 (Fed. Cir. 2001). However, once willful infringement is established,
`
`no additional finding of bad faith is required for enhancing the damage award. IE
`
`Mfg. Co.. Inc. v. Dura Corp, 789 F.2d 895 (Fed. Cir. 1986). A jury’s finding that
`
`
`defendants willfully infringed is advisory only. White v. Mar—Bel Inc., 509 F.2d 287
`
`(11th Cir. 1975) (citing to 35 U.S.C.A. § 284 (West 2009)). Where the jury finds
`
`willful infringement, the court should provide reasons for not enhancing the damage
`
`
`
`award. Tate Access Floors Inc. v. Maxcess Tech. Inc., 222 F.3d 958 (Fed. Cir..
`
`2000)
`
`Noting that there is no statutory guide as to when enhanced damages ought to
`
`be awarded, the Federal Circuit has held that “an award of enhanced damages requires
`
`a showing of willful infringement.” In re Seagate Tech., LLC, 497 F.3d 1360, 1368
`
`(Fed. Cir.2007). In this context, the concept of willfulness includes reckless behavior.
`
`2 The Federal Circuit is the only one of the thirteen federal appeals courts whose
`jurisdiction is determined entirely on the subject of the lawsuits it hears. Specifically, it is
`the job of the Federal Circuit to hear all appeals from United States District Courts related
`to, among other things, decisions of any of the United States District Courts where the
`original action included a complaint arising under the patent laws. Accordingly, the Court
`cites to decisions from the Federal Circuit as authority.
`
`6
`
`

`
`Case 8:06-cv-01790—VMC-EAJ
`
`Document ‘I86
`
`Filed 09/22/2009
`
`Page 7 of 31
`
`E. at 1371. “[T]o establish willful infringement, a patentee must show by clear and
`
`convincing evidence that the infringer acted despite an objectively high likelihood
`
`that its actions constituted infringement of a valid patent.” I_d_. “If this threshold
`
`objective standard is satisfied,
`
`the patentee must also demonstrate that
`
`this
`
`objectively—def1ned risk (determined by the record developed in the infringement
`
`proceeding) was either known or so obvious that it should have been known to the
`
`accused infringer.” I_d.
`
`In Read Corp. v. Portec, lnc., 970 F.2d 816, 827 (Fed. Cir.1992), the court
`
`identified nine factors (commonly referred to as the “Read factors”) that a district
`
`court may take into consideration in deciding whether to grant enhancement of
`
`damages and in determining the amount
`
`thereof:
`
`(1) whether the defendant
`
`deliberately copied the ideas or design of another; (2) whether the defendant, when
`
`he knew of the other’s patent protection, investigated the scope of the patent and
`
`formed a good faith belief that it was invalid or that it was not infringed; (3) the
`
`defendant’ s behavior as a party to the litigation; (4) the defendant's size and financial
`
`condition;
`
`(5)
`
`the closeness of the case;
`
`(6)
`
`the duration of the defendant's
`
`misconduct; (7) remedial action by the defendant; (8) the defendant's motivation for
`
`harm; and (9) whether defendant attempted to conceal its infringement.
`
`While it is not a rule of law that patent infringement under the doctrine of
`
`equivalents is insufficient to warrant enhanced damages, the avoidance of literal
`
`7
`
`

`
`Case 8:06-cv-01790-VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 8 of 31
`
`infringement is a fact to be considered when determining whether there has been
`
`willful infringement. §§ WMS Gaming, Inc. v. Int’l Game Tech., 184 F.3d 1339
`
`(Fed. Cir. 1999).
`
`Plaintiffs request payment of attorney’ s fees for patent infringement pursuant
`
`to 35 U.S.C. § 285. Under this statute, a court may award reasonable attorney’s fees
`
`to the prevailing party in an “exceptional case.” In determining whether to award
`
`fees, the court should look to the totality of the circumstances, Yarnanouchi Pharm.
`
`Co. V. Danbury Pharmacal. Inc., 231 F.3d 1339, 1346-47 (Fed. Cir. 2000), and may
`
`consider the nine Read factors.
`
`Whether a case can be considered “exceptional” should be based on a variety
`
`of factors, such as willful or intentional infringement, inequitable conduct before the
`
`Patent and Trademark Office, vexatious or unjustified litigation, or other misfeasant
`
`behavior. Multiforrn Desiccants Inc. V. Medzarn Ltd., 133 F.3d 1473, 1481-82 (Fed.
`
`Cir.l998). “A finding of such ‘exceptional’ circumstances does not, however,
`
`mandate an award of attorney fees.” Reactive Metals and Alloys Corp. v. 1 ,
`
`769 F.2d 1578, 1582 (Fed. Cir. 1985).
`
`In an effort to avoid penalizing a party for
`
`merely defending or prosecuting a lawsuit, the Federal Circuit has determined that
`
`district courts should not routinely assess attorney’s fees against a losing party in
`
`patent litigation. Revlon, Inc. v. Carson Prod. Co., 803 F.2d 676, 679 (Fed. Cir.
`
`1986). The decision to award attorney’s fees must be made in light of the totality of
`
`8
`
`

