Case 4:14-cv-00371-ALM Document 361 Filed 04/27/17 Page 1 of 8 PageID #: 20245
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`Civil Action No. 4:14-CV-00371
`Judge Mazzant
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`§§§§§§
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`IMPERIUM IP HOLDINGS (CAYMAN),
`LTD.
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`v.
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`SAMSUNG ELECTRONICS CO., LTD.,
`SAMSUNG ELECTRONICS AMERICA,
`INC., SAMSUNG
`TELECOMMUNICATIONS AMERICA,
`LLC, and SAMSUNG SEMICONDUCTOR,
`INC.
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`MEMORANDUM OPINION AND ORDER
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`Pending before the Court is Defendants’ Rule 60(b) Motion for Reconsideration of
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`Enhanced Damages (Dkt. #348). After reviewing the relevant pleadings, the Court denies
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`Defendants’ motion.
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`BACKGROUND
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`On June 9, 2014, Plaintiff filed the instant action against Defendants, alleging
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`infringement of United States Patent Nos. 6,271,884 (the “’884 Patent), 7,092,029 (the “’029
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`Patent”), and 6,836,290 (the “’290 Patent”). On February 8, 2016, the jury returned a verdict in
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`favor of Plaintiff. Particularly, the jury found the following: (1) Defendants infringed Claims 1,
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`5, 14, and 17 of the ’884 Patent; (2) Defendants infringed Claims 1, 6, and 7 of the ’029 Patent;
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`(3) Defendants willfully infringed the patents-in-suit; and (4) Claim 10 of the ’290 Patent was
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`invalid for obviousness (Dkt. #253). The jury awarded $4,840,772 in damages for infringement
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`of the ’884 Patent and $2,129,608.50 in damages for infringement of the ’029 Patent (Dkt. #253).
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`On August 24, 2016, the Court awarded enhanced damages for willful infringement and entered
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`final judgment (Dkt. #329; Dkt. #330).
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`Case 4:14-cv-00371-ALM Document 361 Filed 04/27/17 Page 2 of 8 PageID #: 20246
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`On December 13, 2016, Defendants filed their motion for reconsideration regarding the
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`Court’s August 24, 2016 Memorandum Opinion and Order (Dkt. #348). On January 6, 2017,
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`Plaintiff filed a response (Dkt. #351). On January 17, 2017, Defendants filed a reply (Dkt.
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`#352). On January 24, 2017, Plaintiff filed a sur-reply (Dkt. #353).
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`LEGAL STANDARD
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`The Federal Rules of Civil Procedure do not specifically provide for motions for
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`reconsideration. Shepherd v. Int’l Paper Co., 372 F.3d 326, 328 n.1 (5th Cir. 2004). Depending
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`on when a party files such a motion, the Court may construe it under Rule 59(e) as a motion to
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`alter or amend a judgment or under Rule 60(b) as a motion for relief from a final judgment. Id.;
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`Williams v. Thaler, 602 F.3d 291, 303 (5th Cir. 2010) (“When a litigant files a motion seeking a
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`change in judgment, courts typically determine the appropriate motion based on whether the
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`litigant filed the motion within Rule 59(e)’s time limit.”). If a party files a motion within than
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`twenty-eight days from the judgment or order of which the party complains, it is considered a
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`Rule 59(e) motion; otherwise, it is treated as a Rule 60(b) motion. See Hamilton Rothschilds v.
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`Williams Rothschilds, 147 F.3d 367, 371 n.19 (5th Cir. 1998). Here, Defendants’ filed their
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`motion for reconsideration more than twenty-eight day after the Court entered final judgment.
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`Thus, the Court will consider the motion under Rule 60(b).
