Case: 23-1140 Document: 30 Page: 1 Filed: 03/20/2024
`
`NOTE: This disposition is nonprecedential.
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`IN RE: CALIFORNIA EXPANDED METAL
`PRODUCTS CO.,
`Defendant-Appellant
`______________________
`
`2023-1140
`______________________
`
`Appeal from the United States District Court for the
`Central District of California in No. 2:20-cv-10409-MCS-
`JEM, Judge Mark C. Scarsi.
`______________________
`
`Decided: March 20, 2024
`______________________
`
`RAYMOND JOSEPH TROJAN, Trojan Law Offices, Beverly
`Hills, CA, argued for appellant. Also represented by DYLAN
`C. DANG.
`
`______________________
`
`Before DYK, MAYER, and TARANTO, Circuit Judges.
`TARANTO, Circuit Judge.
`California Expanded Metal Products Co. (CEMCO)
`owns several patents that describe and claim fire-retardant
`head-of-wall assemblies. In 2020, Seal4Safti, Inc. filed an
`action in district court seeking a declaratory judgment of
`noninfringement, unenforceability, and invalidity of sev-
`eral of those patents, and CEMCO filed affirmative
`
`

`

`Case: 23-1140 Document: 30 Page: 2 Filed: 03/20/2024
`
`2
`
`IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
`
`defenses and counterclaims for patent infringement. In a
`2022 trial, a jury determined that Seal4Safti had willfully
`induced infringement of all asserted patent claims and
`awarded CEMCO damages in the form of a reasonable roy-
`alty. J.A. 1267–69. Subsequently, the district court denied
`CEMCO’s request for a permanent injunction, J.A. 50–52,
`and set aside the jury’s damages award on the ground that
`CEMCO did not meet its burden to prove the amount of a
`reasonable royalty, Seal4Safti, Inc. v. California Expanded
`Metal Products Co., No. 20-cv-10409, 2022 WL 16710721,
`at *3–4 (C.D. Cal. Oct. 3, 2022) (Post-Trial Order); see also
`id. at *5–6 (finding case exceptional and declaring CEMCO
`entitled to attorney’s fees). The court entered judgment for
`CEMCO on all its claims and against Seal4Safti on all its
`claims, but awarded “no monetary or injunctive relief.”
`J.A. 1200.
`On appeal, CEMCO challenges the denial of monetary
`and injunctive relief. We affirm the district court’s setting
`aside of the jury’s royalty award but vacate the denial of
`the permanent injunction and remand the case for further
`proceedings.
`
`I
`CEMCO is the current owner of the five patents at is-
`sue in this case: U.S. Patent Nos. 7,681,365; 7,814,718;
`8,136,314; 8,151,526; and 10,406,389. The patents gener-
`ally describe and claim fire-retardant assemblies for the
`top of a wall, the assemblies including an intumescent strip
`that seals construction joints or gaps when exposed to heat.
`E.g., ’365 patent, Abstract. At the time of trial, there were
`two dominant participants in the market for fire-retardant
`head-of-wall products that can be installed before construc-
`tion of a wall is complete: CEMCO’s exclusive licensee,
`Clarkwestern Dietrich Building Systems LLC (ClarkDie-
`trich), and Seal4Safti. J.A. 43.
`On November 13, 2020, Seal4Safti filed a complaint in
`the United States District Court for the Central District of
`
`

