United States District Court, D. Oregon
J. Edmonds, Stephen F. Schlather, Shea N. Palavan, and
Brandon G. Moore, Collins, Edmonds, Schlather & Tower,
PLLC, John Mansfield, Harris Bricken, Of Attorneys for
T. Oliver, Amin, Turocy & Watson, LLP, Jacob S. Gill,
Stoll Stoll Berne Lokting & Shlachter, PC, Jenny W. Chen,
Taiwan (R.O.C.). Of Attorneys for Defendant.
OPINION AND ORDER
Michael H. Simon, United States District Judge
the Court are two issues relating to the jury's verdict
in favor of Plaintiff, Mass. Engineered Design, Inc.
(“Mass”), and against Defendant, Planar Systems,
Inc. (“Planar”). The first is Plaintiff's
motion to set a prejudgment interest rate relating to the
jury's award of money damages. The second is
Plaintiff's request for post-verdict royalty.
Supreme Court has held “that prejudgment interest
should be awarded under § 284 absent some justification
for withholding such an award.” Gen. Motors Corp.
v. Devex Corp., 461 U.S. 648, 657 (1983); see also
DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245,
1263 (Fed. Cir. 2014) (“Prejudgment interest should
ordinarily be awarded absent some justification for
withholding such an award.”). An award of prejudgment
interest is necessary to ensure that a patent owner is placed
in as good a position as he would have been in had the
infringer entered into a reasonable royalty agreement.
General Motors, 461 U.S. at 655-56 (“An award
of interest from the time that the royalty payments would
have been received merely serves to make the patent owner
whole, since his damages consist not only of the value of the
royalty payments but also of the forgone use of the money
between the time of infringement and the date of the
requests that prejudgment interest be set at six percent.
Mass. asserts that it had to borrow money during the relevant
time period as a result of Planar's infringement and
failure to pay royalties. Mass. further asserts that it paid
rates ranging from five and one-half percent to nearly eight
percent. Thus, Mass. argues, a rate of six percent is a
reasonable rate to compensate Mass. and put it in the
position it would have been in had Planar entered into a
reasonable royalty agreement. Mass. submits the declaration
of Jerry Moscovitch as evidence of these loans and their
interest rates. In the alternative, Mass. argues that the
prime rate should be used, because the Treasury bill rate
during the relevant time period was at historically low rates
and did not represent the realistic cost of borrowing.
objects to the admission of Mr. Moscovitch's declaration
because the information it contains was not timely disclosed
during fact discovery. Planar also argues that the Treasury
bill rate is standard in the Ninth Circuit and should be used
in this case, regardless of how low or high it was during the
relevant time period. Planar further argues that Mass. should
not be awarded prejudgment interest for three years because
Mass. caused undue delay in waiting two years to file the
litigation after dismissing the first lawsuit against Planar,
and then by filing the case in the Eastern District of Texas
instead of Oregon.
objection to Mr. Moscovitch's declaration is overruled.
The Court stated during the telephone conference with parties
relating to the issue of prejudgment interest that the Court
was interested in the actual cost of borrowing during the
relevant time period. Mass. responded by submitting evidence
relating to its actual cost of borrowing. This evidence is
request that Mass. not be awarded prejudgment interest for
three years also is rejected. Prejudgment interest may be
limited or denied “where the patent owner has been
responsible for undue delay in prosecuting the
lawsuit.” General Motors, 461 U.S. at 657.
Mass. explains that its two-year delay in filing a new
lawsuit against Planar was the result of Mass. defending
several declaratory judgment actions that had been filed
throughout the United States. Mass. had to use attorneys
charging by the hour, after Mass's contingency-fee
attorney withdrew due to illness. One month after the last of
those actions was settled, and after Mass. obtained new
contingency-fee counsel, Mass. filed this action. The Court
does not find undue delay on the part of Mass. The Court also
does not find undue delay on the part of Mass. based on the
original filing of this action in the Eastern District of
Texas. That court denied Planar's motion based on
improper venue, and only granted the motion to transfer venue
based on convenience. The delay in transferring was because
that court decided to retain jurisdiction until after claim
considering the appropriate interest rate for prejudgment
interest, courts have broad discretion. Uniroyal, Inc. v.