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`Rule 60(b) of the Federal Rules of Civil Procedure sets out five specific bases for
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`granting relief from a court’s final judgment or order: (1) mistake, inadvertence, surprise, or
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`excusable neglect; (2) newly discovered evidence; (3) fraud, misrepresentation or misconduct of
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`an adverse party; (4) the judgment is void; and (5) satisfaction, discharge, or release of the
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`judgment. Fed. R. Civ. P. 60(b)(1)–(5). In addition, Rule 60(b)(6) provides that a court may
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`relieve a party from final judgment for “any other reason justifying relief from the operation of
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`the judgment.” Fed. R. Civ. P. 60(b)(6). Relief under Rule 60(b)(6) is only granted when it is
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`not covered by the five enumerated grounds and when “extraordinary circumstances are
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`present.” Batts v. Tow-Motor Forklift Co., 66 F.3d 743, 747 (5th Cir. 1995) (citation omitted).
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`“The district court enjoys considerable discretion when determining whether the movant has
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`satisfied any of these Rule 60(b) standards.” Teal v. Eagle Fleet, Inc., 933 F.2d 341, 347
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`(5th Cir. 1991).
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`ANALYSIS
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`The Federal Circuit has explained that “[w]hen reviewing non-patent issues,” including
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`some rulings under Rule 60(b), its “general practice is to apply the law of the regional circuit.”
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`Fiskars, Inc. v. Hunt Mfg. Co., 279 F.3d 1378, 1381 (Fed. Cir. 2002). Federal Circuit law
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`applies, however, “when a district court’s ruling under Rule 60(b) turns on substantive issues
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`unique to patent law.” Lazare Kaplan Int’l, Inc. v. Photoscribe Techs., Inc., 714 F.3d 1289, 1293
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`(Fed. Cir. 2013). This provides for “consistent and uniform application by district courts when
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`handling patent cases.” Id. at 1293. Defendants’ argument for Rule 60(b) relief hinges on the
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`interpretation of Supreme Court and Federal Circuit law to determine the appropriateness of
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`enhanced damages to punish an infringer for egregious, deliberate, or flagrant patent
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`infringement. The Court will therefore apply Federal Circuit law to the issue of enhanced
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`damages in this patent infringement case.
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`Defendants seek relief under Rule 60(b)(2) and Rule 60(b)(6) from the order awarding
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`enhanced damages to Plaintiff and the Court’s subsequent entry of judgment. Defendants
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`contend the Court did not consider the objective reasonableness of their invalidity position when
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`awarding enhanced damages.1 To support this argument, Defendants point to a December 1,
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`1 It is well-settled, however, that Rule 60(b)(6) requires exceptional or extraordinary circumstances. See, e.g.,
`Gonzalez v. Crosby, 545 U.S. 524, 535 (2005) (noting relief under Rule 60(b)(6) requires a movant to show
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`2016 Patent Trial and Appeal Board (“Board”) decision that found all of the asserted claims of
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`the ’029 Patent invalid. Defendants argue the Board’s decision and its reasoning with respect to
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`the asserted claims should be a factor to mitigate enhanced damages for the ’029 Patent.
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`To succeed on their motion under Rule 60(b)(2), Defendants must set forth newly
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`discovered evidence and demonstrate “(1) that it exercised due diligence in obtaining the
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`information, and (2) the evidence is material and controlling and clearly would have produced a
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`different result if presented before the original judgment.” Thermacor Process, L.P. v. BASF
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`Corp., 567 F.3d 736, 744 (5th Cir. 2009) (quoting Hesling v. CSX Transp., Inc., 396 F.3d 632,
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`639 (5th Cir. 2005)). Evidence that is ‘“merely cumulative or impeaching and would not have
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`changed the result’” does not suffice. Id.
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`Defendants have not shown that the Board’s decision constitutes newly discovered
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`evidence and not just new evidence. This distinction is significant. “‘Newly discovered
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`evidence must have been in existence at the time of the trial and not discovered until after trial.’”
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`Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 158 (5th Cir. 2004) (quoting Longden v.
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`Sunderman, 979 F.2d 1095, 1102–03 (5th Cir. 1992)). New evidence makes up everything else.
