Appendix — Oiness v. Walgreen Co.

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APPENDIX TABLE OF CONTENTS

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UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

95-1138,-1164,-1205

PHILIP OINESS and SUN

PRODUCTS GROUP, INC.,

Plaintiffs /Cross-Appellants,

V.

WALGREEN COMPANY, ATICO INTERNATIONAL

INCORPORATED, f/k/a/ J&M ENTERPRISES, d/b/a

ATICO NEW ATICO INTERNATIONAL, LTD., d/b/a

NEW ATICO, a/k/a ATICO,

Defendants-Appellants.

Donald R. Dunner, Finnegan, Henderson, Farabow,

Garrett & Dunner, of Washington, D.C., argued for plain-

tiffs/cross-appellants. With him on the brief was J.

Michael Jakes. Of counsel was Barbara R. Rudolph, Also of

counsel were Gregg I. Anderson and Elizabeth A. Phelan,

Holland & Hart, of Denver, Colorado.

James A. Lowe, of Denver, Colorado, argued for defen-

dants - appellants. With him on the brief was Duane

Burton.

Appealed from: United States District Court for the Dis-

trict of Colorado

Judge Finesilver

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UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

95-1138, -1164, -1205

PHILIP OINESS and SUN

PRODUCTS GROUP, INC.,

Plaintiffs /Cross-Appellants,

v.

WALGREEN COMPANY, ATICO INTERNATIONAL

INCORPORATED, f/k/a J&M ENTERPRISES, d/b/a

ATICO NEW ATICO INTERNATIONAL, LTD., d/b/a

NEW ATICO, a/k/a ATICO,

Defendants-Appellants.

DECIDED: July 2, 1996

Before MAYER, Circuit Judge, COWEN, Senior Circuit

Judge, and RADER, Circuit Judge.

RADER, Circuit Judge.

Walgreen Company (Walgreen) appeals a decision of

the United States District Court for the District of Colo-

rado. The district court denied Walgreen’s motion for

remittitur, or in the alternative a new trial, on a jury

award of $1.1 million in lost profits. The district court

also denied Walgreen’s motion for judgment as a matter

of law that Philip Oiness (Oiness) could not recover pro-

jected lost profits on the record evidence. Finally, the

district court awarded Oiness prejudgment interest at the

Colorado statutory rate of 8%. Because the jury damages

award was speculative, this court reverses-in-part,

vacates-in-part, and remands-in-part.

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Oiness cross-appeals the trial court’s denial of its

motion for enhanced damages and request for prejudg-

ment interest at the rate of 16.52%. This court affirms the

trial court on these issues.

BACKGROUND

This appeal features a small folding headrest called a

Headchair. The Headchair resembles a tiny director’s

chair which supports a user’s head off the ground. The

Headchair sells primarily to sunbathers at the beach or to

campers. This simple produce has seen a tumultuous

legal history.

Steven Younger (Younger) and Rudolf Fiedelak, co-

inventors of the Headchair, filed a patent application for

the Headchair on October 11, 1984. The patent issued on

October 1, 1985 as U.S. Patent No. 4,544,203 (‘203). Youn-

ger, Oiness, and other investors formed the corporation

Sun Global Enterprises, Inc. (Sun Global). The inventors

assigned the ‘203 patent to Sun Global. In March 1984,

Sun Global began making the Headchair. Sales com-

menced in June 1984.

In mid-1985, B&E Sales Co. (B&E) began selling a

folding headrest. Sun Global sued B&E in 1986 for

infringement of the ‘203 patent. In that trial, Younger

testified that B&E’s infringement virtually destroyed the

market for Sun Global Headchairs. Sun Global won a lost

profits damages award from B&E for harm to the retail

market from 1986 through 1992.

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In June 1986, Oiness formed a new corporation, Sun

Products Group, Inc. (Sun Products), to sell the Head-

chair. Sun Products acquired the assets of the defunct Sun

Global. Oiness thus acquired the ‘203 patent. Oiness and

Sun Products then sued Walgreen for infringement of the

‘203 patent.

In April 1991, the district court held its first trial on

this case. The jury found that Walgreen had willfully

infringed the patent and awarded Oiness $300,000 in

damages. Oiness v. Walgreen Co., 774 F. Supp. 1277, 21

USPQ2d 1654 (D. Colo. 1991).

Walgreen appealed that decision to this court. Oiness

v. Walgreen Co., 980 F.2d 742, 26 USPQ2d 1548 (Fed. Cir.

1992) (non-precedential), cert. denied, 507 U.S. 1032 (1993).

On appeal, this court affirmed Walgreen’s liability, but

vacated the damage award and remanded the case for

reconsideration of the amount of damages. This court

determined that the trial court had erred in its jury

instructions on damages. The faulty instructions did not

distinguish between the lost profits award for B&E’s

infringement in 1985-1986 and the lost profits for Wal-

green’s 1987-1990 infringement. Without this distinction,

the jury could assess Waigreen for damages already com-

pensated in the B&E trial. Furthermore, this court dis-

cerned a lack of substantial evidence to support the jury’s

damage award. Id.

The district court retried the case on damages. In

October 1994, the jury awarded Oiness $1,101,240 in lost

profits and $10,150,000 in projected lost profits. Speci-

fically, the jury awarded projected lost profits of $1.4

million in the retail sales market, $750,000 in the premium

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market, and $8 million in the advertising specialty mar-

ket.

Walgreen moved for judgment as a matter of law,

remittitur of the damage award, and alternatively a new

trial on damages, all of which the trial court denied in an

Order Regarding Post-Trial Motions entered December 6,

1994. The district court also awarded 8% in prejudgment

interest on the entire judgment.

DISCUSSION

Actual Sales

Walgreen moved for remittitur, or in the alternative a

new trial and moved for judgment as a matter of law

(JMOL) that the record evidence did not support pro-

jected lost profits. In considering a motion to amend the

judgment, or in the alternative to grant a new trial on the

amount of damages, a trial court must review the record

to determine whether the jury’s verdict contravenes the

“clear or great weight of the evidence.” “Unisplay, S.A. v.

American Elec. Sign Co., 69 F.3d 512, 517, 36 USPQ2d 1540,

1544 (Fed. Cir. 1995) (quoting Standard Havens Prods., Inc.

v. Gencor Indus., Inc. 953 F.2d 1360, 1367, 21 USPQ2d 1321,

1326 (Fed. Cir. 1991), cert. denied, 506 U.S. 817 (1992)).

This court reviews for an abuse of discretion the decision

denying a grant of remittitur or a new trial because of an

excessive damage award. K-B Trucking Co. v. Riss Int'l

Corp., 763 F.2d 1148, 1162 (10th Cir. 1985); see also Shearing

v. lolab Corp., 975 F.2d 1541, 24 USPQ2d 1133 (Fed. Cir.

1992) (reviewing the denial of a motion for a new trial for

an abuse of discretion).

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In considering a motion for JMOL, a trial court

reviews the record for a substant.al evidence to support

the jury’s verdict. Federal Deposit Ins. Corp. v. United

Pacific Ins. Co., 20 F.3d 1070, 1082 (10th Cir. 1994).

On appeal from a decision on a motion for JMOL, this

court must review the record for substantial evidence.

Richardson v. Suzuki Motor Co., 868 F.2d 1226, 1240, 9

USPQ2d 1913, 1924 (Fed. Cir.), cert. denied, 493 U.S. 853

(1989). the measurement of actual damages for patent

infringement is a question of fact. Brooktree Corp. v.

Advanced Micro Devices, Inc., 977 F.2d 1555, 1578, 24

USPQ2d 1401, 1417 (Fed. Cir. 1992).

Upon a finding of infringement, title 35 envisions the

award of damages adequate to compensate the patentee

for infringement, but in no event less than a reasonable

royalty. 35 U.S.C. § 284 (1994). The patent owner bears the

burden of proving this amount. Smithkline Diagnostics,

Inc. v. Helena Lab. Corp., 926 F.2d 1161, 1164, 17 USPQ2d

1922, 1925 (Fed. Cir. 1991). Beyond a reasonable or estab-

lished royalty, a claimant must prove actual damages to

establish entitlement to lost profits. Water Technologies

Corp. v. Calco, Ltd., 850 F.2d 660, 671, 7 USPQ2d 1097, 1106

(Fed. Cir.), cert. denied, 488 U.S. 968 (1988). Proof of actual

damages must include a causal connection between the

infringement and the lost profits. Rite-Hite Corp. v. Kelley

Co., 56 F.3d 1538, 1585, 35 USPQ2d 1065, 1102 (Fed. Cir. )

(en banc), cert. denied, 116 S. Ct. 184 (1995). “To recover

lost profits as actual damages, a patent holder must dem-

onstrate that there was a reasonable probability that, but

for the infringement, it would have made the infringer’s

sales.” Minnesota Mining & Mfg. Co. v. Johnson & Johnson

Orthopaedics, Inc., 976 F.2d 1559, 1577, 24 USPQ2d 1321,

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1336 (Fed. Cir. 1992) (citing State Indus., Inc. v. Mor-Flo

Indus., Inc., 883 F.2d 1573, 1577, USPQ2d 1026, 1028 (Fed.

Cir. 1989), cert. denied, 493 U.S. 1022 (1990)).

