ND Illinois upholds lost profits verdict; denies defendants' JMOL re absence of noninfringing substitutes

On June 13, 2012, in John T. Minemyer v. R-Boc Representatives, et al., Case: 1:07-cv-01763 (N.D. Ill.), Magistrate Judge Cole held that judgment as a matter of law, contesting a jury verdict on lost profits damages, was inappropriate. The damages issue was one of four (including infringement, indirect infringement, and willful infringement) that the defendant contested after the jury had reached a verdict of infringement for the plaintiff. The court reviewed the motion to determine if there was "sufficient evidentiary basis to find for the part on that issue." Fed.R.Civ.P. 50(a)(1).

Plaintiff was the owner of Lozon, a company that produced couplers for one of the defendants, DuraLine, who acted as sales agent and distributor for the products. These couplers were sold to large-scale customers that included Verizon. At trial, the jury found that the defendants were liable for infringement after DuraLine began to replace the Lozon couplers with those made by several of the defendants. Those couplers were found to have infringed.

Defendants raised two objections regarding the jury verdict on damages: 1) there was no evidence that all of defendants' different-sized couplers infringed, and 2) plaintiff failed to show that there were no available non-infringing alternatives. The court held, previously in its decision, that there was sufficient evidence that all of the couplers infringed, thus rejecting the first argument.

Next, the court looked at whether there were acceptable non-infringing alternatives. It found persuasive plaintiff's argument that the defendants had a long track record of selling Lozon couplers to sophisticated customers, without selling alternative, competing products. In addition, DuraLine's customers paid a large, 50% premium over competing products. Because the defendants ignored these alternatives (if they existed), the defendants' "'acceptable substitute argument must be viewed of limited influence.'" Slip op. at 20 (quoting TWM Mfg. Co., Inc. v. Dura Corp., 789 F.2d 895, 902 (Fed.Cir. 1986), and also citing Scripto-Tokai Corp. v. Gillette Co., 788 F.Supp. 439, 445 (C.D.Cal. 1992)).

Plaintiff also provided evidence that Verizon perceived the Lozon couplers to be the main advantage to bidding on DuraLine and that there was overwhelming evidence at trial suggesting that defendants had copied the Lozon coupler. The defendants neglected to respond to the evidence, so the court presumed that the point was conceded.

Consequently, the court held that a judgment as a matter of law on the damages issue was inappropriate.