The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
The Plaintiffs, Aero Products International, Inc. ("Aero") and
Robert B. Chaffee, filed suit against the Defendants, Intex
Recreation Corporation ("Intex"); Quality Trading, Inc.; and
Wal-Mart Stores, Inc. Presently before the Court is Plaintiffs'
Motion to Enter Supplemental Damages Calculation.
On February 25, 2004, a jury found Intex liable for Plaintiffs'
patent, United States Patent No. 5,367,726 ("the '726 patent").
In a general verdict, the jury awarded $2,950,000.00 in damages
for the patent infringement. The jury also found that Intex's
infringement was willful. After the infringement and willfulness verdicts, Intex was
ordered to pay double the patent damages awarded by the jury,
pursuant to 35 U.S.C. § 284. Aero Prods. Int'l v. Intex
Recreation Corp., No. 02 C 2590, 2004 WL 1696749 (N.D. Ill. July
On September 15, 2004, Intex was enjoined from: (1)
manufacturing new mattresses which incorporate a valve that
infringes the '726 patent and (2) selling products bearing
product numbers prohibited by the injunction. Aero Prods. Int'l
v. Intex Recreation Corp., No. 02 C 2590, 2004 WL 2091996 (N.D.
Ill. Sept. 16, 2004); Aero Prods. Int'l v. Intex Recreation
Corp., No. 02 C 2590, 2004 WL 2255984 (N.D. Ill. Sept. 16,
2004). Thereafter, Plaintiffs filed a motion for contempt,
contending that Intex violated the injunction by: (1) selling
products with product numbers prohibited by the injunction; and
(2) selling another product that infringes the '726 patent, the
"G1" mattress, which was not part of the jury trial.
On December 15, 2004, Intex was ordered to immediately cease
and desist selling products bearing prohibited product numbers;
and a hearing was set to determine whether Intex violated the
injunction. Aero Prods. Int'l v. Intex Recreation Corp., No. 02
C 2590, 2004 WL 2958688 (N.D. Ill. Dec. 16, 2004). On May 11,
2005, Intex was found in contempt for selling products bearing
the product numbers prohibited by the injunction and for selling
the G1 mattress. The contempt order required Intex to account for
all products sold in violation of the injunction. Ruling was
reserved on the issue of damages for the sale of these products. Plaintiffs' Motion to Enter Supplemental Damages Calculation
Plaintiffs seek royalties and prejudgment interest for: (1)
sales of the infringing mattress made between January 1, 2004
through September 15, 2004; and (2) sales of the G1 mattress,
which was found to violate the injunction. The proper damage
measure for sales of products bearing the prohibited product
numbers must also be determined.
Plaintiffs seek both a 13.5 percent royalty rate, double
damages, and prejudgment interest on sales of infringing
mattresses made between January 1, 2004 through September 15,
2004. Under 35 U.S.C. § 284, "[u]pon finding for the claimant the
court shall award the claimant damages adequate to compensate for
the infringement, but in no event less than a reasonable royalty
for use made of the invention by the infringer, together with
interest and costs as fixed by the court." "A reasonable royalty
calculation envisions and ascertains the results of a
hypothetical negotiation between the patentee and the infringer
at a time before the infringing activity began." Integra
Lifesciences I, Ltd. v. Merck KgaA, 331 F.3d 860, 870-71 (Fed.
Cir. 2003) (citations omitted). The determination of a reasonable
royalty is committed to the discretion of the district court.
Golight, Inc. v. Wal-Mart Stores, Inc., 335 F.3d 1327, 1338
(Fed. Cir. 2004).
Intex argues that no evidence exists to support an a 13.5
percent royalty rate sought by Plaintiffs, as the evidence relied
upon at trial was only directed to sales occurring before 2004.
However, as discussed above, the computation of a reasonable
royalty contemplates a negotiation at a "time before the infringement began." Riles v. Shell
Exploration & Prod. Co., 298 F.3d 1302, 1311 (Fed. Cir. 2002).
Therefore, the evidence adduced at trial is sufficient to support
a 13.5 percent reasonable royalty on sales made between January
1, 2004 through September 15, 2004.
It is proper to use the royalty rate determined by the jury to
assess damages for the sales at issue in this motion. Stryker
Corp. v. Davol, Inc., 75 F. Supp. 2d 746, 747 (W.D. Mich. 1999);
Oscar Mayer Foods Corp. v. Conagra, Inc., 869 F. Supp. 656, 668
(W.D. Wis. 1994) (Oscar Mayer). Plaintiffs contend that when a
jury renders a general verdict, it is appropriate to extrapolate
a royalty rate from the general verdict. Oscar Mayer,
869 F. Supp. at 668.
Here, the jury awarded Plaintiffs a $2,950,000.00 general
verdict on $21,817,103.00 in sales. Dividing $2,950,000.00 by
$21,817,103.00 results in 13.5 percent ratio of royalty for the
use of the product to total sales. Accordingly, Plaintiffs are
awarded a reasonable royalty for the sales of all products
bearing the prohibited product numbers at the rate of 13.5
percent. Based on all the relevant evidence, the totality of the
circumstances, and considering all possible alternative
sanctions, the Court finds that a 13.5 percent royalty is
reasonable amount based on the reasonable probable harm to
Plaintiffs were awarded double the patent damages assessed by
the jury by the Court on the jury's finding of willfulness. Aero
Prods. Int'l v. Intex Recreation Corp., No. 02 C 2590, 2004 WL
1696749 (N.D. Ill. July 15, 2004). Intex does not dispute that
Plaintiffs should receive double damages for the sales made
between January 1, 2004 and September 15, 2004. Intex also does
not dispute that Plaintiffs should receive prejudgment interest
for these sales. Finally, Intex does not dispute the calculations
made by Plaintiffs regarding the royalty rate. Accordingly, Plaintiffs are awarded $469,018.00 as a reasonable royalty,
enhanced damages of $469,018.00, and prejudgment interest of
$6,733.00 for the sales of infringing mattresses made between
January 1, 2004 and September 15, 2004.
The remaining damage issues arising out of the contempt order
concern: (1) the proper damage measure for sales made between
September 15, 2004 and December 15, 2004, of mattresses bearing
product numbers prohibited by the injunction; and (2) royalties
and prejudgment interest on sales of the G1 ...