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Exmark Manufacturing Company Inc. v. Briggs & Stratton Corp.

United States District Court, D. Nebraska

November 26, 2018

EXMARK MANUFACTURING COMPANY INC., Plaintiff,
v.
BRIGGS & STRATTON CORPORATION, Defendants.

          MEMORANDUM AND ORDER

          Joseph F. Bataillon Senior United States District Judge.

         This matter is before the Court on plaintiff Exmark Manufacturing Company, Inc.'s (“Exmark”) motion to reaffirm the jury's verdict that Briggs & Stratton Corporation's (“Briggs”) infringement was willful, Filing No. 723. This action was remanded from the United States Court of Appeals for the Federal Circuit. Exmark Mfg. Co. Inc. v. Briggs & Stratton Power Prod. Grp., LLC, 879 F.3d 1332, 1338 (Fed. Cir. 2018).

         I. BACKGROUND

         A. Issues on Remand

         The Federal Circuit vacated this Court's enhanced damages award and remanded the action for the court to determine whether a new trial on willfulness is necessary. Id. at 1353. The Appeals Court also reversed the Court's finding on summary judgment that the patent was not invalid as anticipated or obvious, remanding for a determination of whether there was a genuine issue of material fact on the invalidity defense. Id. at 1341-42. This court has now determined that there is not and has reaffirmed its finding of no invalidity. Filing No. 800.

         With respect to willfulness, the Appeals Court found error “to the extent [the court] excluded [evidence of prior art] without also determining whether it was relevant to Briggs' state of mind at the time of accused infringement.” Id. The Appeals Court stated:

In Halo [Elecs., Inc. v. Pulse Elecs., Inc., 136 S.Ct. 1923 (2016)], the Supreme Court held that “[t]he subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.” Id. Thus, under Halo, the district court no longer determines as a threshold matter whether the accused infringer's defenses are objectively reasonable. Rather, the entire willfulness determination is to be decided by the jury. In this case, the sole basis for excluding the prior art from the willfulness trial was the district court's determination that Briggs' litigation defenses were unreasonable.

Exmark, 879 F.3d at 1353. It found “[t]o the extent that decision excluded evidence relevant to Briggs' state of mind at the time of the accused infringement, however, it does not comport with the standard articulated in Halo, which mandates that willfulness is an issue for the jury, not the district court.” Id. The Appeals Court directed this court on remand to “reconsider its decision to exclude evidence of the prior art during the jury trial on willfulness to determine whether Briggs had developed any views about the prior art at the time of accused infringement or whether the evidence only relates to Briggs' litigation-inspired defenses.” Id. (noting “[a]s the Supreme Court explained in Halo, timing . . . matter[s]. [A party] cannot insulate itself from liability for enhanced damages by creating an (ultimately unsuccessful) invalidity defense for trial . . . .”) (quoting WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 n.13 (Fed. Cir. 2016)). On remand, this Court is to determine in the first instance “[w]hether there is a genuine issue of material fact about when Briggs knew of its prior art defenses, and thus whether a new jury trial is required.” Exmark, 879 F.3d 1353.

         Exmark moves the Court to reaffirm the jury's finding that Briggs's infringement of the patent was willful. It argues that it asserted willful infringement only for the time period prior to the filing of this action in 2010 and contends that it is undisputed that Briggs did not form any belief prior to suit that the '836 patent was invalid.

         Briggs opposes the motion, it argues that it had actually formed a belief that the baffles it saw on the Exmark mower in the late-1990s were not inventive because of its knowledge of prior art. It contends that the prior art, which had been excluded at trial, is relevant to Briggs's subjective state of mind at the time of infringement and a new trial on willfulness is necessary.

         B. The 2015 Trial

         1. Prior Art Evidence

         The facts are set forth in the Federal Circuit opinion and will be repeated herein only as necessary to this opinion. Before the trial of this action in September of 2015, the court had determined as a matter of law that: 1) the patent was not invalid as anticipated, obvious, or indefinite; 2) Briggs had infringed the patent with respect to the original design; 3) Briggs's defenses (invalidity, obviousness, and indefiniteness) were objectively unreasonable for purposes of the willfulness determination. In response to Exmark's motion for a summary judgment of no invalidity as to the original Briggs designs, Briggs had argued there were genuine issues of material fact on anticipation in light of the Walker reference and on obviousness based on the Simplicity prior art mower combined with the Kidd patent's or the Koehn patent's (or others') teaching of a front flow control baffle that is spaced apart from the front wall. Filing No. 381, Briggs's Brief at 7-8. The court rejected that contention, based, in part, on the court's claim construction. Filing No. 476, Memorandum and Order at 26-27.

