Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_02-cv-03378/USCOURTS-cand-3_02-cv-03378-65/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

INFORMATICA CORPORATION

Plaintiff, No. C 02-03378 EDL

v. ORDER GRANTING IN PART AND 

DENYING IN PART MOTION FOR

BUSINESS OBJECTS DATA TREBLE DAMAGES, ATTORNEYS’ FEES

INTEGRATION, INC. AND PREJUDGMENT INTEREST, AND

SETTING HEARING ON

Defendant. POST-TRIAL MOTIONS

___________________________________/

This patent infringement action came before the Court for trial by jury on March 12, 2007. 

Following the close of evidence, argument of counsel, and the Court’s instructions, the case was

submitted to the jury on March 29, 2007. On April 2, 2007, after one and one-half days of

deliberation, the jury returned a unanimous verdict for Plaintiff Informatica Corporation, finding that

Defendant Business Objects Data Integration, Inc. (“BODI”), indirectly infringed claims 1, 8, 12,

15, and 18 of the ‘670 Patent, and claims 5, 7, and 11 of the ‘775 Patent, and that the claims are not

invalid for anticipation, statutory bar or obviousness. The jury further found that BODI’s

infringement was willful. 

The jury awarded reasonable royalty damages in the amount of $25,240,000. On the special

verdict form, the jury attributed $2,524,000, or 10% of the damages award, to BODI’s act of

supplying or causing to be supplied in or from the United States all or a substantial portion of the

components of a patented invention, in such a manner as to actively induce the combination of such

components outside of the United States in a manner that would infringe any of the claims at issue if

such combination had occurred within the United States. See 35 U.S.C. § 271(f).

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1 Section 271(f)(2) is not at issue because Judge White determined that BODI’s software

was capable of substantial non-infringing uses. See Order re Cross-Motions for Summary Judgment

(Docket no. 341) (denying summary judgment as to contributory infringement). 

2

Informatica’s motion for treble damages, attorneys’ fees and prejudgment interest against

BODI came on for hearing before this Court on May 8, 2007. Both parties were represented by their

respective counsel. Having considered the evidence of record, the verdict of the jury, and the briefs

and argument of counsel on Informatica's motion and on the impact of the Supreme Court’s recent

decision in Microsoft v. AT&T, ___ U.S. ___, 127 S.Ct. 1746 (U.S., Apr.30, 2007), the Court

concludes that Informatica has demonstrated that a modest enhancement of damages is appropriate,

and that the specific amount of enhanced damages will be determined upon post-trial motions. The

Court further concludes that Informatica is not entitled to attorneys’ fees, and that prejudgment

interest is appropriate. 

I. MICROSOFT V. AT&T

Section 271(f)(1) provides as follows:

Whoever without authority supplies or causes to be supplied in or

from the United States all or a substantial portion of the components of

a patented invention, where such components are uncombined in

whole or in part, in such manner as to actively induce the combination

of such components outside of the United States in a manner that

would infringe the patent if such combination occurred within the

United States, shall be liable as an infringer.1

35 U.S.C. § 271(f)(1). At trial, BODI agreed that under existing law, Section 271(f) imposed

liability on method claims for foreign sales, with the understanding that the Supreme Court might

decide the issue differently in its upcoming Microsoft decision. Trial. Tr. at 921:25-922:20, 925:1-5.

Informatica submitted evidence at trial in the form of a verified discovery response regarding

how BODI supplies the software at issue to its foreign customers:

At present, Business Objects cuts and validates a master CD for its

products in San Jose. The master CD is sent for duplication to a third

party contractor in Ireland, MPO. MPO ships these CDs to another

third party contractor in Ireland, Moduslink, which packages the

product and ships it directly to end users. Prior to MPO setting up

operations in Ireland, Business Objects sent the master CDs to MPO in

Paris for duplication and distribution occurred from there. Prior to its

acquisition by Business Objects, ACTA cut and validated its master

CDs in the San Jose area. All shipments of ACTA product originated

from there. 

Business Objects also makes downloads of its products available over

the internet using a service offered by Intraware. Business Objects

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uploads product and upgrades in San Jose that customers can

download anywhere. 

