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applying the average Treasury Bill rate over the period of infringement
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Civil File No. 98-2294 (MJD/JGL)
April 9, 2003
Douglas J. Williams, Matthew J. Goggin and Rachel K. Zimmerman, Merchant Gould, for and on behalf of Plaintiff.
James T. Nikolai and Peter G. Nikolai, Nikolai Mersereau, P.A., and Russell J. Barron and Joan L. Eads, Foley Lardner for and on behalf of Defendant Gardner Manufacturing, Inc.
ORDER
This matter is before the Court upon Ecolab's motion for prejudgment interest and costs and for a permanent injunction.
1. Prejudgment Interest
Ecolab asserts that it is entitled to prejudgment interest in the amount of $452,043.24, calculated using the interest rate of 4.95%, compounded annually from 1995 through January 2003. Gardner, on the other hand, argues that prejudgment interest should be computed by reference to the Treasury Bill Rate, and that the interest should not be compounded. Using Gardner's computation, prejudgment interest totals $42,570.59.
Whether or not prejudgment interest is compounded is left to the discretion of the district court. Gyromat Corporation v. Champion Spark Plug Company, 735 F.2d 549 (Fed. Cir. 1984). Also, whether the district court uses the Treasury Bill Rate or a statutory rate is also within the court's discretion. See, Oiness v. Walgreen Company, 88 F.3d 1025 (Fed. Cir. 1996) (using state statutory rate) and Allen Archery, Inc. v. Browing Manufacturing Company, 898 F.2d 787 (Fed. Cir. 1990) (using Treasury Bill Rate). The Court will use 4.95% as the applicable interest rate — which represents the average Treasury Bill Rate from 1995 through 2002.
Gardner argues that compounded interest is not warranted in this case because the royalty rate was extremely high and because part of that judgment must represent future lost profits. Ecolab responds, and this Court agrees, that there is no way to know whether part of the jury's award was for future lost profits. Accordingly, these arguments will not effect the computation of prejudgment interest.
Gardner further argues that Ecolab is not entitled to compounded interest on the judgment, because Ecolab's calculation assumes all sales of the WS-50 were made in 1995. However, a breakdown of the sales shows that in 1995, Gardner sold approximately 9% of the total sales of WS-50. Therefore, the judgment does not represent sales made in 1995, it represents all sales from 1995 to 2002. Compound interest dating back to 1995 would thus overcompensate Ecolab. As to this argument, the Court agrees that Ecolab's computation of prejudgment interest results in overcompensation.
A fair resolution to this issue is to calculate prejudgment interest, using the rate of 4.95% compounded annually, but taking into account the number of sales per year. For example, 9% of the total sales of the WS-50's were made in 1995. 9% of the total judgment equals $86,224.57. The compounded interest amount for 1995 would be $40,683.89. Repeating this computation for sales in 1996 in which sales represent 7% of the judgment, the compounded interest amount for that year is $26,987.50. If this calculation is done for every year — the total prejudgment interest is $229,518.49.
This percentage was calculated based on the chart included in Gardner's Memorandum in Support of its Motion to Strike the Reply Brief of Ecolab, p. 2.
2. Costs
Ecolab argues it is entitled to costs because it is a prevailing party. Whether a party is "prevailing" the Court should consider whether "actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." Farrar v. Hobby, 506 U.S. 103, 111-113 (1992). Gardner argues that Ecolab should not be considered a prevailing party, because it failed on most of its claims — willful infringement, false marking, noninfringement on the WS-75, no inducement of infringement. Ecolab did, however, prevail on its claim of infringement of the WS-50, contributory infringement and was awarded almost one million dollars in damages. The jury's finding "materially altered" Gardner's behavior in a way that benefits Ecolab. Accordingly, the law supports a finding that Ecolab is a prevailing party entitling it to costs.
The Court will conduct an inquiry into the reasonableness of the requested costs after appeal.
3. Injunction
Ecolab asserts that based on the jury's verdict, it is entitled to an injunction which enjoins the sale of the WS-50, enjoins the use, suggestion, advertising or promoting the use of the WS-75 with the lid up and recall of the WS-50's in Gardner's inventory and voluntary recall of those in a Distributor's inventory or with an end user and cease distribution of replacement parts for the WS-50.The Court agrees that an injunction is warranted in this case, but that recall of the WS-50's sold or an injunction regarding replacement parts are not necessary as Ecolab has been compensated for the WS-50's sold through the judgment in this case. Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1549 (Fed. Cir. 1987).
Accordingly, IT IS HEREBY ORDERED:
1. Ecolab's Motion to Award Costs is GRANTED;
2. Ecolab's Motion to Award Prejudgment Interest is GRANTED in the amount of $229,518.49;
3. Ecolab's Motion for a Permanent Injunction is GRANTED as follows:
(A) Defendant, Gardner Manufacturing, Inc., is officers, agents, servants, employees, distributors, customers, and any of its successors, assigns, or subsidiaries, and all persons in active concert with them or any of them who receive actual notice of this Order by personal service or otherwise are permanently enjoined from infringing Ecolab's United States Patent No. 5,365,690 by making, selling or offering to sell Gardner units WS-5 — (or other colorable imitations thereof) in the United States;
(B) Defendant, Gardner Manufacturing Co., Inc. its officers, agents, servants, employees, distributors, customers, and any of its successors, assigns, or subsidiaries, and all persons in active concert with them or any of them who receive actual notice of this Order by personal service or otherwise permanently enjoined from infringing Ecolab's United States Patent No. 5,365,690 by using or suggesting, advertising or promoting the use of Gardner units WS-75 with their lids in the raised position (or colorable imitations thereof) in the United States;
(C) Gardner Manufacturing Co., Inc. shall cease infringing, and/or contributing to the infringement of U.S. Patent No. 5,365,690; and
(D) Gardner Manufacturing Co., Inc. shall cease promoting the WS-50 units until expiration of the `690 Patent.