Am. Technical Ceramics Corp. v. Presidio Components, Inc.

490 F.Supp.3d 593

AMERICAN TECHNICAL CERAMICS CORP. and AVX Corporation, Plaintiffs,

v.PRESIDIO COMPONENTS, INC., Defendant.

14-CV-6544 (KAM) (GRB)

United States District Court, E.D. New York.

Signed September 23, 2020

Brad Michael Scheller, Timur E. Slonim, Peter Francis Snell, Vincent M. Ferraro, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., New York, NY, Harold Stewart Laidlaw, Flushing, NY, Heather Repicky, Ronald E. Cahill, Nutter McClennen & Fish LLP, Boston, MA, for Plaintiffs.

Brett Schatz, Charles H. Brown, Gregory Ahrens, Wood, Herron & Evans, L.L.P., Cincinnati, OH, Jeremy D. Richardson, Freeborn & Peters LLP, New York, NY, for Defendant.

MEMORANDUM & ORDER

MATSUMOTO, United States District Judge:

On June 21, 2019, a ten-day patent infringement trial ended with a unanimous verdict finding defendant, Presidio Components, Inc. ("Presidio" or "Defendant"), liable for patent infringement. The jury determined that Presidio infringed patents held by plaintiffs, American Technical Ceramics Corp. ("ATC") and AVX Corporation ("AVX," and together with ATC, "Plaintiffs"), by making or selling over 15 million Buried Broadband ("BB") capacitors, between November 6, 2008 and January 9, 2017. The jury awarded royalty damages to Plaintiffs totaling $738,981.75, but awarded no lost profits, and rejected each defense raised by Presidio, save one, not at issue here.¹ Neither party is entirely satisfied with the trial's outcome. Each now moves to challenge the verdict.

Plaintiffs are convinced the jury erred when calculating damages based on a reasonable royalty rate, resulting in a grossly inadequate award. Their theory defies simple explanation, but may be summarized as follows. During Plaintiffs’ summation, their counsel advocated for both a lost profits measure of damages, and a reasonable royalty. Although Plaintiffs preferred lost profits, which would have conferred a larger award, counsel was forced to acknowledge that a small subset of the infringing units, about one-fifth of the total, were ineligible for lost profits, either because Presidio did not sell them, or because Plaintiffs did not offer a competing product. For this smaller tranche of capacitors, Plaintiffs sought a reasonable royalty, the statutory floor for infringement damages. Plaintiffs’ counsel urged the jury to adopt a $0.25 royalty rate, and provided the jury with the specific damages amounts for each patent that would inevitably result should the jury apply the proposed royalty rate to the smaller subset of accused products.

Alas, the verdict reflected the very damages figures stated by Plaintiffs’ counsel, to the penny. Much to Plaintiffs’ chagrin, however, these damages figures, proposed to the jury exclusively for about one-fifth of the units, comprised the entirety of Plaintiffs’ damages award. The reasonable inference, Plaintiffs assert in post-trial submissions, is that the jury settled on a $0.25 royalty rate, but, in effect, omitted the bulk of infringing units from its calculations. If so, this error was a statutory violation, as patent law requires no less than a minimum royalty for each infringing unit. Plaintiffs insist the jury's manifest error must be rectified and, therefore, move for a new trial on the issue of damages, pursuant to Federal Rule of Civil Procedure 59(a), or, alternatively, an amended judgment under Rule 59(e). (ECF No. 220-1, Plaintiffs’ Memorandum of Law in Support of Plaintiffs’ Motion for a New Trial on Damages or an Amended Judgment ("Pls.’ Mot.").)²

Presidio challenges the verdict in two respects: the jury's findings of infringement, and its rejection of Presidio's anticipation defense with respect to one of the patent claims. Thus, Presidio moves for judgment as a matter of law ("JMOL"), pursuant to Rule 50(b) of the Federal Rules, or alternatively, a new trial. (ECF No. 227-1, Defendant Presidio Components, Inc.’s Memorandum in Support of Motion for Judgment as a Matter of Law and a New Trial ("Def.’s Mot.").)³ Plaintiffs oppose the motion.

In addition, Plaintiffs are seeking supplemental damages for Presidio's continuing infringement after the time period considered at trial, pre- and post-judgment interest, and taxable costs.⁴ (ECF No. 226-1 (UNDER SEAL), Plaintiffs’ Memorandum in Support of Plaintiffs’ Motion for Supplemental Damages, Pre- and Post-Judgment Interest, and Costs ("Pls.’ Dmgs. Mot.").)⁵ As with Plaintiffs’ motion for a new trial, Presidio opposes the bulk of the damages and fees Plaintiffs now seek.

For the reasons that follow, the court: (1) GRANTS Plaintiffs’ motion for a new trial with respect to royalty damages; (2) DENIES Plaintiffs’ motion for a new trial with respect to lost profits damages; (3) DENIES Plaintiffs’ motion for an amended judgment increasing royalty damages; (4) DENIES Presidio's motion for JMOL and a new trial in its entirety; and (5) GRANTS in part, and DENIES in part, Plaintiffs’ motion for supplemental damages, pre- and post-judgment interest, and taxable costs, as set forth in greater detail below.

