1

This Amended Decision and Order replaces the Decision and Order filed July

31, 2007 and makes minor text changes on pages 5, 13 and 14. 

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

SUNDANCE, INC., and

MERLOT TARPAULIN AND SIDEKIT

MFG. CO., INC.,

Plaintiffs,

-vsDEMONTE FABRICATING, LTD.;

QUICK DRAW TARPAULIN SYSTEMS,

INC. and WALTER DEMONTE,

Defendants.

_____________________________________/

Case No. 02-73543

Hon: AVERN COHN

AMENDED1

 DECISION AND ORDER ON POST-TRIAL MOTIONS RELATING TO

REASONABLE ROYALTY AND WILLFULNESS

I. Introduction

This is a patent case. Plaintiffs Sundance, Inc. and Merlot Tarpaulin and Sidekit

Manufacturing Company, Inc. (collectively Sundance), the holders of U.S. Patent No.

5,026,109 (the ‘109 patent) covering a Segmented Cover System, sued DeMonte

Fabricating, Ltd. and Quick Draw Tarpaulin Systems, Inc. (collectively DeMonte) for

infringement of the ‘109 patent. Liability was determined in a prior trial.

After a four day trial on the issues of laches, willfulness, and damages, a jury

awarded Sundance $1,164,446.70 in damages based on a five percent (5%) royalty 

applied to against $23,288,934.00 of infringing sales. The jury found that the
2

Also before the Court is Sundance’s Motion for Partial Summary Judgment

Regarding Inequitable Conduct. That motion is set for hearing and is not the subject of

this decision.

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infringement was willful and that Sundance was not guilty of laches. A copy of the

verdict is attached as Exhibit A.

Now before the Court2 are two motions by DeMonte:

DEFENDANTS’ MOTION FOR JUDGMENT AS A MATTER

OF LAW TO ALTER JUDGMENT, OR FOR A NEW TRIAL

ON THE ISSUE OF REASONABLE ROYALTY

and

DEFENDANTS’ MOTION FOR JUDGMENT AS A MATTER

OF LAW THAT THEIR INFRINGEMENT WAS NOT

WILLFUL OR FOR A NEW TRIAL

and a motion by Sundance:

MOTION FOR ENHANCED DAMAGES DUE TO WILLFULNESS 

While both of DeMonte’s motions ask for a new trial as an alternative to a

judgement as a matter of law, defendants’ briefs do not discuss reasons for a new trial. 

The Court, in this decision, is only considering whether or not the verdicts on the issues

of reasonable royalty and willfulness should stand.

For the reasons which follow, DeMonte’s motions will be granted in part and

denied in part. The jury’s verdict on the issue of reasonable royalty will stand; the jury’s

verdict on willfulness will be set aside. Sundance’s motion will be denied as moot.

II. Background and Trial

A.

The background of the case is reflected in prior rulings of the Court as follows:
3

See Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116

(S.D.N.Y. 1970).

3

MEMORANDUM AND ORDER GRANTING PLAINTIFFS’

MOTION FOR JUDGMENT AS A MATTER OF LAW OR

FOR A NEW TRIAL, filed September 20, 2006 (setting aside

jury verdict that the ‘109 patent was invalid).

MEMORANDUM AND ORDER DENYING DEFENDANTS’

MOTION FOR JUDGMENT AS A MATTER OF LAW

REGARDING INFRINGEMENT, filed April 25, 2007

(upholding jury verdict that the ‘109 patent was infringed.)

The background of the trial is reflected in the JOINT PRETRIAL STATEMENTS

(Damages Trial), filed May 7, 2007.

B.

1.

The witnesses at trial witnesses for Sundance and a general description of their

testimony follows:

1. Vincent J. Merlot, Jr., a co-inventor of the ‘109 patent, testified as to the

manufacture and sale of segmented tarpaulins for flat bed trailers as well as the

features and advantages of such tarpaulins. He also testified as to a license Sundance

granted for the ‘109 patent and the features of DeMonte’s Quick DrawTM system, the

infringing product.