Trial Ex. 452 at 3 (Response to Second 30(b)(6) Deposition Notice Topic No. 6). 

At trial, Informatica’s expert on damages, Dr. O’Brien opined that a reasonable royalty

should be based on a flat fee per license and that about $28.4 million out of total reasonable royalties

of $42.9 million, or 66%, resulted from foreign sales. Trial Tr. at 1011:24-1012:12. BODI’s expert,

Mr. Meyer, calculated damages instead based on a royalty of 1% of domestic and foreign sales, with

foreign sales of approximately $84 million out of $161 million, or about 52% of total sales. Trial Tr.

at 1732:24-1733:10. The jury found that only $2,524,000, or 10% of the damages, were based on

foreign sales. Verdict Form, Ques. No. 10 (docket no. 660). 

After the verdict was entered, the Supreme Court handed down its decision in Microsoft. 

The Supreme Court held that software, uncoupled from a medium, did not constitute a component

supplied from the U.S. for combination with the patented invention, a speech-processing computer,

under Section 271(f). Microsoft, 127 S.Ct. at 1755. In Microsoft, AT&T sued for infringement of

its patent on an apparatus for digitally encoding and compressing recorded speech. Microsoft

conceded that its Windows operating system incorporates software code that, when installed,

enables a computer to process speech in the manner claimed by the patent. 127 S.Ct. at 1750. The

Federal Circuit affirmed the district court’s summary judgment of infringement. The Supreme Court

granted certiorari on the question of whether “Microsoft’s liability extends to computers made in

another country when loaded with Windows software copied abroad from a master disk or electronic

transmission dispatched by Microsoft from the United States.” Id. at 1750-51. The Supreme Court

found that the master disk or electronic transmission that Microsoft sends from the United States is

never installed on any of the foreign-made computers in question, but rather that copies made abroad

are used for installation. Id. at 1751. The Supreme Court held that “[b]ecause Microsoft does not

export from the United States the copies actually installed, it does not ‘supply from the United

States’ ‘components’ of the relevant computers, and therefore is not liable under § 271(f) as

currently written.” Id.

The Supreme Court addressed two questions raised by Microsoft: (1) “when, or in what

form, does software qualify as a ‘component’ under § 271(f)?” and (2) “were ‘components’ of the

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foreign-made computers involved in this case ‘supplied’ by Microsoft ‘from the United States’”? Id.

at 1755. As to the first question, the Court identified two competing ways to conceptualize

software: either as software code in the abstract, like a blueprint, before being expressed as a

computer-readable copy; or as a tangible copy of software encoded on a medium, such as a CDROM. The Court held that only tangible software could be a combinable component under Section

271(f), where the patented invention was a speech-processing computer, reasoning that “an actual,

physical copy of the software must be delivered by CD-ROM or some other means capable of

interfacing with the computer.” Id. at 1756. Responding to Justice Stevens’ dissenting opinion that

“unlike a blueprint that merely instructs a user how to do something, software actually causes

infringing conduct to occur,” id. at 1763 (Stevens, J., dissenting), the Court noted that “Windows

can ‘cause infringing conduct to occur’ - i.e., function as part of AT&T’s speech-processing

computer - only when expressed as a computer-readable copy.” Id. at 1756 n.12. 

As to the second question regarding the element of supplying a component, the Court held

that because “the copies of Windows actually installed on the foreign computers were not

themselves supplied from the United States,” and did not even exist “until they were generated by

third parties outside the United States,” id. at 1757, Microsoft did not supply components from the

United States. The Court rejected the Federal Circuit’s reasoning that a master disk sent abroad

“‘differs not at all from the exact copies, easily, inexpensively, and swiftly generated from the

master.’” Id. at 1756, quoting AT&T Corp. v. Microsoft, 414 F.3d 1366, 1370 (Fed. Cir. 2005). 

Emphasizing that Section 271(f) prohibits the supply of components from the United States, the

Court held that “Section 271(f) contains no instruction to gauge when duplication is easy and cheap

enough to deem a copy in fact made abroad nevertheless ‘supplied from the United States.’ The

absence of anything addressing copying in the statutory text weighs against a judicial determination

that replication abroad of a master dispatched from the United States ‘supplies’ the foreign-made

copies from the United States within the intendment of § 271(f).” Id. at 1756. 

