the record fall woefully short of permitting the court to conclude
whether it can or cannot withstand an enhancement of damages. The
final non-factor is the issue of closeness of the case. The case
was not so one-sided that the court can say that it was
unreasonable for CFM to defend itself. After all CFM was able to
obtain an expert opinion that the ‘580 patent was void and
unenforceable due to anticipation and obviousness. On the other
hand, the jury found willfulness, no anticipation and no
obviousness.

When the Read factors are weighed, there are, of course,
pluses and minuses. However, the one factor that in the court’s
opinion tips the balance in favor of enhancement is the extent of
profits that CFM reaped during’ the four-year period of
infringement. Although Dimplex asks the court to consider the fact
that its expert opined that it had sustained substantially greater
damages than what was awarded by the jury, nevertheless the court
was not particularly impressed by the opinion of Dimplex’s expert
that virtually all of CFM’s sales would have gone to Dimplex had
CFM not had its infringing fireplaces on sale. The court therefore
believes that an enhancement of a factor of .5 is appropriate
considering all of the circumstances of the case including the nine
Read factors.

The Read case also asserts that attorney’s fees should be

allowed only in exceptional cases based on litigation misconduct


9. Whether defendant attempted to conceal its
misconduct.

Of these factors, Numbers 1, 6 and 7 tend to make CFM’s
conduct more culpable and Numbers 8 and 9 tend to mitigate its
culpability. Numbers 2, 3, 4 and 5 in the court’s opinion are non-
factors in this case.

Based on the jury’s verdict of wilfulness and the evidence in
support of it, it is apparent that the jury concluded that CFM
deliberately copied from the ‘580 patent. Its misconduct occurred
over a four-year period after being put on notice of the
infringement. During this time CFM, according to its own expert,
sold approximately 336,000 units and incurred a profit of
approximately $27.4 million. It failed to take any remedial action
during this four-year period, even though it now claims that it
could have done so with minimal consequence and cost. In its
favor, there was no evidence that CFM was motivated by anything
other than its own economic benefit and there was no evidence that
CFM ever attempted to conceal its activities from Dimplex.

The non-factors are whether CFM acted in good faith. It
refused to waive the attorney/client privilege so it is entitled to
no inference either way on this issue. CFM’s behavior during this
litigation was exemplary (as was that of Dimplex). It was a hard
but fairly fought case from beginning to end. CFM’s financial
condition is a non-factor because of its decision to object to

discovery as to its current financial condition. The matters in


rather than based on willfulness. Read, 970 F.2d at 831. As
pointed out above, CFM’s litigation strategy and conduct was
exemplary during the trial. Accordingly, this is not an
exceptional case. The request for attorney’s fees is denied.
III. CONCLUSION

For the reasons stated herein, the Court:

1. Denies CFM’s Motion for Judgment as a Matter of Law on
the Issue of Willful Infringement;

2. Grants Dimplex’s Motion for Enhanced Damages and finds
that an enhancement of damages of .5 or $4,139,977.00 is
appropriate; and

3. Denies Dimplex’s Motion for Attorneys’ Fees.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court

Dated: WA Up —_


(J

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS F ! L E D
EASTERN DIVISION
MAY 1 1 2005

JUDGE HARRY D. LEINENWEBER
CFM CORPORATION, US. DISTRICT COURT JUDGE
Plaintiff/Counter-Defendant,

Case No. 02 C 1981
v.

Hon. Harry D. Leinenweber
DIMPLEX NORTH AMERICA, LTD.,

Defendant/Counter-Plaintiff,

MEMORANDUM OPINION AND ORDER
ENHANCED DAMAGES AND ATTORNEYS’ FEES

Defendant, Counter-Plaintiff, Dimplex North America Ltd.
(hereinafter “Dimplex”), after a jury finding of willful
infringement, has moved the court for enhanced damages and
attorneys’ fees. Plaintiff, Counter-Defendant CFM Corporation
(hereinafter, “CFM”) objects to any enhancement and award of
attorneys’ fees and in addition moves for judgment as a matter of
law on the issue of willfulness.

I. CEM’s MOTION

CFM contends that, given the burden of proof for a finding of
willfulness, i.e., by clear and convincing evidence, the Jury’s
finding of willfulness cannot stand. However the Jury’s verdict
must be upheld unless the finding of willful infringement is
unsupported by substantial evidence. Hoechst Celanese Corp. v. BP

Chems. Ltd., 78 F.3d 1575, 1583 (Fed. Cir. 1996).


The evidence showed that CFM had attempted to design around
the ‘580 patent but had been unsuccessful in creating a
commercially viable product. After two unsuccessful attempts to
purchase the right to use the ‘580 technology, CFM manufactured and
sold its AE 2000 electric fireplaces. The alleged distinguishing
feature of the AE 2000 from the Dimplex fireplaces was the
substitution of a partially reflective Acrylite FF (plastic) screen
for Dimplex’s partially reflective architectural glass screen.
There was evidence produced that tended to show that CFM had not
adequately documented the development of its AE 2000 mechanism. A
substantial number of alleged infringing fireplaces manufactured by
CFM were displayed to the jury so that it could compare them with
the Dimplex Symphony fireplace, an embodiment of the ‘580 patent.
In attempting to prove that it took care to avoid infringement, CFM
produced evidence that it had consulted its patent attorney
regarding possible infringement. However, it did not waive the
attorney/client privilege. Accordingly CFM cannot rely on any
inference that it received an opinion of non-infringement. Further
CFM was on notice that Dimplex considered the AE 2000 fireplaces as
infringing its ‘580 patent. CFM continued to manufacture and
market alleged infringing fireplaces for over a four-year period
after receiving a cease and desist letter from Dimplex in January

2001.


Accordingly, the Court finds that there was, in fact,
substantial evidence before the jury that would allow its finding
of willful infringement to stand. The Motion for Judgment as a
Matter of Law on the Issue of Willful Infringement is denied.

II. DIMPLEX’S MOTION FOR ENHANCED DAMAGES AND ATTORNEYS’ FEES

Under 35 U.S.C.A. § 284, the court has the discretion to
consider enhancement of damages of up to three times the award of
compensatory damages. Also, Section 285 provides that “[t]he court
in exceptional cases may award reasonable attorney fees to the
prevailing party.” Dimplex has moved for both.

The Federal Circuit has set forth nine factors to aid a court
in considering whether to enhance damages and to what extent they
should be enhanced. Read Corp. v. Portec, Inc., 970 F. 2d 816
826-827 (Fed. Cir. 1992). These factors are:

1. Whether the infringer deliberately copied the
ideas or design of another.

2. Whether the infringer, when he became aware of
the patent, investigated the scope of
the patent and formed a good-faith belief that
it was invalid or not infringed.

3. The infringer’s behavior as a party to the
litigation.

4. The Defendant’s size and financial condition.

5. The closeness of the case.

6. The duration of defendant’s misconduct.

7. Any remedial action taken by defendant.

8. Defendant’s motivation for harm.