IP Law Daily Damages award for willful infringement of cable connector technology doubled to $47.7M
Friday, November 4, 2016

Damages award for willful infringement of cable connector technology doubled to $47.7M

By Thomas Long, J.D.

PPC Broadband, Inc., was entitled to a double-damages award of $47.7 million for a competitor’s willful infringement of two patents for coaxial cable connections, the federal district court in Albany, New York, has decided. Defendant Corning Optical Communications RF, LLC, deliberately copied PPC’s patents and concealed its infringement, which continued for 10 years. The court also rejected Corning’s laches and equitable estoppel defenses (PPC Broadband, Inc. v. Corning Optical Communications RF, LLC, November 3, 2016, Sharpe, G.).

Following a three-day trial in July 2015, a jury found that Corning Optical Communications RF, LLC, willfully infringed PPC’s U.S. Patent No. 6,558,194 ("the ’194 patent") and U.S. Patent No. 6,848,940 ("the ’940 patent"), both of which related to coaxial cable connectors. The jury awarded PPC $23.85 million in damages. The court denied Corning’s post-trial motions and decided that the jury verdict should stand. The court then held a two-day bench trial on Corning’s laches and equitable estoppel defenses. PPC also moved for enhanced damages and attorney fees.

Laches. Laches would be presumed if PPC delayed taking action to enforce its patent for over six years. Corning argued that PPC had knowledge of a potential infringement claim in 2004 when it analyzed Corning’s UltraRange coaxial cable connector product for infringement, and that the laches period should run from that date. PPC, however, had determined that the 2004 version of the UltraRange did not infringe. The court also rejected the contention that PPC had constructive knowledge of a potential claim against Corning in 2005, based on evidence that Corning had openly sold the UltraRange and had promoted the product at trade shows. Awareness of the product was not enough to establish knowledge of a claim for purposes of laches, the court said. To trigger the laches clock, PPC had to have actual or constructive knowledge of infringement. Corning argued that PPC would have known of the infringement if it had tested the 2005 version of the UltraRange, but, in the court’s view, PPC did not have a continuing duty to test its competitors’ products for infringement. After determining that the 2004 version did not infringe, PPC had no reason to believe that changes had been made to the product. Furthermore, Corning had concealed the new design features it added to the 2005 version and kept the same series and model number, outward appearance, and marketing materials as the 2004 version. According to Corning’s lead engineer, the new features were "invisible" because they were inside the connector and not noticeable. Corning first learned of the infringement in 2011 and had no reason to know of a potential claim earlier, the court said. Therefore, Corning could not establish laches.

Equitable estoppel. Corning’s equitable estoppel defense also required a showing of knowledge, the court noted. Corning was required to show that PPC’s conduct supported an inference that PPC did not intend to pursue an infringement claim against Corning. To make this showing, Corning had to establish that PPC knew of the allegedly infringing activities. Corning contended that PPC misled it when it did not pursue infringement claims against three models of Corning’s UltraSeal connector product, on which Corning based its UltraRange design, or against the 2004 version of the UltraRange. However, at trial Corning conceded that the UltraSeal and 2004 UltraRange were different from the accused 2005 UltraRange. Any representation by PPC with respect to those products could not form the basis of an estoppel defense with respect to the 2005 UltraRange or the other accused product, Corning’s UltraShield connector. PPC did not have actual knowledge of infringement by the 2005 UltraRange or UltraShield products until 2011; nor did it have constructive knowledge prior to that time, the court said. Therefore, Corning could not prevail on its equitable estoppel defense.

Enhanced damages. PPC requested that the jury’s damages award be trebled because of the jury’s willfulness finding, evidence that Corning copied PPC’s patents, Corning’s continued sales of the infringing products after PPC filed suit, and Corning’s vexatious litigation tactics. First, the court determined that the evidence supported the conclusion that Corning deliberately copied PPC’s patents, and that Corning knew that features added to the 2005 version of UltraRange infringed the ’194 patent. Second, Corning did not have a good faith belief that the either the ’194 or ’940 patent was invalid or that Corning’s accused products did not infringe. Although Corning had obtained legal advice about the UltraRange prior to its launch, that advice was directed to the 2004 version, not the accused products. Third, Corning was financially capable of paying enhanced damages. Fourth, the case was not particularly close, the court said. Fifth, Corning had infringed the patents-in-suit for 10 years. Sixth, the evidence showed that Corning decided to infringe PPC’s patents rather than invest the time and resources to independently redesign its connector, and that Corning intended to divert business away from PPC. Finally, Corning concealed its infringement by identifying and advertising the redesigned UltraRange in the same way as the noninfringing 2004 version. These factors weighed in favor of enhancing the damages award.

Corning’s litigation conduct did not, however, support enhancement, the court said. The conduct of Corning and its counsel amounted to "zealous advocacy in high stakes litigation," not vexatious misconduct. Several of Corning’s affirmative defenses survived summary judgment, indicating that its positions were not unjustified. In addition, Corning engaged in some remedial action by selling off some infringing products, which the parties had stipulated would not be part of the case.

On balance, the factors decidedly supported enhancement, the court stated. The court found that a doubling of the damages award was a sufficient sanction for Corning’s misconduct. Therefore, the jury’s damages award of $23.85 million was doubled to $47.7 million.

Attorney fees. The court denied PPC’s request for an attorney fee award, concluding that the case was not "exceptional" for purposes of the fee-shifting provision of 35 U.S.C. §285. Although the jury ultimately found for PPC and the court rejected Corning’s defenses, Corning’s positions were not wholly meritless. Corning’s counsel did not engage in litigation misconduct warranting a fee award, the court added.

The case is No. 5:11-cv-00761-GLS-DEP.

Attorneys: John Gutkoski (Barclay Damon LLP) for PPC Broadband, Inc. Andrew D. Silverman (Orrick, Herrington Law Firm) for Corning Optical Communications RF, LLC.

Companies: PPC Broadband, Inc.; Corning Optical Communications RF, LLC

MainStory: TopStory Patent TechnologyInternet NewYorkNews

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