Lead Opinion
Opinion for the court filed by Circuit Judge LOURIE. Dissenting opinion filed by Circuit Judge GAJARSA.
In 1995, we vacated and remanded a decision on damages awarded by the United States District Court for the Eastern District of Michigan in a patent infringement case between Transmatic, Inc. and Gulton Industries, Inc. See Transmatic, Inc. v. Gulton Indus., Inc.,
BACKGROUND
In 1990, Transmatic filed suit against Guitón, asserting infringement of claim 1 of U.S. Patent 4,387,415. On cross-motions for summary judgment, the district court held that claim 1 was not proved to be invalid and was not literally infringed, but that factual issues existed regarding
On appeal, we (1) reversed the district court’s summary judgment ruling of no literal infringement; (2) vacated its doctrine of equivalents finding as moot; (3) vacated and remanded its damage award; and (4) affirmed on the other issues raised. See Transmatic, Inc. v. Gulton Indus., Inc.,
On remand, the district court issued “Supplemental Findings Regarding Damages” in which it explained its initial damages award in full detail. See Transmatic, Inc. v. Gulton Indus., Inc., No. 90-CV-70987-DT (E.D.Mich. Jan. 23, 1998) (Transmatic IV). Specifically, the district court explained why Transmatic’s damages award should include forced price cuts but not foregone price increases; why certain expenses were fixed, not variable, and thus not compensable; why damages did not include certain fixture sales; and why prejudgment interest should be awarded at the prime lending rate minus ten percent, compounded monthly. See id. at 8-19. Because the district court’s factual findings did not require it to recalculate the damages award, it did not modify its initial award. See id. at 20. The district court thereafter reentered judgment in favor of Transmatic in the amount of $3,023,773, which included prejudgment interest calculated to October 1993. It also awarded Transmatic $1,119,588 in prejudgment interest for the period from October 1993 to the date of the district court’s remand judgment,, and postjudgment interest at the rate prescribed in 28 U.S.C. § 1961 (1994) for the time thereafter. See Transmatic, Inc. v. Gulton Indus., Inc., 90-CV-
Guitón now appeals from the district court’s decision to apply the prejudgment, rather than the postjudgment, interest rate from the date of the district court’s initial judgment to the date of the remand judgment (hereinafter “the interim period”). It does not challenge the quantum of damages awarded or the pre- and post-judgment interest rates used by the district court. However, awarding prejudgment interest during the interim period resulted in a higher award to Transmatic because, during this period, the prejudgment interest rate awarded by the district court was several percentage points higher than the statutory postjudgment interest rate provided for under 28 U.S.C. § 1961. We have jurisdiction under 28 U.S.C. § 1295(a)(1) (1994).
DISCUSSION
Guitón contends that Transmatic should have been awarded postjudgment interest for the interim period. Guitón asserts that the determination of the dividing line between pre and postjudgment interest is a procedural matter that requires us to follow Sixth Circuit law, in particular its interpretation of 28 U.S.C. § 1961(a), which states that postjudgment interest “shall be calculated from the date of the entry of the judgment.” 28 U.S.C. § 1961(a) (1994). According to Gulton, the Sixth Circuit determines the judgment date for purposes of calculating interest awards by examining both the facts and circumstances of the case in light of the “equity of § 1961” under Bailey v. Chattem,
Transmatic responds that the district court correctly applied the prejudgment interest rate during the interim period. Transmatic also raises a choice-of-law issue. Transmatic agrees that the dividing line between pre- and postjudgment interest is a § 1961 issue, but argues that we are not bound by Sixth Circuit law because the district court’s authority to award prejudgment interest arises under § 284 of the patent statute, and that it is the policies of that provision which need to be considered. Transmatic notes that this should be an issue of Federal Circuit law for reasons of both patent jurisprudence and geographic uniformity. However, Transmatic does not point to any Federal Circuit case law, and only argues that we should follow a Ninth Circuit decision, American Telephone & Telegraph Co. v. United Computer Systems,
A. Choice of Law
We first address whether reference to regional circuit law and § 1961 is appropriate in determining the correct dividing line for calculating pre- and postjudgment interest. In answering that question, we must initially decide whether the issue involved is one that concerns a subject unique to patent law. See Biodex Corp. v. Loredan Biomedical, Inc.,
First, the patent laws do not determine the issue before us. Section 284, the patent damages provision, does not connect the award of interest to any particular judgment date; that provision only prescribes damages and interest as a remedy for patent infringement. When interest begins or ends is not stated. In contrast, § 1961, the postjudgment interest provision, expressly specifies the date post-judgment interest begins. It states that “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court.... Such interest shall be calculated from the date of the entry of the judgment....” 28 U.S.C. § 1961(a) (1994). There is a consensus among the regional circuit courts that even when prejudgment interest is awarded, postjudgment interest begins with the date of judgment; clearly, the “date of entry of judgment” demarcates the boundary between pre- and post-judgment interest.
