Geigtech East Bay LLC v. Lutron Electronics Co., Inc.

Background

After two trials, two post-trial motions remained. Lutron moved for judgment as a matter of law on damages under Federal Rule of Civil Procedure 50. GeigTech moved for enhanced damages, prejudgment interest, post-judgment interest, and costs.

The jury had awarded GeigTech $2,672,000 as a reasonable royalty for Lutron’s infringement of GeigTech’s patent. A reasonable royalty is the amount the parties hypothetically would have agreed upon for use of the patented technology. GeigTech’s expert proposed $4,052,302, while Lutron’s expert proposed approximately $400,000.

Lutron’s Motion for Judgment as a Matter of Law

A judgment as a matter of law may be entered only when a reasonable jury would lack a legally sufficient basis for its verdict. Judge McMahon viewed the evidence in the light most favorable to GeigTech and held that the jury had sufficient evidence to award $2,672,000.

The court rejected Lutron’s argument that the jury improperly used the entire market value rule. That rule can allow a patent holder to base damages on the value of an entire product when the patented feature drives customer demand or substantially creates the product’s value. The court found evidence that the appearance of GeigTech’s wire-hiding bracket drove demand for exposed shading systems, including testimony from GeigTech witnesses and testimony from a Lutron employee about customers choosing competing systems based on appearance.

The court also rejected Lutron’s attempt to reconstruct the jury’s calculation by working backward from the verdict. It held that the jury’s amount did not establish that the jury used an unlawful calculation. In addition, the jury had been allowed to apportion damages—meaning award only the value attributable to the patented bracket—if it did not apply the entire market value rule. GeigTech therefore had not given up the possibility of an apportionment-based award.

The court concluded that the jury’s award was not grossly excessive, unsupported by the evidence, or based only on speculation. Lutron’s motion for judgment as a matter of law on damages was DENIED.

Enhanced Damages

The Patent Act permits a court to increase damages for egregious infringement by up to three times the jury’s award. Judge McMahon evaluated nine factors identified in Read Corp. v. Portec, Inc.

The court found that these factors supported enhancement: Lutron deliberately copied GeigTech’s patented bracket; Lutron’s size and financial condition favored an award; the duration of the misconduct and Lutron’s remedial action slightly favored enhancement; and Lutron’s motivation as a direct competitor favored enhancement. The court described evidence that Lutron employees obtained access to GeigTech products through deception and that an internal project sought to create brackets similar to GeigTech’s.

The court found that Lutron’s good-faith belief concerning patent validity or infringement weighed against enhancement. Litigation behavior was neutral. The closeness of the case weighed against enhancement because Lutron had pursued substantial and partly successful defenses. The lack of an effort to conceal the infringement also weighed against enhancement.

Balancing these factors, the court granted GeigTech’s motion for enhanced damages but did not impose the maximum increase. It enhanced the $2,672,000 jury award by a factor of two, producing a total damages award of $5,344,000.

Interest and Costs

The court declined to postpone its rulings on interest and costs because of GeigTech’s pending appeal. It granted prejudgment interest at the 52-week Treasury Bill rate, compounded annually, and limited that interest to the $2,672,000 compensatory portion of the award. It also granted post-judgment interest under 28 U.S.C. § 1961, applying it to the entire judgment, enhanced damages, prejudgment interest, and any awarded costs.

The court reserved ruling on costs because GeigTech had not yet submitted a bill of costs. GeigTech was ordered to submit that bill within 10 days and to submit a proposed final judgment.

Disposition

Judge Colleen McMahon ordered that: Lutron’s motion for judgment as a matter of law was DENIED; GeigTech’s motion for enhanced damages was GRANTED, with a two-times enhancement and a total award of $5,344,000; GeigTech’s motions for prejudgment and post-judgment interest were GRANTED on the stated terms; and the court RESERVED on GeigTech’s motion for costs pending submission of a bill of costs.