2003 | Cited 0 times | D. Minnesota | June 16, 2003



Plaintiff Itron, Inc. ("Itron") brought this declaratory judgment action against defendant Ralph Benghiat ("Benghiat") seeking a declaration that Itron's hand-held meter reading devices do not infringe Benghiat's patent. Benghiat, the owner of U.S. Patent No. 4,757,456 ("the '456 Patent") asserted a compulsory counterclaim for infringement against Itron. This case was tried before a jury and this Court in December 2002.

On December 20, 2002, the jury returned a special verdict, finding against Itron on its claims that the '456 Patent was unenforceable and invalid. The jury found in favor of Benghiat on his counterclaims that Itron directly infringed the '456 Patent, that Itron induced others to infringe the patent, and that Itron contributed to the infringement of the '456 Patent by another. The jury concluded that Itron was liable to Benghiat for damages in the amount of $7,407,050.00. Finally, the jury found that Itron willfully infringed the '456 Patent.

This matter is now before the Court on Itron's motion for judgment on the equitable question of laches, which was tried to the Court. Also pending is the Court's determination on whether to award Benghiat with enhanced damages for Itron's willful infringement, pursuant to 35 U.S.C. § 284.


I. Benghiat's Motion to Exclude Exhibits

Benghiat has moved to exclude three exhibits that Itron has submitted as part of its filings on laches and enhanced damages. The Court addresses each exhibit in turn.

A. Exhibit F to the Chadwick Declaration

Exhibit F is a photograph of Itron's Trial Exhibit No. 46, the Itron "DataCap H" device. The photograph is annotated with labels pointing to three particular buttons. Benghiat argues that the photograph may not be considered because the labels render the photograph an inaccurate duplicate of the original device. Itron argues that the labels are not intended to supplement or alter evidence already introduced, namely, Trial Exhibit 46. Rather, Itron contends, the labels are merely intended to illustrate certain parts of its laches argument. The Court agrees with Itron and finds that the labels do not render Exhibit F an inaccurate duplicate for the purposes of Itron's laches motion. Therefore, the Court denies Benghiat's motion to exclude Exhibit F to the Chadwick Declaration.

B. Exhibit H to the Chadwick Declaration

Exhibit H consists of excerpts from the transcript of the deposition of Rick Geiger. Benghiat objects to the Court considering this evidence now, arguing that Itron must produce a letter that Geiger discusses in his testimony. Itron responds that the testimony is not being submitted to show the truth of the matter discussed in the letter, but rather to show Itron's state of mind. The Court agrees that this is a proper purpose, and notes that Geiger's testimony on this matter was presented to the jury over Benghiat's objections. The Court will therefore consider the deposition transcript for the limited purpose of demonstrating Itron's state of mind, and not for the truth of the letters that Geiger discusses. Benghiat's motion to exclude Exhibit H to the Chadwick Declaration is denied.

C. Exhibit K to the Chadwick Deposition

Exhibit K is the Declaration of Jim Marek, an employee of Itron, dated August 10, 2000. Benghiat seeks to exclude this evidence, arguing that the Marek Declaration constitutes new evidence not submitted at trial, and that such evidence is barred in post trial motions under Rules 59 and 60 of the Federal Rules of Civil Procedure. This argument is misplaced. Rules 59 and 60 govern conventional post-trial motions filed after judgment has been entered in a case. The laches motion now before the Court is not a post-trial motion, but rather is an equitable trial question on which the Court must render judgment. Therefore, the "trial" on this question has not yet concluded. Benghiat suggests that the Court's statements during trial indicated that no more evidence was required on these questions, but the Court finds its statements to by misinterpreted by Benghiat. The Court indicated that if further briefing on laches and enhanced damages was needed, the Court would request it. The Court has now requested such briefing, and the parties have provided it. Therefore, statements about the "close of evidence" do not apply, and Benghiat's arguments regarding post-trial motions are inappropriate. The Court further finds that to the extent the Marek declaration may be inadmissible for other reasons, Benghiat has waived his right to object to the declaration because he has offered it as part of his arguments on these motions. Accordingly, the Court denies Benghiat's motion to exclude Exhibit K to the Chadwick Deposition.

II. Itron's Motion for Judgment on the Question of Laches

Itron's affirmative defense of laches is an equitable question, and was tried to the Court. See Aukerman Co. v. R.I. Cahides Constr. Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992) (en banc). On December 19, 2002, at the close of evidence in the trial, both parties also orally moved for judgment as a matter of law on the question of laches. The Court deferred ruling on these motions, and Itron has now moved in writing for judgment on this issue.