`

`Case: 23-1140 Document: 30 Page: 3 Filed: 03/20/2024
`
`IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
`
`3
`
`California seeking declaratory judgments of noninfringe-
`ment, unenforceability, and invalidity of the five above-
`listed patents, and in response, CEMCO filed several af-
`firmative defenses and counterclaims for patent infringe-
`ment. The present litigation, originated by Seal4Safti,
`followed previously initiated litigation in which CEMCO
`and ClarkDietrich sought and obtained relief, based on sev-
`eral of the patents at issue in the present case, against
`Seal4Safti, individuals affiliated with Seal4Safti, and com-
`panies having a relation to Seal4Safti. See Seal4Safti, Inc.
`v. California Expanded Metal Products Co., No. 20-cv-
`10409, 2022 WL 2199031, at *2 (C.D. Cal. Jan. 19, 2022)
`(summarizing history of this case); California Expanded
`Metal Products Co. v. Klein, No. 18-cv-00659, 2023 WL
`8086968, at *1 (W.D. Wash. Nov. 21, 2023) (summarizing
`parallel contempt proceedings).
`In a May 2022 trial, a jury determined that CEMCO’s
`asserted patents were not
`invalid, concluded that
`Seal4Safti had willfully induced infringement of all as-
`serted claims, and awarded damages of $156,000. J.A.
`1264–72. The damages award was based on a hypothetical
`royalty negotiation, which the jury determined would re-
`sult in an ongoing royalty payment of 12% of $1,300,000 in
`sales made by Seal4Safti. J.A. 1269. After the jury trial,
`the district court held a bench trial on several remaining
`equitable issues, and it ruled against Seal4Safti on those
`issues, J.A. 45–50, except for denying CEMCO’s request for
`a permanent injunction to bar Seal4Safti from selling and
`advertising its firestopping products, J.A. 50–52. A few
`weeks later, the district court resolved the parties’ post-
`trial motions. As relevant here, the court granted
`Seal4Safti’s request to amend the anticipated judgment to
`set aside the jury’s damages award pursuant to Federal
`Rule of Civil Procedure 59(e). Post-Trial Order, 2022 WL
`16710721, at *3, *6.
`The district court entered final judgment on October 3,
`2022. J.A. 1199–200. Seal4Safti timely filed a notice of
`
`

`

`Case: 23-1140 Document: 30 Page: 4 Filed: 03/20/2024
`
`4
`
`IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
`
`appeal and CEMCO timely filed a notice of cross-appeal.
`Seal4Safti soon moved to dismiss its appeal, explaining
`that it had decided to formally discontinue its operations,
`and we granted the motion, leaving only CEMCO’s cross-
`appeal. We have jurisdiction under 28 U.S.C. § 1295(a)(1).
`II
`A
`We first consider the district court’s decision to set
`aside the jury’s reasonable-royalty award. In reviewing the
`court’s decision on a motion under Rule 59(e), we use the
`standard of review applicable in the regional circuit. See
`CODA Development S.R.O. v. Goodyear Tire & Rubber Co.,
`916 F.3d 1350, 1357 (Fed. Cir. 2019). The Ninth Circuit
`reviews a district court’s decision to alter or amend a judg-
`ment pursuant to Rule 59(e) for abuse of discretion. Kauf-
`mann v. Kijakazi, 32 F.4th 843, 847 (9th Cir. 2022).
`A Rule 59(e) motion may be granted when “necessary
`to correct manifest errors of law or fact upon which the
`judgment rests.” Allstate Insurance Co. v. Herron, 634 F.3d
`1101, 1111 (9th Cir. 2011). Here, the district court set
`aside the jury’s damages award as a matter of law because
`it determined that the jury “had no basis to arrive at a rea-
`sonable royalty of 12%,” so the award was “based on imper-
`missible speculation.”
` Post-Trial Order, 2022 WL
`16710721, at *3 (citing Amgen Inc. v. Hospira, Inc., 944
`F.3d 1327, 1341 (Fed. Cir. 2019) (“A jury’s damages award
`‘must be upheld unless the amount is grossly excessive or
`monstrous, clearly not supported by the evidence, or based
`only on speculation or guesswork.’” (quoting Lucent Tech-
`nologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1310 (Fed.
`Cir. 2009)))). That ruling, we conclude, was not an abuse
`of discretion.
`At trial, CEMCO sought damages in the form of a rea-
`sonable royalty and adopted a hypothetical-negotiation ap-
`proach incorporating a familiar recitation of facts courts
`
`

