## United States Court of Appeals for the Federal Circuit
2007-1490, -1491

FLOYD M. MINKS, Plaintiff-Appellant,

v.
POLARIS INDUSTRIES, INC., Defendant-Cross Appellant.
Christopher T. Hill , Scarborough, Hill & Rugh, of Orlando, Florida, argued for plaintiff-appellant. With him on the brief were Herbert L. Allen and Stephen H. Luther , Allen, Dyer, Doppelt, Milbrath & G ilchrist, of Orlando, Florida. Kenneth C. Bass, III , Sterne, Kessler, Goldstein & Fox P.L.L.C., of Washington, DC, argued for defendant-cross appellant. With him on the brief was Jon E. Wright . Of counsel on the brief was Joseph J. Jacobi , Kirkland & Ellis LLP, of Chicago, Illinois. Appealed from: United States District C ourt for the Middle District of Florida Judge Gregory A. Presnell

## United States Court of Appeals for the Federal Circuit

2007-1490, -1491 FLOYD M. MINKS, Plaintiff-Appellant, v. POLARIS INDUSTRIES, INC., Defendant-Cross Appellant. Appeals from the United States District C ourt for the Middle District of Florida in case no. 6:05-CV-1894, Judge Gregory A. Presnell.

______________________ DECIDED: October 17, 2008

______________________ Before NEWMAN, PLAGER, and GAJARSA, Circuit Judges

. GAJARSA, Circuit Judge

. This is a patent infringement case. Floyd M. Minks (“Mi nks”) appeals from a final judgment that Polaris Industrie s (“Polaris”) willfully infringed claim 2 of U.S. Patent No. 4,664,080 (“the ’080 patent”). 1 After a jury trial, the di strict court reduced the jury’s damages award from $1,294, 620.91 to $55,809.60 (after doubling) and awarded attorney fees of $117,316.50, about hal f the requested amount. Minks appeals the reduction in damages, as well as the amount of attorney fees awarded. He also asserts on appeal that the jury instruct ion as to the date Polaris re ceived actual notice of the alleged infringement was erron eous. Polaris cross-appeals fr om the district court’s

1 The ’080 patent expired on October 28, 2005.denial of its motion for judgment as a matte r of law (“JMOL”) on noninfringement and from the jury’s finding of willfulness. Because the distri ct court reduced the jury’s compensatory damages award without offeri ng Minks a new trial, and because the court’s instruction on actual not ice failed to apprise the jury of the proper legal standard, he is entitled to a new trial on damages. Conv ersely, we affirm the award of attorney fees, but we note that the trial judge may exercise his discreti on to modify the award if it warrants further consideration on remand. Additionally, bec ause the jury’s finding of infringement is supported by substantial evidenc e, we affirm the district court’s denial of Polaris’ JMOL motion. We al so affirm the jury’s finding ofwillful infringement because Polaris has failed to establish plain error in the willfulness instruct ion to the jury. BACKGROUND The ’080 patent is direct ed to an electronic governor system for internal combustion engines. ’080 patent col.1 ll.5–8. In particular, the ’080 patent teaches a circuit to limit the speed of an all-terrain vehicle (“ATV”) when it is operated in the reverse direction—i.e., a reverse speed limiter. Id. at col.1 ll.11–39. The reverse speed limiter circuit of the ’080 patent is activated byshifting the ATV into reverse gear so that the circuit senses the direct current (“DC”) vo ltage used to illuminate a reverse indicator or back up illumination lamp on the ATV—point A of Figure 2. Id. at col.2 ll.36–44. If the engine is coupled to a permanent magnet type alternator , the alternating current (“AC”) output will increase li nearly with engin e speed. Id. at col.2 ll.9–15. Accordingly, once activated, the circuit depict ed in Figure 2 of the ’080 pat ent senses the alternator’s AC voltage output—point B of Figure 2—therebysensing engine speed. Id. at col.2 l.67

2007-1490, -1491 2to col.3 l.3. If the alternator’s AC volt age output exceeds a pr edetermined limit, the

circuit emits a control signal to interrupt the ignition of t he engine—point C of Figure 2. Id. at col.4 ll.16–23. Engine ignition is restored when the engine speed decreases to the point that the alternator ’s AC voltage output falls be low the predetermined limit. Id. at col.4 II.20–23. Claim 2 of ’080 patent is the onl y asserted claim. It states: A system for selectively inhibiting ignition above a preselected engine speed for an internal combustion engine, said system comprising: (a) means for providing an electr ical input which varies in a predetermined manner with engine speed; (b) control means adapted to c ontrol the ignition of said engine, said control means in cluding means for inhibiting ignition responsive to a control signal; and (c) means for providing said control signal responsive to a direct current voltage input to thereby selectively inhibit

2007-1490, -1491 3ignition responsive to the speed of said engine. ’080 patent col.5 II.51-65. The parties agree both that claim 2 is a means-plus-function claim to be analyzed under 35 U. S.C. § 112 ¶ 6 and thatFigur e 2 is the only structure disclos ed in the ’080 patent that corresponds to claim 2. Minks, the inventor of the ’080 patent, is an electrical engineer who designs electronic components for a variety of vehicl e types including ATVs. Minks designs and patents the components, which are then manuf actured and sold by Minks Engineering, Inc., 2 the exclusive licensee of the ’080 patent. Polaris is a manufacturer of ATVs that has been purchasing electrical components from Minks Engineering since about 1970. The reverse speed limiter of the ’080 patent stems from one of Minks’ designs for Polaris. In 1996, Polaris engaged Minks in discussions regarding the ’080 patent and the ability to purchase reverse speed limiters fr om different manufacturers. At this point, Minks informed Polaris that reverse s peed limiters based on engine speed and a DC input were covered by the ’080 patent. Duri ng that same time period, Polaris began implementing a new s peedometer in its ATVs that h ad an integrated reverse speed limiter, which Polaris described to Minks as sensing ground speed rather than engine speed. In 2000 or 2001, Polaris got a quote fr om a new vendor for a part that included a reverse speed limiter, but on September 24, 2001, Minks sent Polaris a letter confirming that the new vendor was refusi ng to build the quoted part because it would infringe the ’080 patent. In 2002, Polaris and Min ks exchanged additional communications regarding Polaris’ continued interest in licensing the ’080 patent. Also in 2002, Minks discovered that, contrary to Po laris’ earlier representations, Polaris’ new