2. James R. Nanci, a co-inventor of the ‘109 patent, testified generally along

the lines of Merlot. 

3. Robert Overbaugh, an expert, testified as to the reasonable royalty

DeMonte should pay on its infringing sales of the Quick DrawTM system. He particularly

testified as to the Georgia-Pacific3

 factors applicable to a reasonable royalty and why
4

the entire market value rule should be applied to the infringing sales of the Quick

DrawTM system.

4. Walter DeMonte, a principal of DeMonte, testified in cross-examination

regarding DeMonte’s manufacture and sale of the Quick DrawTM system.

2.

The witnesses at trial for DeMonte and a general description of their testimony

follows:

1. Walter DeMonte testified as to the history of flatbed trailer cover systems,

the manufacture and sale of the Quick DrawTM system, the features of the Quick

DrawTM system and the unit and dollar sales of the Quick DrawTM system. He also

testified as to the components of the Quick DrawTM system and the lack of significance

in segmentation in the sale of flatbed tarpaulins.

2. Tim P. DeMonte, son of Walter DeMonte, testified in a fashion similar to

Walter DeMonte. 

3. Daniel H. Bliss, a patent law expert, testified as to the nature and benefits

of the ‘109 patent to DeMonte, and why the entire market rule should not be applied to

the sales of the Quick DrawTM system. He did not testify regarding the Georgia-Pacific

factors applicable to a reasonable royalty.

C.

Exhibits at trial included the ‘109 patent, Reexamination Certificates and the

papers related to them, prior art patents, financial statements of DeMonte in various

configurations including unit and dollar sales of the Quick DrawTM system, unit prices
5

generally including allocation of the dollar cost of various components, brochures and

informational materials, license agreements, papers from Sundance’s infringement suit

against Aero Industries, Inc., truck statistics, photographs of Sundance’s segmented

tarpaulin and of the Quick DrawTM system. Particularly significant was Overbaugh’s

Georgia-Pacific analysis (Px 136) and opinion letters received by DeMonte (Dx 228(a)

and Dx 228(b)).

D.

Conspicuously absent from the trial were witnesses from the truck industry who

could have explained the significance of segmented versus non-segmented tarpaulins

as covers for loads on flat bed trailers. Also, defendants did not request a special

verdict or interrogatories, both of which might better explain the jury’s verdicts. As one

commentator has noted, special verdicts and interrogatories, while not perfect, are welladvised in jury patent trials given the fact-intensive nature of the proofs customarily

offered and do much to dissipate the difficulties encountered in the global nature of a

general verdict. See Kimberly A. Moore, Judge, Juries and Patent Cases - An Empirical

Peek Inside the Black Box, 99 Mich. L. Rev. 365, 380 (2000); Kimberly A. Moore,

Juries, Patent Cases, and a Lack of Transparency, 39 Hous. L. Rev. 779 (2002).

III. The Law

A.

1.

The rules relating to a judgment as a matter of law under Fed. R. Civ. P. 50 have

been described in the prior rulings of the Court following the liability trial and need not
6

be repeated except to note:

The case law has developed a set of guidelines governing

consideration of motions for JMOL, consistent with the

Seventh Amendment guarantee. A court must (1) consider

all the evidence, (2) in a light most favorable to the

nonmovant, (3) drawing reasonable inferences favorable to

the nonmovant, (4) without determining credibility of

witnesses, and (5) without substituting its choice for that of

the jury between conflicting elements of evidence. If, having

done all this properly, it concludes that reasonable persons

could not have reached a verdict for the nonmovant, it must

grant the motion. The ultimate conclusion is really a twostep determination: (1) What facts are supported by

substantial evidence? and (2) Do those facts support the

legal conclusion necessarily drawn by the jury en route to its

verdict? In the first step the judge avoids invasion of the

jury’s right to select reasonably from probative evidence and

evaluate credibility. In the second the judge avoids

miscarriage of justice by reaching a different legal conclusion

when necessary.

