Exmark Mfg. Co. v. Briggs & Stratton Corp.

Citation: 348 F. Supp. 3d 907Docket: 8:10CV187

Court: District Court, D. Nebraska; November 25, 2018; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Joseph F. Bataillon, Senior United States District Judge, is addressing Exmark Manufacturing Company's motion to reaffirm the jury's verdict that Briggs & Stratton Corporation's patent infringement was willful. This matter stems from a remand by the United States Court of Appeals for the Federal Circuit, which vacated the district court's enhanced damages award and called for a reassessment of whether a new trial on willfulness is necessary. The Appeals Court also reversed the district court's summary judgment ruling that the patent was not invalid, requiring a reevaluation of the validity defense.

The Appeals Court highlighted an error in excluding prior art evidence relevant to Briggs' state of mind during the infringement. Citing the Supreme Court's decision in Halo, the Appeals Court clarified that the subjective willfulness of a patent infringer may warrant enhanced damages, independent of whether their defenses are objectively reasonable. The court noted that the determination of willfulness is a jury issue, not one for the district court to decide based on the reasonableness of defenses.

On remand, the district court must assess whether there exists a genuine issue of material fact regarding when Briggs became aware of its prior art defenses, which could necessitate a new jury trial on willfulness. Exmark argues for reaffirmation of the jury's willfulness finding based on Briggs' lack of belief in the invalidity of the patent prior to 2010. In contrast, Briggs contends that it had formed a belief regarding the non-inventiveness of the baffles observed on Exmark mowers in the late 1990s, maintaining that the excluded prior art is crucial to understanding its subjective state of mind and supporting the need for a new trial.

In the 2015 trial, the court ruled that the patent in question was valid, with no anticipation, obviousness, or indefiniteness issues. Briggs was found to have infringed the patent concerning its original design, and its defenses of invalidity and obviousness were deemed objectively unreasonable for willfulness determination. Exmark sought a summary judgment to exclude Briggs's invalidity defenses, arguing that these had been previously rejected. Briggs countered that prior art was relevant for assessing damages and understanding whether it should have recognized the patent's validity. The court granted Exmark's motion to exclude evidence related to the invalidity defense but allowed evidence pertinent to damages, while clarifying that prior art was not relevant for determining willfulness. The court reiterated that Briggs could not reasonably argue it relied on valid defenses to infringement, noting that no reasonable litigant would expect such defenses to succeed. Additionally, Briggs claimed attorney-client privilege regarding its counsel's advice on infringement issues but did not use this advice in its willfulness defense for the original designs.

The Court concluded that the jury must determine Briggs's subjective state of mind regarding whether the risk of infringement was known or should have been known. The Court found evidence that Briggs was aware of the '863 patent since at least 2002, as indicated by the deposition of Philip Wenzel, president of Briggs's predecessor, Ferris Industries, in a related case. In 2001, Exmark and The Toro Company sued Scag Power Equipment for infringing the '863 patent among others. Scag's defense included a claim of inequitable conduct, alleging that Exmark employee Garry Busboom misled the USPTO by not disclosing prior art, specifically the Walker mower. However, the Court rejected this claim, confirming that the Walker reference had been disclosed during the original examination of the '863 patent, and denied Scag's summary judgment motion for invalidity of the '475 patent. The case settled shortly before trial. An Ex Parte Reexamination by the USPTO on November 16, 2004, reaffirmed the patentability of the '863 patent claims without changes. 

During the current trial, the Court allowed evidence of prior art for damages related to Briggs's argument on Georgia-Pacific factor 9, specifically permitting evidence regarding side discharge mowers used before Exmark's invention, including the Walker prior art. Testimony from Jim Marshall, an engineering technician, noted familiarity with a similar baffle design. However, prior art evidence related to mulching mowers was excluded as irrelevant to the asserted claims requiring side discharge mowers. Briggs's challenge to this exclusion regarding willfulness was made during a conference, where Briggs's CEO Wenzel acknowledged reliance on counsel for redesign advice, despite the assertion of attorney-client privilege. The Court engaged with Briggs's counsel on willfulness allegations connected to the old design, particularly concerning activities during the period following the lawsuit's filing.