`

`Case: 23-1140 Document: 30 Page: 5 Filed: 03/20/2024
`
`IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
`
`5
`
`have considered within that framework, set forth in Geor-
`gia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116,
`1120 (S.D.N.Y. 1970), modified on appeal sub nom. Geor-
`gia-Pacific Corp. v. U.S. Plywood-Champion Papers Inc.,
`446 F.2d 295 (2d Cir. 1971). CEMCO presented several
`pieces of evidence corresponding to several Georgia-Pacific
`considerations. See, e.g., J.A. 363 (testimony about Clark-
`Dietrich’s sales under its license); J.A. 1131–32 (total sales
`of Seal4Safti’s fire-retardant gasket products); J.A. 1147–
`50 (inventor’s declaration discussing the benefits, commer-
`cial success, and popularity of patent-covered products);
`J.A. 1172–90 (profitability of similar products). But the
`district court concluded that CEMCO did not provide ade-
`quate testimony tying this evidence to any particular roy-
`alty rate, and CEMCO has not identified such evidence on
`appeal.1 CEMCO first presented its proposed royalty rate
`of 20% in its closing arguments, and its analysis of Georgia-
`Pacific considerations was limited to attorney argument.
`See, e.g., J.A. 293 (arguing ClarkDietrich’s dominance in
`the market would “drive[] up” the reasonably royalty); J.A.
`294–95 (arguing the commercial success of patent-covered
`products “is significant”).
`
`
`1 CEMCO notes in this court that it also sought to
`introduce several prior licensing and settlement agree-
`ments that, it says, would have provided evidence of com-
`parable licensing rates. The district court excluded that
`evidence due to deficiency of the disclosure required by
`Federal Rule of Civil Procedure 26. J.A. 755–56. In this
`court, CEMCO does no more than assert that the exclusion
`of the evidence was improper; it does not develop an argu-
`ment challenging the exclusion of the evidence. We there-
`fore consider the argument forfeited. See Rodriguez v.
`Department of Veterans Affairs, 8 F.4th 1290, 1305 (Fed.
`Cir. 2021).
`
`

`

`Case: 23-1140 Document: 30 Page: 6 Filed: 03/20/2024
`
`6
`
`IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
`
`“The burden of proving damages falls on the patentee.”
`Lucent, 580 F.3d at 1324. And when a party chooses to use
`a hypothetical-negotiation framework, “while mathemati-
`cal precision is not required, some explanation of both why
`and generally to what extent the particular factor impacts
`the royalty calculation is needed.” Whitserve, LLC v. Com-
`puter Packages, Inc., 694 F.3d 10, 31 (Fed. Cir. 2012). We
`find no error in the district court’s conclusion that, as a
`matter of law, CEMCO failed to carry its burden to prove
`damages for lack of such explanation of the proper royalty
`rate in its evidence. See Exmark Manufacturing Co. v.
`Briggs & Stratton Power Products Group, LLC, 879 F.3d
`1332, 1350 (Fed. Cir. 2018) (requiring claimant to “care-
`fully tie” Georgia-Pacific considerations “to the proposed
`royalty rate”); see also Whitserve, 694 F.3d at 31–32.
`B
`We next turn to the district court’s denial of CEMCO’s
`request for a permanent injunction. A plaintiff seeking a
`permanent injunction “must demonstrate: (1) that it has
`suffered an irreparable injury; (2) that remedies available
`at law, such as monetary damages, are inadequate to com-
`pensate for that injury; (3) that, considering the balance of
`hardships between the plaintiff and defendant, a remedy
`in equity is warranted; and (4) that the public interest
`would not be disserved by a permanent injunction.” eBay
`Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). We
`review a district court’s denial of a permanent injunction
`for abuse of discretion. Robert Bosch LLC v. Pylon Manu-
`facturing Corp., 659 F.3d 1142, 1147 (Fed. Cir. 2011). A
`district court abuses its discretion if it bases its ruling on
`“‘an error of law or clearly erroneous factual findings’” or
`commits “‘a clear error of judgment in weighing relevant
`factors.’” Ecolab, Inc. v. FMC Corp., 569 F.3d 1335, 1352
`(Fed. Cir. 2009) (quoting Innogenetics N.V. v. Abbott Labor-
`atories, 512 F.3d 1363, 1379 (Fed. Cir. 2008)).
`
`