Second, neither pre- nor postjudgment interest awards are unique to patent law. Many other areas of law besides patent law, including contract, tort, insurance, admiralty, employment, securities, and civil rights, also provide for prejudgment interest awards under both statutory and common-law authority.
Third, the rationale for awarding interest to successful plaintiffs is also not particular to patent law; prejudgment interest, like all monetary interest, is simply compensation for the use or forbearance of money owed. See Black’s Law Dictionary 812 (6th ed.1990). No matter what area of
Finally, regarding nonpatent issues, “we have generally conformed our law to that of the regional circuits, without regard to the relationship of the issue to our exclusive jurisdiction, when there is existing and expressed uniformity among the circuits. Indeed, in such circumstances, a choice of different law might [be] problematic.” Biodex,
B. Section 1961
Having determined that Sixth Circuit law applies and that § 1961(a) is the governing statutory provision, we now address the specific application of that statute under Sixth Circuit law. Section 1961(a) provides that:
Interest shall be allowed on any money judgment in a civil case recovered in a district court.... Such interest shall be calculated from the date of the entry of the judgment, at a rate equal to the coupon issue yield equivalent ... of the average accepted auction price for the last auction of fifty-two week United States Treasury bills settled immediately prior to the date of the judgment.
28 U.S.C. § 1961(a) (1994) (emphasis added). Kaiser is the leading Supreme Court decision addressing the determination of the date from which a court should calculate interest when a damages judgment has been vacated. In Kaiser, the district court concluded that two successive jury verdicts awarding damages to the plaintiffs were unsupported by the evidence. After the first jury verdict, the district court vacated the judgment entered on that verdict and granted the defendant’s motion for a new trial. However, the second jury awarded the plaintiffs a higher damage award than the first jury. Upon defendant’s motion, the court granted judgment notwithstanding the verdict as to part of the damages awarded, vacated the judgment entered on the second jury verdict, and entered a third judgment on a reduced damages amount. The Third Circuit vacated the third judgment entered by the district court and reinstated the judgment entered on the second jury’s damage award. The Supreme Court granted cer-tiorari to consider the calculation of post-judgment interest, and held that, under § 1961, postjudgment interest should run from the date of the second vacated judgment. The Court reasoned that
“[T]he purpose of postjudgment interest is to compensate the successful plaintiff for being deprived of compensation for the loss from the time between the ascertainment of the damage and the payment by the defendant.” Poleto v. Consolidated Rail Corp.,826 F.2d 1270 , 1280 (3rd Cir.1987). Where the judgment on damages was not supported by the evidence, the damages have not been “ascertained” in any meaningful way. It would be counterintuitive, to say the least, to believe that Congress intended postjudgment interest to be calculated from such a judgment.
In this case, both Transmatie and Guitón argue that we must use an “equities approach” in addition to Kaiser to determine the date from which postjudgment interest should be calculated. Before Kaiser, it was clear that the Sixth Circuit took the “equity of the statute” approach to the calculation of post-judgment interest. See Oates v. Oates,
In this case, the damages were meaningfully ascertained at the time of the initial district court judgment because that damages decision was ultimately correct on the merits. In our earlier decision, we stated that we presumed that the district court considered and rejected Gulton’s claimed adjustments to Transmatic’s damages award, but we could not discern that from the court’s summary opinion. See Transmatic III,
The parties ask us to choose between a higher prejudgment interest rate and a lower postjudgment interest rate for an interim period, in part, by considering the “equities” — Guitón argues that awarding the lower postjudgment interest rate is adequate compensation and Transmatie argues that awarding the higher prejudgment interest rate would be closer to full compensation. Because the Sixth Circuit has so clearly departed from the “equity” approach in favor of Kaiser’s “ascertained damages” test, we will not evaluate the equities of the case despite both parties’ urgings. In Kaiser, the Supreme Court held that, regardless of the equities, it would not award a higher postjudgment interest rate than that afforded by § 1961 because Congress made the legislative judgment as to the applicable interest rate, and “courts may not legislate to the contrary.” Kaiser,
Finally, we are unpersuaded by Trans-matic’s argument that the Sixth Circuit’s precedents do not apply because these cases only awarded postjudgment interest, whereas this case also involves a prejudgment interest award. Other courts have considered the fact that prejudgment interest was awarded, either under statutory or common-law authority, irrelevant in determining the date postjudgment interest should begin under § 1961. See Foley, 948 F.2d at 22; Fuchs,
CONCLUSION
The district court erred in awarding prejudgment interest during the interim period. Accordingly, the Judgment and Order entered by the United States District Court for the Eastern District of Michigan on April 9, 1998, is hereby vacated and the case is remanded for calculation of interest in a manner consistent with this opinion.
