Red Carpet Studios v. Midwest Trading Group, Inc., 1:12-cv-00501

Background

Red Carpet Studios sued Midwest Trading Group (MTG), CVS, and Walgreens for design patent infringement of the '034 patent (the "Solar Spinner"); the Court previously granted summary judgment of infringement.
Plaintiff sought disgorgement of profits under 35 U.S.C. § 289; parties agreed only two issues remained: (1) the relevant "article of manufacture," and (2) the defendant's "total profit" attributable to that article; Plaintiff also sought prejudgment interest.
Defendants argued the article of manufacture was only the decorative outer blades (not the whole spinner), disputed the profit calculations (costs, unit counts, deductible expenses), and asserted remaining issues should go to a jury.
The Court addressed whether § 289 damages are equitable (bench determination) and applied the Supreme Court's four-factor test from Samsung to identify the article of manufacture.
The Court held § 289 disgorgement is equitable (no right to jury) and, applying the four factors, concluded the article of manufacture is the entire Solar Spinner as sold by defendants.
The Court calculated total profits and awarded $286,768 (Walgreens), $132,000 (CVS), and $121,034 (MTG), granted prejudgment interest (directing Plaintiff to recalc to March 31, 2021), and reserved post-judgment interest calculations.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Right to jury trial for § 289 disgorgement	Disgorgement is equitable; no jury right; Court should decide damages	Defendants wanted jury (or bench trial) to decide profits	§ 289 disgorgement is equitable; no Seventh Amendment right to jury; Court need not hold a bench trial or jury and may decide on the papers
Article of manufacture	Article includes the entire Solar Spinner (including optional ornament depicted in broken lines)	Article is only the decorative outer blades; ornament and solar light are unclaimed/separate	Applying Samsung four-factor test, the article of manufacture is the entire Solar Spinner as sold
Total profits calculation method and figures	Plaintiff provided sales, revenue and costs to compute gross profit and sought disgorgement of defendants' total profit (amounts: Walgreens $286,768; CVS $132,000; MTG $121,034)	Defendants disputed unit counts, per-unit costs, and deductible expenses; proposed lower profit figures	Court accepted plaintiff's calculations where supported by discovery; required defendants to prove any deductible expenses; awarded the plaintiff the stated amounts for each defendant
Prejudgment (and post-judgment) interest	Plaintiff requested prejudgment interest compounded quarterly at prime through April 14, 2020 (asked Court to update to Mar 31, 2021)	Defendants contended calculation premature	Court allowed prejudgment interest (directed plaintiff to supply updated amounts as of Mar 31, 2021); post-judgment interest calculation reserved as premature

Key Cases Cited

Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (2016) (establishes § 289 two-step framework and defines "article of manufacture")
City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687 (1999) (equitable claims do not carry a jury right)
Texas Advanced Optoelectronic Sols., Inc. v. Renesas Elecs. Am., Inc., 95 F.3d 1304 (Fed. Cir.) (disgorgement is equitable; jury award vacated and remanded for court determination)
Osborn v. Griffin, 865 F.3d 417 (6th Cir. 2017) (discusses historical equitable nature of disgorgement remedies)
Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959) (distinguishing jury and bench-trial protections)
Ferrari S.P.A. v. Roberts, 944 F.2d 1235 (6th Cir. 1991) (disgorgement in Lanham Act context is equitable)
Hard Candy, LLC v. Anastasia Beverly Hills, Inc., 921 F.3d 1343 (11th Cir. 2019) (accounting/disgorgement in trademark cases is equitable)
Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437 (Fed. Cir. 1998) (history of profits and equitable remedies in patent law)
Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277 (Fed. Cir. 2002) (permitting prejudgment interest on profit awards)