The district court properly instructed the jury that

Oiness was entitled to present proof of lost profits based

upon Walgreen’s sales. Oiness, however, did not present

proof of Walgreen’s sales. Instead Oiness presented only

pictures of Headrest displays in three Walgreen stores.

From these pictures, Oiness presumed that Walgreen

devoted one and a half to two square feet of floor space

in every store to Headrest sales. Without proof that every

store sold Headrests or the amount of space in those

stores for Headrest sales, Oiness then multiplied its esti-

mated square footage by 1600, the number of Walgreen

stores. Oiness next relied on a Value Line report for

investors which discussed the vague concept of sales per

square foot. This report suggested that Walgreen aver-

aged sales of $379 per square foot of floor space. This

report made no assessment of the sales of Headrests and

no assessment of whether Headrest sales fell above or

below the square foot sales average. Nonetheless, Oiness

multiplied the presumed floor space in each Walgreen

store by $379 per square foot. Finally, Oiness projected

this calculation over a five year period. Thus Oiness

extrapolated that Walgreen would have sold 3.6 to 4.8

million Headrests. This number of sales generates lost

profits between $4,840,000 and $6,450,000.

This evidence adds vague estimation and gross

extrapolation to unsupported presumption. At every

step, this damages calculation is fraught with specula-

tion. Three pictures do not support a conclusion for 1600

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stores. The Value Line report does not supply any infor-

mation about Headrest sales. The five-year projection

does not account for market fluctuations over time and

does not relate to the three pictures or the Value Line

report at all. Instead of presenting evidence of actual

sales combined with reliable economic analysis of

demand, supply, and price over time, Oiness invites the

jury to engage in rapt speculation. Based as it is on

insubstantial evidence, this court reverses the jury’s

$1,101,240 lost profits award.

A court is not at liberty to supplant its own judgment

on the damages amount for the jury’s findings. Unisplay,

69 F.3d at 519. Therefore, in holding that a jury damage

award is excessive, an appellate court has two options. It

may simply reverse the jury award and order a new trial

or allow plaintiff the option of agreeing to a remittitur in

a specified amount. See id.; 11 Charles A. Wright et al.,

Federal Practice & Procedure § 2820 (2d 3d. 1995). This

court has adopted the “maximum recovery rule” which

requires this court to remit the damage award to the

highest amount the jury could “properly have awarded

based on the relevant evidence.” Unisplay, 69 F.3d at 519.

The record shows conclusively that Walgreen sold

142,230 Headrests in the retail market. Younger testified

that the average net profit on the Headchair in the retail

market was $1.33. Multiplying the amount of Headrests

Walgreen sold by the admitted average net profit of the

Headchair equals a total of $189,000 in the retail market.

In addition, Vernon Brunner (Brunner), the Executive

VP of Marketing for Walgreen, testified that at the end of

August 1990, Walgreen had 23,610 Headrest left in its

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stores. The warehouse report, which was the cornerstone

of Walgreen’s proof of Headrest sales, shows no move-

ment of Headrests after this date. The 142,230 units

reflect the 165,840 units moved to stores, minus the

inventory remaining in the stores as of August 1990.

Walgreen produced no records accounting for the where-

abouts of the 23,610 Headrests. Brunner also testified that

the stores were not advised to stop selling the Headrest

until approximately March 1991. It is uncertain what

happened to the 23,610 Headrests. Therefore, in view of

Walgreen’s lack of records, it was reasonable that the jury

inferred these Headrests had been sold. Lam, Inc. v. Johns-

Manville Corp., 718 F.2d 1056, 219 USPQ 670 (Fed. Cir.

1983). Adding the 23,610 unaccounted for Headrests with

the 142,230 sold amounts to $220,567 in actual sales. This

amount serves as a benchmark for remittitur.

Oiness questioned this evidence on actual sales by

alleging that Walgreen withheld evidence of actual sales.

To the contrary, Walgreen presented inventory and ware-

house records. Brunner, presented unrebutted testimony

that these records were the most accurate method to

determine the number of Headrests Walgreen had avail-

able for sale. Moreover, in light of the utter failure of

Oiness to present proof of lost profits, the record contains

no better evidence of Walgreen’s actual sales. Because

this evidence is the only reliable record of actual sales,

this court vacates and remands to the trial court with

instructions to order judgment in the amount of $220,567.

Should Oiness refuse to accept the reduction of its award,

the trial court may grant Oiness a new trial on damages.

This result is consistent with Lam. In Lam, this court

inferred causation of damages when the patent owner

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and the infringer were the only suppliers of the product.

With respect to reliance on the infringer’s sales records,

the court noted that “any adverse consequences must rest

on the infringer when the inability to ascertain lost

profits is due to the infringer’s own failure to keep accu-

rate or complete records.” Lam, 718 F.2d at 1065 (citing

Milgo Elec. Corp. v. United Business Communications, Inc.,

623 F.2d 645, 665, 206 USPQ 481, 496 (10th Cir.), cert.

denied, 449 U.S. 1066 (1980)). The Lam court, however,

noted that the plaintiff has the burden of showing with

reasonable probability defendant’s sales. 718 F.2d at 1065.

Even where defendant's records are not complete, dam-

ages may “not be determined by mere speculation or

guess.” Id. (quoting Story Parchment Co. v. Paterson Pach-

ment Paper Co., 282 U.S. 555, 563 (1931)).

In this case, Oiness purported to meet its burden of

proof with mere speculation and guess work. Any insuffi-

ciency in Walgreen’s records cannot supplant Oiness’s

burden to prove lost profits by a preponderance of evi-

dence. See SmithKline, 926 F.2d at 1164 (at trial it is the

patentee’s burden to prove lost profits by a “prepon-

derance of the evidence”). Due to Oiness’ failure of proof,

the best remaining evidence is Walgreen’s records. Thus,

this court remands with the above instructions.

Projected Lost Profits

This court upholds a jury’s damages award unless

“grossly excessive or monstrous,” clearly not supported

by evidence, or based only on speculation or guesswork.

Brooktree, 799 F.2d at 1580 (citing Los Angeles Memorial

Coliseum Comm'n v. NFL, 791 F.2d 1356, 1360 (9th Cir.

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1986), cert. denied, 484 U.S. 826 (1987)). In this regard, this

court acknowledges that a patentee may produce suffi-

cient evidence to recover projected future losses, see Lam,

718 F.2d at 1068, but those projections must not be spec-

ulative. See Sunward Corp. v. Dun & Bradstreet, Inc., 811

F.2d 511, 541 (10th Cir. 1987); Brooktree, 977 F.2d at 1581

(citing Bio-Rad Lab., Inc. v. Nicolet Instrument Corp., 739

F.2d 604, 616, 222 USPQ 654, 664 (Fed. Cir.), cert. denied,

469 U.S. 1038 (1984)). “The burden of proving future

injury is commensurately greater than that for damages

already incurred, for the future always harbors

unknowns.” Brooktree, 977 F.2d at 1581. “While estimates

of lost future profits may necessarily contain some spec-

ulative elements,” Malloy v. Monahan, 73 F.3d 1012, 1016

(10th Cir. 1996) (citing United Steelworkers of America v.

CCI Corp., 395 F.2d 529, 533 (10th Cir. 1968), cert. denied,

393 U.S. 1019 (1969); Linited States v. Griffith, Gornall &

Carman, Inc., 210 F.2d 11, 13 (10th Cir. 1954)), “the fact-

finder must have before it ‘such facts and circumstances

to enable it to make an estimate of damage based upon

judgment, not guesswork.’ ” Id. (quoting Griffith, Gornall

& Carman, Inc., 210 F.2d at 13).

This case involves three different markets: the pre-

mium market, the retail market, and the advertising spe-

cialty market. Oiness contends that Walgreen’s

infringement destroyed all three markets. The jury

awarded Oiness projected lost profits in all three of these

markets.

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A.

The retail market concerns products sold at retail

through department stores, drug stores, chains, and

direct sales to consumers. Douglas MacLachlan (Mac-

Lachlan) was Oiness’ expert in the retail market. Mac-

Lachlan developed his forecast in this market based on

information from Sun Product’s attorneys, accountant,

and officers. MacLachlan forecasted Sun Product’s lost

profits from the start of infringement until 2002, the

patent expiration date.

MacLachlan admitted that he found very little sales

history to support his projections. The prior infringement

by B&E complicated his reliance on the sales history of

the Headchair. Due to this factor, MacLachlan relied on

the sales unit figures for the second half of 1984, 30,746,

and the first half of 1985, 304,045 — the only figures before

B&E’s infringement. He determined that the difference

between these figures represented a 900% increase. He

used this initial burst in product sales to project the

growth rate for sales over the duration of the patent

absent infringement. Recognizing the alarming size of

this growth rate, however, he proposed “the conservative

approach” of reducing this growth rate to a “mere” 450%

increase in future sales for several years, with another

reduction to 150% growth near the end of the patent

term. In other words, MacLachlan still projected more

than a doubling of annual sales near the end of Oiness’s

patent term.

MacLachlan’s entire premise is flawed. MacLachlan

relies on figures from the first months after Headchair’s

introduction into the market place. He then assumes that

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those figures, from a few months, support an extrapola-

tion of demand over future years. The economic axiom

that demand curves slope downward calls into question

the doubling of demand for a product year after year.