The Court expressed skepticism about Mr. Wenzel's portrayal as an innocent party in the case, likening him to someone who is more cunning than he appears. The discussion highlighted that Mr. Wenzel had initially claimed he would have acted differently if contacted earlier regarding a redesign but was found to have been contacted and acted in a manner contrary to his statement. Mr. Wolf raised concerns about discussions on patent invalidity occurring soon after the redesign, which he had tried to keep out of the proceedings. The Court noted that the CEO's testimony had inadvertently introduced these discussions, complicating the case.

Mr. Wolf sought an instruction that the period before the redesign should not factor into the willfulness analysis, but the Court indicated that the jury would consider the actions of the same individual both before and after the redesign. The Court expressed reluctance to delve deeper into these overlapping issues but was open to Mr. Wolf's request for an instruction in the future.

The excerpt further notes that Briggs's counsel did not request a limiting instruction or present evidence related to prior art for the willfulness analysis. Just before the case went to the jury, Briggs's counsel mentioned prior art in discussions outside the jury's presence, arguing it was relevant to damages and aimed to counter claims suggesting it was unlikely for someone else to have conceived the same invention simultaneously. Exmark countered that the presented patents were irrelevant, as there was no evidence that the relevant engineering manager was aware of these patents when developing the infringing models.

The Court highlighted the lack of evidence regarding the production status of certain items discussed in the case, suggesting potential complications. In 1995, Exmark launched its Exmark Lazer Z mower, while Gary Busboom, the inventor of the '863 Patent, conceived his invention in 1994. The '863 patent, linked to a parent application filed on November 16, 1995, was granted on November 23, 1999. The Procut Z, identified as infringing the '863 Patent, first sold in summer 1998, maintained a consistent baffle design until Briggs's redesign in 2010. Wenzel, associated with Briggs, claimed he was unaware of the patent until the lawsuit, despite having access to Exmark brochures indicating a pending patent. Evidence showed Briggs possessed Exmark mowers marked with the patent number post-1999 and had previously disassembled Exmark mowers for design insights. Wenzel relied on patent attorneys for infringement risks but noted that no subsequent patent reviews were conducted after a product's launch. He expected patent holders to notify Ferris of any infringement risks. Additionally, Briggs possessed an Exmark Lazer Z containing the '863 design as early as Fall 1996. Testimony indicated that Briggs may have copied Exmark’s design, particularly after observing Exmark's flow control baffles, leading to a design modification in 1997 aimed at improving cut quality. Notably, Dale Baumbach, who was involved in the design changes, did not testify at trial, despite suggestions that Briggs knew his whereabouts.

Baumbach collaborated with Jim Marshall on the baffle design, but left Ferris between 2000 and late 2001, and Briggs was unable to locate him until Exmark found him in 2011. Marshall recalled receiving a sketch from Baumbach in Fall 1996 and noted the presence of a baffle similar to the one in question at Ferris. Under examination, he indicated that while he had seen a similar baffle on a walk-behind mower, he had not encountered such a design in a three-bladed deck. The trial records reveal that Briggs's accused products closely resemble the designs illustrated in the '863 Patent. Philip Wenzel, responsible for manufacturing at Ferris in 1997, acknowledged that the newly added front flow control baffle was similar to Exmark's design, which Ferris incorporated to enhance cut quality. Despite the lawsuit, Briggs continued selling mowers with the original baffle design. In closing arguments, Exmark highlighted evidence suggesting that Briggs copied its invention in 1997 and questioned Wenzel's credibility regarding his knowledge of Exmark's patent from prior litigation. Exmark argued that Briggs, as a knowledgeable company, should have sought a patent after allegedly copying the design, thus indicating potential willfulness in their actions.