VACATED AND REMANDED.
Notes
. See, e.g., American Tel. & Tel. Co. v. United Computer Sys.,
. See, e.g., 15 U.S.C. §§ 15(a), 15a (1994) (antitrust); 17 C.F.R. § 201.600 (1994), reprinted in 15 U.S.C. foll. § 78u (securities); 29 U.S.C. § 1132(a)(9) (1994) (ERISA); City of Milwaukee v. Cement Div., Nat’l Gypsum Co.,
Dissenting Opinion
dissenting.
The facts presented in this case are quite simple. In 1990, Transmatic sued Guiton for patent infringement. In 1993, the district court impaneled an advisory jury to determine, among other issues, whether there was infringement under the doctrine of equivalents. The advisory jury found infringement with damages of approximately $3 million in lost profits. The district court adopted the advisory jury’s conclusions with respect to the infringement issue and the damages award.
On appeal, this court vacated the damages award because the district judge had not complied with Rule 52(a) of the Federal Rules of Civil Procedure, which provides that “[i]n all actions tried upon the facts without a jury or with an advisory jury, the court shall find the facts specially and state separately its conclusions of law thereon.” We held that, given the district court’s sparse findings and reasoning, we could not evaluate the damages award. We therefore vacated the damages award and remanded for “further factual findings and [reconsideration of] the amount of the award, if appropriate, in light of the court’s supplemental findings.” Transmatic, Inc. v. Gulton Indus., Inc.,
On remand, the district court provided the necessary factual findings and reasoning and reached the same damages award as it had previously. The district court then awarded Transmatic prejudgment interest under 35 U.S.C. § 284 for the period from October 1993 until its remand decision. The district court also awarded postjudgment interest under 28 U.S.C. § 1961 for the period after its remand decision.
In the present appeal, Guitón argues that the operative judgment date at which prejudgment interest must end under 35 U.S.C. § 284 and postjudgment interest must begin under 28 U.S.C. § 1961 is the date of the first judgment of the district court that was vacated by our court.
A. The Question of Deference
I am deeply troubled by this part of today’s majority opinion for two reasons. First, the issue of deference is not relevant to this case because the determination of the operative judgment date requires interpretation of Section 284, which is clearly within our exclusive mandate of interpreting the Patent Act. Second, even if deference were at issue today, the majority has announced a new test for deference that is in conflict with prior case law from our court.
The first question we are faced with is whether deference to regional circuit law is appropriate in deciding at what point prejudgment interest under 35 U.S.C. § 284 ends and postjudgment interest under 28 U.S.C. § 1961 begins. As this court has previously explained, our initial inquiry in deciding whether deference is due is “whether the law that must be applied, whether procedural or substantive, is one ‘... over which this court does not have exclusive appellate jurisdiction.’ ” Biodex Corp. v. Loredan Biomedical, Inc.,
In applying this framework, the Federal Circuit has not deferred in the resolution of all procedural issues merely because those issues also arise in cases having nothing to do with patent law. We have held that the applicable standard for the issuance of a preliminary injunction, which is a procedural issue not limited to patent law, involved substantive matters unique to the Federal Circuit and therefore we declined to give deference. See Chrysler Motors Corp. v. Auto Body Panels of Ohio, Inc.,
In the case at bar, the determination of the operative judgment date, i.e., the judgment that serves as the dividing line between prejudgment interest under 35 U.S.C. § 284 and postjudgment interest
The majority opinion, however, holds that prejudgment interest under Section 284 of the Patent Act must end at the district court’s initial judgment and that such a determination does not involve the patent laws and therefore requires deference. The majority reaches this result through inconsistent reasoning. The opinion begins by stating that “the patent laws do not determine the issue before us. Section 284 ... does not connect the award of interest to any particular judgment date.... When interest begins or ends is not stated.” However, the term “interest” in Section 284 clearly refers to prejudgment interest only. See General Motors Corp. v. Devex Corp.,
Another factor that seems to influence unduly the majority is that the identification of the date of judgment as the dividing line between pre- and postjudgment interest is “a matter of general, not patent, law.” The majority seems to be greatly persuaded that, because many areas of law also allow for awards of pre- and post-judgment interest, such awards are not “unique to patent law” and therefore we must defer.