MacLachlan offered no sound economic reasoning to sup-

port his assumption that Headchair sales would quadru-

ple and double throughout the life of the patent. The

figures for the first burst of sales do not supply adequate

support for his assumption.

MacLachlan’s assumption is also flawed because he

had no evidence to show that the 1984-1985 sales actually

represented sales to customers over this brief period, as

opposed to large initial sales to retail outlets which might

have languished on store shelves for months. In sum,

MacLachlan’s projections lacked evidentiary support.

In Lam, this court allowed projected lost profits in a

two-supplier market upon a showing of actual pre-

infringement and post-infringement growth rates. Lam,

718 F.2d at 1068. Oiness neither established a reliable pre-

infringement nor a reliable post-infringement growth

rate. The 1984-1985 start-up figures distort MacLachlan’s

growth rate projections. Furthermore, MacLachlan admits

he did not conduct any market surveys of the Headchair.

Rather, he relied on his personal conjecture that Sun

Products would employ manufacturing representatives

around the country at trade shows to increase distribu-

tion over the life of the patent.

Because MacLachlan’s projections of lost profits in

the retail rest on faulty assumptions and a lack of reliable

economic testimony relevant to this market, this court

determines that the record does not support the jury’s

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award of $1.4 million. The only record testimony was

bald speculation by Oiness’ expert. Therefore, this court

reverses the jury’s award of projected lost profits in the

retail market.

B.

The advertising specialty market concerns products —

often calendars and pens — with a company’s logo which

are usually given away to promote the company’s busi-

ness reputation. The advertising specialty market oper-

ates by engaging a manufacturing representative to sell

the product to a distributor. The distributor then resells

the product to an interested company. The distributor

must obtain the product for a price lower than the inter-

ested company might obtain it elsewhere. Therefore,

Oiness argues, when Walgreen sold the Headrest for

$1.00, the price Sun Products could demand in the adver-

tising specialty market plummeted.

Oiness’ expert in the advertising specialty market

was Glen Holt (Holt). Holt admitted that he did not take

into account B&E’s infringement when projecting lost

profits in this unique market. This oversight is fatal to

Holt’s predictions. To the extent B&E had already dam-

aged pricing in this market, Walgreen cannot be liable for

damage caused by another infringer.

In the B&E infringement trial, Younger testified that

B&E virtually destroyed the market for the Headchair. In

his 1988 testimony, Younger held B&E responsible for a

90% drop in the business of Sun Global. B&E’s infringe-

ment extended into 1986 — less than a year before Wal-

green’s infringement. Because Holt did not consider the

orn Pe eee

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effect of B&E’s infringement on the Headchair market, his

Projections of Walgreen’s harm to the price of Head-

chairs, less than a year later, are suspect.

Just as significantly, Holt did no market analysis to

determine if market forces, other than infringement,

might have forced the price of Headchairs to dip. For

instance, Oiness projected vast market penetra‘ion in

other markets in the same period. If this had occurred,

the market itself might have reduced the price as much or

more than Holt attributed to Walgreen’s infringement.

Without more reliable market analysis, Holt provided no

more than speculation upon which the jury cannot base

an award. Because Oiness did not show an established

business in the advertising specialty market or a reliable

basis for Holt’s predictions, this court reverses the jury

award on projected lost profits in the advertising spe-

cialty market.

td

In the premium market, customers buy the products

to give away or sell as premiums in connection with

another product or service, such as a prize in a cereal box.

Customers may also use premium products as incentives

for dealers or sales persons to sell more merchandise.

George Kling (Kling) was Oiness’ expert witness in

the premium market. He testified that this market relies

heavily on the perception of the value of the premium

product. He noted that the perceived value of the Head-

chair dropped because of Walgreen’s infringement.

Before Walgreen’s activity the perceived value of the

Headchair was $5.00 or $6.00; it later dropped to $1.00.

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Because of the drop in the perceived value of the Head-

chair, Kling testified, the premium representatives would

no longer carry the Headchair as a premium product.

Once again, Kling did not factor the B&E infringe-

ment into his calculation of the damage to the perceived

value of the Headchair. Without this calculation, Kling’s

calculations run the risk of charging Walgreen with dam-

age caused by another’s infringement.

The premium market was a new market for Sun

Products. Sun Global had not entered this market. None-

theless, the value of the Headchair in one market is not

independent of its value in other markets. Without con-

sideration of the B&E infringement on Headchair value,

Oiness has not shown that the premium market remained

unaffected by B&E’s infringement.

Edgar Taylor (Taylor), director of the Nestle Food

Company Baking Division at Carnation, testified that

Carnation used the Headchair in its promotion of the

“Carnation Do it Yourself Diet Plan.” He testified that the

reason Carnation chose the Headchair as a promotional

product was its price. Taylor also testified that he would

stay away from a product if “he thought the perceived

value would decline during the course of the program.”

Kling testified that, after Walgreen’s infringement, Carna-

tion withdrew the Headchair as one of its promotional

products.

The mere temporal association of Carnation’s action

and Walgreen’s infringement does not suffice to show

causation. No record evidence showed that Carnation

terminated its premium product due to price decreases

caused by Walgreen. The record does not show a link

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between Walgreen's infringement and price decreases in

the Headchair. B&E’s infringement or other market forces

may also have caused the decreases. Without credible

economic testimony, this court cannot permit a jury to

base its award on speculation. This court reverses this

projection as well.

Interest

The trial court awarded Oiness 8% in prejudgment

interest on the entire damages award. This court reviews

grant or denial of prejudgment interest for an abuse of

discretion. Lummus Indus., Inc. v. D.M. & E. Corp., 862 F.2d

267, 274, 8 USPQ2d 1983, 1988 (Fed. Cir. 1988). Under 35

U.S.C. § 284, prejudgment interest ensures adequate com-

pensation for the infringement. General Motors Corp. v.

Devex Corp., 461 U.S. 648, 655-56, 217 USPQ 1185, 1188-89

(1983); Underwater Devices, Inc. v. Morrison-Knudsen Co.,

717 F.2d 1380, 1389, 219 USPQ 569, 576 (Fed. Cir. 1983).

Prejudgment interest has no punitive, but only compensa-

tory, purposes. Interest compensates the patent owner for

the use of its money between the date of injury and the

date of judgment. Bio-Rad Lab., Inc. v. Nicolet Instrument

Corp., 807 F.2d 964, 969, 1 USPQ2d 1191, 1195 (Fed. Cir.

1986), cert. denied, 482 U.S. 915 (1987).

The trial court abused its discretion by awarding

prejudgment interest on Oiness’ entire damages award,

including the projection of future damages. By awarding

interest on projected lost profits, the trial court compen-

sated Oiness for losses it had not yet suffered. In other

words, the court granted Oiness interest for the use of its

money when Oiness’ money had not been used. This

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award violates the compensatory purpose of prejudgment

interest. Therefore, this court reverses the trial court’s

grant of prejudgment interest on the future damages por-

tion of Oiness’ damage award. Upon remand, the trial

court may award interest on the $220,567 award of lost

profits supported by the record evidence.

CONCLUSION

This court remands on the issue of actual damages

because the jury award exceeded Walgreen’s sales in the

retail market. This court reverses the jury award for pro-

jected lost profits in the retail, advertising specialty, and

premium markets. The jury based these awards on spec-

ulation. The record does not support these awards. This

court also reverses on the trial court’s granting of pre-

judgment interest on any damages based on projections.

COSTS

Each party shall bear its own costs.

AFFIRMS-IN-PART, REVERSES-IN-PART, REMANDS-IN-

PART, and VACATES-IN-PART

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NOTE: Pursuant to Fed. Cir. R. 47.8, this dispo-

sition is not citable as precedent. It is a public

record. The disposition will appear in tables

published periodically.

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

91-1467,-1496

PHILLIP OINESS and

SUN PRODUCTS GROUP, INC.,

Plaintiffs /Cross-Appellants,

v.

WALGREEN COMPANY, ATICO INTERNATIONAL

INCORPORATED, f/k/a J & M ENTERPRISES, d/b/a

ATICO, NEW ATICO INTERNATIONAL, LTD, d/b/a/

NEW ATICO, a/k/a ATICO,

Defendants-Appellants.

DECIDED: October 8, 1992

Before MAYER, Circuit Judge, COWEN, Senior Circuit

Judge, and RADER, Circuit Judge.

RADER, Circuit Judge.

DECISION

Oiness and Sun Products sued Walgreen Company

and Atico International and New Atico International for

infringement of United States Patent No. 4,544,203 (the

203 patent). See Oiness v. Walgreen Co., 774 F. Supp. 1277,

A20

21 USPQ2d 1654 (D. Colo. 1991). A jury found that Oiness

owned the ‘203 patent, that defendants had not estab-

lished the invalidity of the ‘203 patent, and that defen-

dants willfully infringed the patent. The jury then

awarded $300,000 in actual damages. The court trebled

damages and denied attorney fees and prejudgment

interest. Upon review, this court finds substantial evi-

dence to support most of the jury’s findings. However,

due to reversible errors affecting the damages award and

the trial court’s denial of prejudgment interest, this court

affirms-in-part, vacates-in-part, and remands.

Damages

This court reviews the jury’s findings for reasonable-

ness under the substantial evidence standard of review.

