Transamerica Life Ins. v. Lincoln Nat. Life Ins.

625 F.Supp.2d 702

TRANSAMERICA LIFE INSURANCE COMPANY, Western Reserve Life Assurance Co. of Ohio, and Transamerica Financial Life Insurance Company, Plaintiffs, v. LINCOLN NATIONAL LIFE INSURANCE COMPANY, Defendant.

No. C 06-110-MWB.

United States District Court, N.D. Iowa, Cedar Rapids Division.

June 8, 2009.

Gregory M. Lederer, Lederer Weston Craig PLC, Cedar Rapids, IA, James R. Myers, John K. Felter, Ropes & Gray, LLP, Washington, DC, Mark Henry Bloomberg, Ropes & Gray, LLP, New York, NY, for Plaintiffs.

Came Marie Raver, Dale Randall Brown, Gary C. Furst, Barnes and Thomburg

LLP, Fort Wayne, IN, Dennis P. Stolle, Barnes and Thornburg LLP, Indianapolis, IN, Denny M. Dennis, Todd A. Strother, Bradshaw Fowler Proctor Fairgrave, Des Moines, IA, for Defendant.

MEMORANDUM OPINION AND ORDER REGARDING POST-RIAL MOTIONS

MARK W. BENNETT, District Judge.

TABLE OF CONTENTS
I. INTRODUCTION ........................................................... 704
II. LEGAL ANALYSIS ......................................................... 705
    A. Transamerica's Renewed Motion For Judgment As A Matter Of Law ....... 706
       1. Arguments of the parties ......................................... 706
       2. Applicable standards ............................................. 707
       3. Analysis ......................................................... 709
          a. Infringement and damages ...................................... 709
          b. Invalidity .................................................... 709
              i. Waiver .................................................... 709
             ii. Merits .................................................... 710
    B. Transamerica's Alternative Motion For New Trial ..................... 712
       1. Arguments of the parties ......................................... 712
       2. Applicable standards ............................................. 712
       3. Analysis ......................................................... 713
    C. Lincoln's Post-Trial Motions ........................................ 714
       1. The motion for permanent injunction .............................. 714
          a. Arguments of the parties ...................................... 714
          b. Analysis ...................................................... 716
              i. The four-factor equitable test ............................ 716
             ii. Irrelevant considerations ................................. 717
            iii. Application of relevant factors ........................... 718
          c. Language of the permanent injunction .......................... 719
                   i. Lincoln's proposed language .......................... 719
                  ii. Transamerica's comments .............................. 720
                 iii. Analysis ............................................. 720
       2. Lincoln's motion for prejudgment interest ........................ 724
                a. Arguments of the parties ................................ 724
                b. Analysis ................................................ 724
III. CONCLUSION ............................................................ 726

I. INTRODUCTION

On February 13, 2009, after a nine-day trial and a day of deliberations in this patent infringement lawsuit, the jury handed down a verdict in favor of Lincoln on its claims of infringement by Transamerica of independent claim 35 and dependent claims 36 through 39 and 42 of "the '201 patent."¹ The jury awarded a "total reasonable royalty" of $13,098,349 for Transamerica's past infringement, at a "royalty rate" of 11 base points, and a "base" of $11,907,589,871. The jury also rejected Transamerica's claims of invalidity of the '201 patent for "anticipation," "obviousness," and "inadequate written description." See Verdict Form (docket no. 276). On February 18, 2009, a Judgment On Jury Verdict (docket no. 278) was entered accordingly on Lincoln's damages claim, with interest to accrue at the legal rate from February 13, 2009, but that Judgment stated that it did not resolve all of the claims or counterclaims at issue in this case. On February 23, 2009, the court entered a written Order (docket no. 279) reiterating the court's oral extension of the parties' deadlines for post-trial motions on the jury's verdict to and including March 30, 2009, and clarifying that the Judgment On Jury Verdict (docket no. 278) was not, and was not intended to be, an appealable judgment on less than all of the claims within the meaning of Rule 54(b).