2 Minks is the president of Minks E ngineering, but he is not a shareholder.

2007-1490, -1491 4integrated reverse speed lim iters did sense engine spee d. Accordingly, Minks purchased a Polaris ATV, confi rmed that it infringed the ’0 80 patent, and sent Polaris a letter t o this effect on November 23, 2004. On December 22, 2005, Minks filed suit against Polaris, alleging that Polaris infringed apparatus claim 2 of the ’080 patent. After a four-day trial, the jury found that Polaris received actual notice of alleged infringement on Novem ber 23, 2004, that Polaris willfully infringed claim 2 of the ’080 patent, and that Minks was entitled to $1,294,620.91 in royalty damages. The distri ct court subsequently granted Polaris’ Motion for a Reduction in Da mages or Remittitur Pursuant to Rule 59(e) and reduced the jury’s damages award to $27,904.80. Minks v. Polaris Indus., Inc. , No. 6:05-cv1894 (M.D. Fla. May 22, 2007) ( Damages Reduction Order ). The court, however, reduced the damages award as a matter of law under Federal Rule of Civil Procedure 50 without offering Minks a new trial on damages. Id. at 12–13. Based on the jury’s finding of willfulness, t he court doubled this award to $55,809.60 in an amended judgment entered on May 23, 2007. The court also awarded attorney fees plus costs; however, in accordance with the reducti on in damages, the court awarded $117,316.50 in fees and costs—approximatel y half of the amount requested

. Final judgment was entered on June 14, 2007, and the court denied Minks’ mo tion for reconsideration on June 2 9, 2007. Minks filed a notice of appeal on July 25, 2007, challenging th e district court’s reduction of the damages awar d, the amount of attorney fees awarded, and the jury instruction on actual notice. On August 2, 2007, Polaris filed a notice of cross-appeal from the district court’s deni al of its JMOL motion on noni nfringement. On September

2007-1490, -1491 517, 2007, shortly after this court issued its decision in In re Seagate Technology, LLC , 174 F.3d 1360 (Fed. Cir. 2007) ( en banc), Polaris filed an Amended Notice of CrossAppeal, appealing the enhancem ent of damages and grant of attorney fees on the grounds that the jury instruction on willfulness was plain errorunder Seagate . We have jurisdiction over this appeal pur suant to 28 U.S.C. § 1295(a).

uld normally lie.” Tronzo v. Biomet DISCUSSION “We review issues not unique to patent la w according to the law of the regional circuit where appeals from the dist rict court wo , 236 F.3d 1342, 1346 (Fed. Cir. 2001) ( Tro nzo II ). I. DAMAGES In this case, the jury awarded over one million dollars in compensatory royalty damages to Minks, but the trial court granted Polaris’ Rule 50 mo tion for a reduction of damages and reduced this award to less than thirty thousand dollars without offering Minks the option of a new trial. T he court noted that al though “[t]he Seventh Amendment [ordinarily] requires that a plaintiff be given the option of a new trial in lieu of remitting a portion of the jury award[,] . . . this mandate does not apply when the reduction in a damages award is necessitated by legal error.” Damages Reduction Order at 24 (citing Johansen v. Combustion Eng’g, Inc. , 170 F.3d 1320, 1329–30 (11th Cir. 1999)). Applying this rule, the court reviewed Minks’ evidence on damages and found legal error, concluding that “at most t he legally competent ev idence in the record supported a jury award based on a price per reverse speed lim iter of $6.11, a reasonable royalty of 4 percent, and total infr inging sales during the pertinent period of 116,270, for a total compensatory damage award of $27,904.80.” Id. at 33. The issue

2007-1490, -1491 6before us on appeal is whether the Seventh Amendment r equired the district court to offer Minks the option of a new trial in lieu of accepting the reduced damages award. 3 In the Eleventh Circuit, the district court’s decision to reduce the jury’s damages award without offering Minks a new trial is a matter of law revi ewed de novo. See Johansen , 170 F.3d at 1335; see also Tronzo II , 236 F.3d at 1351 (identifying issue as a matter of law). The Reexamination Clause of the Seventh Amendment states that “no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of common law.” U. S. Const. amend. VII. “[T]he Reexamination Clause does not inhibit the aut hority of a trial judge to grant new trials ‘for any of the reasons for which new trials have heretofore been granted in ac tions at law in the courts of the United States.’” Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 433 (1996). This authority extends to “overturning ve rdicts for excessiveness and ordering a new trial without qualificati on, or conditioned on the verdic t winner’s refusal to agree to a reduction (remittitur).” Id. (citing Dimick v. Schiedt , 293 U.S. 474, 486–87 (1935)). Nevertheless, the Supreme Court has long interpreted the Seventh Amendment as requiring that the exercise of a district court’s discretion to set aside an excessive jury award be accompanied by an offer of a new trial. For example, in Kennon v. Gilmerthe Court stated:

3 Minks also argues that the jury’s damages award should be reinstated by this court, but the Eleventh Circu it is unclear as to whether such relief is available. See Johansen , 170 F.3d at 1333 n.23 (stating that if the jury award was reduced too much, the case would be remanded wit h instructions to offer the plaintiff a new trial). Moreover, Minks has failed to articulate any explanation for how the jury might have calculated the compensatory dam ages it awarded. For these reasons, we reject Minks’ argument that the jury’s award should be reinstated.