Robert L. Harmon, Patents and the Federal Circuit, § 13.2(f)(I) (7th ed. 2005) (footnotes

omitted). 

2.

Because the Court set aside a jury’s finding of invalidity following the liability trial

and is now setting aside the jury’s verdict of willfulness, some further comment is in

order.

The judge is not obligated to accept a jury’s verdict willy nilly as Harmon notes

above. Long ago, in Capital Traction Co. v. Hof, 174 U.S. 1, 13-14 (1899), the Supreme

Court said:

“Trial by jury,” in the primary and usual sense of the term at

the common law and in the American constitutions, is not

merely a trial by a jury of 12 men before an officer vested

with authority to cause them to be summoned and

impaneled, to administer oaths to them and to the constable
7

in charge, and to enter judgment and issue execution on

their verdict; but it is a trial by a jury of 12 men in the

presence and under the superintendence of a judge

empowered to instruction them on the law and to advise

them on the facts, and (except on acquittal of a criminal

charge) to set aside their verdict, if, in his opinion, it is

against the law or the evidence.

In a patent case, this proposition is especially pertinent given the complexity of

the subject matter. In the Court’s view, it is even more so when dealing with the issues

of validity and willfulness. These issues are fact intensive and reflect a complexity of

evidence based on testimony and documents and the inference to be drawn from them

beyond those normally associated with the issues of infringement and damages. 

Therefore, a jury’s verdict on the issues of validity and willfulness requires a closer and

more critical review of a record than does the review of a jury’s verdict on issues relating

to infringement damages. This is true for two additional reasons. First, a higher

standard of proof is required on the issues of validity and willfulness. Here willfulness

must have been proven by the highly probable standard. This is another way of saying

clear and convincing. Just recently, the Federal Circuit has defined clear and

convincing “as evidence that ‘place[s] in the ultimate fact finder an abiding conviction

that the truth of the factual findings are highly probable.’” Pfizer, Inc. v. Apotex, Inc.,

480 F.3d 1348, 1360 n. 5 (Fed. Cir. 2007), citing Colorado v. New Mexico, 467 U.S. 310

(1984). Second,

Jury damage awards, unless the product of passion and

prejudice, are not easily overturned or modified on appeal. 

That salutory approach is particularly applicable here, where

the jury had every right to believe the evidence presented to

it respecting a proper damage award sufficient to

compensate the plaintiffs for the injury each suffered.
8

Weinar v. Rollform Inc., 744 F.2d 797, 808 (Fed. Cir. 1984).

3.

At trial, Sundance relied mostly on circumstantial evidence to justify a favorable

verdict on willfulness. There was little direct evidence. Rather, Sundance marshaled a

congerie of facts from which it asked the jury to infer that DeMonte’s infringement was

willful and now wants the verdict sustained on the same basis. What all of this means is

that the Court must engage in a rigorous analysis of the evidence in deciding whether

the verdict of willfulness should stand.

B.

As noted above, this was a jury trial. The law of the case when a jury makes the

decision is set out in the instructions. Peculiarly, neither party mentions the instructions

in their briefs even though there was no challenge to them. Accordingly, a discussion of

the law applicable to the two issues raised by DeMonte’s motions should begin with a

repeat of the instructions. Regarding the issue of a reasonable royalty, no elaboration

on what the jury was instructed is necessary. As to the issue of willfulness, something

further regarding the applicable law is appropriate given the complexities of the

determination.

C.

Since the standards of proof differ as noted above on the issues, it is important to

repeat how the jury was instructed:

In any legal action, facts must be proved by a required

standard of evidence, known as the “burden of proof.” In a

patent case such as this, there are two different burdens of

proof that are used.
9

The first burden of proof standard requires that, in order for a

party to prevail on an issue, you must be persuaded that

what the party seeks to prove is more probably true than not

true.

