Petition for Writ of Certiorari — Mee Industries Inc. v. Dow Chemical Co.

rame Court, U.S

- FILED

No. 10-______ 19-60 1 Nu 2~ 2010

— OFFICE OF THE CLERK

Bn The

Supreme Court of the United States

—_—___—. @ — a

MEE INDUSTRIES, INC.,

Petitioner.

DOW CHEMICAL COMPANY,

Respondent

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

PETITION FOR WRIT OF CERTIORARI

SID LEACH

SNELL & WILMER L.L.P.

One Arizona Center

400 KE. Van Buren

Phoenix, AZ 85004-2202

(602) 382-6372

sleach@swlaw.com

November 2, 2010

Attorney for Petitioner

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

In Anderson v. Liberty Lobby, Inc., 477 U.S. 242

(1986), this Court held that, in ruling on a motion for

summary judgment, a court must view the evidence

presented through the prism of the substantive

evidentiary burden.

1. In applying this Court’s decision in Anderson

uv. Liberty Lobby, Inc., 477 U.S. 242 (1986), how is a

clear and convincing evidentiary standard to be

considered in ruling on a Rule 50 motion for judg-

ment as a matter of law without engaging in imper-

missible weighing of evidence?

2. In applying this Court’s decision in Anderson

v. Liberty Lobby, Inc., 477 U.S. 242 (1986), is a court

required to draw all justifiable inferences in favor of

the non-moving party before the clear and convincing

standard of proof is taken into account, or may the

court determine that inferences which are justifiable

under a lesser standard of proof are not “justifiable”

inferences when the clear and convincing standard of

proof is considered?

3. In applying this Court’s decision in Anderson

v. Liberty Lobby, Inc., 477 U.S. 242 (1986), is it proper

for a court to consider the closeness of the issues on

an affirmative defense on which the moving party

has the burden of proof, when determining whether

the non-moving party has presented sufficient evi-

dence on an issue as to which the non-moving party

has the burden of proof by clear and convincing

evidence?

CORPORATE DISCLOSURE STATEMENT

Petitioner Mee Industries, Inc. is a family owned

private corporation. There is no parent or publicly

held company owning 10% or more of petitioner's

stock

TABLE OF CONTENTS

QUESTIONS PRESENTED

CORPORATE DISCLOSURE STATEMENT

TAR OP CORT EIN ssvicsvesccecssssxscescens

TABLE OF AUTHORITIES. ....

INTRODUCTION ...............

CFR EET OE SU MRI AY 5 cicc ks sibssnapeasanvacecanssaaecias

JURISDICTION

CONSTITUTIONAL AND STATUTORY PRO.-

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REASONS FOR GRANTING THE WRIT ...........

a

Federal Court Decisions Applying Ander-

son v. Liberty Lobby Struggle With the

Prohibition Against Weighing the Evi-

dence, and Take Different Approaches on

Drawing Justifiable Inferences in Favor

of the Non-Moving Party

The States Are Divided on the Adoption

and Proper Application of Anderson v.

Liberty Lobby

This Court’s Guidance Is Needed, and

This Case Is an Ideal Vehicle

TABLE OF CONTENTS — Continued

Page

A. The Record in This Case Included

Evidence That Respondent Had Ac-

tual Knowledge That Respondent

Wrongfully Sued Petitioner for Patent

Infringement Without Any Evidence

That Petitioner’s Customers Infringed

the Patents ............ AFAR AREAS EMA eR Oe 30

B. The Record in This Case Included

Evidence That Respondent Had Ac-

tual Knowledge That Respondent

Wrongfully Sued Petitioner for Patent

Infringement Without Any Evidence

to Support a Claim of Indirect In-

I fo oacs coca vasucrecsssausstaciexnamaivinn 31

C. The Contradictions and Confusing

Standard Provided by Liberty Lobby

Have Resulted in Lower Courts’ Dis-

regarding Fundamental Constraints

on the Role of the Court in the Eval-

EMLIOT OF BI VIGOTICO cc. ccc sccccsvnccsrscccvccnees 35

Se IN hectic ics caigcducieepaa cas iks iadiaoakenusaxeeines 38

APPENDIX

Court of Appeals Opinion (June 15, 2010).......... App. 1

District Court Order (October 31, 2008)........... App. 43

Court of Appeals Order Denying Rehearing

SPRING GT 0 cans sss cn exavdetvassacssciseiovevaxsssions App. 64

is Ns WO, Fos cena cs cane dkepescicansiccaasstdasucceoaees App. 66

TABLE OF AUTHORITIES

Page

CASES

Addington v. Texas, 441 U.S. 418 (1979) ...................28

Anderson v. Liberty Lobby, Inc., 477 U.S. 242

RUS ae ee sare PEL te ae a aN eC REE eee TO EEE ete passim

Bartlett v. Marabel, 128 N.M. 830, 999 P.2d

1062 (Ct. App. 2000), writ of cert. quashed,

130 N.M. 154, 20 P.3d 811 (2001)......... 20, 21, 27, 28

Bell Atlantic Corp. v. Twombly, 550 U.S. 544

Berner v. Caldwell, 543 So.2d 686 (Ala. 1989),

overruled in part on other grounds, 769 So.2d

903 (Ala. 1999)...... SEEIHeL Eada dak aase eoewadeaeraedseetaeeaaet ki Ges 27

Cerberus International, Ltd. v. Apollo Man-

agement, L.P., 794 A.2d 1141 (Del. 2002)............... 27

Chester v. Indianapolis Newspapers, Inc., 553

IV .2G.20 157 CINE. ADD. 1GGO) ...0.sececisccossscesscssccevesness 27

Dairy Stores, Inc. v. Sentinel Publishing Co..,

104 N.J. 125, 516 A.2d 220 (1986).............000.... 21, 25

DePrimo v. Lehn & Fink Prods. Co., 223 N.J.

Super. 265, 538 A.2d 461 (1987) ............... cece neeee 27

Dynacore Holdings Corp. v. U.S. Philips Corp.,

363 F.3d 1263 (Fed. Cir. 2004)....................82, 33, 34

eBay Inc. v. MercExchange, L.L.C., 547 US.

IND: «<0 5-2c ss ins sbnuvuncsanbesnacaiavburgueadediuelssabcceinicousce ee

Festo Corp. v. Shoketsu Kinzoku Kogyo Ka

pusneet Co., BSG UB. TEE CGE) crcccncesvescsenessvscsetens 30

Hewlett-Packard Co. v. Bausch & Lomb, Inc.,

YOY F.2d 1464 (Fed. Cir. 1990)........ . iteiecien ee

v1

TABLE OF AUTHORITIES — Continued

Page

Huckabee v. Time Warner Entertainment Co..,

19 BS. W.0G 413 CTex. ZOO])......rccccsesesceveseees: rercotd, 20

In re First Alliance Mortgage Co., 471 F.3d 977

a is aseugunesenacnente 24

Jacob v. New York City, 315 U.S. 762 (1942)............. 21

Jean v. Dugan, 20 F.3d 255 (7th Cir. 1994)................. 4

Jones v. GMC, 325 Or. 404, 939 P.2d 608 (1997).......27

Lucent Technologies, Inc. v. Gateway, Inc., 543

eee Fe CU, CRE, BD voce dc cccovecsecaccconscvesecsccens neue

Lytle v. Household Mfg., Inc., 494 U.S. 545

ee etd a Te es canneneeies ree 19

Massachusetts Institute of Technology v. Har-

man International Industries, Inc., 584

F. Supp.2d 297 (D. Mass. 2008).................. 22, 23, 24

Matsushita Electric Industrial Co. v. Zenith

Radio Corp., 475 U.S. 574 (1986) ............0.cccccereseeesdD

Moba, B.V. v. Diamond Automation, Inc., 325

F.3d 1306 (Fed. Cir.), cert. denied, 540 U.S.

ee a tu de sco sacnbghacandceua inet

Moffatt v. Brown, 751 P.2d 939 (Alaska 1988) ....21, 26

Organon Inc. v. Teva Pharmaceuticals, Inc.,

244 F. Supp.2d 370 (D.N.J. 2002)............ccccsccssseeesed

Parker v. Haller, 751 P.2d 372 (Wyo. 1988) ............... 27

Reeves v. Sanderson Plumbing Prods., Inc., 530

ee a ED ck, as ce Cane <anncyeuiasvinasaceatenecdevakeancouieess 19

Romero v. Philip Morris Inc., No. 31,433, 2010

N.M. LEXIS 370 (Sup. Ct. June 25, 2010)............. 27

TABLE OF AUTHORITIES — Continued

Page

Schriber-Schroth Co. v. Cleveland Trust Co.,

ee ee ee nd cc ceunaadevankemsmnersnbes 30

SCO Group, Inc. v. Novell, Inc., No. 2:04-cv-139

TS, 2010 U.S. Dist. LEXIS 28805 (ID. Utah

March 25, 2010) ................. ee ee 24

Sieelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807

ee CE, REED daknaiecchncsenaincetunksdsscusieeusiepsnasecss 27

Verve, L.L.C. v. Hypercom Corp., No. CV-05-

0365-PHX-FJM, 2007 U.S. Dist. LEXIS

21998 (D. Ariz. March 26, 2007)...............ccceceeseeeees 38

5Q@’s Car Sales, Inc. v. Florida Dept. of Law

Enforcement, 581 So.2d 212 (Fla. Ct. App.),

review denied, 592 So.2d 679 (Fla. 1991)............... 27

STATUTES AND RULES

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Are ee TE 0 FIED occcédedcucaccccsncdanionccecansnsecncas 4

ee rie Oe CIEE vakawssvuscincoccskasnuteners ena tuau mate 8

35 U.S.C. §271(b).......... Re Pelsttak pen AE AONE Ay Ae SoA SNE 32, 33

SS cs cpcuccugicenns bins sanansaxisuiivaneooienes 2032, OS

Fla. Stat. §768.72(2)(a) (1999)........................0, 4, 7, 31

Pie. COE. SZ. Ta) CLOG Do vcccccccccccssccccsccsvcccnesthy By 2

ID ts IE PMG anc iicvcssudeccsvaccecdsnatans l, 5, 19, 22. 36

Peule BO(a). POG. IR. CRV.E. ..ccccccccccscccccccvcccsecs 4,5, 6, 29, 34

Vill

TABLE OF AUTHORITIES — Continued

Page

Rule 50(b), Fed. R.Civ.P 4, 5, 6, 24

Rule 56, Fed.R.Civ.P 1. 19, 22

OTHER AUTHORITIES

Mullenix, Summary Judgment: Taming the

Beast of Burdens, 10 AM. J. TRIAL ADvoc. 433

(1987)........ cameueseuewinas PIR SSI RIS tO

Issacharoff & Loewenstein, Second Thoughts

About Summary Judgment, 100 YALE L.J. 73,

a ae ae ae aaa ios ca saepavasevebids 1128

Stempel, A Distorted Mirror: The Supreme

Court’s Shimmering View of Summary

Judgment, Directed Verdict, and the Adjudi

cation Process, 49 OHIO ST. L.J. 95, 115-16

(1988) bus Puy Rnoree 28

INTRODUCTION

Lower courts must deal with Rule 50 motions

and Rule 56 motions on a daily basis. Over two

decades ago, this Court held that a court must “view

the evidence presented through the prism of the

substantive evidentiary burden” when a clear and

convincing evidence standard applied to the issues

involved in a Rule 56 motion or Rule 50 motion.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254

(1986). Although the Court’s opinion was replete with

language to the effect that a trial court is not to weigh

the evidence when deciding such motions, Justice

Brennan’s dissenting opinion noted “the Court’s

opinion is also full of language which could surely be

understood as an invitation — if not an instruction

to trial courts to assess and weigh evidence much

as a juror would.” 477 U.S. at 266 (Brennan, J.,

dissenting). This Court’s opinion in the Liberty Lobby

case did not tell a court how a clear and convincing

evidentiary standard is to be considered, and federal

and state courts have struggled to apply the Liberty

Lobby standard. There is a split among state courts,

with some states refusing to adopt this Court’s hold-

ing because it necessarily requires a weighing of the

evidence. In the present case, a Rule 50 motion was

denied on an intentional tort claim under a lesser

standard of proof, but based on the same evidence,

a Rule 50 motion was granted on the question of

punitive damages, where the clear and convincing

standard of proof applicable to a finding of intentional

conduct was held to be determinative. This case

presents the perfect opportunity for this Court to

resolve confusion in the lower courts concerning how

to apply the Liberty Lobby decision without engaging

in impermissible weighing of evidence, and whether

the substantive evidentiary standard makes a differ

ence in the determination of which inferences are

justifiable

OPINION BELOW

The decision of the court of appeals is reported at

608 F.3d 1202, and is reproduced in the Appendix

herein at App. 1-42. The decision of the U.S. District

Court for the Middle District of Florida is not offi

cially reported but is available at 2008 U.S. Dist

LEXIS 116722, and is reproduced in the Appendix at

App. 43-63.

JURISDICTION

The court of appeals issued its decision on June

15, 2010. Appendix (hereafter “App.”) at 1. Respon

dent’s timely petition for rehearing was denied on

August 4, 2010. App. 64. This petition for a writ of

certiorari has been timely filed within 90 days of the

decision denying the rehearing petition. This Court’s

jurisdiction is invoked under 28 U.S.C. §1254(1)

CONSTITUTIONAL AND

STATUTORY PROVISIONS

“In suits at common law, where the value in

controversy shall exceed twenty dollars, the right of

trial by jury shall be preserved, and no fact tried by a

jury, shall be otherwise reexamined in any court olf

the United States, than according to the rules of the

common law.” U.S. Const. amend. VI]

“A defendant may be held lable for punitive

damages only if the trier of fact, based on clear and

convincing evidence, finds that the defendant wa

personally guilty of intentional misconduct or gro

negligence.” Fla. Stat. §768.72(2) (1999)

The Florida statute defines “intentional n

conduct” and “gross negligence” as follow

(a) “Intentional misconduct” means that the

defendant had actual knowledge of the

wrongfulness of the conduct and the

high probability that injury or damage

to the claimant would result and, despite

that knowledge, intentionally pursued

that course of conduct, resulting in in

jury or damage

(D “Gross negligence’ mean Lhat Une

defendant's conduct wa: o reckle:

or wanting in care that it constituted

a conscious disregard or indifference

to the life. safety, Or night: Oot person

exposed to such conduct

la. Stat. 9768.72(Z)a) & (b) (1999). ‘The Latuls

reproduced in full in the Appendix at 66-67

STATEMENT OF THE CASE

‘he basis for federal jurisdiction in the district

court was diversity of citizenship pursuant to 28

U.S.C. §1332(a)(1). The federal question presented

involves the correct analysis for deciding Rule 50

motions (and summary judgment motions where th

INQulry t the ame) when cl che cil and COMVITICIT)

evidentiary standard appli

In the case below, the district court denied a post

trial Rule 50(b) motion by respondent, who was thi

delendant, finding that the evidence was sufficient to

upport a jury verdict that respondent committed thi

intentional tort of malicious prosecution. App. 43

llowever, on the same evidentiary record, the district

court granted a Rule 50(a) motion during trial in

favor of respondent, on the question of punitive

damages, which required proof of intentional mi

conduct (or Pros negligence) meellny a clear and

convincing evidentiary standard. App. 2. The court ol

appeal affirmed the district court on both issue

finding that there wa ullicient evidence t upport

ce Jean v. du ri OW Fe 34d 255. 262-63 jth Cy 1994

Aithough Late law controls the substantive issue Lineal

diversity case, the standard tor deciding whether unmary

judyment Wa ipproprials j aomatter ot tederal tay

1

ad

the jury verdict on the respondent’s lability for

malicious prosecution, but that the clear and convinc-

ing burden of proof was determinative on the issue of

punitive damages. App. 39.

The malicious prosecution action below arose out

of a patent infringement lawsuit that respondent

Dow Chemical Company (“Dow”) filed against peti-

tioner Mee Industries, Inc. (“Mee”) in the U.S. Dis-

trict Court for the Middle District of Florida without

probable cause, and which was ultimately terminated

in favor of petitioner. App. 43-44. The malicious

prosecution action was ultimately tried in the same

federal court before the same judge who had previ-

ously presided over the unsuccessful patent infringe-

ment lawsuit. App. 44.

In order to establish lability for malicious prose-

cution, petitioner presented sufficient evidence to

support jury findings that respondent commenced a

civil proceeding against petitioner, without probable

cause and with malice, causing petitioner to suffer

damages, and the civil proceeding was terminated in

favor of petitioner. App. 47. At trial, it was undisput-

ed that respondent commenced a civil proceeding

against petitioner, causing petitioner to suffer dam-

ages, and the civil proceeding was terminated in

favor of petitioner. App. 47-48. With respect to re-

spondent’s Rule 50 motions, respondent’s Rule 50(a)

motion during trial did not challenge the evidence

supporting a finding of malice, and respondent’s

post-trial Rule 50(b) motion did not challenge the

a dawé

LAT ALL

jury’s finding as to malice. App. 45. RNespoi

stipulated that petitioner suffered damages, and

stipulated to the amount of compensatory damages.

App. 48.

