Court Opinion

ID: 4153675
Source: CourtListenerOpinion
Date Created: 2017-03-17 18:07:37.665118+00
Date Added: 2024-06-11T09:12:36.791363
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

                  NORDOCK, INC.,
                  Plaintiff-Appellant

                           v.

SYSTEMS INC, DBA POWERAMP, DBA DLM INC.,
              DBA MCGUIRE,
          Defendant-Cross-Appellant
           ______________________

                 2014-1762, 2014-1795
                ______________________

   Appeals from the United States District Court for the
Eastern District of Wisconsin in No. 2:11-cv-00118-RTR,
Senior Judge Rudolph T. Randa.
                 ______________________

               Decided: March 17, 2017
               ______________________

   JEFFREY SCOTT SOKOL, Sokol Law Office, Milwaukee,
WI, for plaintiff-appellant.

    PHILIP P. MANN, Mann Law Group, Seattle, WA, for
defendant-cross-appellant. Also represented by TIMOTHY
JOHN BILLICK; JOHN WHITAKER, Whitaker Law Group,
Seattle, WA.
                 ______________________
2                              NORDOCK, INC.   v. SYSTEMS INC.

        Before O’MALLEY, REYNA, and CHEN, Circuit Judges.
PER CURIAM.
     This case returns to us on remand from the Supreme
Court of the United States. Sys., Inc. v. Nordock, Inc.,
137 S. Ct. 589 (2016). Systems, Inc. (“Systems”) sought
review of our prior decision in Nordock, Inc. v. Systems
Inc., 803 F.3d 1344 (Fed. Cir. 2015), arguing that we
erred in our interpretation of design patent damages
pursuant to 35 U.S.C. § 289. The Supreme Court granted
Systems’ petition for a writ of certiorari, vacated our prior
judgment, and remanded the case for further proceedings
in light of its decision in Samsung Electronics Co. v. Apple
Inc., 137 S. Ct. 429 (2016).
    On remand, we recalled our mandate solely with re-
spect to design patent damages1 and reinstated the case.
Both parties filed statements urging us to take different
actions. While Nordock, Inc. (“Nordock”) requests that we
reinstate our prior decision remanding the case to the
district court for a new damages trial, Systems requests
that we affirm the district court’s decision denying
Nordock’s motion for a new trial on damages. For the
reasons explained below, we vacate the jury’s damages
award and remand this case to the district court for
further proceedings, including a new damages trial.
    Section 289 provides, in relevant part, that whoever
manufactures or sells “any article of manufacture to
which [a patented] design or colorable imitation has been
applied shall be liable to the owner to the extent of his
total profit.” 35 U.S.C. § 289. The Supreme Court clari-
fied that a damages award under § 289 involves two

    1   We recalled the mandate only to the extent it re-
lated to the district court’s assessment of design patent
damages. Our decisions with respect to Systems’ cross-
appeal remain intact.
NORDOCK, INC.   v. SYSTEMS INC.                            3

steps: (1) “identify the ‘article of manufacture’ to which
the infringed design has been applied;” and (2) “calculate
the infringer’s total profit made on that article of manu-
facture.” Samsung, 137 S. Ct. at 434. The Court then
explained that the only question before it was narrow:
“whether, in the case of a multicomponent product, the
relevant ‘article of manufacture’ must always be the end
product sold to the consumer or whether it can also be a
component of that product.” Id.
    Looking to the statutory text, the Supreme Court con-
cluded that the term “article of manufacture,” as it is used
in § 289, “encompasses both a product sold to a consumer
and a component of that product.” Id. The Court further
indicated that the term “article of manufacture” is “broad
enough to embrace both a product sold to a consumer and
a component of that product, whether sold separately or
not.” Id. at 436. The Court declined, however, to “set out
a test for identifying the relevant article of manufacture
at the first step of the § 289 damages inquiry.” Id. The
Court subsequently remanded this case for further con-
sideration in light of Samsung. Sys., Inc. v. Nordock, Inc.,
137 S. Ct. 589 (2016).
     Nordock argues that we should reinstate our prior de-
cisions: (1) finding that the district court erred in denying
Nordock’s motion for a new trial to assess damages pur-
suant to 35 U.S.C. § 289; and (2) vacating the jury’s
damages award and remanding for a new trial on damag-
es. According to Nordock, Systems failed to develop or
preserve at trial its assertion that the relevant “article of
manufacture” is anything other than the entire dock
leveler. As such, Nordock argues that we should declare
that the “article of manufacture” is the entire dock leveler.
   Systems submits that a new trial is not necessary be-
cause the patent at issue—U.S. Patent No. D579,754—
makes clear that the “article of manufacture” is a “lip and
hinge plate,” not the entire dock leveler. According to
4                             NORDOCK, INC.   v. SYSTEMS INC.

Systems, the jury found “that Systems’ profits on the lip
and hinge plate are less than $15 per unit.” Systems’
Response Regarding Continued Review at 7, Nordock, Inc.
v. Systems Inc., Nos. 2014-1762, -1795 (Fed. Cir. Mar. 2,
2017), ECF No. 83. Systems explains that the jury was
instructed that Nordock could recover either compensato-
ry damages or Systems’ profits, not both. Systems points
to testimony from its expert that: (1) a royalty was the
proper form of damages; (2) $15 per unit was the appro-
priate amount of royalty; and (3) Systems’ profits would
be “less than that.” Id. at 13. Based on this evidence,
Systems argues that the district court properly declined to
order a new trial.
    After careful consideration, we conclude that remand
for a new trial on damages remains necessary. The jury
awarded Nordock $46,825 as a reasonable royalty and
indicated on the verdict form that Systems’ profits were
$0. As we explained in our now-vacated decision, the
record reveals that both the district court and the jury
were confused with respect to the interplay between 35
U.S.C. § 284 and 35 U.S.C. § 289. The fact that Nordock
could recover only one type of damage on each sale—
either (1) Nordock’s lost profits or a reasonable royalty or
(2) Systems’ profits on the relevant article of manufac-
ture—did not absolve the jury of its obligation to deter-
mine the amount of System’s total profits for purposes of
determining damages under § 289. Because there was no
evidence that Systems’ profits were $0, we vacate the
jury’s damages award and remand for a new trial on
damages.
     On remand, the trial court will have an opportunity to
revisit and restructure its jury instructions on damages to
provide the jury with a clear understanding of its obliga-
tion to determine Systems’ profits under § 289. The trial
court will also have the opportunity to consider the par-
ties’ arguments with respect to the relevant “article of
manufacture” in the first instance. And, the parties will
NORDOCK, INC.   v. SYSTEMS INC.                        5

have the opportunity to develop the record regarding
what constitutes the relevant “article of manufacture” in
these circumstances—a question they could not have
anticipated prior to the Supreme Court’s decision in
Samsung. Accordingly, we remand this matter to the
district court for further proceedings.
            VACATED AND REMANDED