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Server Technology, Inc. v. American Power Conversion Corp.

United States District Court, D. Nevada

March 31, 2015

SERVER TECHNOLOGY, INC., Plaintiff and Counterdefendant,
v.
AMERICAN POWER CONVERSION CORPORATION, Defendant and Counterclaimant.

ORDER

LARRY R. HICKS, District Judge.

Before the court are plaintiff Server Technology, Inc.'s ("STI") motion for a permanent injunction (Doc. #618[1]), and motion for supplemental damages and prejudgment interest (Doc. #619). Defendant American Power Conversion Corp. ("APC") filed oppositions to both motions (Doc. ##630, 631) to which STI replied (Doc. ##636, 637).

Also before the court is defendant APC's motion for judgment as a matter of law, or in the alternative, motion for a new trial. Doc. #626. STI filed an opposition (Doc. #635) to which APC replied (Doc. #638).

I. Facts and Procedural History

This action has an extensive factual and procedural history. In brief, plaintiff STI manufactures intelligent power distribution units ("PDUs"). In 2006, STI brought the underlying patent infringement action against defendant APC alleging that APC's AP7900 and AP8900 series of products infringed two of STI's patents: United States Patents numbers 7, 043, 543 ("the 543 patent"), and 7, 702, 771 ("the 771 patent). Doc. #1.

Like STI, APC manufacturers intelligent PDUs. APC denied that its AP7900 and AP8900 products infringed STI's patents and raised two affirmative defenses. First, APC alleged that STI's 543 and 771 patents were invalid as obvious under 35 U.S.C. § 103. Second, APC alleged that STI engaged in inequitable conduct before the Patent Office during the prosecution of both patents.

Between May 12 and May 27, 2014, a jury trial was held on the issues of infringement and invalidity. On May 29, 2014, the jury returned a verdict finding that APC's AP7900 and AP8900 products infringed claim 15 of both the 543 and 771 patents. Doc. #590. The jury also made an advisory finding that STI's 543 and 771 patents were not invalid as obvious. Id. As part of this advisory finding, the jury made several factual findings concerning secondary considerations of non-obviousness. Id.

From May 28 through May 30, 2014, following the jury trial, the court conducted a bench trial on APC's inequitable conduct claim. On August 8, 2014, after additional post-trial briefing the court entered final findings of fact and conclusions of law on APC's inequitable conduct claim. Doc. #613. In that order, the court found that neither STI CEO Carrol Ewing ("Mr. Ewing") nor STI patent prosecution Attorney Robert Ryan ("Attorney Ryan") engaged in inequitable conduct before the Patent Office during the prosecution of the 543 and 771 patents. Id. The same day, the court issued a separate order finding that the 543 and 771 patents were not invalid as obvious under 35 U.S.C. § 103. Doc. #615.

After entry of final judgment, the parties filed the present post-trial motions.

II. Claimed Inventions

A. Claim 15 - 543 Patent (Col. 12:21-50)

An electrical power distribution plugstrip connectable to one or more electrical loads in a vertical electrical equipment rack, the electrical power distribution plugstrip comprising in combination:

A. a vertical strip enclosure having a thickness, and a length longer that a width of the enclosure;
B. a power input penetrating said vertical strip enclosure;
C. a plurality of power outputs disposed along an area on a face of said length of the strip enclosure, each among the plurality of power outputs being connectable to a corresponding one of said one or more electrical loads;
D. a plurality of power control relays disposed in said vertical strip enclosure, each among said plurality of power control relays being connected to said power input and to one or more corresponding power outputs among said plurality of power outputs;
E. a digital current information display disposed on another area of said vertical strip enclosure and adjacent to said plurality of outputs in current-determining communication with at least one among said power input and said power outputs; and
F. a plugstrip current reporting system (i) associated with the vertical strip enclosure (ii) in power information determining communication with at least one among said power input and said plurality of power outputs, and (iii) communicatingly connectable with a distal current reporting system through a communications network external to the electrical power distribution plugstrip.