2007-1490, -1491 7[I]n a case in which damages for a tort have been assessed by a jury at an entire sum, no court of law, upon a motion for a new trial for excessive damage s and for insufficiency of the evidence to support the verdict, is authorized, according to its own estimate of the amount of damages which the plaintiff ought to have recovered, to enter an absolute judgment for any other sum than t hat assessed by the jury. 131 U.S. 22, 29 (1889). The Court reaffirmed this principle in Hetzel v. Prince William County , holding that the entry of judgment for a lesser amount than that awarded by the jury, without the offer of a new trial, “cannot be squared with the Seventh Amendment” when the reduction is premis ed on a finding that the ev idence does not support the award. 523 U.S. 208, 211 (1998). Despite its recognition of this rule, the Eleventh Circuit held in Johansen that when a jury’s award is premised on “legal e rror,” a court may reduce the award and enter an absolute judgment in an amount su fficient to correct the legal error without offering the plaintiff the option of a new trial. Compare Johansen , 170 F.3d at 1328, 1331 (stating that “the Sevent h Amendment prohibits reexamination of a jury’s determination of the facts, wh ich includes its assessment ofthe extent of plaintiff’s injury,” and analyzing Hetzel ), with id. at 1330–31 (“The Seventh Amendment is not offended by this reduction because the is sue is one of law and not fact.”). Johansen considered whether a federal court ma y reduce a punitive dam ages award by an amount required by the Due Process Cla use of the Fourt eenth Amendment without offering the plaintiff a new trial. In its an alysis, the court identif ied two types of legal error that permit the reduction of a jury awar d without the offer of a new trial. First, “where a portion of a verdict is for an identi fiable amount that is not permitted by law, the court may simply modify the jury’s verdic t to that extent and enter judgment for the correct amount.” Id. at 1330 (citing N.Y., L.E. & W.R. Co. v. Estill , 147 U.S. 591

2007-1490, -1491 8(1893)). 4 Second, a court may reduce a jury’s punitive damages award when the award “enter[s] that ‘zone of arbi trariness that violates the Due Process Clause of the Fourteenth Amendment.’” Id. at 1331, 1334 (quoting BMW of N. Am., Inc. v. Gore , 517 U.S. 559, 568 (1996)). Importantly, both types of error derive from the operation of legal principles without regard to t he evidence presented by the plaintiff. That is, legal errors permitting the reduction of a jury award without the offer of a new trial arise without regard to whether the jury’s award is or is not supportable as an evidentiary matter. 5 Under the Eleventh Circuit’s analysis of Supreme Court precedent, we conclude that the district court’s reduc tion of the jury’s compensatory damages award in this case is governed squarely by Hetzel . The jury found the ’080 pat ent valid and infringed, and awarded Minks a reasonable royalt y of $1,294,620.91. In its analysis of this award, the district court identified no legal pr inciple—such as was present in Estill (state law prohibition on awarding interest) or Johansen (Due Process Clause of the Fourteenth Amendment)—that would limit t he amount of a reasonable royalty in this case. Rather, the district court examined the evidence in the record with respect to the components of a reasonable royalty—number of infringing sales, royalty base, and royalty rate—and found that the evidence could not s upport the jury’s damages award. Damages Reduction Orderat 25–28. The court further found t hat “at most the legally competent

4 In Estill , the jury awarded a tort plaintiff both compensatory damages and interest on that amount. 147 U.S. at 619. Upon a determination that interest was not recoverable in such actions under state law, t he Court vacated the interest portion of the jury award and remanded the case to the dist rict court with instructions to enter judgment in the amount of the jury’s compensatory award—no offer of a new trial was required. Id. at 622. 5 In Estill , for example, the jury’s award ofinterest was prohibited by state law, irrespective of whether the amount of the award would have been correct if awardable.

2007-1490, -1491 9evidence in the record supported a jury award based on a price per reverse speed limiter of $6.11, a reasonable royalty of 4 percent, and total infringing sales of 116,270, for a total compensatory dam age award of $27,904.80.” Id. at 33. Despite its effort to cast this decision as one of law rather t han fact, the court nece ssarily engaged in an independent review of the eviden ce and substituted its conclusion for that of the jury on the factual issue of compensatory damages. Cf. Cooper Indus., Inc. v. Leatherman Tool Group, Inc. , 532 U.S. 424, 437 (2001) (“‘Unlike the measure of actual damages suffered, which presents a question of historical or predictive fact, the level of punitive damages is not really a “fact” “tried” by the jury.’” (quoting Gasperini , 518 U.S. at 448, 459 (1996) (Scalia, J., dissenting))); see also Micro Chem., Inc. v. Lextron, Inc. , 317 F.3d 1387, 1394 (Fed. Cir. 2003) (“The amount of damages based on a reasonable royalty is an issue of fact.”). Under 35 U.S.C. § 2 84, Minks is entitled to a compensatory award no less than a reasonable royalty. Rite-Hite Corp. v. Kelley Co. , 56 F.3d 1538, 1554 (Fed. Cir. 1995) (“A patentee is entitled to no less than a re asonable royalty on an infringer’s sales for which the patentee has not estab lished entitlement to lost pr ofits.” (citing 35 U.S.C. § 284 (1988))). A reasonable royalty “may be based upon an established royalty, if there is one, or if not, upon the supposed result of hypothet ical negotiations between the plaintiff and defendant.” Id. (citing Hanson v. Alpine Valley Ski Area, Inc. , 718 F.2d 1075, 1078 (Fed. Cir. 1983)). “The hypothet ical negotiation r equires the court to envision the terms of a licensing agreement reached as the result of a supposed meeting between the patentee and the infringer at the time infringement began.” Id. A determination of the royalty stemming from a hypothetical negotiati on is often made by