The second burden of proof standard is a higher one. It

requires that you must be persuaded that it is highly

probable that what the party seeks to prove is true.

As previously stated, the burden of proof on the reasonable royalty issue is the former;

the burden of proof on the willfulness issue is the latter.

D.

As to a reasonable royalty, the jury was instructed as follows:

Plaintiffs are entitled to a reasonable royalty for all infringing

sales proven by Plaintiffs in this case.

. . .

A royalty is a payment made to the owner of a patent by a

non-owner in exchange for rights to make, use, or sell the

claimed invention. A reasonable royalty is the royalty that

would have resulted from a willing, hypothetical negotiation

between plaintiffs and a company in the position of the

defendants taking place just before the infringement began. 

You should also assume that both parties to that negotiation

understood the patent to be valid and infringed and that the

licensee would respect the patent and were willing to enter

into a license. 

In determining the value of a reasonable royalty, you may

consider evidence on any of the following factors:

1. Any royalties received by plaintiffs for the licensing of the

patent-in-suit, proving or tending to prove an established

royalty.

2. The rates paid by the defendants to license other patents

comparable to the ‘109 patent.

3. The nature and scope of the license, as exclusive or nonexclusive; or as restricted or non-restricted in terms of its
10

territory or with respect to whom the manufactured product

may be sold.

4. Plaintiffs’ established policy and marketing program to

maintain his right to exclude others from using the patented

invention by not licensing others to use the invention, or by 

granting licenses under special conditions designed to

preserve that exclusivity.

5. The commercial relationship between the licensor and the

licensee, such as whether or not they are competitors in the

same territory in the same line of business.

6. The effect of selling the patented product in promoting

sales of other products of the licensee; the existing value of

the invention to the licensor as a generator of sales of his

non-patented items; and the extent of such collateral sales.

7. The duration of the ‘109 patent and the term of the

license.

8. The established profitability of the product made under the

‘109 patent; its commercial success; and its current

popularity. 

9. The utility and advantages of the patented invention over

the old modes or devices, if any, that had been used for

achieving similar results.

10. The nature of the patented invention; the character of the

commercial embodiment of it as owned and produced by the

licensor; and the benefits to those who have used the

invention.

11. The extent to which the Defendants has made use of the

invention; and any evidence that shows the value of that

use.

12. The portion of the profit or of the selling price that may

be customary in the particular business or in comparable

businesses to allow for the use of the invention or analogous

inventions.

13. The portion of the profit that arises from the patented

invention itself as opposed to profit arising from unpatented
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features, such as the manufacturing process, business risks,

or significant features or improvements added by the

accused infringer.

14. The opinion testimony of qualified experts.

15. The amount that a licensor (such as plaintiffs) and a

licensee (such as the defendants) would have agreed upon

(at the time the infringement began) if both sides had been

reasonably and voluntarily trying to reach an agreement; that

is, the amount which a prudent licensee – who desired, as a

business proposition, to obtain a license to manufacture and

sell a particular article embodying the patented invention –

would have been willing to pay as a royalty and yet be able

to make a reasonable profit and which amount would have

been acceptable by a patentee who was willing to grant a

license. 

16. Any other economic factors that a normally prudent

business person would, under similar circumstances, take

into consideration in negotiating the hypothetical license.

. . . plaintiff may use the “entire market value rule,” which

allows for the recovery of damages based on the value of an

entire apparatus containing several features, even though

only one feature is patented, when the patentee can

normally anticipate the sale of the unpatented features with

the patented feature; that is, the feature patented constitutes

the predominant basis for consumer demand of the

unpatented features.

If the unpatented feature does not constitute the

predominant basis for consumer demand, the damage

award must be adjusted to account for the value that the

unpatented features contribute.