Like the master disks shipped abroad by BODI, the Windows program at issue in Microsoft

was written in the United States and encoded onto “golden master” CDs, which were shipped

abroad. 127 S.Ct. at 1761 (Alioto, J., concurring). Then, “the code was copied onto other disks that

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2 The Supreme Court also extensively analyzed the legislative history of Section 271(f)

as a response to a loophole identified in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972),

and recognized that provision as an exception to the general rule that U.S. patent law does not apply

extraterritorially.

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are then placed into foreign-made computers for purposes of installing the Windows program.” Id.

Microsoft held that “the very components supplied from the United States, and not copies thereof,

trigger § 271(f) liability when combined abroad to form the patented invention at issue.” Id. at

1757. (Ginsburg, J.). In his concurring opinion, Justice Alito, joined by Justices Thomas and

Breyer, went further to state that “[b]ecause no physical object originating in the United States was

combined with these [foreign-made] computers, there was no violation of § 271(f). Accordingly, it

is irrelevant that the Windows software was not copied onto the foreign-made computers directly

from the master disk . . . that originated in the United States. . . . Because the physical incarnation of

code on the Windows CD-ROM supplied from the United States is not a ‘component’ of an

infringing device under § 271(f), it logically follows that a copy of such a CD-ROM also is not a

component.” Id. at 1762 (Alioto, J., concurring). 

Significantly, the Court stressed the presumption of extraterritoriality as decisive in resolving

close questions under patent law:

Any doubt that M’s conduct falls outside § 271(f)’s compass would be resolved by the

presumption against extraterritoriality, on which we have already touched. [Citing 127 S.Ct.

at 1750-1751, 1752.] The presumption that United States law governs domestically but does

not rule the world applies with particular force in patent law. . . . Applied to this case, the

presumption tugs strongly against construction of § 271(f) to encompass as a ‘component’

not only a physical copy of software, but also software’s intangible code, and to render

‘supplied . . . from the United States’ not only exported copies of software, but also

duplicates made abroad.

127 S.Ct. at 1758 (citations omitted).2

 Thus, the Court applied the presumption to its analysis of the

element of supplying from the United States as well as the meaning of “component.” Citing Judge

Rader’s dissent below with approval, the Court agreed with the Solicitor General that AT&T’s

interpretation of section 271(f) “‘converts a single act of supply from the United States into a

springboard for liability each time a copy of the software is subsequently made [abroad] and

combined with computer hardware [abroad] for sale [abroad].’” Id. at 1758-59. 

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Informatica contends that Microsoft does not disturb the Federal Circuit’s holding in Union

Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005), contrasting

the apparatus claim in Microsoft with the method claims here and in Union Carbide. Union Carbide

involved Union Carbide’s process patent for producing ethylene oxide. There, the district court

ruled that Section 271(f) damages were not available for process claims. Relying on its decision in

Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. 2005), the Federal Circuit reversed, stating that Section

271(f) “makes no distinction between patentable method/process inventions and other forms of

patentable inventions.” 425 F.3d at 1379. Importantly, the Federal Circuit explained that, unlike the

Microsoft case, “[t]his case . . . presents an even stronger basis for applying § 271(f) because Shell

supplies all of its catalysts from the United States directly to foreign affiliates. Shell's foreign

affiliates do not copy these catalysts and use the copies in a foreign process, but instead use the

catalysts supplied by Shell directly in their processes.” Id. Furthermore, in distinguishing NTP, Inc.

v. Research in Motion, 418 F.3d 1282, 1322 (Fed. Cir. 2005), on the same basis, the Federal Circuit

in Union Carbide expressed great skepticism that a patented method could come withing the

purview of Section 271(f). Id. (“it is difficult to conceive of how one might supply or cause to be

supplied all or a substantial portion of the steps of a patented method in the sense contemplated by

the phrase ‘components of a patented invention’ in section 271(f)”). Although Union Carbide stands

for the general principle that Section 271(f) can apply to method claims as well as apparatus claims

when the components are supplied to foreign users in a particular manner, it is distinguishable from

Microsoft, as well as the present case, where the infringer supplied software on a master disk to a

foreign, third-party contractor who then duplicated the disk to distribute copies. Union Carbide, 425

F.3d at 1380 (“Because Shell supplies these catalysts directly to its foreign affiliates, this court does

not face another situation involving the domestic sale of a component being used, in part, outside the

United States.”).

