An argument, even a possibly very good argument, which is presented too late, is often of no benefit. (Marine Polymer Technologies, Inc. v. HemCon, Inc.)
Marine Polymer sued HemCon for patent infringement. Summary judgment was entered as to infringement, and the case proceeded to the jury on the question of damages. Marine Polymer’s damages expert opined that his client was entitled to lost profits damages of $66M in respect of lost sales to the military and $1.5M in reasonable royalties – at a royalty rate of 30% - in respect of infringing civilian sales. The alert reader will note that this comes to a total of $67.5M.
Alternatively, this expert continued, the same “reasonable” (30%) royalty rate could be applied to ALL infringing sales, both military and civilian, in which case the damages would be a mere $29,410,246.
As might be expected, HemCon’s damages expert saw things a little differently. He opined that a “reasonable” royalty rate was between two and four percent. Utilizing a damages model where the applicable royalty rate increased as the number of sales increased, he concluded that the appropriate amount of damages would be $2,767,589. Again, the alert reader will note a “substantial disparity” between “reasonable” damages as calculated by the two “experts.”
The jury apparently found the Marine Polymer “expert” to be the more convincing, awarding “reasonable” damages of $29,410,246. This was more than HemCon’s entire profit for all of the infringing sales. Not surprisingly, HemCon filed a motion for judgment as a matter of law (“JMOL”) to reduce the damages award or for a new trial on damages. It argued that the jury’s award was “grossly excessive,” was not based on substantial evidence, and should be reduced by $26,666,713 to an award of $2,743,533. HemCon offered several theories in support of its motion.
Not so fast, ruled the judge. “It is well established that arguments not made [at the close of the evidence] cannot then be advanced in a … motion for judgment as a matter of law.” Late arguments don’t get considered. Moreover, “the law does not require that an infringer be permitted to make a profit.” The jury’s verdict stands.
THE LESSON TO BE LEARNED: “Better late than never” may not apply in a courtroom; present your arguments in a timely manner.
Yet another case that amply illustrates the difficulties that can result from the lack of a baseline standard or bright line, when determining patent damages. Damage awards are on the rise, without an apparent ceiling. Unfortunately, this appears to provide ammunition to certain anti-IP-ers who argue against the current patent system.