Laches is a well-established defense to a patent infringement claim, and its application is within the sound discretion of the district court. Id. at 1032. To invoke the laches defense, Itron must show that: (1) the patentee delayed in bringing an action for an unreasonable and inexcusable length of time after the patentee knew or reasonably should have known of the potential infringement; and (2) the delay results in material prejudice or injury to the accused infringer. Wanlass v. General Elec. Co., 148 F.3d 1334, 1337 (Fed. Cir. 1998); Gasser Chair Co. v. Infanti Chair Mfg. Corp., 70 F.3d 770, 773 (Fed. Cir. 1995).

A. Presumption of Laches

A rebuttable presumption of laches arises when a patentee fails to bring an infringement action more than six years after first acquiring knowledge of the potentially infringing activity. Aukerman, 960 F.2d at 1035-36. Itron claims that because Benghiat did not act to enforce his patent for more than six years, the presumption applies in this case. With the presumption, the Court must infer that Benghiat's delay in enforcing his patent was unreasonable and that Itron suffered material prejudice. Id. at 1037. If the presumption does arise, the burden then shifts back to Benghiat to introduce "a minimum quantum of evidence" that his delay was excusable, or that Itron did not suffer prejudice. Id. If Benghiat meets his burden, the presumption of laches "completely vanishes." Id.

Itron argues that the presumption applies here because Benghiat cannot prove that his delay was excusable or that Itron suffered no prejudice. ( See Itron Br. at 6-10.) This argument, however, holds Benghiat to an improperly high standard. Benghiat need not prove anything to rebut the presumption; he need only produce evidence that his delay was reasonable and excusable, or that Itron was not prejudiced. Id. Benghiat may rebut the presumption simply by "raising a genuine issue respecting either factual element of a laches defense." Id. at 1038. See Wanlass, 148 F.3d at 1337 ("Whenever the presumption arises..., the patentee's evidence must be sufficient to raise a genuine issue of material fact...." (emphasis added)). In its Order dated March 31, 2001, this Court found that genuine issues of material fact existed on the question of laches, and denied Itron's motion for summary judgment on that issue. See Itron, Inc. v. Benghiat, 169 F. Supp. 2d 1073 (D. Minn. 2001) ("March 2001 Order"). Thus, in defeating Itron's motion for summary judgment on laches, Benghiat destroyed any presumption of laches and left Itron to rely upon its evidence at trial. See Aukerman, 960 F.2d at 1038. Accordingly, the Court finds that the presumption of laches does not apply in this case.

The Court further finds that even if it had not considered laches at the summary judgment stage, Benghiat has met his burden here. The briefs clearly demonstrate that Benghiat has produced at least a "minimum quantum of evidence" on both the issues of delay and prejudice. ( See Benghiat 2/10/03 Br. at 3-8; Benghiat 2/24/03 Br. at 3-4, 8-10.) With this evidence, the "bubble" of the laches presumption has burst. See id.; Hemstreet v. Computer Entry Systems Corp., 972 F.2d 1290, 1293 (Fed. Cir. 1992). Therefore, in order to prevail on its defense of laches, Itron must affirmatively prove the facts of unreasonable delay and prejudice, and the Court must judge these facts on the totality of the evidence presented. Aukerman, 960 F.2d at 1038. See Maxwell v. J. Baker, Inc., 875 F. Supp 1371, 1389 (D. Minn. 1995), rev'd on other grounds, 86 F.3d 1098 (Fed. Cir. 1996) ("In determining whether the defense of laches applies, t he court takes into account all the particular facts and circumstances of the case and weighs the equities of the parties.")

B. Unreasonable Delay

The period of delay begins at the time that Benghiat had actual or constructive knowledge of Itron's infringing activities. Wanlass, 148 F.3d at 1337. Constructive knowledge of infringement may be imputed to a patentee even where he has no actual knowledge of conspicuous activities by the infringer, if such activities are "sufficiently prevalent in the [patentee's] field of endeavor." Id. at 1338. A patentee who is "negligently or willfully oblivious to these types of activities cannot later claim his lack of knowledge as justification" for escaping laches. Id. Because delay can be based upon constructive knowledge alone, a patentee like Benghiat has a duty to investigate "a particular product if and when publicly available information about it should have led [Benghiat] to suspect that product of infringing." Wanlass v. Fedders Corp., 145 F.3d 1461, 1466 (Fed. Cir. 1998).

Itron argues that Benghiat had constructive knowledge of its infringement because enough public information was available to put Benghiat on notice that Itron was a possible infringer. Itron's argument relies on the following pieces of information: Benghiat "knew of Itron at least as early as" 1980 (Itron Br. at 2); Benghiat analyzed an Itron patent (the "Newell Patent") in 1986 (Itron Br. at 2; Itron Reply at 3); "information regarding activities of companies in the industry" was publicly available (Itron Br. at 3; Itron Reply at 2); and Itron has long been the premier seller in the small market for utility meter reading devices, owning 80% of the market by 1998 (Itron Br. at 2; Itron Reply at 2). These facts, Itron claims, were enough to put Benghiat on notice that Itron was a likely infringer of his '456 Patent. The Court disagrees.