`

`Case: 23-1140 Document: 30 Page: 7 Filed: 03/20/2024
`
`IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
`
`7
`
`The district court based its denial of a permanent in-
`junction solely on a finding that CEMCO had failed to
`demonstrate an irreparable injury. J.A. 51. And it based
`that finding solely on its reading of our decision in ActiveVi-
`deo Networks, Inc. v. Verizon Communications, Inc., 694
`F.3d 1312 (Fed. Cir. 2012). The district court read that de-
`cision as standing for the proposition that “[w]henever a
`patentee only stands to lose licensing fees for the sale of a
`product when the licensee is not joined in the case,” an in-
`junction should be denied because “‘[s]traightforward mon-
`etary harm of this type is not irreparable harm.’” J.A. 51
`(quoting ActiveVideo, 694 F.3d at 1338).
`The district court gave too broad a reading to ActiveVi-
`deo, which is materially different from the present case. In
`ActiveVideo, the plaintiff patent owner was ActiveVideo,
`and the injunction it obtained against defendant Verizon
`(for infringement) was based on Verizon’s competition with
`Cablevision, a licensee of ActiveVideo. See 694 F.3d at
`1337–38. This court, holding the issuance of the injunction
`to have been improper, id. at 1337–41, explained that “Ca-
`blevision does not have an exclusive license to the patents
`at issue,” id. at 1338, and that it was “conclud[ing] only
`that in light of the record in this case, which shows exten-
`sive licensing, licensing efforts, solicitation of the defend-
`ant over a long period of time preceding and during
`litigation, and no direct competition between [defendant
`and plaintiff], it was clearly erroneous for the district court
`to conclude that money damages would not adequately
`compensate” the plaintiff, id. at 1340. The court did not
`conclude that, on different facts, particularly where a pa-
`tentee has granted an exclusive license to a third party to
`sell patent-covered products, the patentee may not suffer
`irreparable harm from infringement. Such an exclusive-
`licensing patentee might well face harm beyond the simple
`loss of reliably measurable licensing fees, including price
`erosion, damage to intangible reputation, harm to brand
`loyalty, and permanent loss of customers. See Robert
`
`

`

`Case: 23-1140 Document: 30 Page: 8 Filed: 03/20/2024
`
`8
`
`IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
`
`Bosch, 659 F.3d at 1152–55 (finding irreparable harm even
`though neither the plaintiff nor defendant directly sold pa-
`tent-covered products to customers). ActiveVideo does not
`foreclose consideration of such issues in this case.
`Because the district court based its denial of injunctive
`relief solely on its erroneous conclusion that CEMCO stood
`only to lose licensing fees and thus failed to demonstrate
`an irreparable injury, the court did not make additional
`findings necessary for the injunctive-relief inquiry. We
`therefore vacate the court’s denial of injunctive relief and
`remand for the court to reconsider the appropriateness of
`CEMCO’s requested permanent injunction.
`III
`We have considered CEMCO’s additional arguments
`and find them unpersuasive. For the foregoing reasons, we
`affirm the district court’s decision to set aside the jury’s
`damages award, vacate the court’s denial of injunctive re-
`lief, and remand for further proceedings consistent with
`this opinion.
`CEMCO shall bear its own costs.
`AFFIRMED IN PART, VACATED IN PART, AND
`REMANDED
`
`