`
`Case 8:06-cv—01790-VMC—EAJ Document 186
`
`Filed 09/22/2009
`
`Page 9 of 31
`
`the circumstances and the party seeking the award bears the burden of proving facts
`
`which establish the exceptional character of the case by clear and convincing
`
`evidence. Merck & Co., Inc. V. Mylan Pharm., lnc., 79 F.Supp. 2d 552,555 (ED. Pa.
`
`2000), citing Machinegg Corp. of America V. Gullfiber, 774 F.2d 467, 471 (Fed. Cir.
`
`1985).
`
`Plaintiffs also seek attorney’s fees under 17 U.S.C. § 1114 for trademark
`
`infringement. Title 15 U.S.C., Section 11l7(a) provides, in pertinent part:
`
`When a violation of any right of the registrant of a mark
`registered in the Patent and Trademark Office, a violation under
`section 1125 (a) or (d) of this title, or a willful violation under
`section 1125(c) of this title, shall have been established in any
`civil action arising under this chapter,
`the plaintiff shall be
`entitled, subject to the provisions of sections 1111 and 1114 of
`this title, and subject to the principles of equity, to recover (1)
`defendant's profits, (2) any damages sustained by the plaintiff,
`and (3) the costs of the action. .
`.
`. The court in exceptional cases
`may award reasonable attorney fees to the prevailing party.
`
`While the term “exceptional” is not defined in the statute, “the Committee on the
`
`Judiciary stated that the remedy of attorneys‘ fees ‘should be available in infringement
`
`cases where the acts of infringement can be characterized as ‘malicious,’ ‘fraudulent,’
`
`‘deliberate,’ or ‘willful.’” Playboy Enter, Inc. V. Baccarat Clothing Co., Inc., 692
`
`F.2d 1272, 1276 (9th Cir. 1982).
`
`The fact that an act of infringement is found to justify an award of increased
`
`damages for willful
`
`infringement
`
`is not sufficient
`
`in itself to make the case
`
`

`
`Case 8:06—cv-01790-VMC—EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 10 of 31
`
`exceptional as to justify an award of attorney’ s fees. Lang V. VSL, Corp, 219
`
`U.S.P.Q. (BNA) 625 (E.D. Va. 1982).
`
`III. Analysis
`
`Plaintiffs acknowledge that this is not a “polar case” because Defendant’s
`
`conduct was not at the “most egregious end of the spectrum.” (Doc. 168, pp. 12-13).
`
`Plaintiffs do not ask for the treble damages allowed to them by statute; instead they
`
`ask the Court to double the $450,000.00 award from the jury. They claim that double
`
`damages will serve the purposes of deterrence and punishing Defendant’s willful
`
`infringement while fully compensating but not unjustly enriching Plaintiffs. (Doc.
`
`168, pp. 12-13). While the Court agrees with some portions of Plaintiffs’ assessment
`
`of the case, the Court does not deem it appropriate to grant Plaintiffs the majority of
`
`the relief requested in the Motion.
`
`In summary, at this juncture, the Court concludes that (1) it will not overturn
`
`the jury’ s finding that Defendants willfully infringed the ‘552 patent;3 (2) the evidence
`
`Plaintiffs offered in support of the Motion and the record developed at trial,
`
`considered in light of the Read factors, is insufficient to warrant any enhancement in
`
`damages; (3) Plaintiffs failed to prove that they are entitled to attomey’s fees for
`
`
`3 E Minks v. Polaris Indus. Inc., 2007 WL 788418 (MD. Fla. Mar. 14, 2007)
`(assuming that jury’s finding of willful infringement was correct for consideration of
`enhanced damages, but reserving right to reevaluate this finding in the context of a Rule 50
`motion).
`
`10
`
`