First, the Court does not agree that Benghiat's knowledge of Itron's existence in the marketplace should have put him on notice that Itron was infringing his patent.1 Itron contends that Benghiat knew about its existence as early as 1980, when both he and Itron bid to supply meter reading equipment to a municipality. This shows only that Itron was in the meter reading business, along with the eleven other companies listed on the bid sheet. ( See Chadwick Dec. Ex A.) Nothing about this evidence shows that Itron was creating a "particular product" that potentially infringed upon the unique features of the '456 Patent. See Fedders, 145 F.3d at 1466 (refusing to find laches where information available did not show that accused product had unique characteristics of patented device). In fact, the evidence shows that around 1980, Itron's meter reading device was not even similar to the device that Benghiat would ultimately patent. ( See Trial Tr. at 1031-36.)

Later information that Itron was the "industry leader" in handheld meter reading devices is similarly unavailing. Itron relies on this fact to show that Benghiat must have known that its devices were likely to infringe. However, Itron presents no hard evidence to show that any of its devices had the key characteristics that made Benghiat's device patentable, and which would have caused Itron to infringe the '456 Patent. In the absence of evidence that information on these characteristics was publicly available, Benghiat cannot be said to have constructive knowledge of any infringement. See Fedders, 145 F.3d at 1465 (refusing to find laches where there is no evidence that patentee knew accused device had same characteristics as patented device).2

Second, Itron contends that Benghiat should have suspected infringement because he analyzed Itron's Newell Patent in 1986 as part of the approval process for the '456 Patent. ( See Second Chadwick Dec. Ex. L at B00889.) As part of this critique, Benghiat acknowledged that Itron's device had "close similarities" to his device, the Meterlog. ( Id. ) He also noted, however, that it was missing several of the Meterlog's device's unique characteristics, such as its "efficient data structure" and "controls for random accessing any account address." ( Id. ) These unique characteristics, especially the "efficient data structure," are hallmarks of Benghiat's '456 Patent. See Itron, 169 F. Supp. at 1080, 1088-93 (construing the '456 Patent means responsive claims limitations). Thus, Benghiat's 1986 analysis actually shows how the Newell Patent is distinct from the '456 patent in the very features that allowed Benghiat's design to receive a patent. The Court therefore concludes that Benghiat's analysis of the Newell Patent was not sufficient to put him on notice that Itron would infringe the '456 Patent and its unique characteristics.

Finally, Itron argues that Benghiat should have suspected Itron of infringement because "information regarding activities of companies in the industry" was publicly available. (Itron Br. at 3; Itron Reply at 2.) This nebulous assertion cites Benghiat's testimony on how utility companies and device manufacturers discuss new technologies in the industry. ( See Trial Tr. at 389-90.) Nowhere in this testimony does Benghiat suggest that the "information" included specific details from which he might ascertain or suspect that Itron was infringing on his patent. In fact, Benghiat testified just the opposite, stating that the type of information necessary to determine whether a particular device infringed was closely guarded and impossible for him to obtain. ( See Trial Tr. at 348-49.)

Benghiat left the meter-reading industry in 1983. After that date he attended no trade shows and received no industry publications. This alone does not excuse Benghiat from being on alert for possible infringement of his patent. See Fedders, 145 F.3d at 1466 (holding that patentee "could not simply ignore any and all evidence of potentially infringing activity, even if neither he nor his company was... still active in the industry.") At the same time, however, Benghiat had no duty to investigate a particular product in the absence of publicly available information that would lead him to suspect infringement. Id. Itron may not rest on its size or market share; it must produce evidence showing that Benghiat should have been on notice, such as advertising, marketing, publication, or "other conspicuous activi ties of potential infringement." Wanlass, 148 F.3d at 1338. Itron has produced no evidence that any such activities were "sufficiently prevalent" in the field so as to place Benghiat on notice of possible infringement. Id.

The Court also notes Benghiat's claim that he did not have sufficient resources to continuously monitor the industry and police his patent rights. Poverty alone is never an excuse for laches purposes. Hall v. Aqua Queen Mfg., Inc., 93 F.3d 1548, 1554 (Fed. Cir. 1998) (citing Leggett v. Standard Oil Co., 149 U.S. 287) (1893)). However, poverty may be considered as a factor when there are other legally cognizable excuses for delay. Id.; Frank F. Smith Hardware Co. v. S.H. Pomeroy Co., 299 F. 554, 547 (2d Cir. 1924). The Court finds that, in addition to the valid reasons discussed above, Benghiat has shown that he did not have the resources necessary to pursue possible infringers of the '456 Patent.