This matter comes before the court pursuant to the following post-trial motions: (1) Lincoln's March 4, 2009, Motion For Permanent Injunction And Alternative Relief (docket no. 280); (2) Lincoln's March 4, 2009, Motion For Prejudgment Interest (docket no. 281); and (3) Transamerica's March 30, 2009, Renewed Motion For Judgment As A Matter Of Law Or, In The Alternative, Motion For New Trial Or Motion To Alter Or Amend Judgment (docket no. 299). Pursuant to orders setting deadlines for responses to these motions, Transamerica filed a Brief In Support Of Resistance To Lincoln's Motion For Prejudgment Interest (docket no. 300) and a Brief In Support Of Resistance To Lincoln's Motion For Permanent Injunction And Alternative Relief (docket no. 301) on April 6, 2009, and Lincoln filed a Reply In Support Of Its Motion For Permanent Injunction And Alternative Relief (docket no. 304) on April 21, 2009, and a Reply In Support Of Its Motion For Prejudgment Interest (docket no. 305) on April 22, 2009. On May 20, 2009, the court entered an Order (docket no. 309) setting a deadline of May 28, 2009, for Lincoln to submit a proposed permanent injunction order and a deadline of June 4, 2009, for Transamerica to file any comments on the language of Lincoln's proposed order.² Lincoln filed its Proposed Permanent Injunction (docket no. 310) on May 28, 2009, and Transamerica filed its Comments on the proposed order (docket no. 312) on June 4, 2009. On May 11, 2009, Transamerica filed its Unresisted Motion (1) To Withdraw Motion To Alter Or Amend Judgment And (2) To Revise Brief In Support Of Resistance To Lincoln's Motion For Prejudgment Interest (docket no. 306), identifying specific parts of the pertinent motions and briefs that it was withdrawing. The court granted that motion by Order (docket no. 307) dated May 13, 2009. Lincoln then timely filed its Resistance To Transamerica's "Renewed" Motion For Judgment As A Matter Of Law Or, In The Alternative, Motion For New Trial (docket no. 308) on May 14, 2009, and Transamerica timely filed its Reply To Lincoln's Resistance To Transamerica's Renewed Motion For Judgment As A Matter Of Law Or, In The Alternative, Motion For New Trial (docket no. 311) on June 4, 2009.

Although the parties requested oral arguments on some of these motions, the court has not found oral arguments on any of the post-trial motions to be necessary. Therefore, the post-trial motions are now deemed fully submitted.

II. LEGAL ANALYSIS

Logically, the court should first resolve Transamerica's post-trial motion for judgment as a matter of law (JMOL) and, in the alternative, new trial. If Transamerica's motion is granted, in whole or in part, then there is no reason for the court to determine whether or not Lincoln is entitled to either prejudgment interest or a permanent injunction.

A. Transamerica's Renewed Motion For Judgment As A Matter Of Law

1. Arguments of the parties

Transamerica explains that it is "renewing" its motion for JMOL pursuant to Rule 50 of the Federal Rules of Civil Procedure that it does not infringe the asserted claims of the '201 patent; that it is not liable for any damages; and that all asserted claims are invalid under 35 U.S.C. §§ 103(a) ("obviousness") and 112 ("inadequate written description"). More specifically, Transamerica seeks JMOL of non-infringement, first, on purely legal grounds, arguing that Lincoln's unfounded assertions of future hypothetical infringement are legally insufficient to carry the burden of proving infringement. Transamerica also seeks JMOL of non-infringement on insufficiency of the evidence to support a finding of infringement, arguing that Lincoln did not introduce any evidence to prove that Transamerica performed all of the steps of the claimed computerized method to administer variable annuity riders; that the undisputed evidence demonstrated that Transamerica has not performed and could not perform step (e) of claim 35, because its Vantage computer system has not and would not make any scheduled payments "even if" a rider's account value might become exhausted; and that Lincoln presented no evidence that Transamerica performed or is "necessarily required or obligated" to perform step (e) of claim 35 before the '201 patent expires.

Transamerica also argues that the jury's damages award is excessive, because the damages awarded were both improper and insufficiently supported by the evidence. Transamerica contends that the damages award must be reduced, because it did not perform step (b) of claim 35 during the term of the '201 patent for 46% of the riders (representing 57% of the damages awarded), because those riders were issued, and the Maximum Annual Withdrawal Amount ("MAWA") on which the "initial scheduled payment" for those riders was based was determined, before the '201 patent issued on August 8, 2006. Transamerica also contends that the damages award must be reduced, because Transamerica has not performed and is not "necessarily required or obligated" to perform step (c) of the method claimed in claim 35 for 79% of the riders, where Transamerica has not made, and is not required or obligated to make, a single scheduled payment under those riders.

As to its "invalidity" defenses, Transamerica argues that, when the undisputed evidence is weighed and, in particular, when the May 5, 1998, Manulife SEC filing (DTX 1388) ("Manulife...