Cobalt Boats, LLC v. Brunswick Corp.

296 F.Supp.3d 791

COBALT BOATS, LLC, Plaintiff,

v.BRUNSWICK CORP., Defendant.

Civil Action No. 2:15cv21

United States District Court, E.D. Virginia, Norfolk Division.

Signed October 31, 2017

Counsel for Plaintiff: David M. Gettings, Troutman Sanders LLP, 222 Central Park Ave, Suite 2000, Virginia Beach, VA 23462, Robert A. Angle, Troutman Sanders LLP, 1001 Haxall Point, Richmond, VA 23218, B. Scott Eidson, Samir R. Mehta, Stinson Leonard Street LLP, 7700 Forsyth Blvd., Suite 1100, St. Louis, MO 63105, Colin W. Turner, Penny R. Slicer, Stinson Leonard Street LLP, 1201 Walnut St., Suite 2900, Kansas City, MO 64106

Counsel for Defendants: David M. Morris, Morgan Lewis & Bockius LLP, 1111 Pennsylvania Ave NW, Washington, DC 20004, Jason C. White, Michael J. Abernathy, Scott D. Sherwin, Morgan, Lewis & Bockius LLP, 77 W. Wacker Dr., Suite 500, Chicago, IL 60601, Julie S. Goldemberg, Morgan Lewis & Bockius LLP, 1701 Market St., Philadelphia, PA 19103

OPINION & ORDER

HENRY COKE MORGAN, JR., SENIOR UNITED STATES DISTRICT JUDGE

This matter came before the Court pursuant to Plaintiff Cobalt Boats, LLC's ("Cobalt's") five (5) post-trial motions: (1) Motion to Amend Judgment to Include Supplemental Damages, Doc. 358 ("Motion for Supplemental Damages"); (2) Motion for Prejudgment Interest, Post-judgment Interest, and Damages for Continuing Infringement, Doc. 364 ("Motion for Interest and a Continuing Royalty"); (3) Motion for Enhanced Damages Pursuant to 35 U.S.C. § 284, Doc. 370 ("Motion for Enhanced Damages"); (4) Motion for Attorneys' Fees, Doc. 368; and (5) Motion for a Permanent Injunction Against Defendant Brunswick Corporation ("Brunswick"), Doc. 366 ("Motion for a Permanent Injunction"). On August 10, 2017, the Court heard arguments on these Motions. For the reasons stated herein, the Court GRANTS the Motion for Supplemental Damages; GRANTS prejudgment interest at the prime rate, compounded quarterly, from November 19, 2015 through June 23, 2017; GRANTS post-judgment interest in accordance with 28 U.S.C. § 1961(a) ; GRANTS a separate judgment for $257,500 which grants a royalty of $2,500 per unit for the one hundred and three (103) infringing boats after the jury verdict; GRANTS enhanced damages of a factor of 1.5 times compensatory damages; GRANTS the Motion for Attorneys' Fees; and GRANTS the Motion for a Permanent Injunction.

I. BACKGROUND¹

The Court held an eight (8) day trial in this matter between June 12, 2017 and June 21, 2017. See Docs. 317–337. The jury returned a verdict that Brunswick literally infringed claim 4 of U.S. Patent No. 8,375,880 ("the '880 patent"), infringed claims 4 and 5 of the '880 patent under the doctrine of equivalents, and willfully infringed both of those claims. The jury calculated the reasonable royalty per unit as $2,500, with an award of $2,690,000. Id. The Court entered judgment on June 23, 2017. Doc. 347.

Cobalt timely filed its post-trial Motions on July 21, 2017. Docs. 358, 364, 366, 368, 370.² The Parties filed a Joint Motion for Extension of Time to extend the deadline for responses and replies on the Motion for a Permanent Injunction. Doc. 377. The Court GRANTED the Motion and extended the deadlines until August 11, 2017 for a response and August 21, 2017 for a reply. Doc. 379. Brunswick responded to the other four (4) Motions on August 4, 2017. Docs. 380–83. Cobalt replied on August 10, 2017. Docs. 385–89. Brunswick responded to the Motion for a Permanent Injunction on August 11, 2017. Doc. 394. Cobalt replied in support of the Motion for a Permanent Injunction on August 21, 2017. Doc. 401. The Court ORDERED further necessary information from Brunswick on August 31, 2017. Doc. 406. Brunswick responded with an affidavit on September 29, 2017. Doc. 408.

II. LEGAL STANDARDS

Federal Rule of Civil Procedure 59(e) allows the Court "to alter or amend a judgment" if a motion is filed within twenty-eight (28) days after entry. Fed. R. Civ. P. 59(e). Federal Rule of Civil Procedure 54(d)(2) requires a party seeking attorney's fees to file a motion no later than fourteen (14) days after the entry of judgment, unless a statute or court order provides otherwise. Fed. R. Civ. P. 54(d)(2).