As Informatica points out, the Supreme Court declined in a footnote to squarely answer the

question of whether software in the abstract could ever be a component of a patented method

invention under Section 271(f). 127 S.Ct. at 1756 n.13. Yet interestingly, the broader question that

the Supreme Court reserved in this footnote is whether an intangible method or process can ever

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3 Shell Oil noted that it settled the action with Union Carbide, explaining why it did not

petition for certiorari from the Union Carbide decision. Id. at 3; see Informatica Br. re Impact at 3, n.2

(“Neither party petitioned for certiorari.”) 

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qualify as a patented invention, not just the issue of whether software, in the abstract, could ever be a

component within the meaning of Section 271(f): 

We need not address whether software in the abstract, or any other

intangible, can ever be a component under § 271(f). If an intangible

method or process, for instance, qualifies as a “patented invention”

under § 271(f) (a question as to which we express no opinion), the

combinable components of that invention might be intangible as well.

The invention before us, however, AT& T's speech-processing

computer, is a tangible thing.

Id. (emphasis added). Informatica refers to Shell Oil Company’s amicus brief in Microsoft,

contending that the Supreme Court rejected its invitation to address the Federal Circuit’s holding in

Union Carbide and Eolas.

3

 Informatica Br. re Impact (docket no. 688) at 5, n.4. In fact, Shell Oil

asked the Supreme Court to review the Federal Circuit’s decision in Eolas as overreaching in its

holding that Section 271(f) applies to patented processes, rather than being limited to “a component

of a patented machine, manufacture, combination, or composition.” Brief of Shell Oil Co. as

Amicus Curiae in Support of Petitioner at 10-11, Microsoft Corp. v. AT&T Corp., 2006 WL

3740358 (U.S., Dec. 15, 2006) (No. 05-1056).

In Eolas, the Federal Circuit held that Section 271(f) “does not impose a requirement of

‘tangibility’ on any component of a patented invention.’” 399 F.3d at 1340. The Federal Circuit

rejected Microsoft’s argument there that Section 271(f) was limited to the components of a physical

machine, as presented in Deepsouth Packing, and held that “components” in Section 271(f)(1)

included software code on golden master disks. 399 F.3d at 1341. In its amicus brief, Shell Oil

suggested that the Federal Circuit misconstrued “component” in Section 271(f) to apply to intangible

process patents, when the language of Section 271(c) distinguishes a component of a patented

machine, manufacture, combination, or composition from a material or apparatus for use in

practicing a patented process. Id. at 10. This is the larger question which the Supreme Court

declined to address.

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4 In its only reference to Eolas, the Supreme Court noted that the Federal Circuit did not

articulate whether the software at issue was software in the abstract, or a tangible copy of software.

1754 n. 10. At oral argument, Justice Ginsburg, who delivered the Microsoft opinion, noted the

ambiguity on that issue in the Federal Circuit’s opinion below in AT&T Corp. v. Microsoft, 414 F.3d

1366 (Fed. Cir. 2005). See Transcript of Oral Argument at 13-15, Microsoft v. AT&T Corp., 2007 WL

541886 (U.S., Feb. 21, 2007) (No. 05-1056). 

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Consistent with Union Carbide on the issue of directly supplying components abroad,

Microsoft controls on the issue of whether BODI “supplied” components from the United States by

exporting master disks, but not user-ready copies, of its software. To the degree that there is any

ambiguity, that ambiguity must be resolved by limiting the scope of Section 271(f) in light of the

presumption of extraterritoriality as the Supreme Court cautioned. 127 S.Ct. at 1758. Furthermore,

Microsoft calls into question the reasoning of Eolas to the extent that the Federal Circuit may have

been referring to software in the abstract, rather than captured in a medium.4

The evidence at trial established that BODI used four different methods to supply customers

abroad: (1) shipping a master CD from San Jose, California to Ireland, and previously Paris, for

duplication after Acta’s acquisition by Business Objects; (2) shipping Acta’s product directly from