Orthokinetics v. Safety Travel Chairs, 806 F.2d 1565, 1571, 1

USPQ2d 1081, 1084-86 (Fed. Cir. 1986). The district court

instructed the jury to award the “net profits” Oiness

would have made absent Walgreen’s infringement. Under

the unique facts of this case, that instruction likely misled

the jury and caused reversible error. Moreover, this court

detects no substantial evidence supporting the jury’s

damage award. On this record, no reasonable jury could

have reached this result.

In a separate 1988 suit, the United States District

Court for the Eastern District of Michigan awarded

Oiness damages for a short-lived infringement of the ‘203

patent by B&E Sales Company. Sun Prods. Group v. B&E

Sales Co., 700 F. Supp. 366, 9 USPQ2d 2009 (E.D. Mich.

1988). Due to repeated references throughout this trial,

the jury was acutely aware that Oiness previously had

$

A21

received damages from B&E Sales. In particular, Sun

Products received damages for loss of “future profits”

caused by B&E Sales’ infringement.

The jury instructions advised the jury to award

Oiness damages for any “net profits on sales Sun Prod-

ucts would have made absent the infringement.” The

instructions further defined “net profits” as “revenue

from the sale of head rests less the cost of obtaining or

manufacturing the head rest, cost of goods sold, and less

all operating costs and expenses such as advertising, rent,

salaries, promotions, et cetera.” The instructions did not

distinguish between a lost profits award for B&E Sales’

1985-86 infringement and a lost profits award for Wal-

greens’ 1987-90 infringement.

Without this distinction between damages for B&E

Sales’ 1985-86 infringement and Walgreen’s 1987-90

infringement, the jury may well have read the term “net

profits” to require reduction of the damages caused by

Walgreen’s infringement to account for damages awarded

for B&E Sales’ infringement. Regardless of the source of

the jury’s confusion, however, substantial evidence does

not support the jury’s damage award.

The jury awarded Oiness $300,000 in damages for

injury to three distinct markets - premium, advertizing

specialty, and retail. Plaintiffs’ witnesses testified to over

$5 million in retail damages, over $16 million in premium

product damages, and $500,000 in advertising specialty

damages, for a total of over $22 million. Walgreen’s wit-

ness admitted that injury to the advertising specialty

A22

market alone ranged from $250,000 to $500,000. Wal-

green’s expert based this estimate on the cost of rein-

troducing the product and did not include any lost

profits. On the record, this court finds no substantial

evidence supporting the jury’s damage award.

An offending notion woven into the fabric of this

case is: Plaintiff recovered for lost profits in the suit

against B&E Sales, therefore, plaintiff cannot recover for

lost profits against Walgreen. To recover under lost

profits, plaintiff must show that, absent infringement, it

would have made the profits claimed. King Instrument

Corp. v. Otari Corp., 767 F.2d 853, 863, 226 USPQ 402, 409,

(Fed. Cir. 1985), cert. denied, 475 U.S. 1016 (1986). Plaintiff

must show a direct causal connection between the

infringer’s activities and the patent owner’s lost profits.

Sun Products met this burden in recovering lost profits

for B&E Sales’ 1985-86 infringement. In this suit against

Walgreen, plaintiffs certainly cannot recover for profits

lost due to B&E’s infringement. Plaintiffs may recover,

however, all profits lost due to Walgreen’s 1987-90

infringement.

Because the jury instructions did not adequately dis-

tinguish between damages for the separate 1985-86

infringement and because substantial evidence does not

support the jury’s damages award, this court vacates that

award and remands.

Prejudgment Interest

This court reviews the district court’s decision not to

award prejudgment interest for abuse of discretion. See

Hughes Tool Co. v. Dresser Indus., Inc., 816 F.2d 1549, 1558,

BE LA Ra RN, oii: mTOR ARE Rell ln Sodan Keio ee: Babee

A23

2 USPQ2d 1396, 1404 (Fed. Cir. 1987). The district court

did not grant prejudgment interest because Sun Products

received damages in a prior case. Sun Prods., 700 F. Supp.

at 381-87, 9 USPQ2d at 2019-24. The court reasoned that

prejudgment interest would give Sun Products a duplica-

tive recovery. The jury, however, awarded $250,000 for

injury to the premium sales market. Premium products

are purchased in bulk to be given away as part of the

sales promotion of other products. Ir B&E Sales, Sun

Products recovered for retail sales, not premium sales.

Therefore, an award for premium sales in the instant case

would not overlap with the B&E award.

The district court said: “[t}he jury concluded that

plaintiffs were only entitled to recover $300,000 for dam-

ages incurred after 1992.” Oiness, 774 F. Supp. at 1285, 21

USPQ2d at 1660. In the same paragraph, the court relied

on testimony that Walgreen’s infringement affected pre-

mium sales from 1988 through 2002. Id. The district

court's rationale for denying prejudgment interest does

not account for the prejudgment interest on those pre-

mium sales. This failure amounts to an abuse of discre-

tion. Therefore, this court vacates the trial court’s denial

of prejudgment interest and remands. See Nickson Indus.

v. Rol Mfg. Co., 847 F.2d 795, 800-01, 6 USPQ2d 1878,

1881-82 (Fed. Cir. 1988).

CONCLUSION

Both plaintiffs and defendants raised several other

objections to the jury’s verdict and the trial court’s con-

duct of the case. In all respects, this court rejects those

objections and affirms the district court’s judgment. This

A24

court only vacates and remands for reconsideration of the

award of damages for lost profits and of the denial of

prejudgment interest.

COSTS

Ean party shall bear its own costs.

A25

United States Court of Appeals

for the Federal Circuit

95-1138, -1164, -1205

PHILIP OINESS and SUN

PRODUCTS GROUP, INC.,

Plaintiffs /Cross-Appellants,

v.

WALGREEN COMPANY, ATICO INTERNATIONAL

INCORPORATED, f/k/a/ J&M ENTERPRISES, d/b/a

ATICO NEW ATICO INTERNATIONAL, LTD., d/b/a

NEW ATICO, a/k/a ATICO,

Defendants-Appellants.

ORDER

United States Court of Appeals

for the Federal Circuit

ORDER

A combined petition for rehearing and suggestion for

rehearing in banc having been filed by the CROSS-

APPELLANT, and a response thereto having been invited

by the court and filed by the APPELLANT, and the peti-

tion for rehearing having been referred to the panel that

heard the appeal, and thereafter the suggestion for

rehearing in banc and response having been referred to

the circuit judges who are in regular active service,

UPON CONSIDERATION THEREOF, it is

A26

ORDERED that the petition for rehearing be, and the

same hereby is, DENIED and it is further

ORDERED that the suggestion for rehearing in banc

be, and the same hereby is, DECLINED.

The mandate has already issued.

FOR THE COURT,

Dated: October 1, 1996

By /s/ B.P.L.

Brian P. LeDuc

Associate Chief

Deputy Clerk

cc: DONALD R. DUNNER

JAMES A. LOWE

OINESS V WALGREEN CO, 95-1138, -1164, -1205

(Dect - 90-CV-727)

oh oe oe ae ee ee EEE

Note: Pursuant to Fed. Cir. R. 47.6, this order is not

citable as precedent. It is a public record.

SESE EEEAEAEE EASES AAAS EEE EESE EE ES ESSE EE EAEA EERE EE EEA EAA AAAS AEE EEEES

A27

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 90-F-727

PHILIP OINESS and SUN PRODUCTS GROUP, INC.,

Plaintiffs,

v.

WALGREEN COMPANY, ATICO INTERNATIONAL

INCORPORATED, f/k/a J] & M ENTERPRISES, d/b/a

ATICO, NEW ATICO INTERNATIONAL, LTD., d/b/a

NEW ATICO, a/k/a ATICO,

Defendants.

ORDER REGARDING POST-TRIAL MOTIONS

(Filed Dec. 06, 1994)

Sherman G. Finesilver, Judge

This suit involves the infringement of United States

Patent 4,544,203 (“Patent 203”). Patent 203 involves a

small folding headrest product designed for use while

reclining, for example, at the beach or park. Jurisdiction

of this Court is based on 28 U.S.C. §§ 1332, 1338 and 1400.

By way of background, a special jury verdict was

returned in favor of the Plaintiffs in 1991. See Oiness v.

Walgreen Co., 774 F. Supp. 1277 (D. Colo. 1991), aff'd in

part, 980 F.2d 742 (Fed. Cir. 1992), cert. denied, 113 S.Ct.

1849 (1993). The jury awarded $300,000 in actual damages

for the infringement and denied exemplary damages. In

an Order issued June 28, 1991, damages were trebled and

Plaintiffs’ Motion For A New Trial On The Issue Of Damages

was denied. The Parties cross-appealed, and the United

A28

States Court of Appeals for the Federal Circuit in Wash-

ington, D.C. found that the instruction requiring the jury

to award “net profits” was misleading and reversible

error, and there was no substantial evidence to support

the jury’s damages award. The case was remanded on the

question of damages. Oiness v. Walgreen Co., 980 F.2d 742

(Fed. Cir. 1992) (unpubiished disposition).

On re-trial in October 1994, the jury returned a ver-

dict in favor of Plaintiffs in the total amount of

$11,251,240. Judgment was entered on October 20, 1994.

Execution of the judgment has been stayed.

