# Petition for Writ of Certiorari — Mee Industries Inc. v. Dow Chemical Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2703%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2011 - **Citation:** 562 U.S. 1138 ## Text 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.- WF MeN di ci ou caieccatennervaxopanscenvecetasany sean cuereeeuae lat STALLION. OF THE CABB..iccccoscsessessvesenssvveaes 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: «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 concluded the p ivel) acce and Met patent } which concl ‘ at Mee Lechnoloyv hn patent nt Ootties Information Patent Office iT) In ay Oplnio;4n umulative of other He concluded that lit time provin tne patent al variou article elating to Mee | infringement inaly tablished that @ Claim O! ea ommercial Kanuch and ypined that the AGiSis. 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 tituyt i iT) ; . { } | I | }Li¢ ar DY} L interpreted ©] mM UO otf the pO) LaLIOI ehull ’ miet 4 , } I I ci flo | rfé iti ently | j iT] POTILV O| Lhe Lurpine rMOULy Line Lored pe wel compre on iftTi©) nt oO] Wate! if Lr ir ¢ the structural in LeESLIMONY 1 | truction iif ( TOL y that upport DIO! lette ry ' ] ee DO (,uide If { , ‘ ‘ ‘ , ~~ Niel ; ( itl eee) reine 1 ul I} brit PLT Ah} I ence qd ’ bOI 4 '”"¢ 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. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2703%3A1. Public record. Not legal advice.