Upon considering the totality of the evidence and weighing the equities in this case, the Court finds that Benghiat's delay in asserting his patent rights was reasonable and excusable due to Benghiat's long absence from the field, the fact that no public information could make him aware of possible infringement, and because Benghiat did not have sufficient resources to pursue infringement.

C. Material Prejudice

Itron also argues that Benghiat's delay caused it to suffer both economic and evidentiary prejudice. Economic prejudice may arise where a defendant suffers the loss of monetary investments or incurs damages that likely would have been prevented by an earlier suit to enforce the patent. Aukerman, 960 F.2d at 1033. To determine whether Itron has suffered economic prejudice, the Court must look for a change in its economic position during the period of Benghiat's delay. Id. Itron notes that during this period, sales of its infringing devices "increased substantially," and argues that this fact alone is sufficient to demonstrate economic prejudice. (Itron Br. at 9.) Itron's argument misstates applicable law. The Federal Circuit has unequivocally held that a mere change in the infringer's economic position is not enough to show economic prejudice. Hemstreet, 972 F.2d at 1294; ABB Robotics, Inc. v. Robotics Corp., 828 F. Supp. 1386, 1394-95 (E.D. Wis. 1993). Rather, the "change must be because of and as a result of the [patentee's] delay, not simply a business decision to capitalize on a market opportunity." Hemstreet, 972 F.2d at 1294 (emphasis added). "No economic prejudice can be established if this nexus is absent." ABB Robotics, 828 F. Supp. at 1395. Here, Itron provides no evidence of such a nexus. It shows nothing more than that its sales increased during the relevant period, and does not connect this growth to Benghiat 's delay. Therefore, the Court cannot find that Itron suffered economic prejudice.

Itron also alleges that it suffered evidentiary prejudice. Evidentiary prejudice may arise when an alleged infringer cannot "present a full and fair defense on the merits due to the loss of records, the death of a witness, or the unreliability of memories of long past events, thereby undermining the court's ability to judge the facts." Aukerman, 960 F.2d at 1033. Itron claims that it was prejudiced for several reasons. First, Itron contends that Benghiat could not remember key facts because of the long delay. Second, Itron notes that Benghiat had lost copies of correspondence from the municipal contract Benghiat and Itron sought in 1980. Itron claims that these documents "may have supported Itron's contention" that Benghiat knew of Itron as a competitor and that Itron was asked to "bid on devices with Benghiat's claimed features." (Itron Br. at 3-4.) Third, Itron claims prejudice from the destruction of documents related to a device created by the Datamatic company, arguing that such documents "may have shown that Datamatic's actions invalidated the ['456] patent." ( Id. ) Fourth, Itron claims prejudice from the death, disappearance, or unavailability of four witnesses: Bud Etter, Larry Cross, Bill Newell, and Cluro Newton. Itron claims that Etter, the late founder of the Porta-Processor company, "could have been able to provide testimony relating to Porta-Processor's earliest devices." ( Id. ) Itron claims that Cross, the late co-founder of Itron, "may have had evidence regarding Itron's early design and development." ( Id. ) Itron contends that Newell, another Itron founder whose whereabouts are unknown, "may have been able to confirm the existence of public uses or sales that would have invalidated the patent." ( Id. ) Finally, Itron claims prejudice because Newton, who suffered a debilitating stroke, was unavailable to testify as to prior art and invalidity regarding Porta-Printer.

The Court finds that Itron has not suffered evidentiary prejudice because the missing evidence did not prevent the company from presenting a full and fair defense on the merits. In fact, much of the evidence that Itron claims it lost through missing documents or deaths was presented at trial by other means. First, Itron contends that the 1980 municipal contracts on which both Benghiat and Itron bid "may" show that Itron bid on a project requiring a device with Itron's special features. However, at trial Benghiat offered uncontradicted testimony that the bids did not require any of his device's unique characteristics. (Trial Tr. at 353.) Next, as to the Datamatic device, the company's president and founder, Ken Kercher, testified in detail for Itron about the device, and the device itself was admitted into evidence. (Trial Tr. at 1314-30.) When asked whether the missing documents would help him in his testimony, Kercher testified that "it's hard to say." (Trial Tr. at 1320.) As for the missing witnesses, Itron claims that their testimony would involve the early design and development of the Porta-Processor device and Itron's Datamatic device. The record shows that these devices and their patents were introduced as evidence, and knowledgeable witnesses3 provided extensive testimony about the products and their history, design, and development.

The trial in this case lasted two weeks, and Itron presented voluminous evidence on all relevant issues through testimony, documents, and physical devices. The Court determines that Itron's allegations of evidentiary prejudice amount to little more than speculation that even more witnesses testifying on the same issues would materially enhance Itron's case or add crucial facts. The Court therefore concludes that Itron was able to "present a full and fair defense on the merits," and that it did not suffer material evidentiary prejudice through Benghiat's delay. Aukerman, 960 F.2d at 1033.