The district court bifurcated the trial. In the first

phase, the parties presented all evidence of liability

regarding entitlement to both compensatory and

punitive damages, but the jury verdict was limited to

liability for compensatory damages. If the jury came

back with a verdict for petitioner in the first phase,

the jury was then to be asked to consider punitive

damages in the second phase. However, while the

jury was out considering its verdict for the first

phase, the district court granted respondent’s Rule

50(a) motion on punitive damages and took that issue

away from the jury. The district court concluded that

based on the evidence, no reasonable juror could find

by clear and convincing evidence that the require-

ments for punitive damages had been met. App. 14.

The jury returned a verdict for petitioner, con-

cluding that respondent had instituted the patent

infringement lawsuit against petitioner without

probable cause and had not relied upon advice of

counsel in doing so. App. 44.

Respondent’s post-trial Rule 50(b) motion raised

only two issues: (1) whether there was sufficient

evidence to support a jury finding of no probable

cause, and (2) whether no reasonable jury could have

found against respondent on respondent’s affirmative

defense of advice-of-counsel, on which the moving

party respondent bore the burden of proof. App. 44 &

~

48; App. 14. Both the district court and the court of

appeals held that there was sufficient evidence to

support the jury’s finding that respondent filed the

patent infringement lawsuit without probable cause.

App. 53-54 & n.5; App. 31.” Both the district court and

the court of appeals held that respondent failed to

carry its burden of proof on its affirmative defense

that it relied in good faith on the advice of counsel

in filing the patent lawsuit against petitioner. App.

61-62; App. 37-38.

Petitioner was entitled to submit the issue of

punitive damages to the jury if the evidence was

sufficient to support a finding of “intentional miscon-

duct” by respondent within the meaning of Fla. Stat.

§$768.72(2)(a) (1999), under a clear and convincing

evidentiary burden of proof.” This reduced to the

question of whether respondent had actual knowledge

there was insufficient probable cause to support re-

spondent’s patent infringement claims against peti-

tioner, because respondent was well aware of the high

probability that petitioner would be forced to incur a

million dollars or more in legal fees to defend a patent

case, and intentionally pursued the patent case

despite that knowledge. App. 51-53.

* The district court found that “laJmple evidence supports

the jury’s conclusion on the issue of probable cause.” App. 52.

* Alternatively, if petitioner provided clear and convincing

evidence of “gross negligence” within the meaning of Fla. Stat.

§768.72(2b) (1999), the question of punitive damages should

have been submitted to the jury.

A key witness on the question of respondent’s

actual knowledge was William Miller (“Miller”), an

experienced patent attorney who was an employee of

respondent, and who had shepherded respondent's

patent applications through the U.S. Patent and

Trademark Office that resulted in the two patents

asserted against petitioner. App. 57. Miller served as

the “point man” at respondent for prosecution of the

patent applications, and had been involved in the

initial drafting and filing of the patent applications.

App. 57. Miller had been involved in the initial draft-

ing of the required patent claims’ particularly point-

ing out and distinctly claiming the subject matter

which respondent regarded as the invention. Miller

had “lived and breathed” with the patent claims for

“quite some period of time,” and those patent claims

defined what subject matter could be accused of

infringement of respondent’s patents. App. 57.

In the patent infringement action, respondent

accused petitioner of infringement of U.S. Patent

No. 5,930,990 (the “’990 Patent”) and U.S. Patent

No. 5,867,977 (the “’977 Patent”). App. 43-44. Both

patents were directed to increasing the power output

of gas turbines. Both involved methods for adding

water to a gas turbine’s intake air stream in large

enough quantities that at least some water would not

“ 35 U.S.C. §112 (2007) (“The specification [of a patent]

shall conclude with one or more claims particularly pointing out

and distinctly claiming the subject matter which the applicant

regards as his invention.”).

9

evaporate before entering the compressor, creating an

effect known as “wet compression.” App. 44. Respon-

dent’s claimed invention involved the addition of

nebulized water to a gas turbine in sufficient

amounts to achieve “wet compression,” and the water

had to be introduced in increments and in such a

manner as to avoid certain harmful results (destruc-

tive thermal stresses in one patent, deformation of

the angular housing in the other). App. 52. Achieving

“wet compression” by adding water incrementally was

referred to as “incremental wet compression.” App.

21.

The evidence at trial clearly established that

respondent knew “incremental wet compression”

itself was prior art, because respondent admitted it.

App. 52 & n.4; App. 57.° The evidence at trial clearly

showed that Miller knew that “incremental wet

compression” alone would not infringe respondent’s

patents, because Miller admitted it. App. 57 (“Miller

was therefore aware that incremental wet compres-

sion alone would not infringe the Dow Patents ... ”);

App. 29 (Respondent “Dow conceded at trial that the

use of [petitioner’s] systems for incremental wet

In addition to Miller, respondent’s engineer named Steve

Jasper admitted at trial that “wet compression” was old technol-

ogy and unpatentable. App. 53 (“[WJet compression ... was old

technology and unpatentable. Jasper, among others, admitted as

much at trial.”). Jasper was described as “a Dow technical

expert.” App. 4.

10

compression alone was not a sufficient basis for

infringement.”).

More importantly, respondent’s employee Miller

knew that, in prosecuting the applications for both

patents that were asserted against petitioner, re-

spondent had repeatedly tried to claim a method for

performing “incremental wet compression” without

any further limitations, and Miller knew that the

patent examiners had refused to allow such a claim in

either of respondent’s patent applications because

“incremental wet compression” was disclosed in the

prior art. App. 57. Consequently, respondent’s experi-

enced patent attorney Miller knew that respondent

could not expand the scope of the patent claims by

attempting to construe the patent claims in either

patent to cover only “incremental wet compression,”

since respondent had been denied patent claims of

that scope, and had therefore narrowed the scope of

its patent claims in order to obtain the allowance of

both patents asserted against petitioner. App. 57;

App. 29. See also App. 38 (“In this case, [respondent]

Dow possessed extensive knowledge of the back-

ground technology, the history of its patents, and

issues of patent law... ”).

Miller knew that respondent never possessed and

never acquired any evidence of infringement. App. 61-

62. The district court judge, who presided over both

the original patent case and the subsequent malicious

prosecution case, found: “In its research prior to filing

the Patent Case, and indeed throughout the trial in

that case, [respondent] Dow never produced any

1]

evidence that the limitations of the [patent] claims at

issue had been met by the use of any of [petitioner]

Mee’s equipment.” App. 53. In addition to holding

that there was sufficient evidence to support the

jury’s finding that respondent lacked probable cause

to file the patent infringement lawsuit against peti-

tioner, the district court judge confirmed that if the

decision had been one for him to resolve, he would

have reached the same conclusion.” App. 53-54 n.5.

There was evidence produced at trial that Dow

considered Mee a competitor that should either be

forced to pay Dow for a license or get out of the

market for power augmentation technology. App. 61.

The evidence supported a reasonable inference that

respondent Dow took several steps primarily if not

entirely for the purpose of causing financial harm to

petitioner Mee. App. 61. Respondent sued one of

petitioner’s customers, t.e., Florida Power Corpora-

tion (“Florida Power”), in the same lawsuit filed

against petitioner.’ App. 43. The district court found:

At least arguably, Dow took several steps

primarily if not entirely for the purpose of

causing financial harm to Mee. For example,

* This was in response in respondent’s argument that

probable cause was an issue for the court to decide, and not for

the jury to decide. Respondent waived this issue by failing to

object to the jury instructions and verdict form submitting this

question to the jury. App. 53-54 n.5.

’ The patent infringement lawsuit terminated in favor of

Florida Power as well. App. 44.

12

Dow chose to sue the California-based Mee

in Florida, rather than in one of numerous

other states in which Mee had customers -

and with absolutely no evidence that

Florida Power was even using Mee’s

equipment for wet compression. (When

asked why Dow chose to sue in what

appeared to be the most expensive possible

forum for Mee, Dow’s witnesses were unable

to articulate a compelling reason.) Dow also

sent warning letters to the rest of Mee’s cus-

tomers after filing the Patent Suit, informing

them that they might face an infringement

suit for using Mee’s equipment.

App. 61 (emphasis added). The district court also

found that, “Dow sent letters to Mee’s customers,

warning them that they themselves might face an in-

fringement suit for using Mee’s equipment — despite

a lack of evidence that any of these customers

were performing Dow’s patented methods.” App.

58 n.7 (emphasis added).

The letters that respondent sent to all of peti-

tioner’s customers advising them that they might also

be infringing respondent’s patents, were sent out

shortly after the district court denied respondent’s

motion for a preliminary injunction and concluded

that respondent was not likely to prevail on the

merits. App. 37. “[TJhe particular timing of these

letters, coming as they did after the district court had

already told Dow that it had failed to show a likeli-

hood of success, could have led the jury to conclude

that Dow’s purpose was not to vindicate its legitimate

patent rights, but instead to cause Mee financial

harm.” App. 37.

The district court held that the evidence was

sufficient to support a reasonable inference by the

jury that these were “tactics employed [by respon-

dent] for the purpose of ratcheting up the economic

pressure on Dow’s much smaller competitor so as to

force [petitioner] out of the power augmentation

market, regardless of whether any infringement was

occurring.” App. 61.

The patent claims asserted against petitioner in

the patent infringement lawsuit were method claims.

At trial, the parties focused upon a single method

claim in each patent. The two patent claims upon

which the malicious prosecution case was litigated

are reproduced in the court of appeals opinion in the

Appendix, App. 8-9, but it is unnecessary for purposes

of this petition to discuss the claims in detail, given

the admissions and concessions that respondent’s

witness Miller made at trial.

Significantly, it was undisputed at trial that, if

the method claims in respondent’s patents were

infringed at all, they were only directly infringed by

petitioner’s customers when the customers used the

equipment that the customers purchased from peti-

tioner. At trial, respondent conceded that its in-

fringement case against petitioner was necessarily

based only on a theory of indirect infringement. App.

ee ee ee ee a

14

and Dow were well aware of that fact.”); App. 17.

Thus, in order to prevail, respondent needed “proof

that Florida Power performed all of the elements of

this claimed method, and then that Mee either in

duced or contributorily infringed ... ”. App. 17-18.

See also App. 52-53 (“Thus, for Mee to be liable for

inducing or contributing to infringement of these

method patents, Dow needed to show that at least

one of Mee’s customers was actually doing something

more than just incremental wet compression.”).

The evidence clearly showed that “Miller and

Dow also knew that Mee could not be liable for indi-

rect infringement unless one or more of Mee’s cus-

tomers were actually using the equipment in an

infringing manner.” App. 35. Miller and respondent

“knew that [petitioner’s} equipment could be used [by

customers] in ways that did not infringe [respon-

dent’s} patents.” App. 57; App. 31 n.11 (“[T]he record

is clear that the Mee equipment had substantial non-

infringing uses.”). The district court found that, “Dow

made no effort to ascertain whether any of [petitioner

Mee’s| customers actually used Mee’s equipment in a

manner that would infringe the patents.” App. 53."

Respondent never produced any evidence that the

limitations of any of respondent’s patent claims were

* “The absence of a reasonable suspicion that any customer

was directly infringing on the [patent) claims supports a finding

that there was an absence of reasonable suspicion that Mee was

liable under either theory of indirect infringement.” App. 31.

met by the use of petitioner’s equipment by any of

petitioner's customers. App. 53.

As to the evidence relating to respondent’s ad

vice-of-counsel affirmative defense, Miller wrote a

letter to an outside attorney named William

Schramm (“Schramm”), and obtained an opinion

letter from Schramm that respondent’s patents were

valid and infringed. App. 55. The jury could reason-

ably draw an inference from a reading of the letter

written by Miller that respondent only wanted

Schramm’s opinion as to the validity of the patents,

and not an opinion on the question of infringement.

App. 58 (“|A] fair reading of the solicitation letter

from Miller at least arguably suggests that the com-

pany wanted Schramm’s opinion as to the validity of

its patents, only, not their possible infringement by

Mee.”).

The district court and the court of appeals both

held that the evidence supported a finding by the jury

that respondent knew Schramm’s advice was defli-

cient, and the jury could have reasonably concluded

that respondent did not rely in good faith on

Schramm’s advice in filing the patent infringement

lawsuit. App. 38; App. 61-62. The district court found:

Miller knew that when Dow first contacted

Schramm, the company had no evidence that

Mee or its customers were performing

anything more than incremental wet com-

pression. ... Miller was aware that Dow had

not attempted to obtain this evidence by

such means as, for exampie, contacting any

16

of Mee’s customers (using the list that Me

had provided) to inquire as to the methods

they were employing when using Mee’

equipment. And Miller knew that Schramm

did not obtain any evidence that Mee or it:

customers were engaging in something more

than incremental wet compression

App. 58. The district court concluded that a jury could

have reasonably rejected respondent’s affirmativ:

defense based upon “Miller’s knowledge that [respon

dent] never possessed (and Schramm never acquired

any evidence of infringement.” App. 61-62

Finally, Schramm’s letter never explicitly di

cusses any theory of indirect infringement, which wa:

a crucial point required in order to have probable

cause to sue petitioner. App. 36. The court of appeal:

held, that “liJf the jury concluded, as it reasonably

could, that Schramm did not consider indirect in

fringement at all, then a reasonable jury could have

concluded that Dow did not rely in good faith on the

opinion, especially in light of Miller’s knowledge that

Mee could be liable only for indirect infringement

App. 36

However, the court of appeals concluded, “there }

an issue of fact as to whether the [Schramm] letter

actually addressed the issue of indirect infringe

ment.” App. 36. The court of appeals based thi:

conclusion on the fact that Schramm’s letter mention:

a User Guide for petitioner’s equipment. Jd. But as to

the User’s Guide, the court of appeals said that it

provides further evidence that petitioner’s system

could be used to achieve wet compression, and the

systems would add water incrementally, but “Dov

conceded at trial that the use of Mee’s systems for

incremental wet compression alone was not a suffi

cient basis for infringement.” App. 29. Therefore, th

above-mentioned “issue of fact” was apparently based

on a conclusion that a jury might have drawn th

inference that the Schramm letter implicitly ad

dressea indirect infringement, because the jury might

have drawn the inference that Schramm “may hav

implicitly interpreted Mee’s User Guide as evidencing

an expectation on the part of Mee that its customer

would use the equipment to avoid or minimize ther

mal stresses te preserve the structural integrity of

the turbine.” App 3U

Based on the above-described evidence, the court

of appeals concluded, “the probable cause inguiry in

this case presents a close question.” App. 31. Th

court of appeals similarly concluded that the advic«

of-counsel “issue also presents a close question. App

Q9

The court of appeals’ discussion of punitive dam

ages was brief. The court concluded

In this case, the clear and convincing

standard of proof required under §768.72 i

determinative. Although sufficient evidenc:

was presented to place the issues of probable

cause and advice of counsel before the jury

the closeness of those issues confirms that

the evidence is insufficient to allow a reason

apie juror to fing by tne ciear and convincing

{ idard that Dov 1 be Liable lor pun

ve dama ihat being the ca it was n

er! 1 the district court to int Dow

Rule (a) motion on thal

Lore | Lene cle ( | Lit W ii if

agetense a to which re pondent bore the burden

prool and Wi not if) element that pew (a, 'Crl Wil

required LO prove Aas an ¢ lement of pelilionel clain

Re pondent only rail ed Live | uit ol probal le Ciaiu

On appeal and did not ippeal trom the miry Lil in

QO] malice Ol challenge the evidence } ntent

nduct relatin | ré pondent malice

a7

REASONS FOR GRANTING THE WRII

hi (court decision in Andersor ibe

Lobby held that “the determination of whether a viven

factual dispute require ubmission to a jury must be

ruided by the substantive evidentiary standards that

apply to the case.” Anderson v. Liberty Lobby, In

177 U.S. 242, 255 (1986). In other word Lhis Court

uid, “in ruling on a motion for summary judgment

the judve must view the evidence presented through

the prism of the substantive evidentiary burden va

U.S. at 254. However, this Court failed to clearly

é xplain how this was to be done. Courts and commen

Lulor have found thi (Court Opinion In Liberty

Lobby to be confusing and contradictory. A predicted

by sdustice brennan dissenting opimion, Liberty

j yh ha led “to inere med CO } 1()T i”my SOL 1) trict

19

and appellate courts.” 477 U.S. at 265 (Brennan, J.,

dissenting).

This Court has also held that the inquiry under

Rule 56 summary judgment motions is the same

as under Rule 50 motions for judgment as a matter

of law. Id. at 251-52 & 255; Reeves v. Sanderson

Plumbing Products, Inc., 530 U.S. 133, 150 (2000)

(“(T]he standard for granting summary judgment

‘mirrors’ the standard for judgment as a matter of

law, such that ‘the inquiry under each is the same.’”),

quoting from Anderson v. Liberty Lobby, 477 U.S. at

250-51 (additional citation omitted). The impact of

any increased confusion resulting from Liberty Lobby

extends beyond summary judgment motions to also

include Rule 50 motions.

This Court’s opinion in the Liberty Lobby case

said (1) credibility determinations, (2) weighing of the

evidence, and (3) drawing of legitimate inferences

from the facts, are all jury functions, and not those of

the judge, whether the judge is ruling on a motion for

summary judgment or a motion for a directed verdict.