San Jose before acquisition by Business Objects; (3) downloading through a third party, Intraware;

and (4) downloading directly from BODI in San Jose. Trial Ex. 452. There is no evidence breaking

down the amount of sales made by each method, although the direct shipments abroad prior to

Acta’s acquisition for at most a few months were likely minimal. The element of supplying

components from the United States to establish Section 271(f) liability is not met here as to copies

supplied by the first method of a master disk duplicated abroad. Under Microsoft, “the very

components supplied from the United States, and not copies thereof, trigger § 271(f) liability when

combined abroad to form the patented invention at issue,” 127 S.Ct. at 1757, and “the patent is

infringed only when a computer is loaded with [Data Integrator] and is thereby rendered capable of

performing as the patented [process.] Id. at 1750. Indeed, because the claim here is inducement of

infringing use by customers, the foreign customer must actually load the software copy onto a server

or other hardware and then create a dataflow using the EDF feature with one input and one output to

directly infringe the patented process. Thus, the software supplied to foreign customers by means of

a master disk duplicated abroad does not trigger liability under Section 271(f). 

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As to the second method, where Acta duplicated and shipped software from San Jose, such

foreign sales, if any were made during the brief window of relevant time, fall within the scope of

Section 271(f), as defense counsel acknowledged at oral argument. The impact of Microsoft is

somewhat less clear as to the third and fourth methods, which involve downloading software from

the internet. This issue will be more fully addressed in the context of BODI’s forthcoming motion

for a new trial on damages.

As Microsoft impacts the calculation of the amount of damages under Section 271(f), the

Court suggested and the parties agreed to defer the determination of the amount of enhancement of

damages until the Court rules on BODI’s forthcoming motion for new trial on damages. The Court

also adopts Informatica’s proposal as to how to amend its proposed order on its motion for

injunction in light of the Court’s reading of Microsoft.

II. ENHANCED DAMAGES

The Court may increase damages awarded in this infringement action “up to three times the

amount found or assessed.” 35 U.S.C. § 284. “An award of enhanced damages for infringement, as

well as the extent of the enhancement, is committed to the discretion of the trial court.” Read Corp.

v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cir. 1992), abrogated on other grounds by Markman v.

Westview Instruments, Inc., 52 F.3d 967, 975 (Fed.Cir.1995) (en banc). If the Court decides to

enhance damages, the Court looks to the totality of circumstances and considers the egregiousness of

the defendant’s conduct as well as factors that are mitigating or ameliorating to set the amount of

enhancement. Read, 970 F.2d at 826; Rite-Hite Corp. v. Kelley Co., 819 F.2d 1120, 1125-26 (Fed.

Cir. 1987). 

Although willful infringement may authorize the award of enhanced damages, “a finding of

willful infringement does not mandate that damages be enhanced, much less mandate treble

damages.” Read, 970 F.2d at 826. Upon a jury finding of willfulness, however, the Court must

provide reasons for not increasing a damages award. Jurgens v. CBK, Ltd., 80 F.3d 1566, 1572

(Fed. Cir. 1996). The Federal Circuit has articulated the following factors to consider on

enhancement: 

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(1) whether the infringer deliberately copied the ideas or design of another;

(2) whether the infringer, when he knew of the other's patent protection,

investigated the scope of the patent and formed a good-faith belief that it was

invalid or that it was not infringed;

(3) the infringer's behavior as a party to the litigation;

(4) Defendant's size and financial condition;

(5) Closeness of the case;

(6) Duration of defendant's misconduct;

(7) Remedial action by the defendant;

(8) Defendant's motivation for harm;

(9) Whether defendant attempted to conceal its misconduct.

Read, 970 F.2d at 827 (reversing award of enhanced damages). “Inasmuch as a finding of willful

infringement does not mandate enhancement of damages, the above factors taken together assist the

trial court in evaluating the degree of the infringer’s culpability and in determining whether to

exercise its discretion to award enhanced damages and how much the damages should be increased.” 

Id. at 828.