You may exclude from such determination the economic

value properly attributable to the prior art and to other

features and improvements of the infringing product, whether

or not such other features are themselves patented, that

contribute economic value to the infringing product. 

(Tr. 5/21/07 at pp. 57-61).

E.
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1.

As to willfulness, the jury was instructed as follows:

When a person becomes aware that a patent may have

relevance to his or her activities, that person has a duty to

exercise due care and investigate whether or not his or her

activities or proposed activities infringe any valid,

enforceable claim of the patent. If that person did not do this

and is found to have infringed the patent claims, then the

infringement was willful.

. . .

. . . To establish willful infringement, plaintiffs must prove two

things by the highly probable standard. First, plaintiffs must

prove that defendants were aware of the ‘109 patent. 

Second, plaintiffs must prove that defendants proceeded

with the infringing activities without a good faith belief that

the patent was either invalid, not infringed, or both.

In determining whether or not defendants acted in good faith,

you should consider all of the circumstances, including

whether or not defendants obtained and followed the advice

of a competent lawyer. Although the absence of a lawyer’s

opinion does not require you to find willfulness, the obtaining

and following of a lawyer’s advice may be evidence that

infringement was not willful. 

In evaluating defendants’ reliance on the advice of a lawyer,

you should consider when defendants obtained the advice,

the quality of the information defendants provided to the

lawyer, the competence of the lawyer’s opinion, and whether

or not defendants relied upon the advice. Advice is

competent if it was based upon a reasonable examination of

the facts and law relating to validity and/or infringement

issues, consistent with the standards and practices generally

followed by competent lawyers.

Another factor you should consider in determining willfulness

is whether or not, in designing the product or process

accused of infringement, defendants copied the disclosures

of the 109 patent. Evidence of copying a patent is evidence

of willful infringement.
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The fact that it has been determined that defendant [sic]

were wrong and that the ‘109 patent is infringed does not

mean that defendants’ infringement was willful. All that is

required to avoid a finding of willful infringement is that

defendants had a good faith belief that it did not infringe or

that the patent was invalid, and that defendants’ belief was

reasonable under all of the circumstances.

 An initial rejection by the Patent and Trademark Office of

original claims that later were confirmed on reexamination

does not necessarily justify a good faith belief in the invalidity

of the claims. 

Id. at 61-3.

2.

In discussing willful infringement, another commentator states:

The infringers’ intent and reasonable beliefs are the primary

focus of a willful infringement inquiry. When a potential 

infringer has actual notice of the patent rights of another, he

or she has an affirmative duty of due care to avoid infringing

that patent. The primary consideration is whether the

infringer had sound reason to believe that he or she had the

right to act in the manner that was later found to be

infringing. 

Herbert F. Schwartz, Patent Law and Practice, §8.IV.A. (5th ed.) (footnotes omitted).

Harmon, supra at §17.4 says this on willfulness:

For a finding of willful infringement, it must appear that the

infringer had no reasonable basis for believing it had a right

to do the acts in question. The test is whether, under all the

circumstances, a reasonable person would prudently

conduct himself or herself with any confidence that a court

might hold the patent invalid or not infringed. There must be

an honest doubt of infringement or validity.

Harmon also says:

. . . a party cannot be found to have willfully infringed a

patent of which the party had no knowledge. Nor is there a

universal rule that to avoid willfulness one must cease

manufacture of a product immediately upon learning of a
14

patent, or upon receipt of a patentee’s charge of

infringement, or upon the filing of suit. Exercising due care,

a party may continue to manufacture and may present what

in good faith it believes to be a legitimate defense without

risk of being found on that basis alone a willful infringer.

Id. at § 17.4(b).

IV. Reasonable Royalty

The testimony of Overbaugh, Sundance’s damages expert, was not challenged

either in cross-examination by DeMonte or in DeMonte’s defense in its case in chief. 