477 U.S. at 255. This has been repeated in subse-

quent opinions. Reeves v. Sanderson Plumbing Prod-

ucts, Inc., 530 U.S. at 150-51; Lytle v. Household Mfg.,

Inc., 494 U.S. 545, 554-55 (1990).

Nevertheless, Justice Brennan’s dissenting opin-

ion in the Liberty Lobby case warned, “the Court’s

opinion is also full of language which could surely be

understood as an invitation — if not an instruction —

to trial courts to assess and weigh evidence much

20

as a juror would.” 477 U.S. at 266 (Brennan, J.,

dissenting).

There is a split among state courts, with some

states refusing to adopt this Court’s holding because

it necessarily requires a weighing of the evidence.

In Huckabee v. Time Warner Entertainment Co., 19

S.W.3d 413 (Tex. 2000), the Texas Supreme Court

agreed with Justice Brennan that the decision in

Liberty Lobby appears to require a judge to weigh the

evidence, and cannot be squared with the direction

that a judge “is not himself to weigh the evidence.”

19 S.W.3d at 422 (“We are reminded that the majority

in Anderson insisted that its standard did not require

trial courts to weigh evidence at the summary judg-

ment stage. With all due respect, we agree with

Justice Brennan’s dissenting opinion on this point”).

Other courts have similarly agreed with Justice

Brennan’s and Justice Rehnquist’s dissents. Bartlett

v. Marabel, 128 N.M. 830, 836, 999 P.2d 1062, 1068

(Ct. App. 2000) (“We are inclined to agree with Jus-

tice Brennan’s and Justice Rehnquist’s observations

in their dissenting opinions. It appears that Ander-

son’s holding does not so much change the standard

for summary judgment proceedings, but merely

creates confusion for trial courts when determining

the proper basis for granting or denying summary

judgment.”), writ of cert. quashed, 130 N.M. 154, 20

P.3d 811 (2001).

Other courts and commentators have found the

directions in Liberty Lobby to be contradictory, and

that Liberty Lobby effectively requires a judge to

21

weigh the evidence in spite of this Court’s directions

to the contrary. E.g., Bartlett v. Marabel, 128 N.M. at

837, 999 P.2d at 1069 (“It is clearly necessary, in

determining what standard is met, to weigh the evi-

dence. This is one of the many contradictions found

in Anderson’s holding. It is not the function of the

trial court to weigh the evidence.”); Moffatt v. Brown,

751 P.2d 939, 944 (Alaska 1988) (“The clear-and-

convincing test inevitably implicates a weighing of

the evidence, an exercise that intrudes into the

province of the jury.”) (citations and internal quotes

omitted); Dairy Stores, Inc. v. Sentinel Publishing

Co., 104 N.J. 125, 156-57, 516 A.2d 220, 236 (1986)

(“We are persuaded, however, that the clear-and-

convincing test inevitably implicates a weighing of

the evidence, an exercise that intrudes into the

province of the jury.”); Mullenix, Summary Judgment:

Taming the Beast of Burdens, 10 Am. J. TRIAL ADVOC.

433, 462 (1987) (“So replete is the decision with

contradictory pronouncements that opposing counsel

can in the future legitimately cite Anderson’s dicta for

completely repugnant propositions.”).

The right to a trial by jury is a basic and funda-

mental feature of our federal] judicial system that is

protected as a Constitutional right. Jacob v. New York

City, 315 U.S. 752, 752-53 (1942) (“The right of jury

trial in civil cases at common law is a basic and

fundamental! feature of our system of federal juris-

prudence which is protected by the Seventh Amend-

ment. A right so fundamental and sacred to the

citizen, whether guaranteed by the Constitution or

nrovided hy statute, should be iealously guarded by

22

the courts.”); U.S. CONST. amend. VII. This case

presents issues relating to the careful balance that

must be struck between the right to a jury trial and

the use of Rule 56 motions and Rule 50 motions to

ferret out and dispose of cases in which there is no

genuine issue for trial. In order to adequately protect

something as basic and fundamental as the nght of

jury trial, this Court needs to provide better guidance

to lower courts on how to draw the line when faced

with a decision that may deprive a litigant of the

opportunity to have a jury decide an issue.

I. Federal Court Decisions Applying Ander-

son v. Liberty Lobby Struggle With the

Prohibition Against Weighing the Evi-

dence, and Take Different Approaches on

Drawing Justifiable Inferences in Favor

of the Non-Moving Party

Federal courts are not, of course, free to disagree

with this Court’s decision in the Liberty Lobby case.

They are bound to follow it. In doing so, federal courts

appear to have struggled with this Court’s prohibition

against weighing the evidence, or taken inconsistent

paths in their attempts to follow Liberty Lobby.

In the case of Massachusetts Institute of Technol-

ogy v. Harman International Industries, Inc., 584

F. Supp.2d 297 (D. Mass. 2008), the court eloquently

described the struggles faced by a federal court

attempting to follow Liberty Lobby:

I note that obscured in the chromatic meta-

phors deployed by the Supreme Court in

Anderson v. Liberty Lobby to describe the

quantum of evidence to support summary

judgment — more than “merely colorable,” as

“presented through the prism of the substan-

tive evidentiary burden,” — are daunting and

insufficiently illuminated questions for the

trial judge considering summary judgment

motions that turn on a clear and convincing

evidentiary burden. Nothing in the past two

decades has given reason to recede from the

Supreme Court’s earlier observations that

“the ultimate truth as to how the standards

of proof affect decision-making may well be

unknowable,” and that “[w]Je probably can

assume no more than that the difference be-

tween a preponderance of the evidence and

proof beyond a reasonable doubt is better

understood than either of them in relation to

the intermediate standard of clear and con-

vineing evidence.

Massachusetts Institute of Technology v. Harman

International Industries, Inc., 584 F. Supp.2d at 307

n.7 (citations omitted), quoting from Addington uv.

Texas, 441 U.S. 418, 424-25 (1979). In that case, the

court noted that it was “[rjesigned to the uncer-

tainties created by the obligation to apply the ‘ab-

stractions’ of the clear and convincing evidentiary

standard” (Rehnquist, J., dissenting) without itself

actually weighing the evidence, and said “I have

‘struggle[d|’ (Brennan, J., dissenting) as the majority

opinion in Anderson directs, to conduct an ‘inquiry as

to whether a genuine issue exists [regarding] whether

the evidence presented is such that a jury applying

that standard could reasonably find for either the

24

plaintiff or the defendant.’” 584 F. Supp.2d at 307 n.7

(citations omitted).

Some federal courts attempting to follow Liberty

Lobby appear to have followed an approach contrary

to the prohibition against weighing the evidence,

either explicitly or silently. The Ninth Circuit has

expressly acknowledged that some limited weighing

of the evidence must be done. See, e.g., In re First

Alliance Mortgage Co., 471 F.3d 977, 998-99 (9th Cir.

2006) (“Some limited weighing of the evidence is a

natural component of determining whether a jury

could have reasonably found punitive damages ap-

propriate under the heightened clear and convincing

evidence standard.”).

Other courts have taken a different approach,

first drawing all reasonable inferences in favor of the

non-moving party before determining whether the

evidence is sufficient to go to a jury, and refusing to

weigh the evidence in any respect. SCO Group, Inc. v.

Novell, Inc., No. 2:04-cv-139 TS, 2010 U.S. Dist.

LEXIS 28805 (D. Utah March 25, 2010).

In the present case, without saying so, the Elev-

enth Circuit apparently weighed the evidence in

reaching its decision that punitive damages should

not have gone to the jury on grounds that the two

issues raised in respondent’s post-trial Rule 50(b)

motion presented “close questions.” In determining

that the issues presented “close questions,” the

Eleventh Circuit at times viewed the evidence in

the light most favorable to the moving party, 1.e.,

respondent, instead of the other way around. The

25

Eleventh Circuit also apparently engaged in weighing

the evidence on the question of what inferences could

be drawn by a reasonable jury under the clear and

convincing evidentiary standard.

It is apparent, even from this limited review of

the case law, that Liberty Lobby is proving to be

difficult to apply, and federal courts are applying

it inconsistently. Petitioner respectfully submits that

the predictions that Liberty Lobby would create

confusion have proven to be correct.

II. The States Are Divided on the Adoption

and Proper Application of Anderson uv.

Liberty Lobby

While federal courts may engage in weighing the

evidence without saying so, or simply acknowledge

some limited weighing of the evidence contrary to this

Court’s direction in Liberty Lobby, a number of deci-

sions in state courts appear to reject or question

Liberty Lobby because they conclude that a judge

must weigh the evidence in applying that decision.

See, e.g., Huckabee v. Time Warner Entertainment Co.,

19 $.W.3d 413, 421-22 (Tex. 2000) (“Requiring the

trial court to determine at the summary judgment

stage whether a reasonable juror could find the

evidence to be clear and convincing suggests that the

trial court must weigh the evidence.”); Dairy Stores,

Inc. v. Sentinel Publishing Co., 104 N.J. 125, 156-57,

516 A.2d 220, 236 (1986) (“We are persuaded, how-

ever, that the clear-and-convincing test inevitably

implicates a weighing of the evidence. an exercise

26

that intrudes into the province of the jury.”); Moffatt

v. Brown, 751 P.2d 939, 944 (Alaska 1988) (“We agree”

that the clear and convincing test inevitably impli

cates a weighing of the evidence.) (citation omitted).

In a recent case, the New Mexico Court of

Appeals attempted to discern how Liberty Lobby was

to be applied:

It is clear that the Anderson majority did not

give the trial court the power to weigh the

evidence. With this in mind, we must at-

tempt to discern what the trial court should

do when applying the evidentiary standard

at trial to summary judgment proceedings.

It is our understanding that the trial court

need only determine if the disputed facts

could possibly meet the appropriate standard

at trial. The court must look at the “possibil-

ity” of meeting the standard because for the

court to “determine” whether the evidence

meets that standard is to weigh that evi-

dence, which we know is a function Anderson

leaves to the jury. If the evidence presented

at summary judgment has the possibility of

meeting the clear-and-convincing standard,

then the granting of summary judgment is

not appropriate. If the evidence could allow a

jury to conclude that the nonmovant’s claim

is true, then we believe Anderson requires

denial of the motion. In our view, this is the

only possible interpretation that allows the

Court’s holding as a whole to be in harmony

with each of its component parts.

27

Bartlett v. Marabel, 128 N.M. at 836, 999 P.2d at 1068

(citations omitted). This turned out to be an academic

exercise, however, because the New Mexico Supreme

Court has refused to align its approach to summary

judgment with that of the federal courts. Romero v.

Philip Morris Inc., No. 31,433, 2010 N.M. LEXIS 370,

at *13-14 (Sup. Ct. June 25, 2010).

Other state courts have issued decisions declin-

ing to adopt Liberty Lobby. Berner v. Caldwell, 543

So.2d 686, 688 (Ala. 1989), overruled in pat on other

grounds, 769 So.2d 903 (Ala. 1999); 5G’s Car Sales,

Inc. v. Florida Dept. of Law Enforcement, 581 So.2d

212 (Fla. Ct. App.), review denied, 592 So.2d 679 (Fla.

1991); Chester v. Indianapolis Newspapers, Inc., 553

N.E.2d 137, 141 (Ind. App. 1990); Steelvest, Inc. v.

Scansteel Serv. Ctr, Inc., 807 S.W.2d 476, 482 (Ky.

1991); DePrimo v. Lehn & Fink Prods. Co., 223 N.J.

Super. 265, 538 A.2d 461, 463 (1987); Jones v. GMC,

325 Or. 404, 939 P.2d 608, 615 (1997); Parker uv.

Haller, 751 P.2d 372, 376 (Wyo. 1988).

Many other states have adopted Liberty Lobby,

and those courts may represent the majority rule.

See, e.g., Cerberus International, Ltd. v. Apollo Man

agement, L.P., 794 A.2d 1141, 1148-49 (Del. 2002),

and cases cited therein.

The state courts, who are not bound by Liberty

Lobby, and who are more free to comment on the

difficulty in applying that decision, provide additional

support for the notion that guidance from this Court

is appropriate and needed concerning how Liberty

Ty . f. ae Se Seen eee

LsUUU'Y is LU De appiicu.

28

Ill. This Court’s Guidance Is Needed, and

This Case Is an Ideal Vehicle

This Court’s opinion in the Liberty Lobby case did

not tell a court how a clear and convincing eviden-

tiary standard is to be considered, and federal and

state courts have varied in their application of the

Liberty Lobby standard. Commentators have ques-

tioned how a trial judge determines the “caliber and

quality” of the evidence without weighing the evi-

dence. See Issacharoff & Loewenstein, Second

Thoughts About Summary Judgment, 100 YALE L.J.

73, 85 (1990); Mullenix, Summary Judgment: Taming

the Beast of Burdens, 10 AM. J. TRIAL ADvoc. 435, 462

(1987); Stempel, A Distorted Mirror: The Supreme

Court’s Shimmering View of Summary Judgment,

Directed Verdict, and the Adjudication Process, 49

OHIO ST. L.J. 95, 115-16 (1988).

The lack of guidance from this Court on how

Liberty Lobby is to be applied has resulted in rulings

by lower courts that denigrate the role of the jury,

contrary to this Court’s intent. Anderson v. Liberty

Lobby, 477 U.S. at 255 (“Our holding that the clear-

and-convincing standard of proof should be taken into

account in ruling on summary judgment motions does

not denigrate the role of the jury.”). Bartlett v.

Marabel, 128 N.M. at 838, 999 P.2d at 1070 (“Permit-

ting trial courts a license to quantify or analyze the

evidence in a given case under whatever standard

may apply, we believe, would adversely impact our

jury system and infringe on the jury’s function as the

trier of fact and the true arbiter of the credibility of

witnesses.”).

2Q

The present case is a good example of why this

Court needs to provide some guidance and direction

on how Liberty Lobby is to be applied. The court of

appeals provided little illumination of how it applied

Liberty Lobby in reviewing the district court’s deter

mination under Rule 50(a) on punitive damages. Nor

did the court of appeals explain in any detail why the

burden of proof was determinative, or why the evi

dence was sufficient under the lesser standard of

proof but not sufficient under a clear and convincing

evidentiary burden.

The court of appeals’ suggestion that probable

cause was a “close question” does little to explain

exactly where the evidence was insufficient to sup

port a jury finding of intentional conduct. The deter

mination that respondent’s affirmative defense was a

“close question” does not seem to be an appropriate

basis for the appellate court’s decision, since petition

er did not have the burden of proof on that affirma-

tive defense, and respondent did not appeal the jury's

finding of malice or the sufficiency of the evidence

supporting the finding of malice.

The Record in This Case Included

Evidence That Respondent Had Ac-

tual Knowledge That Respondent

Wrongfully Sued Petitioner for Patent

Infringement Without Any Evidence

That Petitioner’s Customers Infringed

the Patents

Miller knew that respondent was unsuccessful in

getting a patent claim that only required wet com

pression and adding water incrementally; and that

respondent subsequently accepted the Dow patents

with narrower claims. App. 57; App. 29. As an experi

enced patent attorney, Miller knew that the patent

claims of respondent’s patents could not be construed

to cover any customer that was merely doing “incre

mental wet compression,” since respondent had

surrendered patent coverage for “incremental wet

compression” when respondent acquiesced in the

patent examiner’s rejection of such broad claims from

respondent's pending patent applications, Festo Corp

v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S

722, 734 (2002); Schriber-Schroth Co. v. Cleveland

Trust Co., 311 U.S, 211, 218 (1940)

Miller knew that “incremental wet compression”

alone would not infringe respondent’s patents. App.

57 (“Miller was therefore aware that incremental

wet compression alone would not infringe the Dow

Patents ... ”); App. 29 (Respondent “Dow conceded

at trial that the use of [petitioner’s] systems for

incremental wet compression alone was not a suffi

cient basis for infringement.”).

“Miller knew that when Dow first contacted

Schramm, the company had no evidence that Mee or

its customers were performing anything more than

incremental wet compression.” App. 58. Miller wa

aware that Dow had not attempted to obtain evidence

of whether any of petitioner’s customers performed

anything beyond “incremental wet compression.” /d

“And Miller knew that Schramm did not obtain any

evidence that Mee or its customers were engaging in

something more than incremental wet compression

App. 58

(riven this evidence, petitioner had provided evi

dence of “intentional misconduct” within the meaning

of Fla. Stat. §768.72(2)(a) (1999). A reasonable jury

could have found that respondent (through Miller)

had actual knowledge of the wrongfulness of the con

duct, t.e., that respondent sued petitioner for patent

infringement without any evidence that petitioner

customers were actually infringing the Dow patent

B. The Record in This Case Included

Evidence That Respondent Had Ac-

tual Knowledge That Respondent

Wrongfully Sued Petitioner for Patent

infringement Without Any Evidence to

Support a Claim of Indirect Infringe-

ment

Respondent conceded that its infringement cas¢

against petitioner was necessarily based only on a

theory of indirect infringement. App. 35 (It wa

“annceded” at trial “that Mee enuid he liahle only far

_

—_s

ndirect mniningement and that IN

well aware of that fact.’ App

( ; |

there can be no indirect infringement by pr

tioner unle there wa direct infringement = b*

least one of petitioner custome! Dynacore Hold

ings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 127%

(ed. Cir. 2004) (“lAlbsent direct infringement of the

claims of a patent there can be neither contnmbutor

infringement nor inducement of infringement

hus, the evidence discussed above nowing that

Maller and ! pondent) had knowledy that there

vas no evidence of direct infringement | ulficient

to meet the intentional miscondus Landard for

punitive damage

fhe evidence at trial showed that Miller (and

respondent) knew that respondent needed “proof that

Mlorida Power performed all of the elements of thi

claimed method, and then that Mee either induced or

contributorily infringed ", App. 17-18. Therefore

even if there had been evidence that one or more ol

petitioner's customers operated their equipment in an

inIringing manner, Miller still knew that respondent

could not sue petitioner ul r there wa | »>pProol Oo!

indirect infrinvemen

here are two pot nial neorie | pdires

Infringement 1) contributory infringement under 3

U.S.C. §271(c), and (2) inducement of infrinvemen

under 35 U.S.C. §271(b

Miller and respondent “knew that |petitione

CQuIpiyit nt could be u ed DY custome! Im) Way Lh i{

33

did not infringe [respondent’s] patents.” App. 57; App.