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`On August 24, 2016, the Court issued its enhanced damages opinion and entered judgment
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`against Defendants, and the Board issued its decision on December 1, 2016. Since the Board’s
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`decision was not in existence at the time of the judgment, it is new evidence and cannot form a
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`basis for relief under Rule 60(b)(2).2
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`“extraordinary circumstances”). The Supreme Court stated, “Intervening developments in the law by themselves
`rarely constitute the extraordinary circumstances required for relief under Rule 60(b)(6).” Agostini v. Felton,
`521 U.S. 203, 239 (1997). The Court is not convinced that the Board’s decision qualifies as extraordinary
`circumstances and thus Rule 60(b)(6) relief is not appropriate.
`2 Defendants argue the facts in this case mirror Chilson v. Metropolitan Transit Authority, 796 F.2d 69, 70 (5th Cir.
`1986). In Chilson, Plaintiff sought Rule 60(b)(2) relief after the jury’s verdict, claiming as newly discovered
`evidence an internal audit reflecting overpayments. Id. at 70. The Fifth Circuit reversed the decision of the district
`court and held the newly discovered evidence was not the internal audit but rather the overpayment as revealed by
`the audit, which had already occurred. Chilson does not apply to the facts at hand. Chilson involved a fact (the
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`Even if the Board’s decision constituted newly discovered evidence, Defendants have not
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`demonstrated such evidence was “material and controlling and clearly would have produced a
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`different result if presented before the original judgment.” Thermacor Process, L.P., 567 F.3d at
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`744. When damages for patent infringement are found, “the court may increase the damages up
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`to three times the amount found or assessed.” 35 U.S.C. § 284. The Supreme Court in Halo
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`Electronics, Inc. v. Pulse Electronics, Inc. rejected the prevailing test for enhanced damages and
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`explained that under § 284, “[d]istrict courts enjoy discretion in deciding whether to award
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`enhanced damages, and in what amount.” 136 S. Ct. 1923, 1932 (2016). The paramount
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`determination bearing on a court’s discretion is the egregiousness of the defendant’s conduct. Id.
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`The Halo Court described such conduct as “willful, wanton, malicious, bad-faith, deliberate,
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`consciously wrongful, flagrant, or . . . characteristic of a pirate.” Id. “[N]one of this is to say
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`that enhanced damages must follow a finding of egregious conduct.” Id. at 1933. Rather,
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`enhanced damages are appropriate after a district court “take[s] into account the particular
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`circumstances of each case” and determines the misconduct goes beyond typical infringement.
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`Id. at 1933–34.
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`Trial in this case commenced on February 1, 2016, and continued until February 8, 2016,
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`when the jury rendered a verdict that found Defendants willfully infringed the patents-in-suit.
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`Despite the jury’s finding of willfulness, the Court exercised its discretion to decide whether to
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`award enhanced damages and in what amount such damages should be awarded. Halo, 136 S.
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`Ct. at 1932. In exercising that discretion, the Court’s August 24, 2016 opinion considered
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`factors set out in Read Corp. v. Portec Inc., 970 F.2d 816 (Fed. Cir. 1992). However, the Court
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`noted, “While the Read factors remain helpful to the Court’s execution of its discretion, an
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`overpayment) that allegedly occurred before trial but the tendered evidence of the fact (the audit) came into
`existence only after the judgment. This case involves nothing more than tendered evidence of a fact (the Board
`decision) that comes after the Court’s order. Therefore, Chilson is distinguishable.
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`analysis focused on ‘egregious infringement behavior’ is the touchstone for determining an
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`award of enhanced damages rather than a more rigid[] mechanical assessment.” (Dkt. #329 at p.
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`11). Accordingly, the Court examined the egregiousness of Defendants’ conduct.
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`The Court first reviewed testimony regarding allegations of Defendants’ copying. Mr.
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`Melfi testified that Defendants sought information on how ESS made its camera and how to
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`duplicate ESS’ camera testing lab. Mr. Bang and Mr. Lee testified that Defendants did not
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`follow Plaintiff’s patents after 2011 or monitor Plaintiff’s previous litigation regarding the
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`patents-in-suit. But evidence produced at trial contradicted Mr. Bang and Mr. Lee’s claims and
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`revealed that Defendants “did track and attempt to obtain . . . Plaintiff’s patents for years before
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`this lawsuit” (Dkt. #329 at p. 12). The Court also stated that Defendants offered no evidence at
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`trial to show they independently developed and/or acquired the technology at issue in this case.