Overbaugh’s Georgia- Pacific analysis (Px 136) amply supports the jury’s finding that

five percent (5%) was a reasonable royalty rate. His analysis coupled with the

testimony of Merlot and Nanci fully support the jury’s finding that the entire market rule

should be applied to the infringing sales of the Quick DrawTM system. The jury could

have reasonably concluded that it was more likely than not the patented features of the

Quick DrawTM system were novel and that its segmented cover moved customer

demand and that the other components of the Quick DrawTM system were of a

secondary consideration so far as customer preference was concerned. Particularly,

there was substantial evidence in the record to support the following facts:

• The invention of the ‘109 patent was a significant advance in tarpaulin

covers for flat bed trailers;

• Segmentation is important to buyers of covers for flat bed trailers. Among

other things, it makes field installation easier and results in lower

maintenance costs;

• The unpatented components of the Quick DrawTM system function

together with the patented components to produce a desired end product;
4

Now DeMonte’s makes only a modest challenge to the total sales testified by

Overbaugh - fifty less.

15

• The prior unitary tarpaulin sold by DeMonte and others was replaced by

sales of the Quick DrawTM system. Customers no longer buy the unitary

tarpaulin.

Two additional considerations emphasize the validity of the jury’s finding that the

entire market rule was applicable and there is substantial evidence in the record

supporting Overbaugh’s royalty analysis.

First, Px 143 is a Quick DrawTM system brochure from its website. The brochure

reads, in part:

SECTIONAL TARPS

Quick Draw’s unique design gives the appearance of a

seamless one-piece tarp, however, separate pieces of tarp

material are used between each bow. Sectional tarps help

to eliminate costly downtime. If the tarp becomes torn

beyond patching, only the damaged section needs replacing. 

This can be done within a few hours for thousands less than

the cost of replacing a one-piece tarp. This is a standard

feature of Quick Draw!

DeMonte’s defense to Sundance’s case on damages was limited to attempting to

persuade the jury that the segmented tarpaulin lacks novelty and that the invention of

the ‘109 patent was a marginal improvement in a crowded art. This assertion is belied

by its own marketing material.

Second, in final argument DeMonte argued that its total sales of infringing Quick

DrawTM systems was $16,127,100,4

 that the infringing components represented only

one percent (1%) of the sales price of a Quick DrawTM system, and that a reasonable
16

royalty rate was between two and a half-percent (2.5%) and four percent (4%). 

DeMonte then went on to argue (Tr. 5/21/07 at p. 34):

So we are asking you to write in to question A either .025 or

.04, whichever you feel is a better result, a more reasonable

royalty rate, and we think when you do that math you are not

going to give these folks $1.6 million, you are not going to

give them $2 million. You are going to give them about

$4,000. That’s what we think it’s worth. $4,000 at 2.5 or

$6,450 at 4 percent. We think that’s all that it’s worth.

DeMonte in its opening brief at p. 8 phrased it somewhat differently:

The jury verdict is the product of a 5% royalty rate multiplied

by a base for sales revenues of $23,288,934.00. For the

reasons set out above, the court should grant the following

relief:

1) As to the Inflated Base. The evidence shows the total

sales revenues were overstated by 50 of the 1998 Quick

DrawTM systems. At an estimated $15,000 a unit for 50 unit

this reduces the base to $22,538,934.00. Further, the

evidence shows that the value of the segmentation feature to

the remaining units was no more than 1% of the total sales

revenues. Therefore the evidence supports a judgment of

no more than 5% x (1% of $22,538,934 or $225,389) =

$11,269.

2) As to the Improper Royalty Rate. The evidence shows a

reasonable rate for a royalty is no more than 2.5%. 

Consequently, the evidence supports a judgment of no more

than 2.5% x $225,389 = $5,635.

Consequently, the court should grant Defendants’ motion

and reduce the amount of the judgment to $5,635. 

Alternatively, the court should grant Defendants’ motion for a

new trial on damages.