31 n.11 (“(T]he record is clear that the Mee equip

ment had substantial non-infringing uses.”). Miller

knew respondent could not sue petitioner for contrib-

utory infringement under 35 U.S.C. §271(c), because

the equipment that petitioner sold to customers had

substantial non-infringing uses. “The mere sale of a

product capable of substantial noninfringing uses

does not constitute indirect infringement of a patent.”

Dynacore Holdings Corp. v. U.S. Philips Corp., 363

F.3d 1263, 1275 (Fed. Cir. 2004). Where accused

equipment can be operated in one of two ways, one

that infringes and one that does not, “it would be too

speculative to conclude that any customer actually

performed the claimed method.” Lucent Technologies,

Inc. v. Gateway, Inc., 543 F.3d 710, 723 (Fed. Cir.

2008).

Miller knew the respondent could not sue peti-

tioner for inducement of infringement under 35

U.S.C. §271(b) unless petitioner actively induced its

customers to operate their equipment in a manner

that infringed the Dow patents. Under 35 U.S.C.

§271(b), the accused inducer must knowingly cause

its customers to perform a method that directly

infringes the patent. Moba, B.V. v. Diamond Auto

mation, Inc., 325 F.3d 1306, 1318 (Fed. Cir.) (“[a]l-

though §271(b) does not use the word ‘knowingly,’ this

court has uniformly imposed a knowledge require-

ment”), cert. denied, 540 U.S. 982 (2003): Hewlett-

Packard Co. v. Bausch & Lomb, Inc., 909 F.2d 1464,

’

“ 4eeere ows fn" ¢ eV tye, (ah ae ad , ¥ ° ‘ ‘ i

L409 (PCa. Ul. iggy) \ Prool OJ actual invent LO Cause

the acts which constitute the infringement is a neces

sary prerequisite to finding active inducement”).

At best, the User Manual relied upon by re

spondent may have been some evidence that peti-

tioner was aware that its customers could operate

their equipment in a manner that might have in-

fringed. But even if petitioner had known that the

equipment it sold may infringe Dow’s patents depend-

ing on how a customer operated the equipment, that

would have been insufficient to establish probable

cause for inducement. See, e.g., Organon Inc. v. Teva

Pharmaceuticals, Inc., 244 F.Supp.2d 370, 380

(D.N.J. 2002) (The “sale of a lawful product by lawful

means, with the knowledge that an unaffiliated, third

party may infringe, cannot, in and of itself, constitute

inducement of infringement”), quoted with approval

in Dynacore, 363 F.3d at 1276 n.6 (“Iwle agree with

this view of inducement”).

Therefore, the evidence presented at trial was

clear that respondent knowingly sued petitioner for

indirect infringement with knowledge that respon-

dent had no evidence that petitioner was guilty of

indirect infringement and no good faith basis for

asserting a claim of indirect infringement against

petitioner. The question of punitive damages should

have been submitted to the jury, and it was an error

of law to grant respondent’s Rule 50(a) motion on the

issue of punitive damages

The Contradictions and Confusing

Standard Provided by Liberty Lobby

Have Resulted in Lower Courts’ Dis-

regarding Fundamental Constraints

on the Role of the Court in the Evalu-

ation of Evidence

Justice White, writing in dissent in the case of

Matsushita Electric Industrial Co. v. Zenith Radio

Corp., 475 U.S. 574 (1986), said that none of the prior

holdings of this Court were intended to “undermine

the doctrine that all evidence must be construed in

the light most favorable to the party opposing sum-

mary judgment.” 475 U.S. at 600-01 (White, J., dis-

senting). It was well-said that “If the Court does not

intend such a pronouncement, it should refrain from

using unnecessarily broad and confusing language.”

Id. at 601. Yet, that doctrine has been undermined as

a result of Liberty Lobby, and if this Court did not

intend such a result, it ought to provide better guid-

ance on how Liberty Lobby should be applied.

In the present case, the Eleventh Circuit ac-

knowledged that it must “consider the evidence in the

light most favorable to the non-moving party.” App.

14. Yet, as part of the appellate court’s analysis in

determining that the issues presented a “close ques-

tion” such that petitioner did not meet the clear and

convincing evidentiary standard, the court of appeals

repeatedly construed Schramm’s opinion letter in the

light most favorable to respondent Dow, who was the

moving party on the Rule 50 motions at issue. This

was significant, since the court or appeais found the

36

Schramm letter “particularly relevant to the issue of

probable cause because Dow emphasized Schramm’s

analysis as key to the probable cause determination

during trial.” App. 22.

For example, the court of appeals found that “the

jury could have reasonably concluded that Dow

construed the three key limitations of the [patent]

claims” in a manner favorable to respondent. App. 22

(emphasis added). But both Schramm and Miller

testified at trial, and there is no citation by the appe!l

late court to any testimony by either of them support

ing a finding that they actually construed the patent

claims that way. Yet the court of appeals used this to

find an issue of fact sufficient to create a “close ques-

tion” sufficient to justify granting a Rule 50 motion in

favor of respondent.

The court of appeals construed the Schramm

letter in the light most favorable to respondent when

it found that the Schramm letter may have “implicitly

address[ed] the question of indirect infringement.”

App. 36.

If the court of appeals was required to draw all

inferences in favor of petitioner, and to view the evi

dence in the light most favorable to petitioner before

determining whether the evidence was sufficient to

present a jury issue (taking into consideration the

clear and convincing evidentiary standard), then the

court would have had to view the Schramm letter as

not offering any opinion on indirect infringement

37

that would have justified respondent’s malicious

lawsuit against petitioner.

The court of appeals acknowledged that “liJf th

jury concluded, as it reasonably could, that Schramm

did not consider indirect infringement at all, then a

reasonable jury could have concluded that Dow did

not rely in good faith on the opinion, especially in

light of Miller’s knowledge that Mee could be lable

only for indirect infringement.” App. 36. But if the

evidence, viewed in the light most favorable to peti-

tioner, showed that respondent knew that petitioner

could only be liable for indirect infringement, and

respondent knew it had no evidence for accusing

petitioner of indirect infringement, and the jury could

have found that respondent had no advice of coun-

sel to support any claim of indirect infringement

against petitioner, then this was a sufficient showing

of “intentional misconduct” for the issue of punitive

damages to have been presented to the jury.

38

CONCLUSION

Patent infringement actions can be extraordinar-

ily expensive to defend, and in some instances can be

used “to charge exorbitant fees” to any company

caught in the crosshairs of a patent owner. The dis-

trict court aptly described the position of petitioner in

this case — “accused of infringement by a competitor

with effectively bottomless pockets, faced with the

prospect of spending a million dollars or more to

successfully defend an infringement suit.” App. 51-52.

Here, a malicious patent infringement lawsuit was

used to eliminate a small family-owned business as a

competitor. This case is part of a disturbing trend in

the increased use of expensive patent litigation for

improper purposes. See, e.g., Verve, L.L.C. v. Hyper-

com Corp., No. CV-05-0365-PHX-FJM, 2007 U.S.

Dist. LEXIS 21998 (D. Ariz. March 26, 2007). In view

of the fact that respondent succeeded in this case in

effectively destroying petitioner’s ability to compete,

the removal of any threat of punitive damages pro-

vides little disincentive for such conduct in the future,

either by respondent or by others similarly situated.

9

See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 396

2006) (Kennedy, J., concurring). In patent cases, “the threat of

discovery expense will push cost-conscious defendants to settle

even anemic cases before reaching those proceedings.” Cf. Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 559 (2007) (antitrust

case).

39

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

Sip LEACH

SNELL & WILMER L.L.P

One Arizona Center

400 E. Van Buren

Phoenix, AZ 85004-2202

(602) 382-6372

sleach@swlaw.com

November 2, 2010

Attorney for Petitioner

App. 1

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 08-16747

D. C. Docket No. 05-01520-CV-ORL-31DAB

MEE INDUSTRIES, A foreign corporation,

Plaintiff-Appellant-Cross-Appellee,

versus

DOW CHEMICAL COMPANY, A foreign corporation,

Defendant-Appellee-Cross-Appellant

Appeals from the United States District Court

for the Middle District of Florida

(June 15, 2010)

Before MARCUS, FAY and ANDERSON, Circuit

Judges.

ANDERSON, Circuit Judge:

This case comprises the respective appeal and

cross-appeal of Mee Industries (“Mee”) and Dow

Chemical Company (“Dow”) in a malicious prosecu-

tion suit brought by Mee against Dow. Mee brought

this suit in response to a patent infringement suit

tiled in the Middie District of Fiorida by Dow againsi

App. 2

Mee and Florida Power Corporation, a Mee customer.

That case was ultimately resolved in Mee’s favor.

In the instant «ase, a jury verdict was entered in

Mee’s favor for the previously stipulated amount of

its attorneys’ fees in the patent infringement case.

On appeal, Mee argues that the district court erred

by granting Dow’s Rule 50(a) motion on the issue

of punitive damages and excluding evidence of

Mee’s damages relating to loss of goodwill under

Fed. R. Civ. P. 37(c)(1). In its cross-appeal, Dow ar-

gues that the district court erred by denying Dow’s

Rule 50(b) motions on the issues of lack of probable

cause and its advice-of-counsel defense. This case

presents two close questions, but after carefully

considering the parties’ briefs, thoroughly investi-

gating the record, and having heard oral arguments,

we affirm.

I. BACKGROUND

A. Pre-Infringement Suit

The foundations of this case were laid in a patent

infringement case filed by Dow against Mee and

Florida Power Corporation. As part of its myriad

operations, Dow i:ses gas turbines to generate power

for manufacturiny operations. Mee sells fogging

systems for a variety of uses, including power aug-

mentation for gas turbines. The infringement case

focused on two patents, United States Patent No.

5,867,977 (“the 977 Patent”) and United States

Patent No. 5,930,990 (“the ’990 Patent”), entitled

App. 3

“Method and Apparatus for Achieving Power Aug-

mentation in Gas Turbines Via Wet Compression.”

Dow is the assignee of both patents. The patents were

issued in 1999 and disclose methods of increasing the

power output of a gas turbine by allowing nebulized

water particles to flow into the compressor of a tur

bine while minimizing the possible negative side

effects.

Gas turbines work in several steps. A working

fluid, such as air, is drawn through an inlet duct into

a compressor section. In the compressor section, the

air is compressed by a row of blades. The compressed

air is combined with fuel in the combustion chamber.

Finally, the compressed air/fuel mixture is oxidized,

and the energy from the hot gas is converted into

work in the turbine section.

The performance of a gas turbine can be im-

proved by cooling the inlet air temperature. Cooling

the inlet air reduces the amount of work necessary to

compress the air in the compressor section. One

method of cooling the inlet air temperature is evapo-

rative cooling. In evaporative cooling, fine water

particles are injected into the air before it enters the

gas turbine. As the water evaporates, the air temper-

ature cools, leading to cooler air entering the turbine.

In evaporative cooling, all of the water injected into

the air evaporates before it enters the compressor.

Thus, no water particles enter the compressor sec-

tion. Wet compression, on the other hand, occurs

when more water is injected into the air than can

evaporate before it enters the compressor. Therefore,

App. 4

under wet compression conditions, fine particles of

water actually enter the compressor section. Those

water particles evaporate in the compressor section,

lowering the air temperature in the compressor

section, thereby providing greater power augmenta

tion. The technology of wet compression has been

understood for some time. The difficulty with wet

compression is that putting too much water into

the compressor can create thermal stresses that can

cause the compressor blades to crack or lead to de

formation of the machine’s housing. Dow’s research

centered around increasing the amount of wate:

added to the system in an incremental fashion to

achieve greater power augmentation without any

negative side effects.

In 1998, Dow licensed its technology to Siemens

Westinghouse. Shortly after that agreement wa:

reached, Siemens made Dow aware that Mee was

selling its fogging systems for use in the power aug

mentation field.

In May 1999, several Dow employees traveled to

California and met with Thomas Mee, the president

of Mee Industries, at Mee’s headquarters to discuss a

possible licensing arrangement related to his prod

ucts and Dow’s patents. Those employees were Wil

liam Miller, Dow’s in-house patent counsel, Paul

Hathaway, a Dow licensing manager, and Steven

Jasper, a Dow technical expert. At the conclusion of

that meeting, Mee provided Dow with information on

Mee’s Fog System, including a Users Manual and

>

information on installations Mee had performed

App

In June 1999, Thomas Mee contacted Hathaway

expressing interest in a licensing arrangement, but

denying infringement of Dow's patents. After that

contact, Miller provided Hathaway with a memo to

assist Hathaway in his negotiations with Mee. The

memo included Miller’s opinion on whether Mee wa:

infringing. His opinion was based on modeling work

performed by Jasper, using the technical information

provided by Mee. Jasper’s model demonstrated that

under certain environmental conditions, some of the

installations on Mee’s customer list were achieving

wet compression if operated at the designed water

flowrates. Miller opined that based on that model and

his understanding of the patents in question, Mee’

systems infringed on several claims. Miller’s memo

also provided information in response to Mee’s claim

that Dow’s patents were invalid. Miller pointed out

that the standard of proof to invalidate an issued

patent was one of clear and convincing evidence

which he characterized as a difficult standard to

meet. Hathaway forwarded Miller’s opinion to Mee

along with an informal, initial licensing proposal

Ultimately, the parties failed to reach any arrange

ment

In December LY9y Miller contacted Bruce

Kanuch, an in-house lawyer specializing in IP litiga

tion, about the possibility of an infringement action

against Mee. Kanuch agreed with Miller’s assessment

that a reasonable basis existed for suing Mee. Miller

then retained William Schramm to act as outside

counsel and to provide an opinion on the validity of

Dow patent

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App. 8

States more than one year before the earliest filing

» . 3

date of the patents at issue. Dow moved for a pre-

liminary injunction. The district court denied that

motion, finding that Dow had failed to meet its bur-

den of showing a likelihood of success on the merits.

Dow Chem. Co. v. Mee Indus., 264 F. Supp. 2d 1018,

1022 (M.D. Fla. 2002), aff’d in part, rev’d in part, 341

F.3d 1370 (Fed. Cir. 2003). Florida Power sought

summary judgment on the grounds that its system

did not infringe on Dow’s method, but that motion

was denied because the court concluded a genuine

issue of material fact existed as to how Florida Power

operated its system. Jd. Mee did not seek summary

judgment on the infringement issue

At trial, the district court focused on two inde-

pendent claims, Claim 14 of the ’977 Patent and

Claim 30 of the 990 Patent. In Claim 14 of the ’977

Patent, Dow claimed

A method for augmenting the net output of a

gas turbine having an axial flow multistage

compressor for acquiring and compressing a

working fluid comprising air, the method

comprising the steps of:

adding increasing amounts of liquid water

comprising liquid droplets to the working

fluid acquired by the compressor, with the

mass flow rate of the liquid droplets being

in addition to the defenses raised, both defendants counter-

claimed, requesting a declaratory judgment that the patents

were invalid, unenforceable, and not infringed

App. 9

increased over time to avoid destructive ther-

mal stresses within the gas turbine which

are related to the providing of increased

amounts of liquid water to the working fluid,

and thereafter, after achieving a desired

mass flow rate, providing liquid water com-

prising liquid droplets to the working fluid

acquired by the compressor at a substan

tially constant mass flow rate over a period

of continuous operation exceeding about 4

hours to augment the net output of the gas

turbine by wet compression.

Patent, col. 29. ll. 9-25. In Claim 30 of the ’990

nt. Dow claimed:

A wet compression power augmentation

method for adding nebulized water to a gas

turbine, said gas turbine having a housing

and a compressor, said compressor having a

compressor inlet, comprising:

nebulizing water in said compressor inlet;

and adding water to modify said nebulized

water in a plurality of nebulized water mass

flow increments such that operationally-

induced thermal stresses within said gas

turbine due to the ingestion and evaporation

in whole or in part of said nebulized water

are sufficiently minimized to preserve struc-

tural integrity in said gas turbine.