The jury determined that Briggs's original mower deck designs (versions 1-4) infringed the '863 patent and found that this infringement was willful, based on Exmark's clear and convincing evidence of Briggs's recklessness. Key considerations for the jury included whether Briggs adhered to industry standards, intentionally copied Exmark’s patented product, had a reasonable belief of non-infringement, made efforts to design around the patent, or attempted to conceal its infringement. The jury ruled that the redesigned mowers did not infringe the patent, and Exmark chose not to seek willfulness damages related to these mowers. The court later upheld the jury's finding of willfulness, resulting in doubled damages under 35 U.S.C. § 284, but declined to award attorneys' fees under 35 U.S.C. § 285. Briggs appealed the willfulness finding and the enhanced damages, arguing that prior art relevant to willfulness had been improperly excluded. During a pretrial conference, the court allowed Exmark to submit additional evidence regarding willfulness, despite Briggs's objections that this evidence was missing from the record. Briggs contended that its defense against willfulness was supported by knowledge of prior art and similar mowers, suggesting their actions were not unreasonably risky.

Briggs failed to identify any witnesses or specific testimony supporting its objections, leading the Court to overrule them after reviewing evidence from both parties. Exmark's supplemental evidence indicated that during discovery, it did not assert that the baffle design was non-inventive during the willfulness period (1999-2010) but rather relied on a lack of awareness of the patent. Exmark noted that Briggs had been designing and selling similar mower decks since before the '863 patent was issued, with allegations of infringement only arising in 2010. Briggs, in its response, referenced the deposition testimonies of Phil Wenzel, Robert Laurin, and James Marshall but did not adequately support its claims regarding its belief on the inventiveness of Exmark's baffles during the relevant period or identify prior art. 

Additionally, the excerpt references the Supreme Court decision in Halo Electronics, which modified the standard for determining willful infringement by eliminating the requirement for an objective prong. The Court emphasized that enhanced damages could be warranted based solely on subjective willfulness, which includes recklessness or knowledge of unreasonable risks. The standard for proving willful infringement was lowered from "clear and convincing" evidence to "preponderance of the evidence." Following Halo, the Federal Circuit affirmed that a jury's finding of subjective willful infringement suffices for a claim of willful infringement, negating the need for a retrial based on previous standards.

Enhanced damages are typically reserved for cases demonstrating egregious willful misconduct, with juries now solely responsible for determining willfulness, as established in Halo. District courts retain discretion under 35 U.S.C. § 284 to award enhanced damages. In this case, the Court assessed whether there was a genuine issue of material fact regarding Briggs's awareness of its prior art defenses, concluding there was not. Briggs claimed ignorance of Exmark's patent until litigation commenced, and no evidence supported its belief that previous observations of Exmark's mower influenced its design decisions. The willfulness claim pertained only to Briggs’s original mower design, introduced in 1998, which showed strong evidence of copying after Briggs's CEO observed Exmark's product at a trade show. 

The Court determined that Briggs was liable for infringement up to the redesign, noting that Briggs did not assert an advice of counsel defense regarding the original designs and maintained privilege over related counsel communications. The relevance of prior art to Briggs's culpability was deemed largely insignificant, as the willfulness determination focused on the design, marketing, and sale of infringing products. Despite Briggs’s ongoing sales post-litigation, it was indicated that they promptly initiated a redesign. 

The Court previously granted summary judgment on validity, but an Appeals Court reversed that finding, requiring a reassessment of potential genuine issues regarding invalidity. Ultimately, the Court reaffirmed its earlier ruling, acknowledging that had genuine issues been found, Briggs's arguments on willfulness could have been stronger. The jury's willfulness finding heavily relied on evidence of copying from Briggs's predecessor, Ferris, and was supported by continuous management between the companies. Following the Halo decision, a jury could determine willfulness based solely on subjective intent, rendering the Court's prior assessment of Briggs's defenses as objectively unreasonable irrelevant. The jury was tasked with evaluating whether Briggs was aware of a significant risk of infringement or if it was so evident that it should have been known.