III. ANALYSIS

A. Motion for Supplemental Damages

Cobalt sought in this Motion to add two hundred and sixty (260) boats to the final judgment as the agreed number of boats with infringing swim steps that Brunswick sold from January 1, 2017 through June 23, 2017. Doc. 359 at 4. Brunswick reserved its opposition to the judgment in general but otherwise did not oppose this Motion. Doc. 380 at 1. Accordingly, the Court GRANTS the Motion for Supplemental Damages and added two hundred and sixty (260) boats to the final judgment, resulting in a final judgment of one thousand three hundred thirty six (1336) boats with infringing swim steps and $3,340,000 in compensatory damages when applying the jury's $2,500 royalty rate.

B. Motion for Interest and a Continuing Royalty

Cobalt sought prejudgment interest, post-judgment interest, and damages for continued infringement after the entry of judgment. Doc. 364. Cobalt sought prejudgment interest at the prime rate, compounded quarterly; post-judgment interest at the statutory rate; and a continuing royalty of $3,125 for any post-judgment infringing sales. Doc. 365 at 1. Brunswick reserved its opposition to the judgment in general, agreed that interest and continued damages are appropriate, and raised three (3) disputes regarding Cobalt's precise terms. Doc. 381 at 1–7.

i. Rate for Prejudgment Interest

The first dispute between the Parties concerned the appropriate interest rate for prejudgment interest. Cobalt sought the prime rate of interest for sales between April 2014 and June 23, 2017. Doc. 365 at 4. Brunswick argued that Cobalt must justify an award of the prime rate, has not provided any such justification, and as a result, was only entitled to the 52-week Treasury bill rate. Doc. 381 at 1–2. It further asserted that the 52-week Treasury bill rate "more accurately reflects what the patentee would have earned on any royalties." Id. at 3. Cobalt replied to note that the Federal Circuit does not apply any test for eligibility for the prime rate and that this District has never followed the other districts that apply such a test. Doc. 385 at 2–3. It defended its request for the prime rate by quoting the rationale for such an award in this District: "[the] prime rate best compensates 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." Morpho Detection, Inc. v. Smiths Detection, Inc., No. 2:11cv498, 2013 WL 5701522 at *1 (E.D. Va. Oct. 17, 2013).

"The rate of prejudgment interest and whether it should be compounded or uncompounded are matters left largely to the discretion of the district court." Bio–Rad Laboratories, Inc. v. Nicolet Instrument Corp., 807 F.2d 964, 969 (Fed. Cir. 1986) (citations omitted). The court must exercise such discretion "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." Id. at 967 (quoting General Motors Corp. v. Devex Corp., 461 U.S. 648, 655–56, 103 S.Ct. 2058, 76 L.Ed.2d 211 (1983) ). Cobalt correctly observes that the Federal Circuit does not require any test before a patentee may receive pre-judgment interest at the prime rate, and this District's opinion in Morpho Detection is persuasive as to why this Court should award the prime rate rather than following other districts that have created a test for it. Thus, the Court GRANTS pre-judgment interest at the prime rate. The Court also observed that an award of interest for the entire infringement period would overcompensate Cobalt because the infringing sales occurred over time, not all at the beginning of the infringement period. Because the Parties specified that April 2014 was the start of infringement, the Court selects the middle of the month, April 15, for a starting point, and calculates the date halfway between April 15, 2014, and the judgment date of June 23, 2017. Accordingly, the Court GRANTS prejudgment interest calculated starting November 19, 2015 and ending on June 23, 2017 in order to recognize that damages were diffuse throughout the period.

Brunswick also raised a conditional objection, arguing that prejudgment interest is not appropriate if the Court awards enhanced damages. Doc. 381 at 4. It contended that enhanced damages would adequately compensate Cobalt and that any prejudgment interest beyond that would be punitive. Id. Cobalt observed in reply that this District has previously awarded prejudgment interest limited to compensatory damages. Doc. 385 at 4 (citing NTP, Inc. v. Research in Motion, Ltd., 270 F.Supp.2d 751, 762–63 (E.D.Va. 2003) ). Because the Parties appear in agreement on the typical practice, the Court GRANTS prejudgment interest limited to the compensatory damages.

ii. Frequency of Compounding for Prejudgment Interest

The second dispute between the Parties concerned the frequency of compounding of prejudgment interest. Cobalt sought interest compounded quarterly, citing several examples of such an award in this District. Doc. 365 at 3–4. Brunswick did not dispute that compounding is appropriate, but it argued that Cobalt must prove its entitlement to compounding that is quarterly rather than annual. Doc. 381 at 3–4. Cobalt replies to note that no authority in this District has ever required some showing to obtain quarterly compounding. Doc. 385 at 3.

Because both Parties are arguing for a different default frequency of compounding, neither offers much analysis regarding why their preferred frequency is appropriate here. It appears that courts in this District routinely grant quarterly compounding in patent infringement cases. See, e.g., Morpho Detection, Inc., 2013 WL 5701522, at *1 ; I/P...