990 Patent, col. 22, ll. 56-67

App. 10

At the conclusion of the bench trial, the district

court concluded that Claim 14 of the 977 Patent’ and

Claim 30 of the "990 Patent were invalid because they

failed the nonobviousness requirement. Dow Chem.,

264 F. Supp. 2d at 1031, 1039-41. Alternatively, the

district court found that neither Mee nor Florida

Power infringed on the claims. Looking first at

Florida Power, the district court found that Florida

Power did not directly infringe on the claims because

it did not increase the water flow over time, but

instead added the water all at once. Jd. at 1043-44. In

relation to Mee, the district court found that Mee did

not directly infringe on the method claims because it

only sold equipment and, therefore, did not practice

the patented methods. /d. at 1044. The district court

then considered the possibility of contributory or in-

ducement of infringement. It found that Mee did not

infringe under those indirect infringement theories

because direct infringement is necessary to support

indirect infringement and that direct infringement

did not occur unless (1) a user employed the patented

method for the purpose of avoiding destructive ther-

mal stresses and (2) the system operated at a high

enough overspray’ level to create thermal stresses.

Id. at 1045. The district court found no evidence that

either limitation was met.

The court also found that all claims that depended from

Claim 14 would be obvious to a person of ordinary skill in the

art

' Overspray is another term for wet compression

App. 1!

On appeal the Federal Circuit held that Claim 14

of the ‘977 Patent and Claim 30 of the 990 Patent

were obvious in light of the prior art. Dow Chem. Co.

v. Mee Indus., Inc., 341 F.3d 1370, 1376 (Fed. Cir.

2003). Dow urged the Federal Circuit to read the claim

language directed to destructive or operationally-

induced thermal stresses to require a certain mini-

mum flow of water. The Federal Circuit, however,

found the “thermal stresses” language did not corre-

spond to a certain minimum amount of water. Jd.

Without a limitation directed to a particular volume

of water, the court found that the claims were obvious

in light of the prior art.° Jd. The Federal Circuit then

reversed the district court’s obviousness finding on

dependent Claims 23 and 24 of the ’977 Patent,

holding that additional limitations in those claims

pertaining to the percentage of overspray rendered

them nonobvious. /d. at 1378. The Federal Circuit

also overturned the district court’s alternative hold-

ing that Mee did not infringe on Claims 23 and 24.

Ls

The Federal Circuit also held that Claims 15, 16, 21, and

22 of the "977 Patent were obvious in light of the prior art. Dow

Chem., 341 F.3d at 1376-77. All of these claims depend from

Claim 14.

In Claim 23, Dow claimed: “The method of any of claims 1,

5, 9, and 14 wherein the working fluid acquired by the compres

sor over a period of continuous operation exceeding about

4 hours comprises from about two weight percent to about

eight weight percent of liquid water in admixture with fully-

humidified air.” 977 Patent, col. 29, ll. 63-67. In Claim 24, Dow

claimed: “The method of claim 23 for augmenting the net output

of a heavy duty industrial gas turbine.” Jd., col. 30, Il. 1-2.

App. 12

The Federal Circuit explained that the district court’s

finding of noninfringement based on a lack of evi-

dence demonstrating that Mee’s systems were used

for the purpose of avoiding thermal stresses was

based on an error of law because the motive of an

accused infringer is irrelevant. Jd. at 1380. The court

also explained that the conclusion that destructive

stresses did not occur at the level of overspray Mee

operated at did not negate infringement. /d. Based on

the validity of Claims 23 and 24, the Federal Circuit

remanded the case for a determination of whether

Mee could be held lable for induced or contributory

infringement of those claims. /d. at 1380-81. On re-

mand, the district court entered judgment against

Dow because Dow introduced no evidence that any of

Mee’s customers infringed those claims by using

Mee’s systems.

C. Malicious Prosecution Suit

In September 2005, Mee filed the instant mali-

cious prosecution suit against Dow in Florida state

court. Dow removed the case to the United States

District Court for the Middle District of Florida. Mee

alleged in its complaint that Dow filed the infringe-

ment action without probable cause because it knew,

or should have known, that there was no reasonable

possibility that Mee would be found to have infringed

the patents. In its answer, Dow denied that it had

acted with the requisite malice or without probable

cause and asserted reliance on advice of counsel as an

affirmative defense.

App. 13

During discovery, Mee produced documents show-

ing offers to purchase the company around the time

that Dow filed its infringement action. In particular,

Mee produced a signed letter of intent from Munters

Corporation to buy the shareholders’ stock in the

business for $38,000,000. That dea] fell through,

allegedly because Munters could not insure around

the risk presented by the pending infringement suit.

At the close of discovery, Dow filed a motion for

summary judgment on the issue of damages from the

loss of the potential sale of stock to Munters. The

district court denied that motion, but stated in its

order that:

Mee has no standing to seek damages from

the cancellation of such sale. While this

Court will not grant summary judgment on

this one issue of damages, the parties are

advised that this discussion constitutes a de-

cision on the merits with regard to Plaintiff’s

entitlement to damages from the loss of this

sale of stock.

Later, in the pretrial statement, Mee sought to

recover, inter alia, the value of the goodwill of the

company that had been reduced by the infringement

lawsuit. Dow made a motion in limine to exclude,

inter alia, evidence of damages to the value of good-

will of the business. The district court granted that

portion of Dow's motion and ruled that Mee could not

pursue any claim for damages to the corporation’s

goodwill.

App. 14

At the close of evidence, Dow made a timely

motion under Rule 50(a) for judgment as a matter of

law on the issues of punitive damages, lack of prob-

able cause, and reliance on advice of counsel. The

district court granted Dow’s motion on the issue of

punitive damages, concluding that based on the

evidence, no reasonable juror could find by clear and

convincing evidence that the requirements for puni-

tive damages had been met. The court reserved ruling

on the issues of lack of probable cause and advice of

counsel.

After the jury returned a verdict in favor of Mee,

Dow made a post-trial motion for judgment as a

matter of law under Rule 50(b) on the issues of lack of

probable cause and reliance on advice of counsel and

a motion for a new trial under Rule 59. The district

court denied the motions.

The instant appeal and cross-appeal ensued.

Il. STANDARD OF REVIEW

This Court reviews a Rule 50 motion de novo,

applying the same standard as the district court.

Telecomm. Technical Servs. Inc. v. Rolm Co., 388 F.3d

820, 830 (llth Cir. 2004). The motion should be

denied only if reasonable and fair-minded persons

exercising impartial judgment might reach different

conclusions. Abel v. Dubberly, 210 F.3d 1334, 1337

(llth Cir. 2000) (per curiam). We consider the evi-

dence in the light most favorable to the non-moving

party, id., but we review all evidence in the record

App. 15

and “draw all reasonable inferences in favor of the

nonmoving party [without] makl[ing] credibility deter-

minations or weighling] the evidence,” Reeves v. San-

derson Plumbing Prods., Inc., 530 U.S. 133, 150, 120

S. Ct. 2097, 2110, 147 L. Ed. 2d 105 (2000). “Credi-

bility determinations, the weighing of the evidence,

and the drawing of legitimate inferences from the

facts are jury functions, not those of a judge.” Id.

(internal quotation marks omitted). When reviewing

the record, we “must disregard all evidence favorable

to the moving party that the jury is not required to

believe.” Jd. at 151. Therefore, we “should give cre-

dence to the evidence favoring the nonmovant as well

as that evidence supporting the moving party that is

uncontradicted and unimpeached, at least to the

extent that that evidence comes from disinterested

witnesses.” Jd. (internal quotation marks omitted).

However, “the nonmoving party must provide more

than a scintilla of evidence that there is a substantial

conflict in evidence to support a jury question.” Ber-

man v. Orkin Exterminating Co.. 160 F.3d 697, 701

(11th Cir. 1998) Gnternal quotation marks omitted).

This Court’s “review of a district court’s decision

to impose sanctions under Rule 37 is sharply limited

to a search for an abuse of discretion and a deter-

mination that the findings of the trial court are fully

supported by the record.” OF'S Fitel, LLC v. Epstein,

Becker & Green, P.C., 549 F.3d 1344, 1360 (11th Cir.

2008) (internal quotation marks omitted).

App. 16

III. DISCUSSION

A. Lack of Probable Cause

Dow argues that the district court erred in re-

fusing to grant its Rule 50 motion on the issue of

whether it lacked probable cause for filing the patent

infringement suit. Dow claims that it possessed

sufficient information on Mee’s fogging system to

inform its infringement analysis, thus it was under

no obligation to gather further information about the

facilities where Mee systems were being used. We

find this to be a close question, but ultimately con-

clude that the record contains sufficient evidence to

support the jury’s verdict.

In order to prevail on a claim of malicious prose-

cution, the plaintiff must prove, inter alia, that “there

was an absence of probable cause for the original

proceeding.” Alamo Rent-A-Car, Inc. v. Mancusi, 632

So. 2d 1352, 1355 (Fla. 1994). “To establish probable

cause, it is not necessary to show that the instigator

of a lawsuit was certain of the outcome of the pro-

ceeding, but rather that he had a reasonable belief,

based on facts and circumstances known to him, in

the validity of the claim.” Wright v. Yurko, 446 So. 2d

1162, 1166 (Fla. 5th DCA 1984) (footnotes omitted).

In other words, the instigator must have had

“aj reasonable ground of suspicion, supported by

circumstances sufficiently strong in themselves to

warrant a cautious man in the belief that the person

accused is guilty of the offense with which he is

charged.’” Goldstein v. Sabella, 88 So. 2d 910, 911

App. 17

(Fla. 1956) (quoting Dunnavant v. State, 46 So. 2d

871, 874 (Fla. 1950)). “Probable cause in the context

of a civil suit is measured by a lesser standard than

in acriminal suit.” Wright, 446 So. 2d at 1166 In City

of Pensacola v. Owens, the Florida Supreme Court

explained that “[wlhat facts and circumstances

amount to probable cause is a pure question of law,”

while the existence of those facts or circumstances “in

any particular case is a pure question of fact.” 369

So. 2d 328, 330 (Fla. 1979) (internal quotation marks

omitted). See also Endacott v. Int'l Hospitality, Inc.,

910 So. 2d 915, 922 (Fla. 3d DCA 2005) (noting that

probable cause is a question for the jury when mate-

rial facts are in dispute). Hereafter, we refer to the

probable cause standard as reasonable suspicion.

Turning to the substantive patent law underlying

the original action between these parties, patent

infringement liability may be predicated on either

direct infringement, see 35 U.S.C. § 271(a), or indirect

infringement. Indirect infringement can be based

either on a theory of inducement of infringement, see

id. §271(b), or contributory infringement, see id.

§ 271(c). “A method claim is directly infringed only by

one practicing the patented method.” Joy Techs. Inc.

v. Flakt, Inc., 6 F.3d 770, 775 (Fed. Cir. 1993) (em-

phasis omitted). At trial, Dow conceded that its in-

fringement case against Mee was necessarily based

on a theory of indirect infringement; thus in order to

prevail, it needed “proof that Florida Power per-

formed all of the elements of this claimed method,

App. 18

and then that Mee either induced or contributorily

infringed... .” (R. 194 at 890.)

In addressing the question of whether Mee

adduced sufficient evidence to establish a lack of

probable cause on the part of Dow in the infringe

ment suit, we first set out the case law concerning the

appropriate pre-filing investigation for a patentee to

establish the necessary reasonable suspicion. Then

we briefly describe Dow’s claim construction and its

pre-filing investigation. Next, because Mee can be

liable only for indirect infringement, we identify the

reasonable suspicion which Dow was required to have

to justify filing its infringement suit. Finally, we

evaluate whether the evidence supports the jury’s

determination that Mee carried its burden of proving

that Dow did not entertain a reasonable suspicion

that its patents were infringed on.

(1) The appropriate pre-filing investiga

tion.

The necessary pre-filing investigation in this case

turns on two considerations: Dow’s claim construction

and the evidence collected to inform its comparison

of the alleged infringing use of Mee systems to

that claim construction. The initial step for any

patentee contemplating the filing of an infringement

suit is to perform a reasonable claim construction

This step is rather obvious; without a clear identifica

tion of the limitations of one’s own patent claim, one

could not possibly make a judgment about possible

App. 19

infringement. Appropriate claim interpretation should

comport with the plain language of the claims, but

not be inconsistent with other intrinsic evidence, such

as the written description or prosecution history. Se

Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295

1300-01 (Fed. Cir. 2004). The patentee should then

collect evidence relating to the allegedly infringing

device or method that establishes a reasonable susp!

cion that the accused device or method meet “acl

limitation in the claim. See td. at

United States, 110 F.3d 780. 784 (Fed. Cir lOO,

Cambridge Products, Ltd. v. Penn Nutrients, Inc., 962

Kk. 2d 1048, 1050 (Fed. Cir. 1992). The patentee should

have an adequate explanation for any evidentiarn

hortcoming supporting its analysis. Se

I’ 3d at 784

The Importance 0} adequate investigation in de

fending against a malicious prosecution suit 1s echoed

in the general principles of tort law, see 52 Am. Jur

2d Malicious Prosecution § 73 (2000) (“A person is not

required to verify the correctness of all the infor

mation supporting his or her action to be prot cted

from a malicious prosecution action, but if a reasona

ble person would investigate further before beginning

the prosecution, the defendant in a malicious pros

cution action would be liable for his or her failure to

do so.”) (footnotes omitted)) and more particularly, in

Florida tort law, see Harris v. Lewis State Bank, 482

So. 2d 1378, 1382 (Fla. Ist DCA 1986) (“Where it

would appear to a ‘cautious man’ that further investi

gation is justified before instituting a proceeding

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App. 22

preserving the structural integrity of the turbine, but

that the water is added in increments for the purpose

of minimizing thermal stresses to preserve the struc-

tural integrity of the turbine. A construction with a

purpose limitation is not at odds with the plain

language of the claims. For instance, Claim 14 of the

"977 Patent describes in pertinent part, a “method

comprising the steps of: adding increasing amounts of

liquid water comprising liquid droplets to the work-

ing fluid acquired by the compressor, with the mass

flow rate of the liquid droplets being increased over

time to avoid destructive thermal stresses within. the

gas turbine....” "977 Patent, col. 29, ll. 13-18 (em-

phasis added). The pertinent language of the claim

can be reasonably read as indicating that the purpose

of incremental addition of water is to avoid destruc-

tive thermal stresses.

We believe the jury could have found Schramm’s

opinion letter, and any reasonable construction taken

from it, particularly relevant to the issue of probable

cause because Dow emphasized Schramm’s analysis

as key to the probable cause determination during

the trial. Because Schramm’s letter could be fairly

read as suggesting a purpose limitation — a limitation

that is not at odds with the plain language of the

claims — the jury could have reasonably concluded

that Dow construed the three key limitations of the

claims at issue as: (1) nebulized water is added at the

compressor inlet, (2) the amount of water added is

modified in mass flow increments, and (3) the amount

of water is modified for the purpose of minimizing

App. 23

thermal stresses to preserve the structural integrity

of the turbine.

Having dealt with claim construction, we turn

next to Dow’s investigation of the Mee equipment. As

noted above, Mee provided Dow with substantial

information with respect to the fogging systems that

it sold to a number of customers. The documentation

contained details on the turbines at the various

installations and, more particularly, on the Mee Fog

Mee argues that Miller’s testimony suggested that he

interpreted the claim language to require the addition of a

minimum amount of water. We reject Mee’s argument in this

regard. Our careful review of Miller’s testimony persuades us

that the only fair reading of his testimony is that he did not

believe that the language of the claims directed to avoiding

destructive thermal stresses imported a requisite minimum

amount of water. We accord little weight to the fact that Tow did

suggest a claim construction that involved a requisite ar:ount of

water before the Federal Circuit in the infringement litigation.

It is clear that Dow altered its claim construction at that late

stage of the infringement litigation, after the district court had

held that Claims 14 and 30 were invalid, in an effort to save its

claims from invalidity.

We also note that the purpose limitation deucribed above

arguably runs counter to the Federal Circuit’s statement in the

infringement litigation in regards to Claims 23 and 24 of the

‘977 Patent that “[elven if an operator increased water over time

in a Mee system for an entirely different reason [than the

avoidance of thermal stresses], that would not avoid infringe

ment... .” Dow Chem., 341 F.3d at 1380. The question before us,

however, is not the legal propriety of a purpose limitation, but

instead whether, based on the evidence presented, the jury could

have concluded as a matter of fact that Dow actually interpreted

the claims as containing a purpose limitation

System installed at each, including the number of fog

nozzles, the number of cooling stages, the water flow

rate, and the cooling potential of the system. Jasper

used this data to develop a computer model of the

various systems. His model demonstrated that in

certain atmospheric conditions, the systems could be

used to achieve wet compression. Mee also provided

Dow with a Users Guide for the Mee Fog System

Pump Skid Controller. The Users Guide describes the

operation of a Mee Fog System. A system generally

consists of a plurality of pumps (Fog Pump Units),

each connected to a fixed number of nozzles, and a

Pump Skid Controller. (Def. Ex. 20 at 5.) The Con-

troller consists of a programmable logic controller

(PLC), an operator interface panel (OIP), and proprie-

tary software. Ud. at 1.) The Controller measures

atmospheric conditions and then makes control deci-

sions based on those conditions and various param-

eters entered by the user. The nozzles connected to a

particular pump constitute a Fog-Cooling Stage. Each

Fog-Jooling Stage has a particular cooling value

associated with it, and each Fog-Cooling Stage can be

operated independently. The Stages are controlled by

a Cooling Stage Manager. The Cooling Stage Manager

calculates the number of stages to turn on given the

ambient conditions and the desired degree of cooling

entered by the user. (Ud. at 7.) The Users Manual also

discusses the prospect of using the Fog System to

perform overcooling. Overcooling occurs when “(tJhe

inlet air stream carries the unevaporated fog droplets

into the compressor.” (/d. at 6.) In other words, ever-

cooling is synonymous with wet compression.