In light of the jury’s finding of willfulness and examination of the Read factors, the Court

concludes that a modest enhancement of damages is appropriate, though not a substantial

enhancement. In view of the detailed jury instruction on willfulness, which include the factors of

whether BODI “investigated the scope of the patent and formed a good-faith belief that the patent

was invalid or that it was not infringed,” and reliance on legal opinion (docket no. 654, Instruction

No. 39), it is apparent that the jury rejected BODI’s contention that it relied in good faith on the

opinion of counsel and had a good-faith belief of invalidity or non-infringement. See Jurgens, 80

F.3d at 1572. Furthermore, BODI did not take any intermediate remedial action to remove the EDF

feature, even after Informatica’s infringement theory was narrowed from the whole product to the

EDF feature. Finally, as to the duration of misconduct, BODI has sold the infringing product since

2001, while on notice of potential infringement, although it is true that Informatica did not articulate

its surviving, narrower infringement theory until 2006.

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On the other hand, there is no contention that BODI deliberately copied Informatica’s ideas or

attempted to conceal its infringement. See BODI Opp. at 18, n.10. Nor does Informatica point to

any negative behavior by BODI during the litigation. On the issue of closeness of the case,

willfulness was a close question given the uncertainty of how the claims would be construed in the

software patents at issue and the evolution of Informatica’s infringement theory, including the

withdrawal of the ‘990 Patent shortly before trial. The invalidity defense was also a somewhat close

question. Although the jury resolved these issues in favor of Informatica, this result is not

determinative of whether the questions were closely balanced and hotly contested. See Applied

Medical Resources Corp. v. United States Surgical Corp., 967 F.Supp. 861, 865 (E.D. Va. 1997). 

The closeness of these issues weigh against substantial enhancement of damages.

Other Read factors are either neutral or do not weigh heavily. As to the infringer’s size and

financial condition, BODI’s financial status as an international conglomerate is offset by its

relatively small market share in the ETL market compared to Informatica’s. As to BODI’s

motivation for harm, its aggressive attempts to compete are not, by themselves, evidence of bad

faith, and did not succeed in eliminating Informatica’s market dominance.

In the totality of facts and circumstances, the Court may consider the size of the damages

award upon ruling on enhancement. Riles v. Shell Exploration and Production Co., 298 F.3d 1302,

1314 (Fed.Cir. 2002) (affirming denial of enhanced damages). Here, the jury awarded a substantial

amount of damages, $25,240,000, or about 60% of the total royalties sought by Informatica, and far

more than the amount calculated by BODI’s expert. The damages will be adjusted downward,

however, to exclude foreign sales that fall outside the reach of Section 271(f), as determined by the

Supreme Court in Microsoft. This adjustment may significantly reduce the award, thereby affecting

the issue of the amount of enhancement.

Although the jury determined that only 10% of the total sales reflected the supply of

components outside the United States, the evidence suggested that the percentage was significantly

higher, and BODI has stated its intention to file a motion for new trial on damages. The Court will

therefore defer determination of the amount of enhancement until ruling on the motion for new trial.

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III. ATTORNEYS’ FEES

Informatica further requests an award of attorneys’ fees. Under Section 285, the Court may

award attorneys’ fees in “exceptional cases.” First, the Court must determine that a case is

“exceptional.” Then it may exercise its discretion to award fees to the prevailing party. See S.C.

Johnson & Sons v. Carter-Wallace, Inc., 781 F.2d 198, 201 (Fed.Cir.1986). “The purpose of § 285

when applied to accused infringers is generally said to be two-fold: one, it discourages infringement

by penalizing the infringer; and two, it prevents “gross injustice” when the accused infringer has

litigated in bad faith.” Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1552 (Fed.

Cir. 1989) “Among the types of conduct which can form a basis for finding a case exceptional are

willful infringement, inequitable conduct before the P.T.O., misconduct during litigation, vexatious

or unjustified litigation, and frivolous suit.” Id.