This matter is currently before the Court on the fol-

lowing post-trial Motions: 1) Plaintiffs’ Motion For

Increased Damages And Prejudgment Interest Rate; 2) Defen-

dants’ Motion To Amend The Judgment; 3) Defendants’

Motion For A New Trial For Lost Profits And Lost Projected

Profits In View Of Incorrect Jury Instruction No. 19; 4)

Defendants’ Motion For Remittitur Or, In The Alternative, A

New Trial For Lost Profits; and 5) Defendants’ Motion For

Renewal Of Judgment As A Matter Of Law Or, In The Alter-

native, Remittitur Or A New Trial For Lost Projected Profits.

For the reasons outlined below, Plaintiffs’ Motion For

Increased Damages And Prejudgment Interest Rate is denied.

Defendants’ several post-trial motions are also denied.

1. Plaintiffs’ Motion For Increased Damages And Pre-

judgment Interest Rate

Plaintiffs move the Court to 1) treble the damages

awarded pursuant to 35 U.S.C. § 284 and 2) increase the

prejudgment interest rate to an amount appropriate

under the circumstances.

A29

A. Increased Damages

Pursuant to 35 U.S.C. § 284, the Court may treble

damages in a patent infringement case. The trebling of

damages is subject to the Court's discretion and will not

be overturned absent a showing of abuse of discretion.

Acoust. cal Design, Inc. v. Control Electronics Co., Inc., 932

F.2d 939, 942 (Fed. Cir.), cert. denied, 112 S.Ct. 185 (1991);

Modine Mfg. Co. v. Allen Group, Inc., 917 F.2d 538, 543

(Fed. Cir. 1990), cert. denied, 500 U.S. 918 (1991). A finding

of willful infringement will support an award of

increased damages. Bott v. Four Star Corp., 807 F.2d 1567,

1574 (Fed. Cir. 1986); Lam, Inc. v. Johns-Manville Corp., 668

F.2d 462, 474 (10th Cir.), cert. denied, 456 U.S. 1007 (1982).

In the first trial of this matter, the jury returned a special

verdict finding that the Defendants’ infringement of

Plaintiffs’ patent was willful. However, such a finding

does not mandate increased damages. Modine, 917 F.2d at

543. After carefully considering the finding of willfulness,

the size of the jury award and the deterrent function of

enhanced damages, enhanced damages are not appropri-

ate. See Id.

_B. Prejudgment Interest Rate

Plaintiffs also argue that they are entitled to a higher

rate of prejudgment interest than eight percent (8%) per

annum. Plaintiffs argue that an increased rate is neces-

sary to prevent Defendants from benefiting from their

infringement. Plaintiffs also assert that because the aver-

age interest paid by Plaintiffs on loans since the date of

Defendants’ infringement is eleven point thirty-seven

percent (11.37 %), the rate of prejudgment interest should

A30

be at least that much. However, Plaintiffs have failed to

affirmatively demonstrate that a deviation from the eight

percent rate is warranted. Lam, Inc. v. Johns-Manville

Corp., 718 F.2d 1056, 1066 (Fed. Cir. 1983). Accordingly,

Plaintiffs’ request for an increased prejudgment interest

rate is denied.

2. Defendants’ Motion To Amend The Judgment

Defendants move the Court to amend the judgment

to preclude prejudgment interest on projected lost profits

occurring prior to the second half of 1988. Defendants

argue that the damages allegedly caused by Defendants’

infringement did not begin until the second half of 1988,

hence, Plaintiffs’ recovery of prejudgment interest should

be limited accordingly. This argument is not persuasive.

Plaintiffs are entitled to prejudgment interest from April

26, 1987, the time of the infringement. The law is clear

that Plaintiffs are entitled “to recover prejudgment inter-

est from the time of the wrong.” Estate of Korf v. A.O.

Smith Harvestore Prods., Inc., 917 F.2d 480, 486 (10th Cir.

1990) (citing Mesa Sand & Gravel Co. v. Landfill, Inc., 776

P.2d 362, 365 (Colo. 1989); See Brabson v. United States, 859

F. Supp. 1360 (D. Colo. 1994). Accordingly, Defendants’

Motion with respect to limiting the commencement date

of prejudgment interest to the second half of 1988 is

denied.

Defendants also contend that in its present form, the

Final Judgment allows Plaintiffs to recover double inter-

est. Defendants assert that the verdict already includes an

award of interest, yet the calculations of actual lost

profits and projected lost profits also include interest

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A31

because of the present value computation. Plaintiffs

respond that there was no reference to “present value” in

the verdict form, thus, Defendants’ assumption that inter-

est was “built in” to the verdict is erroneous. We agree.

There is no indication that the jury’s calculation of dam-

ages included present value computations. Hence, Defen-

dants’ argument that the judgment should be amended to

prevent Plaintiffs from receiving a windfall of double

interest fails. Accordingly, Defendants’ Motion To Amend

The Judgment is denied.

3. Defendants’ Motion For A New Trial For Lost

Profits And Lost Projected Profits In View Of Incor-

rect Jury Instruction No. 19.

The Court gave 24 jury instructions. Defendants

move for a new trial on the grounds that Instruction No.

19 as submitted to the jury was prejudicial error. The first

sentence of Instruction No. 19 initially read:

As proved by the evidence, Plaintiffs are enti-

tled to recover profits lost due to Walgreen’s

infringement of Plaintiffs’ patent (emphasis

added).

When the Court initially went over the instructions with

counsel outside the presence of the jury, it was agreed

upon that Instruction No. 19 would read as follows:

If proved by the evidence, Plaintiffs are enti-

tled to recover profits lost due to Walgreen's

infringement of Plaintiffs’ patent (emphasis

added).

The next sentence of Instruction No. 19 defines “profits

lost” as “loss of profits occurring in the past and lost

A32

profits projected in the future.” In its mandate, the Fed-

eral Circuit stated that the Plaintiffs were entitled to

recover “all profits lost due to Walgreen’s 1987-90

infringement.” Oiness v. Walgreen Co., 980 F.2d 742 (Fed.

Cir. 1992). Defendants conceded during trial that Plain-

tiffs were entitled to recover lost profits and the jury was

so instructed. Instruction No. 22 read in part:

The defendants do not deny that the plaintiffs

are entitled to lost profits based upon defen-

dants’ sales. You are therefore required to

decide the proper amount of lost profits and to

set forth that amount in Column A.

However, Defendants contest what amount, if any, of lost

projected profits the Plaintiffs were entitled.

The official transcript reflects that Instruction No. 19

was read to the jury in the agreed upon form on October

17, 1994, using the verbiage “If proved by the evi-

dence. ... ” On the morning of October 18, 1994 the jury

was given a written version of the jury instructions and

commenced deliberations. Counsel were given the writ-

ten version of the jury instructions immediately after the

jury retired for deliberation. Due to a typographical error,

Instruction No. 19 was submitted to the jury in written

form as the initially proposed “As proved by the evi-

dence,” rather than the agreed upon “If proved by the

evidence” (emphasis added).

Defendants contend that as submitted to the jury in

written form, Instruction No. 19 is a mandatory instruc-

tion rather than permissive; that the jury must award lost

projected profits to the Plaintiffs. Plaintiffs dispute this

contention and assert that Defendants failed to object

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finvabeitn ace es

REN eke

A33

during the jury’s deliberation and therefore Defendants

have not complied with Fep.R.Civ.P. 51. Rule 51 provides

in part that “No party may assign as error the giving or

the failure to give an instruction unless that party objects

thereto before the jury retires to consider its verdict,

stating distinctly the matter objected to and the grounds

of the objection.” Defense counsel made its objection

known to the Court prior to the instructions going to the

jury. When an “objection properly calls the alleged error

to the Court’s attention .. . , the requirement of [Rule 51]

is met.” Weir v. Federal Ins. Co, et al., 811 F.2d 1387, 1391

(10th Cir. 1987) (citing Taylor v. Denver and Rio Grande

W.R.R. Co., 438 F.2d 351, 353 (10th Cir. 1971)). Defense

counsel’s objection to the initial draft of Instruction No.

19 was adequate under Rule 51. Accordingly, Defendants

preserved their right to pursue this challenge on appeal.

In reviewing a jury instruction challenge, the Court

examines “the jury instructions as a whole to determine

whether they correctly state the governing law and pro-

vide an ample understanding of the issues and the appli-

cable standards.” United States v. Arias-Santos, Rascon,

1994 WL 593258, *4 (10th Cir. Nov. 1, 1994) (citing United

States v. Zimmerman, 943 F.2d 1204, 1213 (10th Cir. 1991));

see also, Le Master v. People, 131 P. 269, 272 (Colo. 1913)

(“ ... it is elementary that instructions must be consid-

ered as a whole.”); People v. Olona, 505 P.2d 372 (Colo.

1973) and McCune v. People, 499 P.2d 1184 (Colo. 1972)

(issue is whether under the instructions as a whole, the

jury was adequately informed as to the law). We agree

with the principle that where the instructions “properly

express the law applicable to the case, there is no error

A34

even though an isolated clause may be inaccurate, ambig-

uous, incomplete or otherwise subject to criticism.” Somer

v. Johnson, 704 F.2d 1473, 1478 (11th Cir. 1983) (citing

Johnson v. Bryant, 671 F.2d 1276, 1280 (11th Cir. 1982)). At

issue then is whether the instructions in the instant case

as a whole properly expressed the applicable law and

provided a clear understanding to the jury as to Plain-

tiffs’ burden of proof regarding recovery of lost profits.