App. 25

The foregoing evidence establishes several facts.

Jasper’s model indicated to Dow that Mee systems

could be used to perform wet compression. Mee does

not dispute this point, and in fact, Mee’s Users Guide

discusses and contemplates the use of Mee systems

for wet compression. The Users Guide also estab-

lishes that the Cooling Stage Manager would turn on

(or off) Fog-Cooling Stages in response to ambient

conditions. The cycling of a Fog-Cooling Stage would

incrementally increase or decrease the amount of

water being added to the inlet air flow. And relevant

to the preservation of the structural integrity of the

turbine, Thomas Mee authored an article on the use

of fogging systems for power augmentation in which

he claimed that “[t]o date, more than 50 fog systems

with intercooling capacity have been installed on

turbines in the United States,

”»

and that “[t!here are

no reports of compressor degradation in any of those

systems... .” (Def. Ex. 35.).

(3) Mee can be liable only for indirect

infringement

As noted above, Dow conceded that its infringe-

ment case against Mee was necessarily based on a

theory of indirect infringement. Indirect infringement

can be based either on a theory of inducement of

infringement, see 35 U.S.C. § 271(b), or contributory

infringement, see id. § 271(c). To prove inducement of

infringement, a patentee has to demonstrate that the

accused infringer had the “intent to cause the acts

which constitute the infringement.” Moba B.V. v.

App. 26

Diamond Automation, Inc., 325 F.3d 1306, 1318

(Fed. Cir. 2003). “[A] finding of inducement requires a

threshold finding of direct infringement — either

a finding of specific instances of direct infringement

or a finding that the accused products necessarily

infringe.” Lucent Techs., Inc. v. Gateway, Inc., 580

F.3d 13801, 13822 (Fed. Cir. 2009) (internal quotation

marks omitted) (alteration in original). “In order to

succeed on a claim of contributory infringement, in

addition to proving an act of direct infringement,

plaintiff must show that defendant ‘knew that the

combination for which its components were especially

made was both patented and infringing’ and that

defendant’s components have ‘no substantial non-

infringing uses.’” Cross Med. Prods., Inc. v. Medtronic

Sofamor Danek, Inc., 424 F.3d 1293, 1312 (Fed. Cir.

2005) (quoting Golden Blount, Inc. v. Robert H. Peter-

son Co., 365 F.3d 1054, 1061 (Fed. Cir. 2004)). Signifi-

cantly, the absence of probable cause for the theory

of direct infringement supports the conclusion of a

lack of probable cause on either theory of indirect

infringement because direct infringement is a pre-

requisite for indirect infringement. See Dynacore

Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263,

1277 (Fed. Cir. 2004) (finding that a party’s “failure to

prove direct infringement ... necessarily dooms its

allegations of indirect infringement, because absent

direct infringement of the claims of a patent, there

can be neither contributory infringement nor induce-

ment of infringement” (internal quotation marks and

alteration omitted)).

App. 27

Because it is conceded in this case that Mee could

be liable for infringement only pursuant to a theory of

indirect infringement, and because the foregoing case

law holds that there can be no indirect infringement

in the absence of some direct infringement, it is thus

clear that Dow could have no justification for filing its

infringement suit agai..st Mee unless Dow had a

reasonable suspicion that one or more of Mee’s cus-

tomers was using Mee’s equipment in an infringing

manner. Accordingly, Mee, as plaintiff in this mali-

cious prosecution case, had the burden of proving that

Dow did not entertain a reasonable suspicion that

any customer of Mee was using the equipment in an

infringing manner.

(4) Does the record evidence support the

jury’s determination that Mee carried

its burden of proving thit Dow did not

entertain the requisite reasonable sus-

picion?

The foregoing discussion has narrowed the issues.

We have determined that Dow’s justification for filing

the infringement suit against Mee depends upon

whether Dow had a reasonable suspicion that one or

more of Mee’s customers was using the equipment in

an infringing manner. And by identifying a claim

construction that the jury could have reasonably

concluded Dow adopted, we have defined the scope

of actions on the part of Mee’s customers that

would constitute infringement. As noted above, that

claim construction consists of three main limitations:

App. 28

(1) nebulized water is added at the compressor inlet,

(2) the amount of water added is modified in mass

flow increments, and (3) the amount of water is

modified for the purpose of minimizing thermal

stresses to preserve the structural integrity of the

turbine. Thus, Mee burden of proof in this case was

to prove that Dow did not entertain a reasonable

suspicion that any one or more of Mee’s customers

was using the Mee equipment in a manner that

constituted incremental wet compression to avoid or

minimize thermal stresses to preserve the structural

integrity of the turbine.”

Mee argues that it satisfied this burden of proof

because Dow had no knowledge with respect to the

use of the equipment by Mee’s customers. The record

does indicate that no Dow employee ever visited a site

where a Mee system was in operation.

On the other hand, Dow argues that it did have a

reasonable suspicion that Mee’s customers were using

the equipment in an infringing manner. Dow relies

upon the information provided by Mee at the parties’

meeting, published articles 2uthored by Thomas Mee,

and Jasper’s model. In particular, Dow argues that

the Users Guide provided insight into the uses which

Mee expected of its customers.

* Although Claims 14 and 30 were later held invalid in the

infringement litigation, we assume that, before the infringement

litigation, Dow reasonably believed that its claims were valid

Indeed, Mee does not argue to the contrary in this case.

App. 29

After a careful review of the Users Guide, and of

the other relevant evidence in the record, we conclude

that there were material issues of fact which were

properly left for the jury to decide, and that a reason-

able jury could have found that Dow did not have

sufficient evidence to raise a reasonable suspicion

that Mee’s customers were using the equipment in an

infringing manner. Miller conceded at trial that

Jasper’s model, which only established that some of

Mee’s systems were being used to perform wet com-

pression, was not enough to establish the requisite

reasonable suspicion for filing suit. And although the

Users Guide provides both further evidence that the

systems would be used to achieve wet compression

and that the systems would add water incrementally,

Dow conceded at trial that the use of Mee’s systems

for incremental wet compression alone was not a

sufficient basis for infringement. Finally, Dow points

to an article authored by Thomas Mee as evidence

that the use of Mee Systems by the customers did not

cause significant thermal stresses to their turbines.

That point, however, is not sufficient to establish the

requisite reasonable suspicion because, as we noted

above, to constitute the requisite reasonable suspicion

Dow would have had to have had some evidence that

Mee’s customers were not only using the equipment

to accomplish incremental wet compression with the

result that thermal stresses were avoided, but that

the use was directed to avoiding or minimizing ther-

mal stresses to preserve the structural integrity of

the turbine.

App. 30

Dow’s best evidence for that limitation is the fact

that its outside counsel, Schramm, may have im-

plicitly interpreted Mee’s Users Guide as evidencing

an expectation on the part of Mee that its customers

would use the equipment to avoid or minimize ther-

mal stresses to preserve the structural integrity of

the turbine.” Because Schramm’s opinion letter did

not explicitly assert that the Users Guide evidei :ed

an expectation on the part of Mee that its customers

would use the equipment in an infringing manner,

there is an issue of fact in that regard. Thus, a rea-

sonable jury could conclude that Schramm rendered

no opinion at all with respect to whether the Users

Guide provided evidence that the third limitation was

met by the use of systems by Mee’s customers. That

would eliminate the evidence most favorable to Dow

and leave little evidence in the record suggesting that

Dow did entertain a reasonable suspicion that Mee’s

customers were using the equipment in an infringing

manner. Accordingly, assuming that scenario, there is

support for the jury’s finding that Dow did not enter-

tain a reasonable suspicion that Mee’s customers

were using the equipment in an infringing manner.

Even if the jury found that Schramm did inter

pret the Users Guide to evidence an expectation on

the part of Mee that its customers would use the

equipment not only to accomplish incremental wet

The possibility of this implicit interpretation would derive

from the paragraph from Schramm’s letter quoted above in Part

ITl.A.(2) of this opinion.

App. 31

compression, but also to avoid or minimize thermal!

stresses to preserve the integrity of the turbine, we

still believe Dow’s Rule 50(b) motion fails. We have

carefully examined the Users Guide in the context of

the entirety of the evidence. We cannot conclude that

the Users Guide unequivocally evidences any such

expectation on the part of Mee. We conclude that

there is an issue of fact as to whether the Users

Guide does evidence an expectation or intent on the

part of Mee that its customers would use the equip-

ment in a manner that would constitute infringe-

ment. In other words, a reasonable jury could find

that the Users Guide was not susceptible to an inter-

pretation evidencing such an expectation or intent on

the part of Mee. And the absence of a reasonable

suspicion that any customer was directly infringing

on the claims supports a finding that there was

an absence of reasonable suspicion that Mee was

liable under either theory of indirect infringement.

Accordingly, we cannot disturb the jury’s verdict that

neither the Users Guide nor any other evidence’

was sufficient to give Dow a reasonable suspicion

that Mee’s customers were using the equipment in an

infringing manner or that Mee was guilty of indirect

infringement.

As we noted before, the probable cause inquiry in

this case presents a close question. Probable cause,

Other evidence also supports the jury verdict — e.g., the

record is clear that the Mee equipment had substantial non

infringing uses

App. 32

particularly in a civil suit, is not a high bar to meet

Gill v. Kostroff, 82 F. Supp. 2d 1354, 1364 (M.D. Fla

2000) (“The standard for establishing probable cause

in a civil action is extremely low and easily satis

fied.”). In most circumstances, we would continue to

expect malicious prosecution plaintiffs to have a diffi

cult time establishing lack of probable cause. Conse

quently, the grant of a Rule 50 motion in favor of a

malicious prosecution defendant will often be appro

priate. Under the particular circumstances of thi

case, however, sufficient evidence was presented to

sustain the jury’s finding that Dow lacked probable

cause to institute a patent infringement suit against

Mee

B. Advice of Counsel

Dow next argues that the district court erred in

refusing to grant its Rule 50 motion on its advice-of

counsel defense. Dow contends that it made a full

disclosure of all material facts to Schramm, and that

there is no evidence to the contrary. Dow also con

tends no evidence exists to support the conclusion

that Dow believed Schramm’s opinion was incorrect

This issue also presents a close question, but ulti

mately we conclude that the record contains sufficient

evidence to support the jury’s verdict

“|Alcting on the advice of counsel is a complete

defense to an action for malicious prosecution eithe:

of civil or criminal actions.” Duval Jewelry Co. |

Smith, 1386 So. 878, 880 (1931). That advice, however

App. 33

“must be sought in good faith, with the sole purposs

of being advised as to the law.” /d. It “must be pred:

cated on a full, correct, and fair statement of all

material facts bearing on the guilt of the accused, the

specific proceeding complained of must have been

advised by counsel, and the advice must have been

acted upon in good faith under the belief that the

charge was true.” [d

It 1 undisputed that Dow consulted with

Schramm and that Schramm provided Dow with an

opinion letter in which he concluded that Dow

palents were valid and infringed. In his letter

Schramm first considered the question of validity. He

tated that he had reviewed the patent file histori

art cited by the Patent and Trademark Office, the

information disclosure statement ubmitted to the

PTO and the references cited therein, and four other

references that potential licensees had brought to

Dow's attention. (Pl. kx. 117 at 1.) He also noted that

he had discussed the matter with various Dow per

onnel. Ud.) In light of his research, he concluded

that the patents were valid’ and that anv challenger

would have a difficult time proving invaiidity. Ud. at

2.) After concluding the patent claims wer alid

Schramm turned to the question of infringement. He

Although Claim 1 and 30 were later held invalid in tl

infringe ment litigation Lhe record clearly indicats Lnat DotN

Miller and Schramm. before the mininverme nt litigation ict Atty

believed the patent were valid. In this case lee chk

qué tion that fact or the reasonablens thers

App. 36

bad-faith decisions depend upon various circum-

stances and usually are issues of fact to be deter-

mined by a fact-finder.”). We agree with Mee that

there are genuine issues of fact with respect to Dow’s

good faith reliance upon Schramm’s opinion, and that

a reasonable jury could find that Dow did not rely in

good faith on the opinion.

Schramm’s letter never explicitly discusses any

theory of indirect infringement, a crucial point for

proving liability against Mee. Dow now argues that

the letter was not incompetent on this point because

the letter describes the Users Guide as teaching the

steps of the method and teaching a method that in-

fringes is sufficient to state a claim for inducement of

infringement. At best, the letter implicitly addresses

the question of indirect infringement. Thus, we con-

clude that there is an issue of fact as to whether the

letter actually addressed the issue of indirect in-

fringement. If the jury concluded, as it reasonably

could, that Schramm did not consider indirect in-

fringement at all, then a reasonable jury could have

concluded that Dow did not rely in good faith on the

opinion, especially in light of Miller’s knowledge that

Mee could be liable only for indirect infringement.

Because such issues of fact do exist, we conclude

that the district court properly left for the jury to

decide whether Dow relied in good faith upon

Schramm’s legal opinion. In addition to the issue of

fact pinpointed above, other less significant, but

nevertheless relevant, matters bolster our conclusion

that Dow’s good faith reliance was a jury question.

App. 37

Certain letters sent by Dow to Mee customers could

indicate that Dow was not proceeding in good faith.

In the infringement litigation, shortly after the

district court denied Dow’s motion for preliminary

injunction — the district court concluded that Dow

had failed to demonstrate a likelihood of success on

the merits — Dow sent letters to Mee customers

alerting them about the lawsuit, and advising them

that they might also be infringing Dow’s patents.

Although such letters may not be unusual and do

serve a legitimate purpose, the particular timing of

these letters, coming as they did after the district

court had already told Dow that it had failed to show

a likelihood of success, could have led the jury to

conclude that Dow’s purpose was not to vindicate its

legitimate patent rights, but instead to cause Mee

financial harm. As we noted, such letters will often

serve a legitimate purpose, and standing alone the

letters would not be sufficient to support the argu-

ment that Dow did not rely on Schramm’s advice in

good faith. We conclude only that, given the particu-

lar circumstances and timing of these letters, the jury

could properly have considered them alongside other

stronger evidence indicating a lack of good faith.

As with probable cause, whether Dow exercised

good faith reliance on Schramm’s opinion is a

close question. Although reliance on advice of counsel

is not an absolute defense to a claim of malicious

prosecution, Wright, 446 So. 2d at 1167, it is an

effective defense when the client makes “a full, cor-

rect. and fair statement of all material facts” and

then acts on counsel's advice in good faith under the

belief that the charge was true, Duval Jewelry, 136

So. at 880. But that is not this case. In this case, Dow

possessed extensive Knowledge of the background

technology, the history of its patents, and issues of

patent law such that a reasonable jury could find that

Dow knew that Schramm’s advice was deficient.

In that situation, the jury could have reasonably

concluded that Dow did not rely in good faith on

Schramm’s advice in filing the infringement suit.

C. Punitive Damages

Mee argues that the district court erred by grant-

ing Dow’s Rule 50(a) motion on the issue of punitive

damages because it presented sufficient evidence to

place the issue before the jury. Under Florida law,

“{a] defendant may be held liable for punitive dam-

ages only if the trier of fact, based on clear and con-

vineing evidence, finds that the defendant was

personally guilty of intentional misconduct or gross

negligence.” Fla. Stat. § 768.72(2) (2005). In order to

demonstrate intentional misconduct, the plaintiff

must show “the defendant had actual knowledge of

the wrongfulness of the conduct and the high prob-

ability that injury or damage to the claimant would

result and, despite that knowledge, intentionally

pursued that course of conduct, resulting in injury or

damage.” Id. § 768.72(2)(a). In order to demonstrate

gross negligence, the plaintiff must show “the defen-

dant’s conduct was so reckless or wanting in care that

it constituted a conscious disregard or indifference to

App. 39

the life, safety, or mghts of persons exposed to such

conduct.” Jd. § 768.72(2)\(b). Although malice is an

element of malicious prosecution, a jury verdict for a

plaintiff in a malicious prosecution suit does not by

itself automatically establish a right to punitive

damages. Louis v. Costco Wholesale Corp., 719 So. 2d

1226, 1228 (Fla. 4th DCA 1998) (“While an absence of

probable cause can result in a finding of legal malice,

legal malice, based solely on the absence of probable

cause, is insufficiemt to support an award of punitive

damages.”).

In this case, the clear and convincing standard

of proof required under §768.72 is determinative.