2007-1490, -1491 10assessing factors such as those set forth in Georgia-Pacific Corp. v. U.S. Plywood Corp. , 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970). See Maxwell v. J. Baker, Inc. , 86 F.3d 1098, 1109–10 (Fed. Cir. 1996); Rite-Hite , 56 F.3d at 1554–55. A comparison of the Georgia-Pacificfactors and the standard of a hypothetical negotiation to the evidence of record in this case makes clear that t he district court’s reduction of compensatory damages necessarily amounted to an assessment of the sufficiency of the evidence, and as such, the option of a new trial was required. The first Georgia-Pacificfactor looks to “[t]he roya lties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty.” 318 F. Supp. at 1120. The district court re lied on the most rec ent agreement between Minks and Minks Engineering, under which Min ks receives a four percent royalty on total gross sales of patented and unpatented items, yet Mi nks testified that this agreement was but the latest in a series of royalty agreements. Under a previous agreement, for example, Minks had received a ten percent royalty based solely on the sale of patented items. As the reasonable royalty award to which Minks is entitled in this case is based solely on patented reve rse speed limiters, the district court was required to assess the sufficiency of Minks’ testimony to support an established royalty of four percent, ten percen t, or some other rate. Similarly, the sixth Georgia-Pacificfactor looks to “[t] he effect of selling the patented specialty in pr omoting sales of otherproducts of the lic ensee; that existing value of the invention to the licensor as a generator of sa les of his non-patented items;

2007-1490, -1491 11and the extent of such deriv ative or convoyed sales.” 6 318 F. Supp. at 1120. In this case, Polaris discussed licensing the ’080 patent from Minks begi nning in 1997, but Minks refused. Instead, the parties negot iated an agreement under which Polaris ordered approximately $7 mill ion in both patented and unp atented merchandise over several years. During that time, Minks was co mpensated at a rate of four percent on all these sales. Accordingly, the district court must have assessed whether the evidence of these negotiations, in which Minks was able to secure sales of non -patented items, was sufficient to support a reasonable royalty ra te higher than four percent. Finally, the hypothetical negot iation is deemed to be an arm’s length transaction. Rite-Hite , 56 F.3d at 1576. Courts should not, t herefore, accept “as conclusive the royalty arrangement between the patent ownerand the single licensee, a close corporation owned by the inv entor’s family . . . .” Cheramie v. Orgeron , 434 F.2d 721, 727 (5th Cir. 1970). Indeed, the district court in Rite-Hite employed this exact reasoning in its determination of the royalty rate that was affirmed by this court. See Rite-Hite Corp. v. Kelley Co. , 774 F. Supp. 1514, 1535 (E.D. Wis. 1991), aff'd in part, rev'd in part , 56 F.3d 1538 (Fed. Cir. 1995) (“This court also places little weight upon the royalty rate that Mike White paid for Rite-Hite paten ts when Mike White bought Rite-Hite from his father. Such an intra-familysale is too dissimilar from this hypothetical situation in which one competitor voluntar ily grants a novel license to its primary competitor.”); see also Ziggity Sys., Inc. v. Val Watering Sys. , 769 F. Supp. 752, 826 (E.D. Pa. 1990)

6 In Rite-Hite , this court clarified that “the re levance of anticipated collateral sales to the determination of a reasonable royalty rate ” is not to be confused with the application of the entire market value ru le to a determination of the royalty base . 56 F.3d at 1549 n.9 (citing Deere & Co. v. Int’l Harvester Co. , 710 F.2d 1551, 1559 (Fed. Cir. 1983)) (emphasis added).

2007-1490, -1491 12(“Eldon Hostetler owns part of Ziggity and, therefore, has an interest in assigning his patent rights to Ziggity in exchange for a low ro yalty rate. What is a reasonable royalty rate between an inventor and his own company is clearly not a reasonable royalty rate between two competitors in the same line of business.”). Although the record is not wholly clear on the relations hip between Minks and Minks Engineering, they are not competitors. As such, the district court must have considered wh ether the evidence in this case warranted a departure from the ro yalty rate established between Minks and Minks Engineering. We need not consider the exact reasonable royalty supported by this evidence. Gasperini , 518 U.S. at 433. However, the distri ct court’s exercise of discretion to assess the evidence and overturn the jury’s verdict upon a determination that it is excessive may only result in th e order of a new trial, eitherunqualified or conditioned on Minks’ refusal to accept a reduction. Id. ; see also Hetzel , 523 U.S. at 211 (stating that entry of “judgment for a le sser amount than that determined by the jury without allowing petitioner the option of a new trial, cannot be squared with t he Seventh Amendment”). We further conclude that this court’s decision in Tronzo II is not to the contrary. Tronzo II affirmed the judgment of the district court, enter ed following this court’s remand order in Tronzo v. Biomet, Inc. , 156 F.3d 1154 (Fed. Cir. 1998) ( Tronzo I ), which reduced a jury’s compensatory damages award without offering the plaintiff a new

2007-1490, -1491 13trial. To the extent that Tronzo II remains good law, 7 the facts and pr ocedure of that case are distinguishable from the present appeal. In Tronzo I , the defendant appealed from a ju ry verdict of willful patent infringement, breach of a confidential rela tionship, and fraud. After reversing the judgment of infringement or vali dity as to all asserted claims of the patent, the court considered whether the co mpensatory damage award for th e state law claims was supportable under either a constructive trust (los t profits) theory or a reasonable royalty. Tronzo I , 156 F.3d at 1160–61. The court ruled that neither remedy was available under state law because these types of awar ds lack the requisite “nexus between the damages claimed and the injury incurred.” Id. at 1161 (citing Rucker v. Garlock, Inc. , 672 So. 2d 100, 102 (Fla. Dist. Ct. App. 1996)). Moreover, because tort damages are awarded to “place the plaintiff in the pos ition he would have been absent the tortious conduct,” the court remanded the case to t he district court for a determination of whether the record contained “evidence to prov e any of the costs and injuries incurred

7 Tronzo II relied on Johansen ’s analysis of Due Proc ess Clause limitations on punitive damage awards an d their interplay with the Seventh Amendment right to a jury trial, but the Supreme Court has clarified that the Reexami nation Clause of the Seventh Amendment applies to puni tive damage awards in a manner that differs from its application to compensat ory damage awards. In Cooper Industries , the Court considered the proper standar d of review “when passing on district courts’ determination of the constitutionality of punitive damage awards .” 532 U.S. at 436. In concluding that a de novo st andard of review was both appropriate and permissible, the Court reasoned that “[u]nlike the measure of actual damages suffered,” the level of punitive damages is not a “fact” tried to the jury as that term is used in the Reexamination Clause of the Seventh Amendment. Id. at 437; cf. id. at 432 (reasoning that compensatory damages “are intended to redress the concre te loss that the plaintiff has suffered by reason of the defendant’s wrongful conduct,” whereas punitive damages “operate as ‘private fines’ intended to punish the defendant and to deter future wrongdoing”). Accordingly, Tronzo II ’s affirmance of a reduction of a compensatory damages award without the offer of a new tr ial may be inconsistent with the Supreme Court’s reasoning in Cooper Industries