BACKGROUND

I. The Parties and Patents-in-suit

Plaintiffs commenced this action on November 6, 2014 (ECF No. 1, Complaint ("Compl.")), accusing Presidio of infringing United States Patent No. 6,144,547 ("'547 Patent"), and United States Patent No. 6,337,791 (" '791 Patent," together with the '547 Patent, the "Patents-in-suit"). (See generally Compl.; see also ECF No. 1-3, Compl., Ex. 1 (annexing Patents-in-suit).)⁶ ATC is a wholly-owned subsidiary of the publicly traded AVX Corporation, and is based in Huntington Station, New York. AVX owns the '547 Patent, which it licensed to ATC in November 2014, and ATC owns the '791 Patent. (See ECF No. 79, Claim Construction Order ("Cl. Constr. Order") 2.) Presidio is a privately-owned company based in San Diego, California.

The parties are manufacturers of electrical devices, such as capacitors. (Cl. Constr. Order 2) Capacitors are electronic components that store and release energy within a circuit, and are used in a variety of electrical systems, including consumer electronics. (Id. ) Capacitors typically consist of two parallel conductive, usually metal, plates separated by a non-conductive, insulating material known as a "dielectric." (Id. )

The Patents-in-suit describe "multilayer ceramic capacitors" ("MLCCs"), which are created through the combination of multiple capacitors by stacking several layers of conductive material and non-conductive, or dielectric, material. (Cl. Constr. Order 2-3.) All parties manufacture and sell MLCCs. (Id. 3.) Defendant manufactures products known as BB capacitors, which Plaintiffs contend practice and infringe the Patents-in-suit. Plaintiffs filed the Complaint seeking, inter alia , a judgment that Presidio infringed the Patents-in-suit, damages arising from the alleged infringement, an award of attorneys’ fees pursuant to 35 U.S.C. § 285, injunctive relief prohibiting Presidio from engaging in further infringement, an accounting, and an award of interest and costs. (Compl. 5-6.)

Four-and-a-half years after this case began, during which time the parties engaged in extensive discovery, inter partes review, two claim construction hearings pursuant to Markman v. Westview Instruments, Inc. , 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996), and cross-motions for summary judgment, the case proceeded to trial. Over the span of two weeks, Plaintiffs presented evidence to a jury that Presidio infringed the Patents-in-suit, and sought damages commensurate with Plaintiffs’ economic injury. (See Minute Entries dated 6/10/2019 to 6/21/2019.)

II. The Trial

A. The '791 Patent

1. Infringement of Claim 2

Claim 2 of the '791 Patent ("Claim 2") requires "second dielectric layer length and the second dielectric layer width dimensions co-extensive with the first dielectric layer length and the first dielectric layer width dimensions respectively of the first dielectric layer ...." (ECF No. 227-2, '791 Patent, col. 4, ll. 40-45 (emphasis added).) At trial, the parties disputed whether Presidio's BB capacitors satisfied the "co-extensive" requirement, as well as other limitations in Claim 2.

Presidio's technical expert, Dr. Michael Randall, testified that Presidio's BB capacitors do not meet the "co-extensive" requirement, and therefore, do not infringe Claim 2. Dr. Randall relied, in part, on close-up images of allegedly infringing capacitor chips. The exemplar immediately below, upon which Defendant relied, magnified the bottom right and bottom left corners of a capacitor chip to illustrate that the first and second dielectric layers are not equal in length and, therefore, are not co-extensive:

(ECF No. 227-3, Plaintiffs’ Ex. PDX-005.127; see also ECF No. 227-6, Trial Ex. CQ (close-up images of dielectric layers).) Dr. Randall, advancing his conclusion that the lengths of the dielectric layers in the accused devices are not co-extensive, emphasized the non-overlapping red and blue line markers extending from the widest extent of the first and second dielectric layers. (Tr. 1893:13-21.)⁷

Furthering that point, Mr. Alan Devoe, Presidio's President and corporate designee, described the impact of Presidio's "corner rounding" process, and how it results in a first and second dielectric layer with different dimensions. (Tr. 1148-63.) Corner rounding, explained Mr. Devoe, is an "important" and time-consuming aspect of Presidio's capacitor manufacturing process, designed to minimize damage to the ceramic capacitors when they collide with one another. (Id. ) As Mr. Devoe elaborated at trial:

[T]he ceramic of the capacitor is very delicate.... [T]here are a lot of ceramics that are very strong in this world; maybe like what we use for our dishes, that kind of thing. But the ceramic for the capacitors has been optimized to give good electrical properties as the primary objective, and then it's just not the strongest ceramic in the world.

... [T]he problem with a sharp corner is that as we're processing the parts, the

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