Although sufficient evidence was presented to place

the issues of probable cause and advice of counsel

before the jury, the closeness of those issues confirms

that the evidence is insufficient to allow a reasonable

juror to find by the clear and convincing standard

that Dow could be liable for punitive damages. That

being the case, it was not error for the district court

to grant Dow’s Rule 50(a) motion on that issue.

D. Exclusion of Loss of Goodwill Damages

The final issue is whether the district court erred

by excluding evidence relating to Mee’s proposed

theory of damages based on loss of goodwill. The

district court excluded Mee’s loss of goodwill damages

theory based on lack of notice in the required Rule 26

disclosures and the interrogatories of both the theory

and the calculation of damages.

App. 40

Rule 37(c) of the Federal Ruies of Civil Procedure

provides for sanctions against a party that fails to

disclose information required under Rule 26(a) or (e).

Specifically, the rule states that:

If a party fails to provide information or

identify a witness as required by Rule 26(a)

or (e), the party is not allowed to use that

information or witness to supply evidence on

a motion, at a hearing, or at a trial, unless

the failure was substantially justified or is

harmless.

Fed. R. Civ. P. 37(c)(1). Disclosures required under

Rule 26(a) include “a computation of each category

of damages claimed by the disclosing party.” Fed.

R. Civ. P. 26(a)(1 Aili). Rule 26(¢) requires parties

to supplement disclosures made under Rule 26(a) or

through responses to interrogatories or requests for

production “if the party learns that in some material

respect the disclosure or response is incomplete or

incorrect, and if the additional or corrective infor-

mation has not otherwise been made known to the

other parties during the discovery process or in

writing.” Fed. R. Civ. P. 26(e)(1)(A).

In this case, the district court’s findings are sup-

ported by the record. Mee’s initial disclosure did not

include “loss of goodwill” as a category of damages.

During discovery, Dow propounded an interrogatory

in which Mee was asked to identify any other claims

of damages beyond the alleged lost sale to Munters

and the attorneys’ fees and costs in defending the

underlying action. In its response, Mee failed to

App. 41

identify “loss of goodwill” as a category of damages.

Mee did not enumerate “loss of goodwill” as a cate-

gory of dan:ages until the Joint Pretrial Statement.

Moreover, Mee never provided Dow a calculation for

its alleged loss of goodwill damages.

The district court did not abuse its discretion in

concluding disclosure was required under Rule 26

and that Mee’s failure to meet the Rule 26 require-

ments was not substantially justified or harmless.

Mee argues that its failure to disclose loss of goodwill

as a category of damages is excused under Rule 26(e)

because by adverting to the lost sale of the share-

holders’ *ock to Munters, the information had been

“otherwise ... made known.” Although there may be

evidentiary overlap between the alleged lost sale and

a claim of loss of goodwill, considerable differences

exist between the two theories. A loss of goodwill

claim compensates for harm to the value of the busi-

ness as an ongoing concern and involves complex

finar: ‘31 calculations, both before and after the

infr, «ent suit. The district court did not abuse its

broad discretion in rebuffing Mee’s belated effort to

introduce a new category of damages, especially in

light of its failure to ever present the required com-

putation of alleged good will damages and the com-

plexity of the financial calculations that would have

required expert testimony. Mee also argues that

sanction under Rule 37(c) was not warranted because

its failure to provide a damage calculation was harm-

less. Because calculating the goodwill of a business

and the harm to that goodwill that flows from a

App. 42

particular lawsuit will often involve complex financial

calculations, the district court did not abuse its

discretion in finding that Mee’s failure to provide a

damage calculation was not harmless. See Design

Strategy, Inc. v. Davis, 469 F.3d 284, 293-97 (2d Cir.

2006) (upholding exclusion of lost profits evidence

based on lack of notice or computation of damages).

On the facts of this case, the district court did not

abuse its discretion by excluding Mee’s loss of good-

will theory of damages.

IV. CONCLUSION

We affirm the district court in all respects. Be-

cause sufficient evidence supported the jury’s conclu-

sions that Dow filed the patent infringement suit

without the requisite probable cause and did not rely

in good faith on the advice of counsel, the district

court did not err in refusing to grant Dow’s Rule 50(b)

motion on those issues. The evidence, however, was

not sufficient to meet the clear and convincing stan-

dard required for an award of punitive damages;

therefore, the district court did not err in granting

Dow’s Rule 50(a) motion on that issue. Finally, the

district court did not err in excluding Mee’s loss of

goodwill theory of damages.

AFFIRMED.

App. 43

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

MEE INDUSTRIES,

Plaintiff,

Case No. 6:05-cv-

1520-Orl-31DAB

DOW CHEMICAL COMPANY,

Defendant.

-“VS-

ORDER

(Filed Oct. 31, 2008)

This matter comes before the Court on the Re-

newed Motion for Judgment as a Matter of Law or, in

the Alternative, Motion for a New Trial (Doc. 211)

filed by the Defendant, Dow Chemical Company

(“Dow”), the response (Doc. 214) filed by the Plaintiff,

Mee Industries (“Mee”), and sur-replies (Doc. 217,

221) filed by both parties.

Background

In the instant case, Mee sued Dow for malicious

prosecution. In the underlying action, Dow Chemical

Company v. Mee Industries, Case No. 6:00-cv-437-

ORL-31DAB (the “Patent Case”), Dow sued Mee and

Florida Power Corporation (“Florida Power”), con-

tending that water misting systems sold by Mee to

Florida Power (and hers) were being used to in-

fringe two Dow patents: U.S. Patent No. 5,930,990

App. 44

(the “’"990 Patent”) and U.S. Patent No. 5,867,977

(the “’977 Patent”). The patents were directed to

increasing the power output of gas turbines. Both

involved methods for adding water to a turbine’s air

stream in large-enough quantities that at least some

water would not evaporate before entering the com-

pressor, creating an effect known as “wet compres:

sion.”

After extensive litigation, including a six-day

bench trial before the undersigned and an appeal to

the United States Court of Appeals for the Federal

Circuit, Mee and Florida Power prevailed. The major-

ity of the patent claims asserted by Dow were found

to be invalid. As to the remainder, Mee was found not

to have infringed them, or contributed to (or induced)

infringement of them by others.’

Mee filed this malicious prosecution action in

2005, contending that Dow lacked probable cause or

legal justification for bringing the Patent Case. The

action proceeded to trial before a jury. At the close of

all the evidence, Dow moved for judgment as a matter

of law, which was denied. The jury found in favor of

Mee, concluding that Dow had instituted the Patent

Case without probable cause and had not relied on

advice of counsel in doing so. (Doc. 184 at 1-2). Dow

now renews its request for judgment as a matter of

law. In the alternative, Dow seeks a new trial.

1 ‘ . . ° m6

Florida Power was also found not to have infringed the

patents.

App. 45

II. Legal Standards

A. Judgment as a Matter of Law

Rule 50(a) of the Federal Rules of Civil Procedure

provides that, if a party has been fully heard on an

issue and the court finds that a reasonable jury would

not have a legally sufficient evidentiary basis to find

for the party on that issue, the court may resolve the

issue against the party and grant a motion for judg-

ment as a matter of law against the party on a claim

or defense that requires a favorable finding on the

issue. Rule 50(b) provides in pertinent part that if the

court does not grant a party’s Rule 50(a) motion, it is

considered to have submitted the action to the jury

subject to the court’s later deciding it, and the movant

is permitted to renew the motion within 10 days after

the entry of judgment.

In considering a defendant’s renewed motion for

judgment as a matter of law, the court should review

all of the evidence in the record; in doing so, however,

the court is required to draw all reasonable inferences

in favor of the nonmoving party, and it may not make

credibility determinations or weigh the evidence.

Reeves v. Sanderson Plumbing Products, Inc., 530

U.S.133, 150, 120 S.Ct. 2097, 2110, 147 L.Ed.2d 205

(2000). “Thus, although the court should review the

record as a whole, it must disregard all evidence

favorable to the moving party that the jury is not

required to believe.” Jd. at 151, 120 S.Ct. at 2110.

Even though the trial judge might have reached a

different conclusion had he been the trier of fact, he is

App. 46

not free to reweigh the evidence or to re-evaluate

credibility of witnesses. Hiltgen v. Sumrall, 47 F.3d

695, 700 (5th Cir. 1995).

B. New Trial

A renewed motion for judgment as a matter of

law may be joined, in the alternative, with a motion

for a new trial under Rule 59. Fed.R.Civ.P. 50(b). Rule

59(a)(1) provides that after a jury trial a new trial

may be granted to all or any of the parties on all or

part of the issues “for any of the reasons for which

new trials have heretofore been granted in actions at

law in the courts of the United States.”

A movant is entitled to a new trial under Rule 59

when the verdict is against the great, not merely the

greater, weight of the evidence. Williams v. City of

Valdosta, 689 F.2d 965, 973 (11th Cir. 1982). To make

this determination, the trial judge must independent

ly weigh the evidence favoring the jury verdict

against the evidence in favor of the moving party. /d.

(citing Rabun v. Kimberly-Clark Corp., 678 F.2d 1053,

1060 (11th Cir. 1982)). A trial judge should not substi

tute his own credibility choices and inferences for the

reasonable credibility choices and inferences made by

the jury. Williams at 973 n.7 (11th Cir. 1982), In cases

involving simple issues, highly disputed facts, and an

absence of “pernicious occurrences,” the Court has

less freedom to disturb a jury verdict than it does

in cases involving complex issues, facts not highly

disputed, and events arguably marred by error. /d

(citing, among others, Conway vo. Ch mical Leal

lank Line Inc.. 610 F.2d 360. 362 (5th Cir. 1980)

3 Matliciou Pro ecution

Lo prevail in a maliciou prosecution ict

under Florida law, a plaintifl must establish that

(1) an onginal criminal or civil judicial pre

ceeding against the present plaintiff wa

commenced or continued: (2) the present ae

fendant was the legal cause of the original

proceeding against the present plaintiff a

the defendant in the original proceeding

(3) the termination of the original proceeding

constituted a bona fide termination of that

proceeding in favor of the present plaintifl

(4) there was an absence of probable caus

for the original proceeding; (5) there wa

malice on the part of the present defendant

and (6) the plaintiff suffered damage as a re

ult of the original proceeding

Alamo Rent-A-Car v. Mancusi, 632 So. 2d 1352, 1355

(Fla. 1994). “|The failure of a plaintiff to establish

any one of these six element is fatal to a claim

malcou pro ecution ld

lil. Analysis

\ Motion fo! Judgme nta 1 Matter of Law

lt is undisputed that the first three element

of a malicious prosecution action were met in thi

case: A civil proceeding (1.0 the Patent Case) wa

\pp. 48

commenced against Mee, Dow was the leval cause of

that proceeding, and Mee prevailed. And, at least for

purposes of this motion, Dow does not challenge the

jury's finding as to malice. Finally, Dow stipulated

prior to trial that Mee suffered damayes, in the form

ol attorneys fees, in defending the Patent Cas

Therefore, to establish its entitlement t judyement on

the malicious prosecution claim, Di must demon

Lrate that no reasonable jury could have found that

it lacked probable cause to institute the Patent Cass

In the alternative, Dow argue that no reasonable

jury could have found against it on the advice-ol

coun l affirmative defense ita erted at trial

| Probable (lau ‘

Under Florida law, probable cause for institutin,

ult is defined as “a reasonable ground of suspicion

upported by circumstance: ulliciently Lrong in

themselves to warrant a cautious man in the belief

that the person accused 1s guilty of the offense with

which he is charged.” Goldstein v. Sabella, 88 So. 2d

910, 911 (Fla. 1956) (citing Dunnavant v. State. 46 So

2d 871, 874 (Fla. 1950)). Probable cause is measured

by a lesser standard in the context of a civil suit than

it is in a criminal suit. Wright v. Yurko. 446 So. 2d

1162, 1166 (Fla. 5th DCA 1984). “To establish prob

able cause, it 1s not necessary to show that the insti

gator of a lawsuit was certain of the oulcome of the

proceeding, but rather that he had a reasonablk

belief, based on facts and circumstanc: known to

him, in the validity of the claim.’

App. 49

In the Patent Case, Mee eventually prevailed on

two different bases: Some claims were found to be

invalid. As to the others, the Court found that Dow

had not produced evidence of direct infringement by

Mee or Florida Power, or of contributory infringement

or inducement of infringement by Mee. In the instant

proceedings, Mee has not argued that Dow lacked

probable cause to file the Patent Case because it

knew or should have known its claims were invalid

For purposes of this motion, the probable cause issue

turns on whether Dow had a reasonable belief, based

on the facts and circumstances known to it at the

time of filing, that its patents were being infringed

Dow argues that the evidence at trial so over

whelmingly favored it on this point that no reason

able jury could have found against it. Dow points to

four items: (1) the fact that it obtained legal opinions

from in-house and outside attorneys prior to filing;

(2) the fact that its internal Litigation Review Com

mittee (“LRC”) vetted the proposed suit before it was

filed; (3) evidence that allegedly showed that Mee

believed it might be infringing; and (4) some decisions

made by this Court in the Patent Case that, in Dow's

view, support a finding that it possessed probable

cause to bring suit. (Doe. 211 at &).

Tellingly, the first two items Dow cites as “evi

dence” are not evidence at all, Rather, they are con

clusions reached by individuals on Dow’s payroll

i.e., in-house and outside counsel, and the members of

App. 50

the LRC — that probable cause to bring suit existed.”

And the Patent Case decisions upon which Dow seeks

to rely — denials of multiple motions for summary

judgment and a motion for attorney’s fees — are also

of no assistance to Dow here.

It is true that, for purposes of a malicious prose-

cution case, a court’s decisions in an underlying case

may sometimes indicate that the original plaintiff

possessed probable cause. See, e.g., Yurko, 446 So. 2d

at 1167. However, Dow makes no showing that this

principle is applicable here. Dow never even attempts

to identify the issues that were addressed on sum-

mary judgment in the underlying case or how those

issues might be relevant to the question of infringe-

ment. The Court’s sua sponte review of those sum-

mary judgment motions suggests that they had no

such relevance. For example, one of them addressed

the issue of whether Dow’s patents met the “best

mode” and “enablement” requirements of 35 U.S.C.

§$ 112, while another was concerned with the issue of

whether Dow had engaged in inequitable conduct

while prosecuting its patent applications. (Doc. 120,

Doc. 96 in Case No. 6:00-cv-437-GAP). Neither of

* In its memorandum, Dow cites to trial testimony from

some of these individuals as to the research underlying their

conclusions, such as the places they visited and the documents

they reviewed. (Doc. 211 at 9-10). However, Dow never describes

any particular evidence — such as, for example, facts discovered

on those visits or in those documents — that could reasonably

have been relied upon to support a belief that Mee’s systems

were being used to infringe Dow’s patents.

App. 51

these motions had implications as to the issue of

infringement. In addition, the differing burdens of

proof in the Patent Case and in this action® undercut

the notion that decisions from the first case are

dispositive or strongly suggestive of the proper result

here.

This leaves the evidence that allegedly indicates

that Mee thought it was infringing Dow’s patents.

According to Dow, this evidence consisted of the

following three items: the fact that Mee attempted to

obtain an exclusive license from Dow, the fact that

Mee’s counsel proposed ways that Mee could “avoid”

Dow’s claims, and the fact that Thomas Mee wrote to

his lawyer that “we are going to have to face the Dow

patent issue sometime soon ... [e]ven if we only

negotiate favorable terms for a license.” (Doc. 211 at

10). Even if Dow had been aware of these items prior

to filing — which does not appear to be the case as to

the second and third — they certainly do not establish

a belief on Mee’s part that it was infringing. Any

prudent (and non-infringing) business owner in Mee’s

position — accused of infringement by a competitor

with effectively bottomless pockets, faced with the

prospect of spending a million dollars or more to

* As an example, as noted in this Court’s order of January

10, 2008, malicious prosecution is a state tort requiring proof of

malice by a preponderance of the evidence. In contrast, patent

law requires clear and convincing evidence that a case was so

exceptional as to qualify for an award of attorney’s fees pursuant

to 35 U.S.C. § 285. (Doc. 100 at 5-6).

App. 52

successfully defend an infringement suit — would

likely explore the possibility of making the problem

go away more economically by securing a license. And

advice from a lawyer as to how one might abide by

the law is hardly proof that one is currently violating

the law.

It is not even clear that these three items (and

the inferences that could reasonably be drawn from

them) could constitute “circumstances sufficiently

strong in themselves to warrant a cautious man in

the belief” that Mee Industries was infringing. But

they clearly are not such strong evidence as to compel

a finding in Dow’s favor on this point. The jury was

simply not required to accept the inferences that Dow

seeks to have drawn from these three items.

Ample evidence supports the jury’s conclusion on

the issue of probable cause. First, it should be noted

that Dow’s claimed invention involved the addition of

nebulized water to the compressor of a combustion

turbine — 7.e., wet compression — in increments and in

such a manner as to avoid certain harmful results

(destructive thermal stresses in one patent, defor-

mation of the angular housing in the other). Incre-

mental wet compression itself was admittedly prior

art and not patentable by Dow." Thus, for Mee to be

liable fer inducing or contributing to infringement of

these method patents; Dow needed to show that at

Indeed, as discussed below, Dow’s applications for such a

PI

patent were rejected by the USPTO.