To argue to the jury and now to the Court, both validity and infringement having

been established, that DeMonte’s liability for infringement is at most $6,450 borders on

the frivolous. This line of argument enhances the proofs of Sundance at trial and
17

particularly Overbaugh’s opinion as to what constitutes a reasonable royalty. 

The jury’s verdict on the amount of infringing sales and a reasonable royalty is

consistent with the instructions. There is no good reason for disturbing the jury’s verdict

that there were $23,288,934 in infringing sales and that a reasonable royalty on these

sales is five percent (5%).

V. Willfulness

A.

Whether or not DeMonte’s infringement of the ‘109 patent was willful as found by

the jury presents a substantially more complex question than was the question of what

constitutes a reasonable royalty and the sales base to which the royalty rate applies. 

Sundance justifies the jury’s findings of willfulness on the basis of a jury finding

the following facts by the highly probable standard:

• DeMonte began the manufacture of segmented tarpaulins after seeing a

segmented tarpaulin at Detroit Tarp, Inc. in 1993. The segmented

tarpaulin manufactured by Detroit Tarp, Inc. for Sundance and was the

cover of a dump truck. 

• In 1993, DeMonte saw a Sundance brochure picturing a segmented

tarpaulin on a dump truck with the words “patent pending.”

• DeMonte began the manufacture and sale of segmented tarpaulins in

1993.

• DeMonte in 1999 heard about Sundance’s lawsuit with Aero Industries,

Inc., which involved a claim of infringement of the ‘109 patent.

• Sundance sued DeMonte for infringement of the ‘109 patent in December
18

2001. (The suit was dismissed on jurisdictional grounds. This case was

filed on September 4, 2002.)

• While Sundance obtained a legal opinion shortly after the Pennsylvania

case was filed that the ‘109 patent was invalid in March 2002 and in April

2002 saw a draft of a letter to DeMonte (which was never sent) which

stated that the Quick DrawTM system did not infringe, these opinions were

by a Canadian lawyer not expert in United States patent law.

• DeMonte continued to manufacture and sell the Quick DrawTM system

until at least January 23, 2007. Between 2002 and 2007, the U.S. Patent

and Trademark Office twice reexamined the ‘109 patent and twice found it

valid.

Sundance says that the jury could reasonably have concluded that DeMonte’s

conduct was culpable, and that DeMonte breached the affirmative duty of due care not

to infringe. Sundance also says that DeMonte’s post-trial argument that the case was a

close one, true or not, does not detract from its culpable conduct. 

B.

Sundance is wrong. First, as noted, Sundance ignores the highly probable

standard required for proof of willfulness. The facts that DeMonte saw a segmented

tarpaulin at Detroit Tarp, Inc., saw a brochure with the words “patent pending,” and

heard of the Aero Industries lawsuit are neither probative nor determinative of

willfulness. Culpable conduct is measured from the point in time a putative infringer has

actual knowledge of an issued patent and not before. Seeing a brochure with the words

“patent pending” is insufficient. The precedents from the Federal Circuit support this
19

finding. In Conopco, Inc. v. May Dep’t Stores Co., 46 F.3d 1556, 1562 (Fed. Cir. 1994)

the Federal Circuit stated:

[i]n resolving the willfulness, enhanced damages, exceptional case, and

attorney fees issues, the court is cautioned not to place undue weight on

defendants' activities prior to the issuance of the patent. Although these

activities may have been undertaken with knowledge that a patent

application covering the relaunched lotion formulation was pending (in

view of the “patent pending” notice affixed to the relaunched product), that

is insufficient to support a finding of willfulness. 

(citations omitted). It is clear that “[t]o wilfully infringe a patent, the patent must exist

and one must have actual knowledge of it.” State Industries, Inc. v. A.O. Smith Corp.,

751 F.2d 1226, 1236 (Fed. Cir. 1985). DeMonte knew of the ‘109 patent and that

Sundance claimed infringement only with the filing of the Pennsylvania lawsuit in

December 2001 and not before.