.
2007-1490, -1491 14by [the plaintiff], such as the costs of prosecuting the patent and lost business opportunities.” Id. On remand, the district c ourt found, aside from $520 in patent prosecution costs, “a ‘complete absence of competent subst antial evidence’” to support the award of damages in tort. Tronzo II , 236 F.3d at 1345 (quoting districtcourt opinion on remand). The district court further declined to re -open the record and take new evidence on damages actually sustained by the plainti ff, reasoning that “both parties had been represented by competent counse l and had made strategic decis ions in this protracted litigation.” Id. Accordingly, the district court entered a judgment for compensatory damages of $520 on the state law claims (reduced from th e initial jury award of $7,134,000) without offering the plainti ff the option of a new trial. In its affirmance of the district court’ s reduction of the compensatory damages award, Tronzo II ruled that the reduction was made on “purely legal grounds.” 236 F.3d at 1351 (citing Johansen , 170 F.3d at 1330, for the propos ition that such a reduction need not be accompanied by the option of a new trial). Because the plaintiff “never introduced anylegally competent evidence to support” an award of lost business opportunities damages—i.e., the pl aintiff only introduced evidence of the gain realized by the defendant that the court rejected in Tronzo I —“the district court did not reweigh
anyevidence, nor did it exercise its discr etion in computing the damages award.” Id. (emphases added). To reach this result, the court distinguished Hetzel on the grounds that the reduction of the compen satory award in that case was an exercise of discretion based on a conclusion that the awar d was “excessive in light of the limited evidence of harm.” Id. (emphasis added).

2007-1490, -1491 15Comparing the holding of Tronzo II with the analysis of Hetzel therein, the district court’s reduction of compensatory reasonable royalty damages in this case must be adjudged under the rule of Hetzel . As set forth above, Minks has presented at least “limited evidence” that the district court necessarily rejected in adopting a reasonable royalty rate of four percent. Thus, even under Tronzo II , the district court’s decision here amounts to an exercise of discretion subject to Hetzel ’s requirement that Minks be offered a new trial. For these reasons, we vacate the distri ct court’s order reducing the jury’s compensatory damages award to $27,904.80, and we remand for a new trial on damages. II. ATTORNEY FEES Based on the jury’s finding of willful infri ngement, the district court found the case exceptional and awarded Minks enhanced damages and attor ney fees under 35 U.S.C. § 285. The court determined that a “reas onable fee” under this section would be $234,663.00, after all deductions. However, the district court criticized Minks’ damages theory as “economic nonsense” and only awarded half the reas onable fee to offset the “great deal of time during trial [that] was wasted by Plaintiff attempting to evade the basic laws of economics and common sense.” We review an award of attorney fees for an abuse of discretion. ACCO Brands, Inc. v. ABA Locks Mfrs. Co. , 501 F.3d 1307, 1312 (Fed. Cir. 2007). Although we herein vacate the distri ct court’s judgment reducing the compensatory damages awar d without offering Minks a newtrial, we detect no abuse of discretion in the aw ard of attorney fees. Even on appeal, Minks remains unable or unwilling to articulate a coherent damages theory. We t herefore affirm the

2007-1490, -1491 16award of attorney fees, but we note that t he trial judge may exercise his discretion to modify the award if it warrants further cons ideration on remand. III. NOTICE INSTRUCTION Under 35 U.S.C. § 287(a), w here a patentee has failed to mark its patented product, “no damages shall be recovered by t he patentee in any action for infringement, except on proof that the infringer was notified of t he infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.” Neither party disputes that Minks Engineering did not mark its products and that the damages recoverable by Minks ar e therefore limited by the date that Polaris received notic e satisfying the requirements of § 287(a). The jury found that Minks’ November 23, 2004 letter to Polari s, which informed Polari s of Minks’ belief that Polaris’ integrated reverse speed li miters infringed the ’080 patent, satisfied § 287(a)’s notice requirement. Minks did not move for JMOL on the issue of notice under § 287(a), but he does seek a new tria l based on legal error in the court’s instructions to the jury. Despite the absence of a motion for JM OL, Minks “may still challenge a jury verdict by establishing that the judge comm itted legal error or abused his discretion.” Advanced Display Sys., Inc. v. Kent State Univ. , 212 F.3d 1272, 1281 (Fed. Cir. 2000). If a jury instruction is objected to, and a cura tive instruction was requested, we review the instruction de novo for legal error. United States v. Klopf , 423 F.3d 1228, 1241 (11th Cir. 2005) (“A trial judge’ s refusal to give a requested instruction will warrant a new trial only if (1) the requested instructi on was substantively correct, (2) the court's charge to the jury did not cover the gist of t he instruction, and (3) the failure to give the