`
`Case 8:06-cv-01790-VMC—EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 11 of31
`
`patent infringement; and,
`
`(4) Plaintiffs should be awarded attorney’s fees for
`
`trademark infringement and prejudgrnent interest. A detailed analysis follows.
`
`A. Willful Infringement
`
`The logical starting point for the Court’s analysis is the jury’s finding that
`
`Defendant willfully infringed the ‘5 5 2 patent. A jury’ s finding of willful infringement
`
`authorizes the Court to award enhanced damages and attorney’ s fees. E generally
`
`
`
`Minks V. Polaris Indus. Inc., 2007 WL 788418 (M.D. Fla. March 14, 2007).
`
`However, such a finding is not a mandate for the Court to award enhanced damages
`
`and attorney’s fees. Read Com., 970 F.2d at 826.
`
`The Court is very mindful of the deference that it must accord any decision
`
`reached by the jury. Assuming that the jury was correct and that there was sufficient
`
`evidence of willfulness to sustain the jury’s verdict, the Court will not award
`
`enhanced damages in this case.
`
`The Court finds that in light of the punitive function of enhanced damages,
`
`such damages are not warranted in this case. Furthermore, the Court finds that t e
`
`record evidence supporting the jury’s threshold finding of willful infringement is not
`
`of the weight and strength to support the imposition of enhanced damages. The Court
`
`bases its conclusion on its analysis of the evidence and witness testimony presented
`
`at trial. See S.C. Johnson & Son,lnc.,LCarter-Wallagg, lnc., 781 F.2d 198, 201
`
`(Fed. Cir. 1986) (the court refused to enhance damages where the question of
`
`11
`
`

`
`Case 8:06-cv-01790—VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 12 of 31
`
`willfulness was close because “[t]he trial judge is in the best position to weigh
`
`considerations such as the closeness of the case, the tactics of counsel, the conduct of
`
`the parties, and any other factors that may contribute to a fair allocation of the burdens
`
`of litigation as between winner and loser”).
`
`Under figagq, willfulness requires a two-prong evidentiary showing. First is
`
`the threshold objective standard, under which the “patentee must show by clear and
`
`convincing evidence that the infringer acted despite an objectively high likelihood
`
`that its actions constituted infringement of a valid patent.” , 497 F.3d at 1370-
`
`71. Second, “[i]f this threshold objective standard is satisfied, the patentee must also
`
`demonstrate that this objectively-defined risk .
`
`.
`
`. was either known or so obvious that
`
`it should have been known to the accused infringer.” E.
`
`Defendant focuses its arguments on the first prong of . Essentially,
`
`Defendant argues that the jury’s finding cannot survive because Plaintiffs failed to
`
`produce the requisite clear and convincing evidence at trial that Defendant acted with
`
`“objective recklessness” with respect to the ‘552 patent. (Doc. 170 at p. 1).
`
`The Court will not recite all of Defendant’ s arguments, but by way of example,
`
`Defendant claims that the first prong of Seagate’s willfulness inquiry cannot be met
`
`where a defendant presents a substantial defense at trial. (Doc. 170 at p. 5, citing to
`
`TGIP, Inc. v. AT&T Corp, 427 F.Supp. 2d 561, 579 (ED. Tex. 2007)). Defendant
`
`also claims that the first prong of Seagate cannot be met where a jury finds
`
`12
`
`

`
`Case 8:O6—cv-01790—VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 13 of 31
`
`infringement under the doctrine of equivalents. (Doc. 170 at p. 4 (citations ornitted)).
`
`The Court appreciates Defendant’s focus and understands its arguments.
`
`These arguments, supported by case law, provide sufficient bases for the Court to
`
`conclude that the jury erred when it found Defendant willfully infringed on the ‘552
`
`patent.‘ However, assuming that the jury’ s finding is correct or, at the very least, that:
`
`the jury’s finding allows Plaintiffs to overcome the objective prong of , the
`
`Court turns to the second prong of fieagm and continues its analysis of willful
`
`infringement under the Read factors.
`
`B.
`
`The Read Factors
`
`Plaintiffs contend that “the first through third, fifth, sixth, eighth and ninth
`
`[Read] factors” favor them, the fourth factor favors Defendant and the “parties are
`
`close to being equal with respect to the seventh factor, however, this factor slightly
`
`tips in favor of [Plaintiff] Hako-Med.” (Doc. 168 at p. 5). As mentioned above,
`
`Defendant does not address directly the separate Read factors.
`
`In considering enhanced damages, “the paramount determination .
`
`.
`
`. is the
`
`egregiousness of the defendant's conduct, based on all the facts and circumstances.”
`
`Electro Scientific Industries, Inc. v. General Scanning, Inc., 247 F.3d l341, 1353
`
`4 Although not raised by Defendant, the Court also notes that in Seagate, the Federal
`Circuit suggests that if a patentee fails to obtain a preliminary injunction on the issue of
`patent infringement, as was the case here, that fact may show an absence of an objectively
`high likelihood that a defendant’s actions constituted infringement of a valid patent.
`Seagate, 497 F.3d at 1374.
`
`13
`
`