Rudkin-Wiley Corp., 939 F.2d 1540, 1545 (Fed. Cir. 1991)
(citation omitted) (“A trial court is afforded wide
latitude in the selection of interest rates, and may award
interest at or above the prime rate.”). The Ninth
Circuit, in a case involving a collision at sea, noted that
the Treasury bill rate is appropriate for fixing the
prejudgment interest rate “in cases such as this . . .
unless the trial judge finds, on substantial evidence, that
the equities of the particular case require a different
rate.” Western Pac. Fisheries, Inc. v. S.S.
President Grant, 730 F.2d 1280, 1289 (9th Cir. 1984). In
patent cases arising in California, however, district courts
routinely apply the California state statutory interest rate
of seven percent. See, e.g., Columbia Sportswear
N. Am., Inc. v. Seirus Innovative Accessories, Inc.,
2018 WL 1805102, at *2 (S.D. Cal. Apr. 17, 2018)
(“Here, the Court finds that California's statutory
rate of seven percent is appropriate to fully compensate
Columbia and to prevent Seirus from being unjustly enriched
by its infringement of the Design Patent.”);
Presidio Components Inc. v. Am. Tech. Ceramics
Corp., 723 F.Supp.2d 1284, 1330 (S.D. Cal. 2010),
aff'd in part, vacated in part, 702 F.3d 1351
(Fed. Cir. 2012) (“California courts have found that a
simple interest rate of 7% is usually appropriate to fully
compensate the plaintiff for the infringement.”).
also consider whether the patent holder borrowed money at a
rate other than the Treasury rate. See, e.g.,
Kowalski v. Mommy Gina Tuna Res., 2009 WL 855976, at
*6 (D. Haw. Mar. 30, 2009) (considering whether it was the
patent holder or an unrelated entity who actually borrowed
the money and thus paid the higher interest rate); Mars,
Inc. v. Conlux USA Corp., 818 F.Supp. 707, 721 (D. Del.
1993) (noting that where the plaintiff is a net borrower,
“the cost of borrowing money-and not the rate of return
on investing money-provides a better measure of the harm [the
plaintiff] suffered as a result of the loss of the use of
money over time”); Sun Studs, Inc. v. ATA Equip.
Leasing, Inc., 1990 WL 293886, at *3 (D. Or. Sept. 19,
1990) (“I awarded plaintiff prejudgment interest on its
patent claims at the rate of interest actually paid
by plaintiff. Plaintiff is entitled to be compensated for the
actual amount of interest it paid.” (emphasis in
original)); cf. Uniroyal, 939 F.2d at 1545
(“[I]t is not necessary that a patentee demonstrate
that it borrowed at the prime rate in order to be entitled to
prejudgment interest at that rate.”). Thus, the
Treasury rate is not necessarily the de facto rate,
even for courts in the Ninth Circuit.
Moscovitch states in his declaration that he created a
separate entity, Sidlin Realty, Inc. (“Sidlin”),
which he owned during the relevant time period. Sidlin held
title to the building and real estate of Mass's
headquarters. Because of Mass's legal and financial
situation, including in part Planar's infringement and
failure timely to enter into a royalty agreement, Mass. could
not obtain any loan. Sidlin thus borrowed money from 2007
through 2015, secured by the building and land that was
Mass's headquarters. Those loans were passed through to
Mass. to pay operating expenses. At first Sidlin did not
charge Mass. any extra interest, but within one year Sidlin
began charging Mass. one percent additional interest.
loans from 2007 through early 2015 were at fluctuating
interest rates, but all were above 6 percent. For example,
the rate paid by Sidlin in 2009 was 6.625 percent and the
rate in 2015 was 6.85 percent. Because Sidlin was charging
Mass. an extra one percent, Mass. was paying 7.625 percent
and 7.85 percent in those years respectively. In March 2015
Sidlin borrowed funds at 4.5 percent and paid off all earlier
loans. In June 2015, Sidlin and Mass. merged, with Mass. as
the remaining entity. On July 6, 2015, Mass. sold the ...