2007-1490, -1491 17instruction substantially impai red the defendant’s ability to pr esent an effective defense.” (quoting United States v. Roberts , 308 F.3d 1147, 1153 (11th Cir. 2002) (per curiam))); see also Serio-US Indus., Inc. v. Plastic Recovery Techs. Corp. , 459 F.3d 1311, 1317 (Fed. Cir. 2006) (“A party seeking to alte r a judgment based on erroneous jury instructions must establish that (1) it m ade a proper and timely objection to the jury instructions, (2) those instructions were l egally erroneous, (3) the errors had prejudicial effect, and (4) it requested alternative instructions that would have remedied the error.”). “In deciding whether a defendan t’s requested instruction was substantially covered by the actual charge deli vered to the jury, we ‘need only ascertain whether the charge, when viewed as a whole, fairly and correctlystates the issues and the law.’” Klopf , 423 F.3d at 1241 (quoting United States v. Gonzalez , 975 F.2d 1514, 1517 (11th Cir. 1992)). The district court gave the followi ng instruction on actual notice: The date notice was given is the date on which Minks communicated to Polaris a spec ific charge that one of its products may infringe claim two of the ’080 patent. Minks objected to this instruction on the grounds that it precludes a jury from finding notice prior to discovery of Polaris’ infri ngement. Minks thus requested the following instruction: The date notice was given is the date on which Minks communicated to Polaris a spec ific charge that one of its products infringed or would in fringe claim two of the ’080 Patent. Minks argues that the proposed instruction indicates that a pat entee can provide sufficiently specific notice to an accused infringer before the pa tentee discovers the actual infringement by the accused. We agree with Minks that the given instruction does not fairly and correctly state the issu es and the law; the jury should have been

2007-1490, -1491 18more clearly instructed that it was permitt ed to find notice prior to the date Minks discovered Polaris’ infringement. Section 287(a) requires actual notice to the accused “to assure that the recipient knew of the adverse patent during the per iod in which liability accrues, when constructive notice by marking is absent.” SRI Int’l, Inc. v. Adv. Tech. Labs., Inc. , 127 F.3d 1462, 1470 (Fed. Cir. 1997). “[I]n SRI we explained that as long as the communication from the patentee provides sufficient specificit y regarding its belief that the recipient may be an infringer, the statutory requirement of actual notice is met. Thus, the requirement of ‘a specificcharge of infringement’ set forth in Amsted does not mean the patentee must ma ke an ‘unqualified char ge of infringement.’” Gart v. Logitech, Inc. , 254 F.3d 1334, 1345–46 (Fed. Cir. 2001) (internal citation omitted). Under this standard, general letters re ferring to the patent and including an admonishment not to in fringe do not constitute actual notice. See Amsted Indus. Inc. v. Buckeye Steel Casting Co. , 24 F.3d 178, 187 (Fed. Cir. 1994) . Conversely, letters that specifically identify a product and offer a license for that product do constitute actual notice. See Gart , 254 F.3d at 1346. Under our case law, Min ks made a qualified charge of infringement when he informed Polaris that reverse speed limiters that sensed engine speed and a DC input infringe the ’080 patent. Actual notice thus turns on the point at which this charge—in any of its various forms in the history ofthe relationship between Minks and Polaris— was sufficiently specific such that Polaris “knew of the adverse patent and the alleged infringement.” Gart , 254 F.3d at 1345. As a long time customer of Minks Engineering, Polaris knew of the ’080 patent. Moreover , as early as 1997, Minks specifically

2007-1490, -1491 19communicated his belief that reverse speed limiters sensing en gine speed and a DC input infringe the ’080 patent. Similarly, on September 24, 2001, Minks sent Polaris a letter confirming that a third party vendor wa s refusing to build a quoted reverse speed limiter for Polaris because the quoted part would infringe the ’080 patent. During this time period, Polaris misrepresented the nature of its substitute reverse speed limiter, employed since 1996, as sensing ground s peed rather than engine speed. Although it is not for us to determine whether, as a fa ctual matter, any of these exchanges were sufficient actual notice under § 287(a), the court’s instruction to the jury should have more clearly articulated that, in the cont ext of this ongoing re lationship between the parties, knowledge of a specific infringing device is not a le gal prerequisite to such a finding. IV. INFRINGEMENT Polaris cross-appeals from t he district court’s denial of its JMOL motion on noninfringement. 8 The denial of a JMOL motion is al so reviewed de novo, applying the same standard as the district court. Nebula Glass Int’l, Inc. v. Reichold, Inc. , 454 F.3d 1203, 1210 (11th Cir. 2006) . When conducting this analysis, the jury’s verdict is reviewed for substantial evidence, drawing a ll reasonable inferences in favor of the
nonmovant. Id. ; Odetics, Inc. v. Storage Tech. Corp. , 185 F.3d 1259, 1269 (Fed. Cir. 1999). Substantial evidence is evidence re levant to the matter at hand that a reasonable mind might accept as adequate to support a conclusion. Id. “Judgment as a matter of law is appropriate when ‘a partyhas been fully heard on an issue and there

8 Polaris’ motion in the district c ourt sought both JMOL or alternatively a new trial. The court denied both aspects of the motion, and Polaris does not seek a new trial in its cross-appeal.

2007-1490, -1491 20is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.’” Go Med. Indus. Pty., Ltd. v. Inmed Corp. , 471 F.3d 1264, 1272 (Fed. Cir. 2006) (quoting Fed. R. Civ. P. 50(a)). The parties do not dispute that claim 2 of the ’080 patent is a means plus function claim that falls under 35 U.S.C. § 112 ¶ 6. That paragraph states: An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, materi al, or acts described in the specification and equivalents thereof. 35 U.S.C. § 112 ¶ 6 (2000). “The first step in construing such a limitation is to identify the function of the means-p lus-function limitation.” Texas Digital Sys., In c. v. Telegenix, Inc. , 308 F.3d 1193, 1208 (Fed. Cir. 2002). “The next step is to identify the corresponding structure in the written description necessary to perform that function.” Id. “‘Structure disclosed in the specificati on is “corresponding” structure only if the specification or prosecution history clearly links or associ ates that structure to the function recited in the claim.’” Id. (quoting B. Braun Med., Inc. v. Abbott Labs. , 124 F.3d 1419, 1424 (Fed. Cir. 1997)). Be cause Figure 2 in the ’080 patent is the only structure linked or associated with the f unctions required by claim 2, the district court concluded that “the means-plus-function limitations of claim 2 are limited to the structures set forth in Figure 2 (and thei r equivalents).” Minks v. Polari s Indus., Inc., 464 F. Supp. 2d 1229, 1233 (M.D. Fla. 2006). The parties do not dispute that the circui try of the accused devices differs from that taught by Figure 2 of the ’080 patent. Specifically, Polaris’ ATVs sense engine speed based on the frequency of the alternator’s AC output, wh ile the circuit of Figure 2