Because Itron has not proven that Benghiat's delay was unreasonable or inexcusable, and because Itron has not proven that it suffered material prejudice, Itron's laches claim fails. The Court will therefore deny Itron's motion for judgment on its affirmative defense of laches, and will grant judgment on that question for Benghiat.4

III. Enhanced Damages

The jury found that Itron willfully infringed the '456 Patent. This finding permits the Court to award Benghiat with as much as treble damages, pursuant to 35 U.S.C. § 284. The Court may also decide to award no damages, because a finding of willfulness does not mandate that damages be increased. Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cr. 1992). Benghiat now asks the Court to award him treble damages.

Determining whether to award increased damages is a two -step process. Transclean Corp. v. Bridgewood Services, Inc., 290 F.3d 1364, 1377 (Fed. Cir. 2002); Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 (Fed. Cir. 1996). The jury's finding of willfulness satisfies the first step. Transclean, 290 F.3d at 1377. For the second step, the Court exercises its discretion whether to increase damages. In doing so, the Court may consider a number of factors, including: (1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, upon learning of the patent, investigated and formed a good-faith belief that the patent was invalid or that it was not infringed; (3) the infringer's behavior as a party to the litigation; (4) the infringer's size and financial condition; (5) the closeness of the case; (6) duration of the infringer's misconduct; (7) remedial action by the infringer; (8) the infringer's motivation for harm; and (9) whether the infringer attempted to conceal its misconduct. Id. at 1377-78; Read Corp., 970 F.2d at 827.

In deciding whether to increase damages, the Court must consider Itron's conduct based on all the facts and circumstances. Read Corp., 970 F.2d at 826. Thus, the Court is not limited to the nine factors outlined in Read Corp., nor will each of the factors apply in every case. To ensure that all the facts have been explored, however, the Court will address each of the nine factors in turn. Upon considering these factors and the totality of the circumstances, the Court has decided not to enhance damages.

A. Deliberate Copying

To determine that Itron deliberately copied Benghiat's patented "ideas or design," the Court may not rest upon a finding that Itron copied the elements of the patent claim. Id. at 827 n.7. The Court must find, for example, that Itron copied the commercial embodiment of a patent. Id. Benghiat contends that Itron copied the functions of the '456 patent because those functions were demanded by the market. As proof, Benghiat claims that "Itron had access to information from which it could have copied the patented functions," and that Itron "most likely" had actual knowledge of the '456 Patent. (Benghiat Br. at 3-4.) In particular, Benghiat points to "a fairly thick file of patents... on the general subject of meter reading" that Itron apparently possessed, and "which would be expected to have included the '456 Patent."5 (Benghiat Br. at 4.) The Court finds this argument to be mostly speculation. Benghiat's only evidence about copying relates to business he conducted in 1980 and 1981. Benghiat alleges that he bid on some utility contracts, and that those utilities were aware of his new - but as yet unpatented -ideas and functions. Benghiat offers no evidence that Itron copied any of these ideas, but argues - presumably based on little more than Itron's existence - that Itron copied the ideas. However, Benghiat points to no evidence in the record that Itron actually copied anything. Most important, during the time that Benghiat alleges the copying took place, he had no patent. The '456 Patent was not issued until 1988.6 Thus, the Court finds no evidence of deliberate copying.

B. Investigation and Good Faith Belief of Invalidity or Non-Infringement

Once a potential infringer has actual notice of another's patent rights, she has an affirmative duty to exercise due care to determine whether she is infringing or whether the patent is valid. Minnesota Mining and Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., 976 F.2d 1559, 1580 (Fed. Cir. 1992) (" 3M "); Schneider (Europe) AG v. SciMed Life Sys., Inc., 852 F. Supp. 813, 856 (D. Minn. 1994). This duty normally requires the potential infringer to obtain competent legal advice on infringement or validity. 3M, 976 F.2d at 1580. The parties spend a considerable number of pages in their briefs arguing whether Itron did or did not meet these standards. However, these arguments are misplaced, as they do little more than invite the Court to revisit the jury's determination of willful infringement.