The jury was instructed based on the Halo standard, which assesses willful infringement. Substantial evidence indicated that Exmark's mower deck significantly improved cut quality compared to prior art, specifically side-discharge mowers. Testimony was presented regarding the Walker prior art and baffles previously observed by Marshall, but the Appeals Court upheld the exclusion of other prior art (like mulching mowers) as irrelevant to the claims. The potential relevance of alternative baffle designs suggested that Briggs lacked a credible defense against infringement, indicating that they either knew they were infringing or that the infringement was obvious.

Briggs's arguments regarding the novelty of Exmark's design were undermined by their marketing strategies that highlighted the improved cut quality of their infringing products. Despite holding other patents, Briggs did not pursue a patent for the baffle design, and their claim of privilege limited inquiry into evidence that might clarify their intent. No evidence supporting Briggs's invalidity defense was presented, suggesting it was merely a litigation tactic.

The jury found Briggs's infringement to be willful, with evidence indicating that prior art would not have altered the jury's judgment given the strong indications of copying. The significance of the invention lay in the improved cut quality of Exmark's three-bladed, side-discharge mower, which prior art had not achieved. The court noted that evidence of prior art, if admitted, would not have changed the outcome due to the compelling evidence of Briggs's recklessness in disregarding the patent's validity—especially given the existence of "patent pending" markings on Exmark's products and Briggs's own disassembly of patented mowers. Briggs's assertion that other manufacturers had used similar baffles for years was deemed insufficient, as Exmark was recognized as the first to employ that specific baffle design in a three-bladed, side-discharge mower.

Ferris's and Briggs's limited patent review policy fails to provide a reasonable defense, particularly due to its claim of privilege over evidence that could clarify its actions. Prior art related to similar baffles is deemed irrelevant to the damages or willfulness associated with the '863 patent, as evidence of old baffle use would confuse the jury. Briggs's reliance on a laches argument—claiming Exmark delayed in asserting its rights—was rejected by the Appeals Court, which upheld the exclusion of evidence regarding Exmark's timing in filing for infringement, noting resource constraints. The record indicates Briggs exhibited subjective intent to infringe, recognizing Exmark's inability to litigate. Briggs's assertion that Exmark failed to notify them of the infringement is inconsequential, as Exmark had no duty to inform. Exmark's claims regarding redesigned baffles did not compel Briggs to cease infringement or negotiate a licensing fee. The jury's conclusions aligned with Halo standards, determining willfulness based on the known or obvious risk of infringement, which Briggs contested without success. The jury found evidence of subjective intent to infringe, rejecting Briggs's claim of ignorance regarding Exmark's patent until 2010. Evidence shows Briggs acquired an Exmark Lazer Z in 1996, replicated the flow baffles, began selling the infringing product in 1998, and did not investigate patent status—indicating reckless disregard for Exmark's patent rights. Briggs's argument regarding the prejudicial nature of Exmark's comparisons to the accused product, without considering prior art, was dismissed as unmeritorious.

Comparison of Claim 1 to the accused product is crucial for establishing evidence of copying, while comparing it to prior art could improperly allow the alleged infringer to introduce an alternative claim construction and re-litigate a previously disallowed defense. Following the Federal Circuit's remand, the Court determines that a retrial on the willfulness finding is unnecessary, leading to the granting of Exmark's motion to affirm the jury's willfulness finding. A new trial will be limited to determining the amount of compensatory damages. The Court also addresses Briggs's intention to present numerous prior art exhibits, stating that prior art is relevant only insofar as it pertains to commercialized products, which was previously misinterpreted by the Appeals Court. The court clarified that uncommercialized prior art references were not applicable since they did not pertain to side-discharge mowers, thus lacking relevance. The significance of commercialization lies in its ability to indicate the alleged infringer's awareness of the invention's unique qualities compared to existing products, which is essential for assessing the market value of the infringed invention. The Appeals Court also upheld the exclusion of prior art related to mulching mowers as irrelevant.