Hubbard/Downing, Inc. v. Kevin Heath Enterprises, No. 1:10-cv-1131-WSD, slip op. (N.D. Ga. May 30, 2013).
The Hubbard/Downing court reminds us that a court is not constrained by the patent damages statue when fashioning a sanction for contempt of an order precluding infringement. In Hubbard, the court awarded double lost profits and attorneys’ fees when it concluded Defendant had willfully tried to evade a Consent Order not to infringe.
Plaintiff originally sued Defendant alleging patent infringement. The parties settled, agreeing to a Settlement Agreement and the entry of a Consent Order which said Defendant and its affiliates would cease making the accused products. Id., slip op. at 2 – 4.
Defendant then created a new company that began marketing a similar device in a similar manner less than a year later, and Plaintiff filed a motion for an Order to Show Cause why Defendant should not be held in contempt. Id., slip op. at 5 – 7.
After a hearing, the district court agreed with Plaintiff and held Defendant in contempt. The court decided (1) the new device was no more than colorably different from the originally accused device, and (2) the new company was bound by the Consent Order. Id., slip op. at 46.
The court then awarded contempt damages, saying:
- A court has broad discretion to determine what contempt sanctions are necessary to ensure compliance and compensate a party for losses suffered as a result of the contempt. Id., slip op. at 46 – 47.
- In a contempt proceeding, the court is not bound by the remedy provisions of the patent statute. Id., slip op. at 46 – 47, n. 22.
- An award of Plaintiff’s lost profits was appropriate to ensure compliance and to compensate Plaintiff for losses resulting from the contemptuous conduct. Id., slip op. at 48.
- Because Defendant created the new company to evade the Consent Order, an additional amount, not to exceed double Plaintiff’s lost profits, may be appropriate. Id., slip op. at 48 – 49.
- Plaintiff was entitled to its reasonable attorneys’ fees incurred in conjunction with seeking contempt. Id., slip op. at 49.
The court then instructed Defendant to provide information regarding sales and costs associated with those sales as a predicate to making a final award. Id. 49, 50.