783 F. Supp. 2d 891
E.D. Tex.2011Background
- Affinity sued Hyundai and Kia for patent infringement related to connecting a portable device to a car stereo; patents-in-suit are the '833 and '228 patents, both found infringed by a jury with no invalidity findings.
- The jury awarded past damages: Hyundai $2,430,065 and Kia $406,472, with no damages for vehicles lacking a corresponding cable sale; Affinity sought ongoing post-judgment royalties.
- The court denied a permanent injunction, prompting consideration of an ongoing royalty for post-judgment infringement.
- Damages experts disagreed on the appropriate royalty base (head units vs. cables) and on whether only cables with a corresponding sale should drive ongoing damages.
- The court adopted a starting market royalty of $11 per unit for vehicles with a corresponding Hyundai/Kia iPod cable sale, and rejected royalties for vehicles without a corresponding cable sale or for post-trial generic after-market cables.
- The court then enhanced the ongoing royalty by 33% to account for willfulness, finalizing at $14.50 per such vehicle sold.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How should an ongoing post-judgment royalty be calculated? | Affinity argues for a market-royalty approach grounded in pre-suit Georgia-Pacific factors, aligned with past damages. | Hyundai/Kia accepts a starting rate around the jury's past-damages figure and urges limited or no adjustment for market changes. | Begin with a reasonable market royalty of $11 per vehicle with a corresponding cable sale; no ongoing royalty for vehicles lacking a corresponding cable sale. |
| Should ongoing royalties be awarded for vehicles with no corresponding cable sale? | Affinity seeks royalties for all infringing vehicles, regardless of cable sale. | Hyundai/Kia argues no royalty without a corresponding cable sale. | No ongoing royalty for vehicles without a corresponding Hyundai/Kia iPod cable sale. |
| Should the ongoing royalty be enhanced to reflect willful infringement? | Affinity supports a substantial enhancement; 33% suggested. | A smaller premium (e.g., 25%) or none should suffice given other factors. | A 33% enhancement is justified, producing $14.50 per accused vehicle with a corresponding cable sale. |
| Whether post-trial evidence of after-market cables may justify a higher rate | Frost declaration suggests third-party cables may function similarly and warrant consideration. | Evidence was untimely disclosed and improperly admitted; not reliable to base an increase. | Frost declaration excluded as improper post-trial evidence and not used to increase the rate. |
Key Cases Cited
- Paice LLC v. Toyota Motor Corp., 504 F.3d 1293 (Fed. Cir. 2007) (guides ongoing royalties post-judgment and willfulness considerations)
- i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831 (Fed. Cir. 2010) (willful infringement and enhancement framework)
- Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992) (nine-factor test for culpability in willful infringement)
- Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) (hypothetical negotiation framework and factors for royalty setting)
- eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (S. Ct. 2006) (injunction standards and relief considerations in patent cases)
- Griffin v. Matherne, 471 F.2d 911 (5th Cir. 1973) (consistency with jury findings and evidentiary views in damages context)