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`Next, the Court assessed the material misrepresentations made by Defendants under oath.
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`During discovery, Defendants misrepresented their knowledge of Plaintiff’s patents in a sworn
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`response to an interrogatory. At trial, Defendants also misrepresented facts bearing on
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`infringement and willfulness, which resulted in the sanctions. Finally, the Court indicated that
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`Defendants failed to produce relevant discovery documents until the fifth day of trial. After
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`examining these instances of Defendants’ conduct at the time of the accused infringement, the
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`Court found Defendants’ conduct to be sufficiently egregious to warrant enhanced damages.
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`Defendants claim if the Court had the Board’s decision and the Federal Circuit’s legal
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`clarification in WesternGeco L.L.C. v. ION Geophysical Corp., 837 F.3d 1358 (Fed. Cir. 2016),
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`then it would have reached a different enhanced damages award (Dkt. #348 at p. 6).
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`WesternGeco noted that while “objective reckless” conduct is no longer the standard for willful
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`infringement, the “objective reasonableness” of an infringer’s positions is still a relevant factor
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`that a court must consider among the totality of circumstances in deciding whether to enhance
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`damages. WesternGeco, 837 F.3d at 1364.
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`The Court disagrees with this argument on two points. First, the Supreme Court in Halo
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`granted courts considerable discretion when deciding whether to enhance damages and in what
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`amount. The egregiousness of a defendant’s conduct and the totality of the circumstances guide
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`the Court in this discretion. Halo, 136 S. Ct. at 1932. Halo did not require a court to examine
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`the objective reasonableness of an infringer’s positions in awarding enhanced damages. In fact,
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`the Supreme Court maintained the opposite: “The subjective willfulness of a patent infringer,
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`intentional or knowing, may warrant enhanced damages, without regard to whether his
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`infringement was objectively reckless.” Id. at 1933; see also WBIP, LLC v. Kohler Co., 829 F.3d
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`1317, 1340 (Fed. Cir. 2016) (“[A]n infringer’s subjective bad faith alone may support an award
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`of enhanced damages.” (citing Halo, 136 S. Ct. at 1933)); WesternGeco, 837 F.3d at 1362
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`(“Rather, Halo emphasized that subjective willfulness alone . . . can support an award of
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`enhanced damages.”). Thus, the Court was not required to assess the objective reasonableness of
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`Defendants’ positions.
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`Second, the Court actually examined the objective reasonableness of Defendants’
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`positions when considering the totality of the circumstances. The Court consulted the Read
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`factors as helpful guideposts for this evaluation. The Read factors are as follows: (1) “whether
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`the infringer deliberately copied the ideas or design of another”; (2) “whether the infringer, when
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`he knew of the other's patent protection, investigated the scope of the patent and formed a good
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`faith belief that it was invalid or that it was not infringed”; (3) “the infringer’s behavior as a party
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`to the litigation”; (4) “[d]efendant’s size and financial condition”; (5) “[c]loseness of the case”;
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`(6) “[d]uration of defendant's misconduct”; (7) “[r]emedial action taken by the defendant”; (8)
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`“[d]efendant’s motivation for harm”; and (9) “[w]hether defendant attempted to conceal its
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`misconduct.” Read, 970 F.2d at 827–28. The fifth Read factor, “closeness of the case,” which
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`overlaps considerably with the second Read factor, includes an examination of objective
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`reasonableness. While not expressly discussing objective reasonableness, the Court reviewed the
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`nine Read factors, along with Defendants’ egregious conduct, and awarded enhanced damages.
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`Because Defendants have not shown that the Board’s decision would have changed the
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`Court’s decision regarding the award of enhanced damages, they are not entitled to relief from
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`the Court’s enhanced damages award or the judgment based on Rule 60(b)(2).
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`CONCLUSION
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`It is therefore ORDERED that Defendants’ Rule 60(b) Motion for Reconsideration of
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`Enhanced Damages (Dkt. #348) is hereby DENIED.
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