`
`Case 8:06—cv-01790-VMC-EAJ
`
`Document 186
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`Filed 09/22/2009
`
`Page 14 of 31
`
`(Fed. Cir. 2001) (citations omitted). The Court now addresses each of the nine Read
`
`factors in turn.
`
`(1)
`
`Deliberate Copying
`
`Plaintiffs contend that Mr. Scott Johnson’ s admission that he “disassembled”
`
`Plaintiffs’ device (Doc. 172, p. 86, lines 4-5) combined with his admitted “awareness”
`
`of the ‘S52 patent (Doc. 172, p. 86, lines 8-12: p. 88, line 25 — p.89, lines 1-12) are
`
`evidence that Defendant deliberately copied Plaintiffs’ ideas.
`
`Defendant claims that the admission that Mr. Johnson disassembled Plaintiffs’
`
`device is not evidence of deliberate copying. Rather, Defendant argues, the admission
`
`of “disassembling” is proof of the Defendant’s concerted effort to “design around”
`
`the ‘552 patent. (Egg, Trial Tr. Doc. 172, p. 230: lines 22—25—p. 231: lines l-17).
`
`Defendant points to the testimony of its expert witness, Dr. Barry Feinberg, that
`
`“designing around” a patent is a standard practice in the medical device industry.
`
`(Trial Tr. Doc. 172, p. 184: lines 13-25-p. 185: lines 1-21). Defendant also claims
`
`that, in contrast to its demonstrated good faith not to infringe, Plaintiffs failed to
`
`provide the Court with any evidence or testimony that Defendant deliberately copied
`
`the alleged invention of the ‘552 patent or intended to infringe the ‘552 patent. (Doc.
`
`170 at p. 6).
`
`The Court undertook an independent review ofpertinent case law on this topic,
`
`including review of the case law cited by Defendant. This review made it clear that
`
`14
`
`

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`Case 8:06-cv—O1790—VMC—EAJ Document 186
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`Filed 09/22/2009
`
`Page 15 of31
`
`(1) designing around a patent is standard and even encouraged in the medical device
`
`industry and (2) a defendant’ s efforts to design round a patent can preclude a finding
`
`of Willfulness under Seagate. Sfi ggg WMS Gaming, Inc. V. International Game
`
`Tech., 184 F.3d 1339 (Fed. Cir. 1999); State Indus. Inc. V. A.O. Smith Cor_p., 751
`
`F.2d 1226 (Fed. Cir. 1985).
`
`The case of Rhino Assocs., L.P. V. Berg Mfg. and Sales CoQ., 531 F. Supp.2d
`
`652 (Fed. Cir. 1993),
`
`is informative on both of the above points. In Rhino, the court
`
`denied the plaintiff’s request for enhanced damages stating:
`
`Given the attempt to design around the “essentially one piece”
`requirement in the '889 patent, the court finds that Berg did not
`act with “an objectively high likelihood that its actions constituted
`infringement of a valid patent.” In re Seagate Tech., LLC, 497
`F.3d at 1371; g:§_al§gWestvaco Corp. v. Int'l Paper Co., 991 F.2d
`735, 745 (Fed. Cir. 1993) (“One of the benefits of apatent system
`is
`its so-called ‘negative incentive’
`to ‘design around’
`a
`competitor's products, even when they are patented, thus bringing
`a steady flow of innovations to the marketplace. It should not be
`discouraged by punitive damage awards except in cases where
`conduct is so obnoxious as clearly to call for them.” (quoting
`State Indus., Inc. v. A.O. Smith Corp, 751 F.2d 1226, 1235-36
`(Fed. Cir. 1985))). Therefore, Rhino has not demonstrated
`objective recklessness by [defendant] and enhanced damages are
`not warranted.
`
`Rhino Assocs., 531 F.Supp. 2d. at 658-59. The evidence cited by Plaintiffs is not
`
`conclusive evidence of deliberate copying. Essentially, Plaintiffs ask the Court to turn
`
`an inference into evidence, and this is something the Court declines to do. Thus, the
`
`Court finds that this factor weighs against enhancement.
`
`15
`
`