2007-1490, -1491 21is only capable of sensing the volt age of an alternat or’s AC output. 9 As such, the parties also agree that the accused circui try has different components than those shown in Figure 2 of the ’080 patent. Neverthele ss, the district court denied Polaris’ JMOL motion of noninfringe ment, ruling that the jury heard evidence that the amplitude and the frequency of the AC voltage both vary predictably with engine speed and that, to one skilled in the art of circuit design/electrical engineering, they ar e equivalent for purposes of determining speed. As such the jury coul d reasonably conclude that the methods employed in the ’080 Patent and in the accused devices were equivalent or interchangeable. Minks v. Polaris Indus., Inc. , No. 6:05-cv-1894 (M.D. Fla. May 15, 2007). We agree with the district court. To determine whether a particular means-p lus-function limitation is met, “‘the court must compare the accused structure with the disclosed structure, and must find equivalent structure as well as identity of claimed func tion for that structure.’” Chiuminatta Concrete Concepts, Inc. v. Cardinal Indus. , 145 F.3d 1303, 1308 (Fed. Cir. 1998) (quoting Pennwalt Corp. v. Durand-Wayland, Inc. , 833 F.2d 931, 934 (Fed. Cir. 1987) (en banc)). Polaris argues that the accused devices do not have an identical function to the claimed function because th e accused devices sense the frequency of the alternator’s AC output rat her than its peak voltage. However, the function for which the accused device must be i dentical is the function s pecified in the claim. MasHamilton Group v. LaGard, Inc. , 156 F.3d 1206, 1211–12 (Fed. Cir. 1998) (citing

9 Alternating current has two main properties: amplitude, measured in voltage, and frequency, measured in hertz. Thus the accused device senses engine speed by measuring the number of alternating cycles per second, while Figure 2 depicts an embodiment of the invention that s enses engine speed by measuring the peak voltage in a cycle.

2007-1490, -1491 22Pennwalt , 833 F.2d at 934). Here, the function of element (c) of clai m 2 is “providing said control signal responsive to a direct current voltage input to thereby selectively inhibit ignition responsive to the speed of said engine.” 10 ’080 patent col.5 ll.62–65 (emphasis added). Polaris makes no argum ent that the accused devices do not perform this claimed function. Accordingly, t he district court’s denial of Polaris’ JMOL motion was not improper on this basis. In addition to identity of function, t he accused device must have equivalent structure. Equivalence between the accu sed structure and that set forth in the specification has been analyze d under “a reduced version ofthe well-known tripartite test for the doctrine of equivalence”—i.e., “whether it performs the function in substantially the same way to achiev e substantially the same result.” IMS Tech., Inc. v. Haas Automation, Inc. , 206 F.3d 1422, 1435 (Fed. Cir. 2000). On cross appeal, Polaris argues that a finding of equivalent stru cture requires a finding that the accused frequency sensitive devices contain component s equivalent to the voltage divider R1 and R2 and switching transistor Q1. Polaris fu rther posits, without citation to the record, that this combination of components is res ponsive only to voltage rather than frequency, and as such, the frequency sensing circuitry of the accused devices cannot be equivalent as a matter of law. The difference in physical structure alone, however, is not determinative of § 112 ¶ 6 equivalence. Id. at 1436 (“Indeed, the statute r equires two structures to be equivalent, but it does not require them to be ‘structurally equivalent,’

10 The direct current voltage input acti vates the circuit and differs from the measurement of the alte rnator’s AC output. ’080 patent col.5 ll.22–25.

2007-1490, -1491 23i.e., it does not mandate an equivalency compar ison that necessarily focuses heavily or exclusively on physical structure.”). Rather, onc e identity of function is established, the test for infringement is whether the stru cture of the accused device performs in substantially the same way to achieve subst antially the same result as the structure disclosed in the ’080 patent. “Evidence of known interchangeability between structure in the accused device and the disclosed structure has also been considered an important factor.” Id. at 1436 (citing Al-Site Corp. v. VSI Int’l, Inc. , 174 F.3d 1308, 1319–21 (Fed. Cir. 1999), and Chiuminatta , 145 F.3d at 1309 (citing Graver Tank & Mfg. Co. v. Linde Air Prods. Co. , 338 U.S. 605, 609 (1950))). Under this precedent, we agree with the distri ct court that the jury’s verdict of infringement is supported by substantial ev idence that the accuse d devices meet claim 2 element (c) of the ’080 paten t. Specifically, both expert testimony and the ’080 patent itself indicate that a person of ordinary skill would know that circuitry responsive to the frequency of an AC current is interchangeable with circuitry re sponsive to the voltage of an AC current. First, as a liability expert, Min ks explicitly testified on cross examination that the interchangeability of these circuit ty pes was well known to those skilled in the art of circuit design. Second, the ’080 patent refers to point B of Figure 2—the point at which the alternator’s output is sensed—as the “the primary input voltage or frequency lead.” ’080 patent col.5 ll.22 –25. As noted previously, t he patent also teaches that either the frequency or the voltage of a pe rmanent magnet-type alte rnator may be used to sense engine speed. Id. at col.5 ll.22–25 (“It should be noted that this control lead [Point A] is neither the prim ary input voltage or frequency lead, point B, or the primary ignition turn off lead, point C . . . .”). This record constitutes substantial evidence upon

