Sometimes an infringer (slimeball), having been dragged into court, does everything it can to obstruct the orderly progress of the litigation and, in the process, annoys the judge. Such tactics have their price. (ReedHycalog UK, Ltd. et al. v. Diamond Innovations Inc.)
ReedHycalog is the owner of nine (yes, 9!) related patents pertaining to the fabrication of cutting elements incorporated into drill bits. The patents were successfully litigated in three previous cases. ReedHycalog has licensed 95% of the drill bit industry and receives over $100M per year in royalties. At trial, Diamond allowed this information to be presented to the jury, and then acknowledged that the decision in the instant case would have an effect on the existing royalty stream. Diamond further allowed testimony that it had been offered – and had rejected – a royalty-free license under the patents. This offer was still open. Finally, the parties stipulated that, if infringement was found, the damages would be $1.5M.
After a six-day trial, the jury found the patents – all nine of them – valid and infringed. They further found the infringement to be willful. This is where the case gets interesting.
The Court – meaning the Judge – had now to decide whether to enhance the stipulated damages pursuant to the jury’s finding of willfulness. He further had to decide whether to award pre-judgment and post-judgment interest on the damages award, and whether to grant a permanent injunction barring Diamond from the future practice of the patented inventions. Moreover, ReedHycalog had filed a motion seeking recovery of its attorney’s fees and costs – including the fees paid to its expert witness.
The portion of the judge’s decision addressing those issues begins with the ominous statement, “[t]he Court discusses the more egregious actions here.” The judge went on to enumerate these actions. Diamond improperly “concealed and withheld” a validity opinion after waiving the privilege therein by producing a different, and presumably more favorable, opinion. It “repeatedly burdened the Court with unnecessary motion practice throughout this case.” “At depositions, Diamond Innovations repeatedly interrupted testimony by making improper objections that were contrary to the Local Rules. Also, its counsel improperly conferred with [a witness] during a break in his deposition, which led him to change his answer to an important question, and then refused to let him answer questions about the discussion with counsel even though he was a testifying expert. Further, … Diamond Innovations chose to ignore the Court’s order and did not participate in … mediation as ordered.”
So, what was the result of all this misconduct? The Court exercised its discretion to treble the stipulated damages to $4.5M. It awarded pre-judgment interest of $155,424 plus “post-judgment interest at the lawful federal rate.” It found the case to be “exceptional,” awarding attorney’s fees of $5,266,884. It went on to find that Diamond had unnecessarily required ReedHycalog to perform expensive tests to prove infringement of numerous products. For this reason, the Court awarded ReedHycalog $3,043,267 in experts’ fees. Finally, just to make the point absolutely clear, the Court entered a permanent injunction against Diamond. Case closed.
THE LESSON TO BE LEARNED: Play by the rules and DO NOT ANNOY THE JUDGE.