In all but one7 of the cases on which either party relies on this point, the district court, not a jury, determined the question of willfulness. See id.; Graco, Inc. v. Binks Mfg. Co., 60 F.3d 785 (Fed. Cir. 1995); Westvaco Corp. v. International Paper Co., 991 F.2d 735 (Fed. Cir. 1993); Read Corp., 970 F.2d 816; Ortho Pharmaceutical Corp. v. Smith, 959 F.2d 936 (Fed. Cir. 1992); Bott v. Four Star Corp., 807 F.2d 1567 (Fed. Cir. 1986); Underwater Devices Co. v. Morrison-Knudson Co, Inc., 717 F.2d 1380 (Fed. Cir. 1983); Schneider, 852 F. Supp. 813; Western Elec. Co. v. Piezo Technology Inc., 15 U.S.P.Q.2d 1401, 1409 n.25 (M.D. Fla. 1990); Shiley, Inc. v. Bentley Laboratories, Inc., 601 F. Supp. 964 (C.D. Cal. 1985). In those cases, therefore, the courts' decisions on enhanced damages were inextricably linked to their determinations on willfulness. See, e.g., Read Corp., 970 F.2d at 826. The parties' reliance on these cases thus suggests -erroneously - that because bad faith is implicit in any finding of willful infringement, enhanced damages must always flow from a finding of bad faith. Such a conclusion, however, ignores the law's clear direction that a finding of willful infringement does not mandate increased damages. See Johns Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1365 (Fed. Cir 1998) ("[A] finding of willful infringement does not mandate that the district court enhance damages; it merely authorizes the court to do so at its discretion.") Therefore, it is imperative for the Court to render its independent judgment on whether to enhance damages, accepting the jury's finding of bad faith as a part of the totality of the circumstances.

The only case upon which the parties rely in which a jury determined willful infringement is Jurgens v. CBK, Ltd., 80 F.3d 1566 (Fed. Cir. 1996). In that case, the Federal Circuit reversed the district court's refusal to increase damages, because the trial court's decision was based on its finding that the infringer sought advice of counsel.8 Id. at 1572. This finding implied that the infringer acted in good faith, so it was inconsistent with the jury's verdict that the infringer willfully infringed, that is, infringed in bad faith. Id. The court thus found that the decision not to enhance damages must be reversed because the district court "did not have discretion to reweigh the evidence about the competency of the opinion or [the infringer's] reliance on it." Id. In this case, the Court accepts the jury's determination that Itron infringed in bad faith, but it need not reweigh any evidence to refuse enhanced damages. Rather, as discussed above, the Court may accept the jury's finding of willfulness and still decide that, based upon the totality of the circumstances, damages should not be increased. See Transclean, 290 F.2d at 1377 (rejecting patentee's argument that district court abused its discretion in refusing to enhance damages in light of jury's finding of willfulness).

Therefore, the Court must not address the parties' competing arguments about good faith, reliance upon opinions of counsel, and the competence of those opinions.

Such arguments address the merits of the jury's willfulness determination, and are not properly made here.9 For the purpose of deciding whether or not to increase damages, the Court accepts the jury's verdict that Itron was aware of the '456 Patent and "had no reasonable basis to reach a good faith conclusion that its product did not infringe the '456 patent, or that the '456 patent was invalid." (Jury Instr. No. 51.)

C. Conduct During Litigation

Benghiat argues that Itron should be assessed enhanced damages because it "used bad faith litigation tactics since it could not win on the merits." (Benghiat Br. at 8.) Specifically, Benghiat claims that Itron threatened him, forced him to fly to Minnesota for a canceled deposition, concealed relevant information in discovery, moved to strike its trial counsel as witnesses, and generally "filed numerous motions as part of its bad faith scheme to drive up Benghiat's expenses of litigation...." (Benghiat Br. at 9.) The Court finds Benghiat's allegations to be without merit. Benghiat provides little legal authority for his accusations. The one instance for which he does provide authority, Itron's alleged "threat" to reduce the amount of its settlement offer, is not persuasive. Benghiat cites a case in which the Tenth Circuit found it "offensive" that a large alleged infringer threatened a smaller patentee with $150,000 in litigation expenses. See Lam, Inc. v. Johns-Manville Corp., 668 F.2d 462, 475 (10th Cir. 1982). The present case is not comparable. The Court finds that the alleged "threat" was simply part of the settlement and licensing negotiation process, and is not offensive in the way that the Tenth Circuit found in Lam. The Court also finds that the remainder of Benghiat's allegations represent his dissatisfaction with positions taken or strategies used by Itron. Simply because such actions may have bothered Benghiat, however, does not make them in bad faith. Moreover, most of Benghiat's allegations have already been addressed in some manner by this Court or by the Magistrate Judge. This litigation has been long and extremely complicated, and both sides have filed countless motions and engaged in various strategies designed to protect their clients' rights or advance their interests. While some of these maneuvers may have tried both parties' patience, the Court finds no evidence that Itron's tactics before, during, or after trial manifest bad faith or inequitable conduct. This factor thus weighs against increasing damages.