2007-1490, -1491 24which a reasonable jury could conclude that the accused devices perform the requisite function in substantially the same way—sensing the frequency of the alternator’s AC output rather than the voltage of that output—to achieve an identical result—interrupting the engine ignition. 11 In sum, under the legal standard for infr ingement of a § 112 ¶ 6 claim, Polaris has not made any argument that the accu sed devices do not perform a function identical to that recited in the claim, to achieve an identical result. In addition, substantial evidence supports a finding that the accused devices perform in substantially the same way as the circuit di sclosed in Figure 2 of the ’080 patent. For these reasons, the district court’s denial of Polaris’ JMOL motion is affirmed. V. Willfulness Polaris also cross-appeals on the ground that the instruction to the jury on willful infringement, which was unobjected to at trial, constitutes plain error based on this court’s decision in In re Seagate Technology, LLC , 174 F.3d 1360 (Fed. Cir. 2007) (en banc). Under plain error review, an appellate court must not correct an error the defendant failed to raise in the district court unless there is: (1) error, (2) that is plain, and (3) that affects substantial rights. If all three of those conditions are met, the court may exercise its discretion to notice a forfeited error but only if (4) the error seriously affects the fairness, integrity, or public reputation of judicial proceedings. United States v. LeCroy , 441 F.3d 914, 930 (11th Cir. 2006). For the error to be “plain,” it must either have been clear under the law at the time the error was made, or clearly contrary to the law at the time of the appeal. United States v. Mitchell , 146 F.3d 1338,

11 That the accused devices achieve this result is not in dispute.

2007-1490, -1491 251342–43 (11th Cir. 1998). In a ddition, when the first two pr ongs of plain error review are met, the party appealing the error bears the burden of demonstrat ing that the plain error affected its substantial rights. Id. at 1343. Under this standard, Polaris has failed to show plain error in the ju ry instruction on willfulness. The willfulness instruction given by the district court is as follows: Willfulness must be proven by clear and convincing evidence showing that: One, Polaris had actual knowledge of the ’080 patent; and, Two, Polaris had no reasonable basis for believing, A, that its accused product did not infringe the ’080 patent, or, B, that the ’080 patent was invalid or unenforceable. In making the determination as to willfulness, you must consider the totality of the circ umstances. The totality of the circumstances comprises a numberof factors, which include but are not limited to whether Po laris intentionally copied the claimed invention or a product covered by the ’080 patent, whether Polaris exercised due ca re to avoid infringing the patent, whether Polaris relied on competent legal advice, and whether Polaris presented a substantial defense to infringement. In Seagate , the en banc court overruled Underwater Devices Inc. v. Morrison-Knudsen Co. , 717 F.2d 1380 (Fed. Cir. 1983), changing t he standard for a finding of willfulness from one of an affirmative duty of care to one of objective recklessness. 497 F.3d at 1371. Polaris thus argues that the given instruction is plai n error because it instructs the jury to consider “whether Polaris exerci sed due care to avoi d infringing the patent” rather than whether Pola ris’ infringement was objectively reckless. We need not, however, decide whether the in struction constitute s error that is plain (i.e., the first two of the four requisi te elements of plain error) because Polaris makes no argument and cites no evidence to es tablish that any alleged error affected its substantial rights or affected the fairness, integrity, or public reputation of judicial

2007-1490, -1491 26proceedings (i.e., the third and fourth elem ents of plain error). For example, the Eleventh Circuit has expl ained that to affect substantia l rights, “the ‘error must have been prejudicial: It must have affe cted the outcome of the distri ct court proceedings.’” Mitchell , 146 F.3d at 1343 (quoting United States v. Olano , 507 U.S. 725, 736 (1993)). Under Mitchell then, any plain error in the jury in struction on willfulness only affected Polaris’ substantial rights to t he extent that the jury would not have found willfulness if it had received a willfulness instruct ion lacking such error. Polaris, however, makes no argument with respect to a different outcome under Seagate ’s objective recklessness standard. Rather it merely asserts that the jury finding of wil lfulness affected its substantial rights because it resulted in the imposition of enhanced damages and attorney fees. Moreover, we think Polaris c ould not have shown that the error in the jury instructions affected its substantial rights even if it had so argued. In particular, in the order granting Minks’ request for enhanced damages, the trial co urt concluded that “it is fairly clear” that Polaris deli berately copied Minks’ patent ed reverse speed limiter “and the case was not close.” Accordingly, based on the district court’s review of the record, it appears that error in the juryinstruction was not prejudicial because the jury may very well have arrived at the same result. Pola ris similarly makes no mention of how this case might “seriously affect[] the fairness, integrity, or public r eputation of judicial proceedings.” For these reasons, Polaris has not demonstrated plain error in the jury

2007-1490, -1491 27instruction on willfulness, and the jury’s finding of willful infringement is therefore affirmed. 12
CONCLUSION The district court reduced the jury’s compensatory damages award without offering Minks a new trial as required by t he Seventh Amendment. Ad ditionally, the jury instruction on actual notice under § 287(a) was erroneous and prejudicial to Minks’ case. For these reasons, we vacate the district court’s judgment on damages and remand for a new trial on these issues. We affirm the award of attorney fees, but we note that the trial judge may exer cise his discretion to modify the award if it warrants further consideration on remand. We also a ffirm the jury’s verdict of infringement as supported by substantial evidence. On appeal, Polaris has failed to make any argument regarding two of the four elem ents of plain error, and we therefore affirm the jury’s verdict of willfulness. AFFIRMED-IN-PART, VACATED-IN- PART, AND REMANDED-IN-PART COSTS No costs.

12 A different result is not required by this court’s recent decision in Voda v. Cordis Corp. , 536 F.3d 1311 (Fed. Cir. 2008). That case was decided under the law of the Tenth Circuit, which we r ead as differing significantly from the Elevent h Circuit law that governs here. In particular, we noted in Voda that when “the cl aimed error in the jury instruction is based on a change in the law that arose after tria l, the Tenth Circuit reviews the jury instruction de novo .” Id. at 1328 (emphasis added) (citing Anixter v. Home-Stake Prod. Co. , 77 F.3d 1215, 1231 (10th Cir. 1996); Key v. Rutherford , 645 F.2d 880, 883 (10th Cir. 1981) ). We further noted that under this review, an error in the jury instruction will be affi rmed unless the error “‘could not have changed the result.’” Id. (quoting World Wide Ass’n of Specia lty Programs v. Pure, Inc. , 450 F.3d 1132, 1139 (10th Cir. 2006)). The harmless error standar d employed in the Tenth Circuit differs greatly from the Eleventh Circuit’s plain error review applicable here.

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