As for copying, there are substantial differences between what DeMonte saw at

Detroit Tarp, Inc. and the Sundance brochure and the design of the Quick DrawTM

system. The jury could not reasonably have found applying the highly probable

standard that DeMonte copied Sundance’s commercial embodiment of the ‘109 patent.

The legal opinion that DeMonte received that the ‘109 patent was invalid and the

draft opinion it saw stating that the Quick DrawTM system did not infringe, while written

by Canadian counsel, was such that DeMonte could have reasonably relied on them. 

These was nothing in evidence to support the assertion that the Canadian lawyer lacked

the competence to express the opinions he did. As stated in Ortho Pharmaceutical

Corp. v. Smith, 959 F.2d 936, 944 (Fed. Cir. 1992):

[C]ounsel’s opinion must be thorough enough, as combined

with other factors, to instill a belief in the infringer that a court

might reasonably hold the patent is invalid, not infringed, or
3

On reflection, the Court should have dealt substantively with Defendants’ Motion in Limine

to Remove the Issue of Willfulness from Jury Consideration, filed April 26, 2007. Rereading these motion papers satisfies the Court that the issue of willfulness should never

have been put to the jury.

20

unenforceable.

DeMonte vigorously defended the case both on the validity issue and on the

infringement issue. The fact that DeMonte continued to manufacture and sell the Quick

DrawTM system as the case progressed is not evidence of willfulness. During the

course of the this case, twice DeMonte went to the U.S. Patent and Trademark Office in

an effort to have the ‘109 patent rejected on grounds of obviousness and twice the U.S.

Patent and Trademark Office went through the reexamination process. Indeed, the

Court in its MEMORANDUM AND ORDER GRANTING DEFENDANT’S RENEWED

MOTION TO STAY PROCEEDINGS AND GRANTING PLAINTIFFS’ MOTION TO

AMEND entered September 2, 2004 stated:

. . . it does not appear that DeMonte’s renewed request for a

stay has a dilatory tactical motive behind it. DeMonte raised

the issue of validity in its first responsive pleading and

thereafter. The USPTO’s recent decision lends credence to

its position that the ‘109 patent is invalid.

Perhaps most significantly, this was a close case – so close that were the Court

not to overturn the jury’s finding of willfulness, it is likely it would deny enhanced

damages and attorneys’ fees. See Modine Mfg. Co. v. Allen Group, Inc., 917 F.2d 538,

543 (Fed. Cir. 1990)5

 (noting that a finding of willfulness “merely authorizes, but does

not mandate, an award of increased damages.”) (emphasis in original). See also Cybor

Corp. v. FAS Tech., Inc., 138 F.3d 1448, 1461 (Fed. Cir. 1998) (recognizing same).

Lastly, when the Court compares the facts in this case to a case in which the
21

Federal Circuit upheld the Court’s finding of willful infringement, Bott v. Four Star Corp.,

807 F.2d 1567 (Fed. Cir. 1986), satisfies the Court that the rejection of the jury’s finding

of willfulness is appropriate.

VI. Conclusion

Accordingly, for the reasons stated above, DeMonte’s motion for judgment as a

matter of law on the reasonable royalty issue is DENIED, and its motion for judgment as

a matter of law on willfulness issue is GRANTED. The jury’s finding of willfulness is

SET ASIDE. 

In light of this decision, Sundance’s Motion for Enhanced Damages Due to

Willfulness is DENIED AS MOOT.

SO ORDERED.

 s/Avern Cohn 

AVERN COHN

UNITED STATES DISTRICT JUDGE

Dated: August 1, 2007

I hereby certify that a copy of the foregoing document was mailed to the parties of

record on this date, August 1, 2007, by electronic and/or ordinary mail.

 s/Julie Owens 

Case Manager, (313) 234-5160