`
`Case 8:O6—cv-01790-VMC—EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 16 of31
`
`(2)
`
`Investigation of the Scope of the Patent/Good Faith Belief
`Regarding Defenses
`
`Plaintiffs contend that there is no competent evidence that Defendant had a
`
`good faith belief that the ‘552 patent was invalid or that Defendant did not infringe
`
`upon the ‘552 patent after first seeking competent legal advice prior to launching its
`
`product in the marketplace. (Doc. 168, pp. 6—7).5
`
`Defendant claims that the uncontroverted trial testimony demonstrates that its
`
`intention was always to avoid infringement of the ‘55 2 patent and that it affirmatively
`
`attempted to do just that. As cited above, Defendant offers the testimony of its chief
`
`engineer, Mr. Scott Johnson, that Defendant was aware of and carefully examined the
`
`‘552 patent as it developed the EPS8000 to make sure that it did not infringe. Mr.
`
`Johnson was asked who provided guidance to Defendant in the “engineering process
`
`to not build a device to not infringe?” (Trial Tr. Doc. 173, p. 10: lines 6-9). Mr.
`
`Johnson responded that they had a “large body of people that reviewed these things
`
`.
`
`.
`
`. engineering staff, medical staff,
`
`.
`
`. .regulatory staff.” (Trial. Tr. Doc. 173, p. 10:
`
`lines 10-13).
`
`Defendant’s President and CEO, Mr. James Gibson, also testified at length
`
`about the composition of Defendant’s development team and elaborated on the
`
`5 The focus of this Read factor is on Defendant’s good faith belief in its defense.
`Thus, the Court has confined its analysis to the testimony of Defendant’s expert, Dr. Barry
`Feinberg and its chief engineer, Mr. Scott Johnson. The competing claims of the parties’
`experts will be addressed under Read factor No. 5, Closeness of the Case.
`
`16
`
`

`
`Case 8:O6—cv-O1790—VMC—EA.J
`
`Document 186
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`Filed 09/22/2009
`
`Page 17 of31
`
`processes that it went through when deciding to make the EPS 8000, which included
`
`receiving input from its internal engineering and production departments, as Well as
`
`information from clinicians and a heavily credentialed medical advisory board. (Trial
`
`Tr. Doc. 173, p. 27: lines 1-30: line 5).
`
`Defendant claims that
`
`it mounted a substantial
`
`invalidity and lack of
`
`infringement defense at trial. Defendant cites to testimony from its expert, Dr. Barry
`
`Feinberg, that it did not infringe on the ‘552 patent and that the ‘552 patent was
`
`invalid for lack of enablement.6 At trial, Dr. Feinberg testified about his credentials.
`
`Dr. Feinberg has forty years experience as a biomedical engineer and has served as
`
`an expert Witness in twenty-six patent cases (Trial Tr. Doc. 172, p. 187: line 24-p.
`
`188: line 10). Dr. Feinberg also testified that he studied the ‘552 patent extensively
`
`(Trial Tr. Doc. 172, p. 188: lines 23-24 and p. 202: lines 21-23) and participated in
`
`every phase of the EPS8000‘s development, including testing for the reports and
`
`programs (Trial Tr. Doc. 172, p. 202: line 25 — p. 203: line 9).
`
`After extensive questioning from Defendant’s counsel
`
`that
`
`included a
`
`6 As part of its defense against Plaintiffs’ claim of patent infringement, Defendant
`argued that claims 1, 3 and 5 of the ‘552 patent were invalid for lack of enablement. As
`explained in Jury Instruction No. 8, enablement means that “[t]he written description set
`forth in a patent must disclose sufficient information to enable or teach one skilled in the
`field of the invention to make and use the full scope of the claimed invention. This
`requirement is known as the enablement requirement. If a patent claim is not enabled, it is
`invalid.” (Doc. 167, Jury Instruction No. 8).
`
`17
`
`

`
`Case 8:06-cv—01790—VMC-EAJ
`
`Document 186
`
`Filed 09/22/2009
`
`Page 18 of 31
`
`demonstration of the EPS8000, Dr. Feinberg testified that the EPS8000 did not
`
`infringe the ‘552 patent and that the ‘552 patent was invalid based on the theory of
`
`enablement.
`
`Defendant claims that even if “such a defense proves unsuccessful [this] does
`
`
`not establish that infringement was willful.” (Doc. 170 at p. 5, citing to TGIP Inc. v
`
`AT&T Corp., 427 F.Supp. 2d 561, 579 (ED. Tex. 2007)).
`
`One way to establish a good faith basis for a belief that a product does not
`
`infringe or that the subject patent is invalid is to obtain and rely upon an independent
`
`written opinion from a pat

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