B. Claim 15 - 771 Patent (Col. 12:19-46)

An electrical power distribution plugstrip connectable to one or more electrical loads in an electrical rack, the electrical power distribution device comprising in combination:

A. an enclosure having length that is longer than a width of the enclosure;
B. a power input penetrating the enclosure;
C. a plurality of power outputs disposed along an area on a face of said length of the enclosure, each among the plurality of power outputs being removably connectable to a corresponding one of said one or more electrical loads;
D. a plurality of power control relays disposed in the enclosure, each among said plurality of power control relays being connected to said power input and to one or more corresponding power outputs among said plurality of power outputs;
E. a digital current information display disposed on another area of the enclosure in current determining communication with at least one among said power input and said plurality of power outputs; and
F. a current information reporting system (i) associated with the enclosure (ii) in power information determining communication with at least one among said power input and said plurality of power outputs, and (iii) communicatingly connectable with a distal current reporting system through a communications network external to the electrical power distribution device.

III. STI's Motion for a Permanent Injunction (Doc. #618)

In its first post-trial motion, STI moves for entry of a permanent injunction prohibiting APC from selling the AP7900 and AP8900 products, as well as any other PDU that is "not colorably different" from the AP7900 and AP8900 products. See Doc. #618. In the alternative, if an injunction is not issued, STI seeks an order from the court ordering a compulsory license and establishing an ongoing royalty rate of 15% - or three times the 5% reasonable royalty rate established by the jury - for any future sales of APC's AP7900 and AP8900 products. Id.

A permanent injunction is an "extraordinary remedy that may only be awarded upon a clear showing that [the moving party] is entitled to such relief." Id. ( citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam)). A patent holder seeking a permanent injunction after a finding of infringement must satisfy a four-factor test: (1) irreparable harm; (2) inadequacy of monetary damages; (3) the balance of hardships is in the patent holder's favor; and (4) that the public interest would not be disserved by a permanent injunction. eBay, Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006). As addressed below, the court finds that STI is not entitled to the extraordinary remedy of a permanent injunction in this action.

A. Irreparable Injury

As part of an irreparable injury analysis, courts regularly examine three main considerations: (1) direct competition between the parties; (2) the patentee's loss of market share due to the infringement; and (3) loss of goodwill by the patentee. See, e.g., Presidio Components Inc. v. Am. Tech. Ceramics Corp., 702 F.3d 1351, 1362 (Fed. Cir. 2012) (stating that direct competition in the same market strongly supports the potential for irreparable harm absent an injunction); i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010) (finding that harm to a patentee's market share, revenues, and brand recognition is relevant for determining whether the patentee has suffered an irreparable injury); Celsis in Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922, 930 (Fed. Cir. 2012) (holding that loss of goodwill, damage to reputation, and loss of business opportunities are all valid grounds for finding irreparable harm).

The court has reviewed the documents and pleadings on file in this matter and finds that STI has established that continued infringement by APC will cause harm to STI's business. First, it is undisputed that STI and APC compete directly in the limited rack-mounted PDU market. In fact, at trial, both STI's and APC's witnesses acknowledged that both companies are direct competitors and have the largest market share of the rack-mounted PDU market. See Doc. #599, Pat Johnson Trial Testimony, p.1462:5-23, 1501:11-23; Doc. #602, Julie Davis Trial Testimony, p.2301:11-17. Second, as APC and STI directly competed for the same limited sales in the market, continued infringement by APC will cause STI to lose customers and market share to APC as APC sells its infringing PDUs at a lower price than STI's patented products.[2] Therefore, the court finds that STI has established irreparable harm resulting from APC's continued infringement.

However, while there is no question that STI and APC compete to sell PDUs in the market, STI has competed in this market despite APC's infringement throughout the eight-years of this litigation. During that time STI has maintained a competitive edge in the market, holding the second largest market share next to APC. Thus, the court finds that although STI has established ...


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