Instruction No. 19 in its totality as submitted to the

jury in written form read as follows:

As proved by the evidence, Plaintiffs are entitled to

recover profits lost due to Walgreen’s infringement of

Plaintiff's patent.

The term “profits lost” includes loss of profits

occurring in the past and lost profits projected in the

future. Lost profits include both past and future profits

in each of the retail, advertising, and premium incentive

markets.

Lost profits are profits which the Plaintiffs lost

because of sales of the infringed product by the Defen-

dant. Projected lost profits are profits which Plaintiffs

claim it lost because of the expected loss of sales of the

product in the future.

To recover damages for the patent infringement by

Defendants, Plaintiffs must establish a causation

between the infringement by the Defendants and lost

po vfits not occasioned by B&E. A factual basis for cau-

sation is proven if it is shown that but for the infringe-

ment of the Defendants, Plaintiffs would make the lost

profits claimed as damages.

A35

In this suit against Walgreens and Atico, Plaintiffs

cannot recover any damage caused by B&E’s infringe-

ment. As you have been instructed, Plaintiffs may

recover profits due to Walgreen’s and Atico’s infringe-

ment. It is only the damage shown legally from Wal-

green’s and Atico’s infringement which should be

considered.

A determination of damages cannot be speculative,

remote or conjectural; it must be based upon a reason-

able degree of certainty but does not require absolute

certainty.

The term “lost profits” refers to the total revenue

Plaintiffs would have received less the cost Plaintiffs

would have incurred in making and selling the HEAD-

CHAIR head rests.

Instruction No. 19 specifically explains what Plain-

tiffs must prove in order to recover any lost profits

To recover damages for the patent infringe-

ment by Defendants, Plaintiffs must establish

a causation between the infringement by the

Defendants and lost profits not occasioned by

B&E. A factual basis for causation is proven if

it is shown that but for the infringement of the

Defendants, Plaintiffs would make the lost

profits claimed as damages.

As noted, Instruction No. 19 also cautioned the jury

that

It is only the damage shown legally from Wal-

green’s and Atico’s infringement which should

be considered.

A36

Instruction No. 19 also advised the jury that it cannot

base any determination of damages on speculation, but

rather a determination of damages must be based upon a

reasonable degree of certainty.

Hence, any possibility of confusion occasioned by the

first word of Instruction No. 19 as submitted to the jury

in written form was clearly alleviated by the balance of

Instruction No. 19.

To underscore our view that the instructions were

adequate, clear and free from ambiguity, we highlight

several.

1. Instruction No. 2 stated in part:

No single instruction states all the applicable

law. All of them must be read and considered

together.

2. Instruction No. 2 also stated:

The Court did not in any way, and does not by

these instructions, express any opinions as to

what has or has not been proved in the case, or

to what are or are not the facts of the case.

3. Instruction No. 3 explained that the burden was

upon the Plaintiffs to prove their case by a preponderance

of the evidence and these terms were defined for the jury.

4. Instruction No. 7 reminded the jury of Plaintiffs’

burden. As to projected lost profits, Instruction No. 7

stated:

Oiness and Sun Products need only prove to a

reasonable probability that they would have

made additional sales or that they could have

charged higher prices, or both.

A37

5. Instruction No. 8 stated:

In determining the issue of damages, the Court

instructs you that the law does not permit an

award of a greater sum than the monetary loss

which the patent owner has suffered as a result

of the infringement.

If, under the Court’s instructions, you find

plaintiffs are entitled to damages, in fixing the

amount of such damages you may not include

and/or add to an otherwise just award any sum

for purposes of punishing the defendants or to

set an example.

6. Instruction No. 22 explained to the jury the

cedure for filing out the verdict form.

It read:

The defendants do not deny that the plaintiffs

are entitled to lost profits based upon defen-

dants’ sales. You are therefore required to

decide the proper amount of lost profits and to

set forth that amount in Column A.

The defendants contend that plaintiffs have

not proved that plaintiffs are entitled to lost

projected profits. Therefore, you are to first

decide if plaintiffs have established by the

evidence that they are entitled to lost projected

profits in each of the three markets. If you find

that plaintiffs have met their burden for one or

more of the three markets, place the amount of

projected profits the plaintiffs have proven for

each of such markets in Column B. If you find

that they have not proven lost projected profits

for one or more of the three markets, place a

zero on the verdict form in Column B for each

of such markets.

A38

Any possibility that Instruction No. 19 conveyed to

the jury it was mandatory that they award Plaintiffs lost

projected profits was clearly erased by the specificity of

Instruction No. 22 along with the above-referenced

instructions.

Defendants cite cases for the proposition that a jury

instruction is not cured by a correct version appearing

elsewhere in the instructions. However, the factual cir-

cumstances of these cases render them inapplicable to the

instant action.

In Jamesbury Corp. v. Litton Indus. Prods., Inc., 756 F.2d

1556 (Fed. Cir. 1985), cert. denied, 488 U.S. 828 (1988), the

district court referred to the patentee in a pejorative

manner, characterizing it as a “monopolist.” The district

court also implied that it was against the public interest

to allow the patentee to maintain a monopoly. The Fed-

eral Circuit held that the instruction in this form was

legally erroneous and prejudicial. More prominent, how-

ever, was the district court’s erroneous instruction

regarding the standard of proof. The correct standard was

“clear and convincing.” The jury was instructed as to the

“preponderance of the evidence” standard as well as the

correct “clear and convincing” standard. The Federal Cir-

cuit held that the additional instruction was confusing,

and the district court’s misstatement of the law was not

cured by the correct standard appearing elsewhere. The

Federal Circuit framed the question as, in light of the

misstatement, “whether the error was so egregious, con-

sidering the instructions as a whole, as to require the

verdict to be set aside.” Id. at 1560. Defense counsel’s

A39

attempt to equate the instant action involving the inad-

vertent exchange of a two-lettered word to the misstate-

ment of the burden of proof, is unpersuasive.

Similarly, Defendants’ reliance on Somer v. Johnson,

704 F.2d 1473 (11th Cir. 1983) is misplaced. In Somer, the

district court correctly explained the statutory duty of

physicians, but in the same instruction, qualified or

relaxed the standard of liability by inserting the word

“however.” The Eleventh Circuit felt that it was possible

that the jury may have employed the wrong standard. In

the instant action, never was the burden of proof placed

upon Plaintiffs misstated, and any possibility of confu-

sion created by the interchange of “as’’ and “if” cannot

rise to the ievei of egregiousness necessary to warrant a

new trial. Defense counsel also references other cases too

dissimilar to the instant action to warrant further com-

ment.

In the criminal context, generally “errors in jury

instructions do not constitute fundamental error that

would provide a basis for collateral attack.” People v.

Shearer, 508 P.2d 1249 (Colo. 1973) (citing Lineberger v.

State of Oklahoma, 404 F.2d 1092 (10th Cir. 1968), cert.

denied, 394 U.S. 938 (1969)). In People v. Zapata, 759 P.2d

754 (Colo. App. 1988), aff'd, 779 P.2d 1307 (Colo. 1989),

the court gave an instruction proposed and prepared by

defendant on the theory of the case which could have

been construed as placing the burden on defendant to

prove his misidentification. On appeal, defendant

asserted that the instruction misstated the law and the

court committed reversible error in giving it. While dis-

tinguishable from the instant case on these factual differ-

ences, nonetheless, the court was faced with the issue of

A40

whether a misstatement of the law of the case is revers-

ible error. The court noted that the jury had been prop-

erly instructed as to the burden of the proof elsewhere in

the instructions. The court held that “if the law of the

case is clearly and explicitly set forth in one instruction,

the effect of equivocal language elsewhere is eliminated.”

Consequently, “any error in the wording of the theory of

the case instruction is insufficient to mandate reversal.”

Id. at 756.

In People v. Turner, 730 P.2d 333 (Colo. App. 1986), the

defendant challenged an instruction given by the trial

court which defendant contended mandated the return of

a guilty verdict. The Court held that in light of the

instructions as a whole and assuming that the jury took a

commonsense view of the instruction, “we are convinced

that the jury was adequately apprised of the law, notwith-

standing the defective language in the instruction at

issue.” Id. at 336 (citing Chambers v. People, 682 P.2d 1173

(Colo. 1984)).

In United States v. Downen, 496 F.2d 314 (10th Cir.),

cert. denied, 419 U.S. 897 (1974), a blackboard chart sum-

marizing the Government’s theory of the case, which had

not been admitted into evidence, was erroneously sent to

the jury room and remained there during jury delibera-

tions. The Court held that “in light of the careful and

detailed cautionary instructions given by the Trial

Court,” the jury’s verdict was not prejudicially influenced

by the blackboard. Id. at 320.

In United States v. Hueftle, 687 F.2d 1305 (10th Cir.

1982), a card stating “They’re Guilty, Nuke’M” was found

to have been included in the evidence submitted to the

A41

jury. The Tenth Circuit held that the inclusion of the card

in the exhibits “was not so blatantly prejudicial that the

verdict must be overturned.” Id. at 1310-11.

