Case Cite

Imaginal Systems, LLC v. Leggett & Platt, Inc., No. 10-07416-RGK, slip op. (C.D. Cal. July 3, 2013).

IPDQ Commentary

In Imaginal, Plaintiff made a timely request for prejudgment interest, but its request for an ongoing royalty was 15 months too late. Such requests must come in connection with post-trial motions and the denial of permanent injunctive relief, not after the appeal is decided.

Case Summary

After a judgment for infringement damages was affirmed on appeal, Defendant promptly wired the amount of the judgment, plus statutory post-judgment interest, to Plaintiff. Id. at 1. When plaintiff moved to determine the amount of prejudgment interest and sought ongoing royalties, Defendant moved for satisfaction of judgment. Id. at 1 – 2.

Prejudgment Interest – The court concluded the motion to determine prejudgment interest was timely, and the correct interest rate was 5%, saying:

  • Plaintiff’s motion to determine prejudgment interest under §284 was timely. Id. at 2. The motion was a timely Rule 60(a) motion to correct an oversight or omission, not an untimely Rule 59(e) motion to amend or alter the judgment as Defendant argued. Id. The judgment entered by the court provided for interest, but it did not specify whether the interest was post-judgment or prejudgment. Id. The term “interest . . . as provided by law” in the judgment included prejudgment interest. Id. Section 284 and case law supports this conclusion. Id. at 2-3.
  • The appropriate rate of interest was 5%. The purpose of prejudgment interest is to return the patent owner to the position he would have enjoyed if the infringer had entered into a reasonable royalty agreement. Id. at 3. The amount of interest is left to the discretion of the trial court. Id. Generally, the U.S. Treasury bill rate is acceptable absent proof the patent owner borrowed money at a higher rate. Id. Plaintiff’s evidence that it (1) had to sell equity at a premium to fund its business due to a lack of capital, and (2) had to borrow money at 8% to 12% due to a lack of revenue, was overly general. Id. at 3-4. The only specific evidence was interest paid on a relatively small amount. Id. at 4. The evidence was sufficient to support interest at a 5% rate of simple interest beginning on the date of infringement, not the 7% sought by Plaintiff. Id.
  • There was no evidence Plaintiff delayed in bringing suit as a litigation tactic. Thus, there was no basis to toll the accrual of interest for any such delay as Defendant argued. Id.

On-Going Royalties – The court found the imposition of an ongoing royalty unwarranted, after determining:

  • The court disagreed with Defendant’s assertion that the judgment represented a paid-up royalty. Id. at 4. The verdict form specifically referenced damages up to the date of the verdict. Id.
  • But, the court was never asked to make any determination involving use of the patents subsequent to the verdict. This distinguished the case from other cases where an ongoing royalty was awarded. Id. at 5. Plaintiff’s request coming 15 months after the final judgment, and after the Federal Circuit decided the appeal, was too late. There was no order of remand, and the request represented a motion to alter or amend the judgment pursuant to Rule 5(e). Id. The time for such request had long since passed, so the imposition of an ongoing royalty in the case was improper. Id.

Satisfaction of Judgment – Based on its findings on prejudgment interest and ongoing royalties, the court denied Defendant’s motion for satisfaction of judgment, saying the judgment would not be satisfied until the correct amounts of prejudgment and post-judgment interest were paid to Plaintiff. Id. at 5.