The Court may consider the following criteria on a motion for fees:

Willful infringement, the award of enhanced damages, and the award

of attorney fees in exceptional cases are all related but independent

concepts. As with enhanced damages a finding of willful infringement

is sufficient to declare a case exceptional but it does not mandate that

conclusion. However, if a court is to declare a case not exceptional in

such circumstances it must articulate its reasons for doing so. Finally,

“even an exceptional case does not require in all circumstances the

award of attorney fees.” [S.C. Johnson, 781 F.2d at 201.] The decision

to award fees is ultimately committed to the sound discretion of the

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

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

The criteria a court ought to consider in making these decisions is

parallel to but not the same as that set forth in Read. The Court has

considered such criteria and believes it serves to inform the Court as to

the factual finding it must make as to whether the case is exceptional

within § 285. See Reactive Metals and Alloys v. ESM, Inc., 769 F.2d

1578, 1578 (Fed.Cir.1985). 

Advanced Cardiovascular Systems, Inc. v. Medtronic, Inc., 2000 WL 34334583 at *17 (N.D. Cal.

2000). Here, consulting the Read factors for enhancement, as articulated in Section II, supra, the

Court declines to find that this case qualifies as an “exceptional case.” In particular, the closeness of

the evidence of willfulness and BODI’s assertion of substantial invalidity defenses negate the

conclusion that this case is exceptional.

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Even if it were deemed exceptional, a finding of willful infringement does not mandate that

attorneys’ fees be awarded. See Mot. for Treble Damages, Fees & Prejud. Int. at 16. Considering

the totality of information, such as the closeness of the issues litigated, the refinement of

Informatica’s infringement theory over the course of litigation, resulting in the accused feature being

only one of many in the software at issue, and the high level of professionalism and advocacy on

both sides, an award of attorneys fees is not appropriate here. The Court notes that out of the four

original patents in suit, BODI succeeded on two of them, with a favorable summary judgment ruling

on the ‘374 patent, and Informatica’s withdrawal of the ‘990 patent. Further, an award of attorneys’

fees would not further the dual purposes of Section 285. First, the damages award as enhanced will

adequately penalize BODI for willful infringement. Second, Informatica has not demonstrated

“gross injustice” from bad faith litigation; BODI did not exhibit frivolous or vexatious conduct

during the litigation. Accordingly, Informatica’s motion for attorneys’ fees is denied.

IV. PREJUDGMENT INTEREST

Prejudgment interest is ordinarily awarded to the prevailing plaintiff in a patent infringement

suit, although Informatica acknowledges that the rate of interest and whether to compound it are

within the Court’s discretion. Mot. at 17. BODI does not oppose the award of prejudgment interest,

but contends that it should run from the date of McGoveran’s June 2006 deposition, when

Informatica’s surviving theory of infringement was articulated. Prior to that, BODI argues,

Informatica had not given meaningful notice of its claims. The circumstances of this case do not,

however, merit departure from the normal procedure of awarding prejudgment interest from the date

of infringement to the date of payment. See Bio-Rad Labs., Inc. v. Nicolet Instrum. Corp., 807 F.2d

964, 967 (Fed. Cir. 1986) (“An award of interest from the time that the royalty payments would have

been received merely serves to make the patent owner whole, since his damages consist not only of

the value of the royalty payments but also of the foregone use of the money between the time of the

infringement and the date of the judgment.”).

The Court awards the prejudgment interest requested by Informatica of 4.78 % annually from

the date of first infringement to the date of judgment. As with the amount of enhanced damages, the

amount of prejudgment interest will be calculated after the Court rules on the parties’ post-trial

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motions, particularly the motion for new trial on damages. Prejudgment interest will be based only

on the compensatory portion of the damages award, subject to the Court’s ruling on post-trial

motions, and not on the enhanced additional damages. Beatrice Foods v. New England Printing, 923

F.2d 1576, 1580-81 (Fed. Cir. 1991).

V. CONCLUSION

For the reasons stated above, the Court grants Informatica’s motion for enhanced damages and

for prejudgment interest in an amount to be determined after ruling on post-trial motions. The Court

denies Informatica’s motion for attorneys’ fees.

The parties shall file briefs on post-trial motions in accordance with the time limits set forth by

the Federal Rules of Civil Procedure. A hearing on the motions is set for July 10, 2007 at 9 a.m. 

IT IS SO ORDERED.

Dated: May 16, 2007 _____________________________ 

ELIZABETH D. LAPORTE 

United States Magistrate Judge

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