In United States v. Pinelli, 890 F.2d 1461 (10th Cir.

1989), cert. denied, 495 U.S. 960 (1990), a “post-it” tab

which essentially reiterated the government's contentions

was inadvertently sent to the jury. The Tenth Circuit held

that the conscientiousness of the jury, along with the

cautionary instruction of the trial court, rendered the

alleged error harmless. Id. at 1474.

Finally, in People v. Bieber, 835 P.2d 542 (Colo. App.

1992), cert. denied, 114 S.Ct. 716 (1994), the parties had

stipulated that defendant had submitted to a drug test on

the day of the murder with which defendant was

charged, and that the test showed that amphetamines

were not present in defendant’s body. Nonetheless, a

small plastic bag containing white powder, which had not

been introduced into evidence, was found inside one of

the People’s exhibits sent to the jury room. Despite an

affidavit submitted by a juror stating that the juror was

aware of the bag in the jury room as well as the fact that

it was not admitted into evidence, the Court held that this

error did not rise to the level of plain error warranting a

new trial. Id. at 547.

After careful review of the applicable case law and

the jury instructions given in the instant case as a whole,

Defendants’ Motion For A New Trial For Lost Profits And

Lost Projected Profits In View Of Incorrect Jury Instruction

No. 19 is denied.

4. Defendants’ Motion For Remittitur Or, In The Alterna-

tive, A New Trial For Lost Profits And 5. Defendants’ Motion

A42

For Renewal Of Judgment As A Matter Of Law Or, In The

Alternative, Remittitur Or A New Trial For Lost Projected

Profits

Defendants move for remittitur, or in the alternative,

a new trial for lost profits and lost projected profits.

Defendants argue that the verdict for lost profits and lost

projected profits in the amounts of $1,101,240 and

$10,150,000 respectively is against the clear weight of the

evidence and as such, substantial justice is absent. Defen-

dants assert that it is impossible to determine what

numbers the jury used in its calculation of the awards or

how the awards were computed. In summary, Defendants

contend that the lost profits and lost projected profits

awards are not supported by the evidence and therefore,

the Court should either reduce the awards or grant

Defendants’ request for a new trial.

In response, Plaintiffs contend that testimony was

offered at trial to the effect that Plaintiffs’ damages were

in the multiple millions of dollars. Plaintiffs argue that

the awards total approximately one third of the damages

shown by Plaintiffs’ evidence and are therefore not exces-

sive.

The decision of whether to order a remittitur “rests

within the sound discretion of the trial court.” Garrick v.

City und County of Denver, 652 F.2d 969, 971 (10th Cir.

1981). Under federal law, remittitur is not proper “unless

the amount of damages awarded is so excessive that it

shocks the judicial conscience.” O’Gilvie v. Int'l Playtex,

Inc., 821 F.2d 1438, 1448 (10th Cir. 1987), cert. denied, 486

U.S. 1032 (1988), (citing Malandris v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 703 F.2d 1152, 1168 (10th Cir. 1981)

A43

cert. denied, 464 U.S. 824 (1983)). Remittitur may be appro-

priate where the amount awarded by the jury exceeds the

amount established by the evidence. K-B ‘lrucking Co. v.

Riss Int'l Corp., 763 F.2d 1148, 1163 (10th Cir. 1985) (quot-

ing Goldstein v. Manhattan Indus. Inc., 758 F.2d 1435, 1448

(11th Cir. 1985)).

Plaintiffs claimed damages in three markets: the

retail market, premium incentive market and the adver-

tising specialty market. The retail market involves sales

to regular customers. The premium incentive market pro-

vides products at a substantial savings to consumers who

have responded to special advertising offers or have

bought other products for which they are rewarded by

the sale to them of the premium incentive product. In the

advertising specialty market, the product bears the logo

or traderiark of the company using the product and is

usually given away free to the company’s customers

rather than sold.

Douglas MacLachlan, PhD., an expert in the area of

marketing and damages in the retail market, testified that

damages in the retail sales market were approximately

$9.5 million. TR 219:16-222:23. George Kling, an expert in

the areas of marketing and damages in the premium

incentive market, testified that Defendants’ infringement

caused more than $11 million in damages in the premium

market. TR 336:10-337:16. Glen Holt, an expert in the area

of marketing and damages in the advertising specialty

market, testified to over $11 million in damages in the ad

specialty market. TR 272:2. Plaintiffs claimed approxi-

mately $31 million in total damages. In light of the evi-

dence presented, we cannot say that the jury’s award of

$11 million in total damages was excessive. Succinctly

A44

stated, substantial evidence supports this award. Hence,

Defendants’ request for remittitur as to the lost profits

and lost projected profits awards is denied.

A motion for a new trial alleging a verdict contrary to

the weight of the evidence requires a review of the facts

presented at trial and such review is “committed to the

sound discretion of the trial court.” In Re Air Crash Disas-

ter At Stapleton Int'l Airport, 720 F. Supp. 1467, 1485 (D.

Colo. 1989) (citing Black v. Hieb’s Enterprises, Inc., 805 F.2d

360, 362-63 (10th Cir. 1986)). A new trial may be granted

if it is reasonably clear that prejudicial error has occurred

or that substantial justice has not been done. Anthony v.

Baker, 808 F. Supp. 1523, 1525 (D. Colo. 1992). However,

the trial judge must be convinced that a mistake has

occurred in light of all the evidence. Id. The Court cannot

substitute its judgment for that of the jury. See Holmes v.

Wack, 464 F.2d 86 (10th Cir. 1972). Absent some indication

that “improper cause invaded the trial, the jury’s deter-

mination of the fact is considered inviolate.” In Re Air

Crash Disaster At Stapleton Int’l Airport, 720 F. Supp. 1467,

1485 (D. Colo. 1989) (quoting Barnes v. Smith, 305 F.2d 226,

228 (10th Cir. 1962)); Metcalfe v. Atchison, Topeka and Sante

Fe Ry Co., 491 F.2d 892, 898 (10th Cir. 1973).

The jury award in the instant action is not “clearly,

decidedly, or overwhelmingly against the weight of the

evidence.” In Re Air Crash, 720 F. Supp. at 1485. Colorado

is committed to the principle that jury awards are not set

aside “unless the damages awarded are grossly and mani-

festly excessive or, on the other hand, are grossly and

manifestly inadequate.” Gibbons v. Choury, 455 P.2d 649,

A45

650 (Colo. 1969). The jury’s award was not grossly exces-

sive, monstrous or based only upon speculation or guess-

work. Brooktree Corp. v. Advanced Micro Devices, Inc., 977

F.2d 1555, 1581 (Fed. Cir. 1992). Plaintiffs presented evi-

dence on every aspect of the damages they believe they

suffered and the jury returned a verdict for an amount

less than the amount which Plaintiffs requested. Accord-

ingly, Defendants’ request for a new trial is denied.

Defendants also move to renew their motion for

judgment as a matter of law. The standard of review for

such a motion is whether substantial evidence was pre-

sent at trial whereby a reasonable jury could have ren-

dered the verdict reached by this jury. Brooktree Corp. v.

Advanced Micro Devices, Inc., 977 F.2d 1555, 1569 (Fed. Cir.

1992). The Court is to review the evidence in the light

most favorable to the Plaintiffs, the nonmoving party.

Kearns v. Chrysler Corp., 32 F.3d 1541, 1548 (Fed. Cir. 1994).

Defendants have failed to show that “on the entirety of

the record reasonable persons could not have found the

facts necessary” to support the jury’s verdict in this case.

Id. at 1549. Accordingly, Defendants’ Motion For Renewal

Of Judgment As A Matter Of Law is denied.

ACCORDINGLY, it is ORDERED that:

(1) Plaintiffs’ Motion For Increased Damages And Pre-

judgment Interest Rate, filed October 28, 1994 is DENIED;

(2) Defendants’ Motion To Amend The Judgment, filed

October 28, 1994 is DENIED;

(3) Defendants’ Motion For A New Trial For Lost

Profits And Lost Projected Profits In View Of Incorrect Jury

Instruction No. 19, filed October 28, 1994 is DENIED;

A46

(4) Defendants’ Motion For Remittitur Or, In The

Alternative, A New Trial For Lost Profits, filed October 28,

1994 is DENIED; and

(5) Defendants’ Motion For Renewal Of Judgment As

A Matter Of Law Or, In The Alternative, Remittitur Or A

New Trial For Lost Projected Profits, filed October 28, 1994

is DENIED.

Dated this 6th day of December, 1994, at Denver,

Colorado.

BY THE COURT:

/s/ Sherman G. Finesilver

Sherman G. Finesilver, Judge

United States District Court

——

A47

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 90-F-727

PHILLIP OINESS and SUN PRODUCTS GROUP, INC.,

Plaintiffs,

v.

WALGREEN COMPANY, ATICO INTERNATIONAL

INCORPORATED f/k/a J] & M ENTERPRISES, d/b/a

ATICO, NEW ATICO INTERNATIONAL, LTD., d/b/a

ATICO,

Defendants.