This is simply not the test for determining deference that we have used in the past and we should not begin its use now. That the same issue may arise in different areas of law in addition to patent law is not a reason for automatically giving deference. As this court stated in Biodex, “we have not deferred in the resolution of all procedural issues merely because that issue might separately arise in a case having nothing to do with the patent laws.” Biodex,
The majority is employing a simplistic rule for deference: If an issue can appear in a nonpatent context, then deference should be given to the regional circuit because the issue is not “unique” to patent law. Basically, the majority is announcing a new rule for determining deference today that is in conflict with prior Federal Circuit case law. This may explain why the majority fails to cite to any Federal Circuit cases during its analysis of the three factors that it believes shows no deference is required.
B. The Question of When Damages are Meaningfully Ascertained
Sections 284 and 1961 are complementary statutory provisions and should therefore be interpreted consistently.
Eventually, Bonjorno sought post-judgment interest under Section 1961 and argued to the Supreme Court that post-judgment interest should have accrued after the first jury verdict. The Supreme Court stated:
“[T]he purpose of postjudgment interest is to compensate the successful plaintiff for being deprived of compensation for the loss from the time between the ascertainment of the damage and the payment by the defendant.” ... Where the judgment on damages was not supported by the evidence, the damages have not been “ascertained” in any meaningful way. It would be counterin-tuitive, to say the least, to believe that Congress intended postjudgment interest to be calculated from such a judgment.
Kaiser,
In this case, the majority relies on the benefit of twenty-twenty hindsight to determine that the original damages award by the district court was meaningfully ascertained. The majority here presumes, infers, and suspects that the original damages award issued by the district court was correct. Because the original judgment was eventually “reinstated” on remand to the district court, the majority, with such foresight that would make Merlin blush, concludes that the damages in the first judgment were reasonably ascertained. No matter how many inferences and presumptions we may draw from the first judgment issued by the district court, we cannot overcome the fact that we vacated the district court’s original damages award because it was not supported by sufficient findings of fact and reasoning to
Also, as a procedural matter, once this court vacated the first judgment, it was not enforceable by Transmatic. A vacated judgment is annulled and canceled. Because it is legally void, it never existed and therefore it becomes unenforceable. The premise which the majority uses to determine ascertainability of the original judgment is that the damages amount was not amended by the district court. The majority therefore presumes, infers, and suspects that the damages were meaningfully ascertained. A vacated judgment cannot be resurrected by presumption, inference or suspicion.
In addition, “[t]he purpose of post-judgment interest is to compensate the successful plaintiff for being deprived of compensation for the loss from the time between the ascertainment of the damage and the payment by the defendant.” Id at 835-36. In this case, the defendant did not “drag its feet” and deprive the plaintiff of compensation after the entry of the initial district court judgment because this judgment was vacated, i.e., this damages judgment was void and there was no specific sum of money due to the plaintiff as a result.
The majority opinion is also not in accord with the plain language of 28 U.S.C. § 1961(a), which provides that “[ijnterest shall be allowed on any money judgment in a civil case recovered in a district court.... Such interest shall be calculated from the date of entry of the judgment....” 28 U.S.C. § 1961(a) (emphasis added). A vacated judgment is not a “money judgment in a civil case recovered in district court” and therefore cannot be the relevant judgment for purposes of calculating the date of entry of such a money judgment.
For these reasons, I respectfully dissent. I would hold that Federal Circuit law is applicable and that the operative judgment date for purposes of prejudgment interest pursuant to 35 U.S.C. § 284 and post-judgment interest pursuant to 28 U.S.C. § 1961 is the judgment date of the second determination of the district court.
. The operative judgment date is somewhat analogous to a property line dividing the land of two neighbors. That property line cannot be drawn without reference to the legally operative documents and concerns pertaining to both of the neighbors. In other words, the property line cannot be drawn merely by looking at the deed of one neighbor and ignoring the other neighbor. Similarly, the operative judgment, which is the dividing line between prejudgment interest and post-judgment interest, cannot be determined without considering both Sections 284 and 1961 and analyzing their explicit language, underlying policies, and relevant caselaw.
. Whal if the damages had been reinstated, but were increased by $10? By $100? By $100,000? At what point would we say that the vacated damages were no longer reasonably ascertained in hindsight?