App. 53

least one of Mee’s customers was actually doing

something more than just incremental wet compres-

sIon.

Prior to the filing of the Patent Case, Mee pro-

vided Dow with a list of its customer installations.

(Doc. 193 at 9). But Dow made no effort to ascertain

whether any of these customers actually used Mee’s

equipment in a manner that would infringe the

patents. Rather, Dow simply had Steve Jasper, one of

its engineers, calculate that under certain tempera-

ture and humidity conditions, Mee’s customers could

be using the equipment to accomplish wet com-

pression. (Pl. Exh. 277). But this misses the mark.

Even if Mee’s customers were using the equipment

for wet compression, that was old technology and

unpatentable. Jasper, among others, admitted as

much at trial. (Doc. 193 at 16-17). In its research

prior to filing the Patent Case, and indeed throughout

the trial in that case, Dow never produced any evi-

dence that the limitations of the claims at issue had

been met by the use of any of Mee’s equipment. And

this fact is more than sufficient to support the jury’s

verdict on this point.

The Court finds no error in the jury’s determina-

tion that Dow lacked probable cause to bring the

Patent Case.”

Dow also argues that the question of probable cause is a

legal issue to be decided by the judge and that the Court erred

by submitting it to the jury. However, Dow waived this issue by

(Continued on following page)

App. 54

2. Advice of counsel

Generally speaking, good-faith reliance on the

advice of counsel in instituting a criminal or civil

action is a complete defense to a subsequent action

for malicious prosecution. Duval Jewelry Co. v.

Smith, 136 So. 878, 880 (Fla. 1931). The fact that the

attorney's advice was unsound or erroneous wiil not

affect the result. Jd.

The advice of counsel cannot be sought or se-

cured as a shield from a feigned action for

malicious prosecution or as a cloak to hide

malice, but it must be sought in good faith,

with the sole purpose of being advised as to

the law. The advice of counsel must be predi-

cated on a full, correct, and fair statement of

all material facts bearing on the guilt of the

accused, the specific proceeding complained

of must have been advised by counsel, and

the advice must have been acted upon in

good faith under the belief that the charge

was true.

Id.

The jury 1n this case was asked whether, “[b]efore

filing the patent infringement case against Mee, Dow

failing to object to the jury instructions and verdict form

Fed.R.Civ.P. 51(d)(1)(A). The Court also notes that Dow has not

identified any particular factual issues that should have been

resolved by the jury so that the Court could resolve the legal

issue of probable cause. Moreover, to the extent that the issue

should have been resolved by the Court, rather than the jury,

the undersigned would have reached the same conclusion.

App. 55

in good faith sought the advice of a lawyer, gave the

lawyer a full, correct, and fair statement of what it

knew, and reasonably relied on the lawyer’s advice in

filing the case.” (Doc. 184 at 2). The jury answered in

the negative. (Doc. 184 at 2). Dow contends that the

record at trial admitted only one conclusion: that the

jury was wrong, and that Dow relied in good faith on

the advice of counsel in bringing the Patent Case.

It is undisputed that Dow consulted an outside

attorney — William Schramm (“Schramm”) — who

provided an opinion letter in which he opined that

6

Dow’s patents were valid and being infringed

In support of the advice-of-counsel defense, Dow also

points to similar opinions rendered by its in-house counsel

before Schramm’s opinion was sought. However, contrary to

Dow’s representations, the law is not clear that a corporation or

similar entity can rely on its own employees to establish an

advice of counsel defense. The one Florida case cited by Dow

for this proposition — Toomey v. Tolin, 311 So. 2d 678 (Fla. 5th

DCA 1975) — involves a police department with a separate le-

gal department, somewhat different than the situation at a

business that employs numerous patent attorneys and is de-

ciding whether to sue a competitor. More importantly, the

Toomey court never addressed the issue of whether in-house

counsel could properly be relied on to establish an advice-of-

counsel defense, because no one raised it. Rather, the court was

called on to decide whether advice of counsel could provide a

defense to a false arrest claim, as opposed to its more traditional

application to a malicious prosecution claim. Id. at 680. The fact

that the advice had been provided by police department counsel

rather than an outside attorney never came up.

The second case relied on by Dow, Western Elec. Co. v.

Stewart-Warner Corp., 631 F.2d 333 (4th Cir. 1980), was a patent

case, not a malicious prosecution case. In Stewart-Warner, the

(Continued on following page)

App. 56

Schramm eventually filed and litigated the Patent

Case on Dow’s behalf. However, after a careful review

of the record, the Court finds no error in the jury’s

determination that Dow is not entitled to judgment

in its favor on its advice-of-counsel defense. As

Dow puts it in its brief, “the proper inquiry here is

whether Dow chose Schramm in good faith and

whether it had reason to believe that the advice of the

lawyers, including Schramm, was unsound.” (Doc 211

court had to assess whether an infringer’s reliance on its in-

house counsel’s advice in raising certain defenses was so absurd

as to warrant increased damages and an award of attorney’s

fees. Obviously, this is entirely different from the question of

whether such advice can itself establish a defense to the tort of

malicious prosecution.

In the final case cited by Dow, Shea v. Chase Manhattan

Bank, N.A., 781 A.2d 352 (Conn. App. 2001), the defendant bank

relied on both in-house counsel and outside counsel in deciding

to bring the underlying suit. As such, the Shea court had no

need to decide whether reliance on the advice of in-house

counsel, alone, would be enough to establish the defense.

In addition to the shortcomings in the precedent it cites,

Dow has not pointed to anything in the opinions offered by its

in-house attorneys that would make them more useful or

reliable than Schramm’s opinion in establishing its defense. Dow

has not shown that the opinions of its in-house counsel were

based on any information unknown to Schramm, or that the in-

house counsel reached a conclusion materially different than

that reached by Schramm. The testimony at trial was that the

opinions of Dow’s in-house counsel were at most the starting

points for Schramm’s opinion, and that Schramm’s opinion was

the product of the most extensive research. As such, in deter-

mining whether Dow is entitled to judgment on its advice of

counsel defense, the Court will not consider the advice offered by

Dow’s in-house counsel.

App. 57

at 17). Based on the evidence presented at trial, the

jury could have reasonably concluded that Dow had

reason to believe its lawyers’ advice was not sound.

Dow’s William Miller (“Miller”), an experienced

patent attorney, had shepherded the applications

through the Patent Office that resulted in the issu-

ance of the ’930 Patent and the ’977 Patent. Miller,

who served as the “point man” at Dow for prosecution

of the patent applications, had been involved in the

initial drafting of the claims and the filing of the

applications, and had “lived and breathed” with the

claims for “quite some period of time.” As a result, he

was “intimately familiar with the language of the

claims.” (Doc. 195 at 67). He knew that, in prosecut-

ing the ‘930 Patent and the ’977 Patent, Dow had

repeatedly tried to claim a method for performing wet

compression by way of an incremental addition of

water, with no further limitations, and he knew that

the patent examiners had refused to allow the claim

on the grounds that this method (henceforth, “incre-

mental wet compression”) had been disclosed in prior

art. (Doc. 194 at 92-107). Miller was therefore aware

that incremental wet compression alone would not

infringe the Dow Patents, and that something more

was required. (Doc. 195 at 83).

Miller (and through him, Dow) knew that Mee’s

equipment could be used in ways that did not infringe

its patents. For example, it could be used for evapora-

tive cooling, in which all of the added water is evapo-

rated prior to its being drawn into the compressor.

(As noted above, “wet compression” occurs when

App. 58

unevaporated water enters the compressor.) Miller

knew that when Dow first contacted Schramm, the

company had no evidence that Mee or its customers

were performing anything more than incremental wet

compression. (In fact, a fair reading of the solicitaticn

letter from Miller at least arguably suggests that the

company wanted Schramm’s opinion as to the validity

of its patents, only, not their possible infringement by

Nee.) Miller was aware that Dow had not attempted

to obtain this evidence by such means as, for exam-

ple, contacting any of Mee’s customers (using the list

that Mee had provided) to inquire as to the methods

they were employing when using Mee’s equipment.’

And Miller knew that Schramm did not obtain any

evidence that Mee or its customers were engaging in

something more than incremental wet compression.

In his opinion letter, Schramm opined that “at

least claim 30 of the "990 Patent’ is infringed,” based

" Dow did, on the other hand, employ the list for another

purpose. Shortly after filing the Patent Case, Dow sent letters to

Mee’s customers, warning them that they themselves might face

an infringement suit for using Mee’s equipment — despite a lack

of evidence that any of these customers were performing Dow’s

patented methods. (Doc. 194 at 57-60; Doc. 195 at 84-85).

* Claim 30 of U.S. Patent No. 5,930,990 read as follows:

A wet compression power augmentation method for

adding nebulized water to a gas turbine, said gas tur-

bine having a housing and a compressor, said com-

pressor having a compressor inlet, comprising:

nebulizing water in said compressor inlet; and

adding water to modify said nebulized water in a plu-

rality of nebulized water mass flow increments such

(Continued on following page)

App. 59

solely on two things: that the Mee sprayer-control

system “accounts for numerous ambient conditions”

and that “Mee has numerous fog systems installed

nationwide.” Together these two things suggested to

Schramm “that the method of adding water to the

compressor in increments does not cause any signifi-

cant thermal stresses to the system.” (PI Exh. 117).

However, suggesting that the additional water does

not cause thermal stresses is a far cry from suggest-

ing that the water was added for the purpose of

avoiding thermal stresses, as claim 30 required. The

evidence showed that the water could be incremental-

ly increased for other purposes, such as to maintain

complete evaporation for evaporative cooling in the

face of changing humidity and temperature condi-

tions outside the turbine. Or the total volume of

water added (in increments or otherwise) might be

small enough so that wet compression was accom-

plished with no possibility of creating such problems

as destructive thermal stresses, mooting any possi-

bility that the water was being added incrementally

for the purpose of avoiding such problems.

that operationally-induced thermal stresses within

said gas turbine due to the ingestion and evaporation

in whole or in part of said nebulized water are suffi

ciently minimized to preserve structural integrity in

said gas turbine.

App. 60

Schramm’s infringement opinion as to claim 5 of

the 977 Patent’ was similarly lacking. The claimed

method required operation for a certain minimum

time period — “about 4 hours” — and with a suffi-

ciently uniform distribution of the water to limit

angular deformation of the housing. In his opinion

letter Schramm relied on evidence that the Mee

system produced uniform distribution of water and

did not cause angular deformation of the housing,

’ Claim 5 of U.S. Patent No. 5,867,977 read as follows

A method for augmenting; the net output of an indus

trial gas turbine characterized in operation by periods

of continuous use exceeding about 4 hours in length in

driving a generator or compressor, the industrial gas

turbine having an axial-flow multistage compressor

having an inlet for acquiring a working fluid compris-

ing air, said axial-flow multistage compressor having

a housing, the method comprising the steps of:

providing liquid water comprising liquid droplets to

the working fluid acquired by the axial-flow compres

sor to reduce the temperature increase of the working

fluid caused by compression to achieve an increase in

the net output of the industrial gas turbine available

to drive said generator or compressor as measured

against the net output of the industrial gas turbine

under comparable conditions but without liquid water

provided,

said method including the further step of insuring a

sufficiently uniform distribution of liquid water in the

working fluid to limit angular deformation of the

housing to a generally predetermined acceptable limit

that prevents damage to the axial-flow multistage

compressor.

App. 61

but pointed to nothing that suggested that it was

being done for this purpose. (P| Exh. 117).

There was evidence produced at trial that Dow

considered Mee a competitor that should either be

forced to ether pay Dow for a license or get out of the

market for power augmentation technology. (Doc. 194

at 50; Doc. 195 at 70). At least arguably, Dow took

several steps primarily if not entirely for the purpose

of causing financial harm to Mee. For example, Dow

chose to sue the California-based Mee in Florida,

rather than in one of numerous other states in which

Mee had customers — and with absolutely no evidence

that Florida Power was even using Mee’s equipment

for wet compression. (When asked why Dow chose to

sue in what appeared to be the most expensive possi

ble forum for Mee, Dow’s witnesses were unable to

articulate a compelling reason.) Dow also sent warn

ing letters to the rest of Mee’s customers after filing

the Patent Suit, informing them that they might face

an infringement suit for using Mee’s equipment. (Doc.

194 at 57-60; Doc. 195 at 84-85). Obviously, the jury

was free to accept Dow’s explanations that these were

entirely legitimate steps, done with no ulterior mo-

tive. However, the jury could also have interpreted

them as tactics employed for the purpose of ratchet-

ing up the economic pressure on Dow’s much smaller

competitor so as to force it out of the power augmen-

tation market, regardless of whether any infringe

ment was occurring.

A reasonable jury, combining the evidence sug

gesting Dow’s commercial motivations with Miller’s

App 62

knowledge that the company never possessed (and

Schramm never acquired) any evidence of infringe

ment, could have concluded that Dow knew that

Schramm’s advice was unsound, but did not care. A:

such, the jury could properly have rejected Dow’

advice of counsel defense

B. New Trnal

Dow argues that if the probable cause and advice

of-counsel issues raised above are not enough to

warrant judgment as a matter of law, they meet the

lesser standard required to obtain a new trial. Aiter

reviewing the record, the Court does not find that

those issues were decided against the great weight of

the evidence or otherwise require a new trial

Dow also argues that a new trial is required

because the closing remarks by counsel for Mee were

inappropriately inflammatory, referring to Dow as an

“800-pound gorilla” out to crush an annoying “cock

roach”. The Court disagrees, particularly in light of

the fact that the Mee-as-cockroach reference came

from one of Dow’s internal emails. Dow also com

plains of certain alleged misstatements of the law

made by counsel for Mee in closing, but the Court

finds that the statements were neither erroneous nor

prejudicial. In addition, Dow did not make a timely

objection to these statements, and the Court’s in

structions clearly admonished the jurors that what

the lawyers say is not evidence (Doc. 178 at 4) and

Lhnat the appli 1 e law would be CXp ained

Court (Doc 1/78 at 2-3)

In consideration of the foregoing. itis hereby

ORDERED that the Renewed Motion for Judy

ment as a Matter of Law or. in the Alternative. Mo

tion for a New ‘Trial (Doc. 211) is DENIED.

DONE and ORDERED in Chamber: Orland

lorida on October 31. 2008

Gregory A Presnell

GREGORY A. PRESNELL

UNITED STATES

DISTRICT JUDGE

( Op! furnished t

Counsel of Record

Unrepre ( ntled Part ,

App. 64

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 08-16747-CC

MEE INDUSTRIES,

A foreign corporation,

Plaintiff-Appellant-

Cross-Appellee,

versus

DOW CHEMICAL COMPANY,

A foreign corporation,

Defendant-Appellee-

Cross-Appellant.

On Appeal from the United States District Court

for the Middle District of Florida

(Filed Aug. 4, 2010)

BEFORE: MARCUS, FAY and ANDERSON, Circuit

Judges.

PER CURIAM:

The petition(s) for rehearing filed by Appellee/

Cross-Appellant is DENIED.

App. 65

ENTERED FOR THE COURT:

‘s/ R. Lanier Anderson, III

UNITED STATES

CIRCUIT JUDGE

ORD

t]

App. 66

Fla. Stat. § 768.72. Pleading in civil actions; claim

for punitive damages

(1) In any civil action, no claim for punitive

damages shall be permitted unless there is a reason-

able showing by evidence in the record or proffered by

the claimant which would provide a reasonable basis

for recovery of such damages. The claimant may move

to amend her or his complaint to assert a claim for

punitive damages as allowed by the rules of civil

procedure. The rules of civil procedure shall be liber-

ally construed so as to allow the claimant discovery of

evidence which appears reasonably calculated to lead

to admissible evidence on the issue of punitive dam-

ages. No discovery of financial worth shall proceed

until after the pleading concerning punitive damages

is permitted.

(2) A defendant may be held hable for punitive

damages only if the trier of fact, based on clear and

convincing evidence, finds that the defendant was

personally guilty of intentional misconduct or gross

negligence. As used in this section, the term:

(a) “Intentional misconduct: means that the

defendant had actual knowledge of the wrongfulness

of the conduct and the high probability that injury or

damage to the claimant would result and, despite

that knowledge, intentionally pursued that course of

conduct, resulting in injury or damage.

(b) “Gross negligence” means that the

defendant’s conduct was so reckless or wanting in

care that it constituted a conscious disregard or

App. 67

indifference to the life, safety, or rights of persons

exposed to such conduct.

(3) In the case of an employer, principal, corpo-

ration, or other legal entity, punitive damages may be

imposed for the conduct of an employee or agent only

if the conduct of the employee or agent meets the

criteria specified in subsection (2) and:

(a) The employer, principal, corporation, or

other legal entity actively and knowingly participated

in such conduct;

(b) The officers, directors, or managers of

the employer, principal, corporation, or other legal

entity knowingly condoned, ratified, or consented to

such conduct: or

(c) The employer, principal, corporation, or

other legal entity engaged in conduct that constituted

gross negligence and that contributed to the loss,

damages, or injury suffered by the claimant.

(4) The provisions of this section shall be ap-

plied to all causes of action arising after the effective

date of this act.