         The court had also ruled on several motions in limine before the trial. See Filing No. 496, Exmark Motion; Filing No. 565, Memorandum and Order. Exmark moved to preclude evidence on, inter alia, issues over which Briggs had claimed privilege, third-party mowers, patent invalidity, and irrelevant prior art.[1] Id. Exmark's prior art argument related to the potential offer of several dozen pieces of prior art exhibits at trial. Exmark argued that Briggs should not be allowed to relitigate the invalidity defense the court had earlier rejected on summary judgment.[2] In opposition to the motion, Briggs argued that prior art was relevant to damages as evidence relating to whether Briggs knew or should have known the '863 patent was valid in connection with damages. Filing No. 514, Briggs's Opposition to Exmark's Fourth Motion in Limine at 5-6. Briggs argued that evidence underlying the invalidity and non-infringement defenses went to the heart of the issue of whether its infringement was “so obvious” that Briggs should have known about it. Id. It also contended that the prior art reflected “old modes” for doing the same thing as the patented invention, which is one of the damages factors set out in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970). See Filing No. 565, Memorandum and Order at 5-6.

         The Court granted Exmark's motion to exclude “to the extent the evidence relates to the invalidity defense but denied [it] with respect to evidence related to damages, without prejudice to its reassertion via timely objection at trial.” See id.The Court stated that prior art was not relevant to willfulness for the reasons stated in its earlier order addressing willfulness under In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). Id. In the earlier order, the Court had addressed the then-applicable willfulness analysis under In re Seagate, 497 F.3d at 1371. Filing No. 564, Memorandum and Order at 3. The Court found that Briggs “[could] not credibly argue that it relied on reasonable defenses to infringement” (including invalidity by anticipation) and it had acted “despite an objectively high likelihood that its actions constituted infringement of a valid patent.” Id. at 3. The Court noted:

The evidence presented in connection with the summary judgment motions also establishes that Briggs's defenses, and any reliance thereon, were not reasonable. The court finds as a matter of law that no reasonable litigant could realistically expect those defenses to succeed. Notably, Briggs has asserted attorney-client privilege with respect to the details of its lawyers' involvement and advice in connection with the issue of infringement of the redesigned mowers and it does not rely on advice of counsel in defense of the willfulness allegations in connection with the original designs.

Id. (emphasis added). The Court determined that the “issue of Briggs's subjective state-of-mind-whether the objectively-defined risk ‘was either known or so obvious that it should have been known to the accused infringer' remained to be determined by the jury.” Id.

         The Court based its finding that Briggs had proceeded in the face of an objectively high likelihood of infringement on evidence that Briggs was aware of the '863 patent at least as of 2002 because Philip Wenzel, the president of Briggs' predecessor in interest, Ferris Industries, had been deposed in the Toro v. Scag Power Equip. case in 2002. Id. at Filing No. 564 at 2-3. In 2001, Exmark and its parent, The Toro Company (“Toro”), sued Scag Power Equipment, Inc. (“Scag”), et al. for infringement of the '863 patent and three other patents. Toro Co. v. SCAG Power Equip., Inc., No. 8:01-CV-279, Filing No. 1, Complaint (D. Neb. May 16, 2001). The '863 patent is a continuation of the '475 patent. Filing No. 193, Memorandum and Order at 2 (Jan. 27, 2003). The Toro action was heard in this Court. Scag asserted an inequitable conduct defense, contending that Exmark employee Garry Busboom, one of the inventors of the '863 patent, had intentionally misled the USPTO by failing to disclose the Walker mower as prior art. See Toro, Filing No. 185, Memorandum and Order at 6 (D. Neb. Jan. 15, 2003). This Court rejected Scag's argument, finding that the Walker reference had been disclosed to the USPTO during the original examination of the '863 patent. Toro, Filing No. 185, Memorandum and Order at 6-7; Filing No. 188, Memorandum and Order at 6-7 (D. Neb. Jan. 22, 2003). The Court also denied the defendants' motion for a summary judgment of invalidity of the the ‘475 patent. Toro, Filing No. 193, Memorandum and Order at 6 (Jan. 27, 2003). Shortly thereafter, on the eve of trial, the case settled. See Toro, Filing No. 195, Settlement Agreement (Sealed). On November 16, 2004, an Ex Parte Reexamination certificate was issued by the USPTO which affirmed the patentability of claims 1 - 10 of the '863 patent and required no changes to the patent. See Toro, Filing No. 322, Ex. 36. At trial in the present case, the court allowed evidence of prior art as relevant to damages with respect to Briggs's argument regarding Georgia-Pacific factor 9, but found the evidence was only relevant to the extent the patent was commercialized. Filing No. 565 at 6. Accordingly, the court stated that Briggs was “entitled to introduce side discharge mowers that were actually used prior to Exmark's invention.”[3] Id.

