Patent Law

In an update to my August 26, 2009 post on the Krippelz v. Ford, Judge James B. Zagel issued a November 18, 2009 Memorandum Opinion and Order in the Jacob Krippelz, Sr. v. Ford Motor Company case in the Eastern Division of the United States District Court, N.D. Illinois.

Judge Zagel writes:

I am awarding $11,685,957 in prejudgment interest, calculated using an interest rate of prime plus 1%, compounded quarterly, on the first day following the quarter during which the royalties were actually earned. 

• During the ten-year period of infringement, Ford's long-term and short-term borrowing rate has averaged between .7% and 1.47% above prime. Because of the large risk of non-repayment, the rate of prime plus one percent is appropriate here.
• Ford has failed to demonstrate the existence of any special circumstance warranting a deviation from the norm put forth by the Seventh Circuit, and as a result, the interest in this case must be compounded.
•  Because Ford offers no argument as to why annual compounding is more appropriate in this case than quarterly, the interest award to Krippelz will be compounded quarterly.
• Had Ford been making quarterly royalty payments to Krippelz, they would have been based on sales made during each quarter, calculated at quarters' ends, and then paid to Krippelz...For this reason, interest should be compounded at the end of each quarter.
• ...taxes should not be deducted from Krippelz's award of prejudgment interest.

I am granting Krippelz's motion for costs.

In Read Corp. v. Portec, Inc., 970 F.2d 816, 827 (Fed.Cir.1992), abrogated in part on other grounds by Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed.Cir.1995) (en banc), the Federal Circuit set forth the factors for consideration in determining whether a plaintiff should be awarded enhanced damages for a defendant's willful infringement. I will discuss each factor in turn.

1. Whether the infringer deliberately copied the ideas or design of another (...this factor weighs against Ford and in favor of enhanced damages.)

2. Whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed (...enhanced damages)

3. The infringer's behavior as a party to the litigation (They do not necessitate the enhancement of damages.)

4. The defendant's size and financial condition (This factor is neutral.)

5. Closeness of the case (...in favor of enhancement.)

6. Duration of the defendant's misconduct (...in favor of enhancement.)

7. Remedial action by the defendant (...in favor of enhancement.)

8. Defendant's motivation for harm (...this factor is neutral.)

9. Whether the defendant attempted to conceal its misconduct (This factor is neutral.)

...of the nine Read factors, I have found that only five weigh in favor of enhancement, and the remaining are neutral. For this reason, I find doubled damages to be appropriate here. Because Ford's willfully infringing sales represent 91.38% of the total accused sales in this case, Krippelz is entitled to an additional $21,017,400, over and above the jury award of $23,000,000.

See the full opinion here.