FINAL JUDGMENT

(Filed Oct. 20, 1994)

THIS ACTION came on for trial before the Court and

a jury of eight beginning on October 11, 1994, the Honor-

able Sherman G. Finesilver, District Judge, presiding, the

jury returned its verdict for damages for the plaintiffs on

October 18, 1994 for the following amounts. Accordingly,

it is

1. ORDERED AND ADJUDGED that judgment be

entered upon the verdicts of the jury returned on October

18, 1994, in favor of the plaintiffs Phillip Oiness and Sun

Products Group, Inc., and against the defendants Wal-

green Company, Atico International Incorporated, f/k/a J

& M Enterprises, d/b/a Atico, New Atico International,

Ltd., d/b/a New Atico, a/k/a Atico in the following

respective amounts:

A48

(a) that plaintiffs, Phillip Oiness and Sun Prod-

ucts Group, Inc., recover of defendants, Wal-

green Company, Atico International

Incorporated, f/k/a J & M Enterprises, d/b/a

Atico, New Atico International, Ltd., d/b/a

New Atico, a/k/a Atico, the sum of One Mil-

lion, One Hundred One Theusand, Two Hun-

dred-Forty Dollars and 00/100 ($1,101,240.00)

for Total Lost Profits.

(b) that plaintiffs, Phillip Oiness and Sun Prod-

ucts Group, Inc., recover of defendants, Wal-

green Company, Atico International

Incorporated, f/k/a J & M Enterprises, d/b/a

Atico, New Atico International, Ltd., d/b/a

New Atico, a/k/a Atico, the sum of Ten Million,

One Hundred Fifty Thousand Dollars and

00/100 ($10,150,000.00) for Total Lost Projected

Profits.

(c) that plaintiffs, Phillip Oiness and Sun Prod-

ucts Group, Inc., recover of defendants, Wal-

green Company, Atico International

Incorporated, f/k/a J] & M Enterprises, d/b/a

Atico, New Atico International, Ltd., d/b/a

New Atico, a/k/a Atico, the total sum of Eleven

Million, Two Hundred Fifty-One Thousand, Two

Hundred Forty Dollars and 00/100 Dollars

($11,251,240.00) plus prejudgment interest to be

calculated at the rate of 8% per annum from

April 26, 1987 to the date of entry of this judg-

ment. It is

2. FURTHER ORDERED AND ADJUDGED that the

Verdict Form returned on October 18, 1994 is incorpo-

rated into this Final Judgment by this reference. This

A49

Final Judgment for the amount set forth above in para-

graph l(c) is entered against defendants on the basis of

the Verdict Form. It is

3. FURTHER ORDERED that post-judgment interest

shall accrue at the legal rate of 6.06% per annum from the

date of entry of judgment. It is

4. FURTHER ORDERED that plaintiffs shall have

their costs upon filing of a Bill of Costs with the Clerk of

this Court within ten (10) days of the entry of judgment.

DATED at Denver, Colorado this 20th day of October,

1994.

FOR THE COURT:

JAMES R. MANSPEAKER, CLERK

By: /s/ Stephen P. Ehrlich

Stephen P. Ehrlich,

Chief Deputy Clerk

APPROVED AS TO FORM:

/s/ Sherman G. Finesilver

Sherman G. Finesilver,

United States District Judge

A50

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 90-F-727

PHILIP OINESS, an Individual residing

in the State of Washington, and

SUN PRODUCTS GROUP, INC.,

A Washington corporation,

Plaintiffs,

V.

WALGREEN COMPANY, an Illinois

corporation, ATICO INTERNATIONAL

INCORPORATED, f/k/a J & M ENTERPRISES,

d/b/a ATICO, NEW ATICO INTERNATIONAL, LTD.,

d/b/a NEW ATICO, a/k/a ATICO,

Defendants.

VERDICT FORM

Verdict Form

We, the Jury, award damages for patent infringement

in the following categories against the Defendants Wal-

green and Atico:

Column A

Lost Profits

Damages in the retail sales market $1,101,240.00

Total Lost Profits: $1,101,240.00

ewes

A51

Column B

Lost Projected Profits

Damages in the retail sales market $1.4 MILLION

Damages in the premium incentive

market $750,000.00

Damages in the advertising

speciality market $8.0 MILLION

Total Lost Projected Profits: $10,150,000.00

CNK

Total Damages Adding Column A (Total Lost Profits) and

Column B (Total Lost Projected Profits):

$11,251,240.00

Dated this 18 day of October, 1994:

/s/ Jos. Moehmel

Foreperson

/s/ Marilyn J. Elrod /s/ Michael O. VanDonn

Juror Juror

/s/ Keiese Angell /s/ Joyce K. Roach

Juror Juror

/s/ Maria P. Tresel /s/ Camalia Candelarie

Juror Juror

/s/ Pamila C. Frazier

Juror

A52

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Judge Daniel B. Sparr

Civil Action No. 90-S-727

PHILIP OINESS and SUN PRODUCTS GROUP, INC.,

Plaintiffs,

V.

WALGREEN COMPANY, an Illinois corporation;

ATICO INTERNATIONAL INCORPORATED f/k/a

J & M ENTERPRISES d/b/a ATICO;

NEW ATICO INTERNATIONAL, LTD. d/b/a

NEW ATICO a/k/a ATICO,

Defendants.

ORDER AMENDING JUDGMENT

(Filed Sep. 24, 1996)

THIS MATTER comes before the court on: (1) the

Defendants’ Motion to Amend Court’s Judgment of

August 22, 1996 Pursuant to Fed. R. Civ. P. 59(e); and (2)

the Defendants’ Motion to Compel Plaintiffs to Pay the

Cost of the Premium on the Supersedeas Bond Defen-

dants Obtained as Security Pending Appeal, Pursuant to

Rule 39(e) Fed. R. App. P., both filed August 28, 1996. The

court has reviewed the motions, the Plaintiffs’ responses

(filed September 20, 1996), the entire case file, and the

applicable law and is fully advised in the premises.

In April of 1991, a jury awarded the Plaintiffs dam-

ages for patent infringement. The damages award was

then trebled by the trial court, for a total award of

A53

$900,000.00. Oiness v. Walgreen Co., 774 F.Supp. 1277

(D.Colo. 1991). On appeal, the Federal Circuit Court of

Appeals affirmed the finding of liability but vacated the

damage award and remanded the case. Oiness v. Walgreen

Co., 980 F.2d 742 (Fed. Cir. 1992), cert. denied, 507 U.S.

1032 (1993).

In October of 1994, on retrial on the issue of dam-

ages, a jury awarded Plaintiffs approximately $11 million

in damages for actual lost profits and projected lost

profits. The Plaintiffs also received pre-judgment and

post-judgment interest. On appeal, the Federal Circuit

Court of Appeals reversed in part, vacated in part, and

remanded in part. Oiness v. Walgreen, 88 F.3d 1025, 1034

(Fed. Cir. 1996).

In accordance with the remand from the Federal Cir-

cuit, the district court, on August 22, 1996, entered judg-

ment for the Plaintiffs in the amount of $220,567.00. The

district court indicated that: (1) should the Plaintiffs

accept the remittitur within sixty (60) days of the date of

the August 22, 1996 Order, judgment as modified would

be final, or (2) should the Plaintiffs not accept the remit-

titur, a new trial would be granted “solely on the issue of

damages.” The Defendants first ask the court to amend

its August 22, 1996 judgment to clarify that retrial is

available only as to claims of actual damages and that the

claims of projected lost profits were reversed in their

entirety.

The Plaintiffs, citing Oiness, 88 F.3d at 1030, argue

that the Federal Circuit afforded them “a new trial on

damages.” First, however, the language regarding “a new

trial on damages” is contained within the section of the

A54

opinion that addresses actual sales. Oiness, 88 F.3d at

1028-31. Second, the Federal Circuit specifically

remanded “on the issue of actual damages,” should the

Plaintiffs decline to accept the remittitur. Oiness, 88 F.3d

at 1034. The Federal Circuit specifically reversed “the jury

award for projected lost profits... .” Id.

The Defendants next argue that, pursuant to Fed. R.

App. P. 39(e), the Plaintiffs should pay the cost of the

premium on the supersedeas bond. Fed. R. App. P. 39(e)

provides:

the premiums paid for cost of supersedeas

bonds . . . shall be taxed in the district court as

costs of the appeal in favor of the party entitled

to costs under this rule.

Fed. R. App. P. 39(a) provides:

if a judgment is affirmed or reversed in

part, . . . costs shall be allowed only as ordered

by the court.

The court declines to order the Plaintiffs to pay the cost of

the premiums paid by the Defendants for the supersedeas

bonds.

Accordingly, IT Is ORDERED:

1. The Defendants’ Motion to Amend Court’s Judg-

ment of August 22, 1996 Pursuant to Fed. R. Civ. P. 59(e)

is GRANTED. The judgment entered by this court on

August 22, 1996 is hereby amended to state that, should

the Plaintiffs not accept the remittitur the amount of

$220,567.00, a new trial shall be granted solely on the

issue of actual damages.

A55

2. The Defendants’ Motion to Compel Plaintiffs to

Pay the Cost of the Premium on the Supersedeas Bond

Defendants Obtained as Security Pending Appeal, Pur-

suant to Rule 39(e) Fed. R. App. P. is DENIED.

DATED at Denver, Colorado, this 24th day of Sep-

tember, 1996.

BY THE COURT:

/s/ Daniel B. Sparr

Daniel B. Sparr

United States District Judge