         Briggs was allowed to argue and to present evidence on the Walker prior art. Filing No. 615, Trial Transcript (“T. Tr.”) at 1193; Filing No. 724-3; Ex 179. Jim Marshall, Ferris's engineering technician, testified that he had seen a similar baffle before on a single- bladed walk-behind mower. Filing No. 616, T. Tr. at 1486. The jury was presented with a sketch of that baffle. Id.; Filing No. 739-2. The Court excluded prior art evidence directed to mulching mowers (including the Koehn, Simplicity, and Samejima references) because they were not relevant to the Asserted Claims, which required a side-discharge mower.[4]

         Briggs challenged the Court's exclusion of prior art evidence in connection with willfulness at a conference outside the presence of the jury. Filing No. 615 at 1211-14. The following colloquy between the court and Briggs's counsel ensued during the testimony of Briggs CEO Philip Wenzel, who had formerly been the CEO of Briggs's predecessor in interest, Ferris Industries. Wenzel had just testified that he relied on advice of counsel concerning the baffle redesign despite Briggs's assertion of attorney client privilege. Id. at 1204.

MR. WOLF: Very briefly, Your Honor. And it's tricky and I invite your guidance.
THE COURT: Good luck.
MR. WOLF: Yeah. That was actually sincere in that particular instance. So as Your Honor's aware, there is a willfulness allegation against the old design but not the new design. For the first time that at least I'm aware of, we heard allegations in-or argument in this cross that somehow that stub period after the filing of the lawsuit, when there was the wind-down of the old product, that that's somehow evidence of willfulness. Now, here's the - THE COURT: Well, here's the way I took the evidence.
MR. WOLF: Okay.
THE COURT: Mr. Wenzel is coming across as the lamb that has been led to the shearer, okay?
MR. WOLF: Yes.
THE COURT: He's not the lamb that's been led to the shearer. He's like my old boss's secretary. She's crazy like a fox. Okay? So he says that he would have-if he would have been contacted originally, he would have done X. And the answer was he was contacted originally on the redesign and he did Y. (emphasis added)
MR. WOLF: Well, here's the problem-
THE COURT: Whether that goes to willfulness, I see your point. But now you want to do what?
MR. WOLF: Well, here's the problem. Almost immediately-and we've kept this out entirely-almost immediately there were discussions of the invalidity of the patent.
THE COURT: Yeah.
MR. WOLF: And so I-we have studiously avoided that topic.
THE COURT: Well, he-yeah. And-and during cross-examination stuff comes up and he's already testified. We've had numerous opinions that the patent is invalid and you have studiously tried to keep attorney-client privilege out of the redesign process and he brought it in, okay? He did. Not me, not the defendant's lawyer, but your CEO of this mark, okay? Now, it's my intention not to let [plaintiff] pursue that because it happened during cross-examination. So, you know, I'm not sure where you're going. What do you want to do?
MR. WOLF: Your Honor, I actually don't want to do anything. What-I think at the end of the day what I'd like is an instruction that the stub period doesn't weigh into the willfulness analysis.
THE COURT: Well, [the jury is] not going to be asked about willfulness with respect to the redesign. Your client's conduct before the redesign and then his conduct after the redesign is by the same person, and his conduct in total helps decide what his thinking was before the redesign. And that's just unfortunately the way it is, Mr. Wolf. If you had two different executives, maybe you could get away with it, but you don't.
MR. WOLF: Well, Your Honor, we'll-we'll leave it for today, but we may come back at you to request that instruction.
THE COURT: And I have no problem with that at all. I-it's just that, you know, there's overlap on all of these issues- MR. WOLF: Understood.
THE COURT: -and the question is how far do you get into the overlap before you really are inquiring about something the jury ought not to be inquiring. And I-I-at this juncture, I don't think we've gone over the threshold. And that's why I would be reluctant to allow anyone to continue to probe these issues any more deeply, certainly to cover them, but not to probe them any more deeply.
MR. WOLF: All right. Well -
THE COURT: So that would be my general direction. If there's something specific you want to do and you want to ask me in advance how I'm likely to rule on it, ...

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