D. Itron's Size and Financial Condition

Benghiat next contends that Itron should be required to pay treble damages because it has sufficient cash on hand to do so, relying upon St. Regis Paper Co. v. Winchester Carton Corp., 410 F. Supp. 1304 (D. Mass. 1976). In that case, the court found that the defendant, a sole-proprietorship, willfully infringed upon the patent of the plaintiff, a larger company. Id. at 1309. That case, however, is inapposite. In St. Regis, the trial court decided to increase damages after finding egregious behavior by the defendant: he adopted the plaintiff's patented device shortly after it was introduced, then "made a mere show of abandoning it after formal notice, and offered a frivolous explanation at trial." Id. The parties' relative sizes came into play only in determining the extent of the enhancement. Because the infringer was so small, the Court decided only to double rather than treble the damages. Id. St. Regis thus has little applicability here. First, the egregious factors in that case are absent here. Second, simply because the judge in that case minimized damages to account for defendant's small size does not mean that this Court must maximize damages here to account for Itron's large size. Enhanced damages are designed to punish based upon culpability. See Jurgens, 80 F.3d at 1570; Lightwave Technologies, Inc. v. Corning Glass Works, 19 U.S.P.Q.2d 1838, 1848-49 (S.D.N.Y. 1991) (increasing damages based on infringer's culpability and appropriate compensation to patentee, but awarding double damages because infringer could not afford treble). They are not an automatic sliding scale based on ability to pay. Because the Court does not find that Itron's culpability approaches that of the infringer in St. Regis, that Court's determination is not controlling here. This factor does not support increasing damages.

E. Closeness of the Case

Benghiat contends that because the jury took "merely four hours" to reach a verdict, "the jury certainly felt that this was not a close case." (Benghiat Br. at 10.) Based upon this assertion, Benghiat cites Crucible, Inc. v. Stora Kopparbergs Bergslags AB, 701 F. Supp. 1157 (W.D. Pa. 1988), for the proposition that damages should be increased when cases are not close. First, the Court disputes Benghiat's presumption that a short deliberation means the case was not close. It is a mistake to make any presumptions based upon the length of deliberations. Second, even if Benghiat could make such a presumption, Crucible does not stand for the proposition he seeks to establish. In that case, the trial court found that the infringers did not act "egregiously" and that the question of willful infringement was "a close one." Id. at 1164. The Court therefore concluded that although increased damages were warranted, double and not treble damages were appropriate. Id. It does not follow, as Benghiat would have it, that in a case that is not close, damages must be trebled.

F. Duration of the Misconduct

Benghiat contends that Itron "probably knew of the patent when it issued in 1988, but certainly did by November 1998." (Benghiat Br. at 3.) Benghiat thus claims that this factor weighs in favor of awarding treble damages. Itron argues, citing Bott v. Four Star Corp., 1985 U.S. Dist. LEXIS 12747 (S.D. Mich. Dec. 16, 1985), that this factor does not apply in cases, like this one, where judgment has not been entered. The Court is not convinced that Bott stands for such a sweeping proposition; it appears that the court's decision in that case stemmed from its unique facts and procedural posture. See id. at *52. Thus, the Court accepts the jury's determination that Itron has been infringing upon the '456 Patent since it learned of the patent in November 1998. The Court finds that this factor could support increased damages.

G. Remedial Action

Benghiat claims that "Itron presented no evidence that it ever took any steps to avoid infringing," and that it has not attempted to "design around" the '456 Patent as a remedial measure. (Benghiat Br. at 3.) In support, Benghiat relies upon Intra Corp. v. Hamar Laser Instruments, Inc., 662 F. Supp. 1420 (E.D. Mich. 1987). In that case, the infringer voluntarily stopped manufacturing and selling its infringing systems during the litigation. Id. at 1439. This was one factor in the court's decision to only double the damages. Id. As with many of Benghiat's other authorities, however, the converse of Intra Corp 's holding does not necessarily follow; Benghiat provides no authority holding that failure to voluntarily stop producing an accused product is grounds for trebling of damages. More important is evidence that since receiving the verdict that its products infringed the '456 Patent, Itron has begun redesigning its products. ( See Bohrer 2/7/03 Aff. Ex. A.) The Court recognizes this and other evidence in the record regarding Itron's actions, but rejects any suggestion that Itron's remedial measures (or lack thereof) are dispositive of whether to enhance damages.

H. Motivation for Harm

Benghiat argues that Itron's motivation to harm him lay in its desire to remain competitive in the marketplace. Citing the jury's finding that his patented features solved a "long-felt need not solved by others," Benghiat claims that demand in the marketplace drove Itron to harm him by adopting his patented features. Benghiat does not support this argument with legal authority, but, as Itron notes, authority does exist to challenge Benghiat's claim. See American Safety Table Co. v. Schreiber, 415 F.2d 373, 378 (2d Cir. 1969). In American Safety Table, the court held that the pressures of the marketplace actually mitigated the infringer's culpability. Id. Thus, under that case, Benghiat's assertion that Itron responded to a "long-felt need" in the mar ketplace would actually decrease any enhanced damages, not increase them. See Century Wrecker Corp. v. E.R. Buske Mfg. Co., Inc., 913 F. Supp. 1256, 1285 n.19 (N.D. Iowa 1996) ("Even where defendants' infringing acts are willful and with knowledge of the plaintiff's rights, plaintiff is not necessarily entitled to enhanced damages where defendant's motivation is not to do harm, but rather is a result of prevailing economic pressure in the form of customer dissatisfaction.") Thus, because the evidence shows that Itron was responding to economic pressure, this factor weighs against increased damages.

I. Concealment

Finally, Benghiat claims that "Itron's attempt to conceal its misconduct" merits increased damages. (Benghiat Br. at 3.) Benghiat makes no argument on this point, but does cite Russell Box Co. v. Grant Paper Box Co., 203 F.3d 177 (1st Cir. 1953) in support. In that case, the court affirmed increased damages where there was "ample evidence" that the infringer "failed to preserve its records and had failed to cooperate as it should at the trial of the issue of damages." Id. at 183. Here, however, Benghiat points to no evidence that Itron has failed to cooperate or has conducted itself as did the infringer in Russell Box. Thus, the Court finds no support for Benghiat's contention of concealment.

Upon considering all of the above factors and the totality of circumstances in this case, the Court determines that it should not increase damages. Beyond what the jury has already determined - that Itron infringed in bad faith upon the '456 Patent - the Court finds little additional evidence to warrant enhanced damages in excess of Benghiat's substantial jury award. Therefore, the Court denies Benghiat's demand for enhanced damages pursuant to 35 U.S.C. § 284.


Based on the foregoing, all the records, files, and proceedings herein, IT IS HEREBY ORDERED that:

1. Defendant's Motion to Exclude Exhibits F, H, and K to the declaration of Eric H. Chadwick [Docket No. 531] is DENIED.

2. Plaintiff's Motion for Judgment as a Matter of Law on Plaintiff's Laches Claim [Docket No. 471] is DENIED.

3. Defendant's Motion for Judgment as a Matter of Law on Plaintiff's Laches Claim [Docket No. 471] is GRANTED.

4. Defendant's Demand for Enhanced Damages [Docket No. 516] is DENIED.


5. Post-trial motions shall be filed no later than ten days from the date of this Order.

6. Responses to post-trial motions must be filed within ten days of the receipt of post-trial motions.

7. Judgment shall be entered upon the Court's ruling on post trial motions.

1. The Court notes that Itron could not begin to enforce his patent rights until 1988, when the patent was issued.

2. Itron attempts to distinguish Fedders by claiming that it was resolved on summary judgment. The Court finds this unpersuasive. It is true that in Fedders, the Federal Circuit found that the record was insufficient to mandate summary judgment for the alleged infringer. See Wanlass v. Fedders Corp., 145 F.3d 1461, 1468 (Fed. Cir. 1998). The legal principles for which Fedders stands, however, remain applicable to this case. See id. at 1465-66. In Fedders, the Court held that on the record presented, the alleged infringer did not show that the patentee should have known of possible infringement. Id. at 1466-67. Thus, laches was inappropriate. Id. at 1467. Here, upon a fully developed factual record, this Court makes the same determination; Itron has not shown sufficient evidence to merit a finding of laches.

3. Although Porta-Printer founder Bud Etter is dead, his son Jeff Etter, who was the company's first employee, provided extensive testimony about the company, including its earliest days and products. (Trial Tr. at 1247-1312.) As for Itron, the company presented testimony of Randall Kinsey, a senior marketing manager at Itron with 18 years at the company. (Trial Tr. at 947-73, 995-1052.) Itron also presented Cindy Jesperson, a software engineer with 19 years at the company, who worked on the Datameter device. (Trial Tr. at 1107-1122.)

4. Because the Court finds that laches does not apply, it need not consider Benghiat's allegation that Itron's inequitable conduct bars the laches defense.

5. No such file has been made part of the trial record.

6. The only meter reading devices that Benghiat ever created were last sold in 1981, seven years before the '456 Patent issued. ( See Trial Tr. at 345.)

7. One other case cited by the parties in which the jury determined willfulness, Johns Hopkins University v. CellPro, Inc., 152 F.3d 1342 (Fed. Cir 1998), was not cited for any proposition relevant to the Court's analysis here. ( See Benghiat Response Br. at 4.)

8. The Federal Circuit also held that the district court relied upon evidence that was of "questionable relevance" to the question of increased damages. Jurgens v. CBK, Ltd., 80 F.3d 1566, 1572 (Fed. Cir. 1996).

9. Such arguments would be proper on a post-trial motion.

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