United States District Court, S.D. New York
November 22, 2005.
ROCKET JEWELRY BOX, INC., Plaintiff,
QUALITY INTERNATIONAL PACKAGING, INC., Defendant.
The opinion of the court was delivered by: RONALD ELLIS, Magistrate Judge
OPINION AND ORDER
In its second amended complaint, dated December 8, 1998,
plaintiff Rocket Jewelry Box, Inc. ("Rocket") alleged that
defendant Quality International Packaging, Inc. ("Quality"),
infringed United States design patent number 333, 264 ("the '264
patent"). On March 17, 2004, Rocket filed a motion for a
permanent injunction, to set the interest rate on prejudgment
interest, and for costs. Quality opposes Rocket's motion. For the
reasons which follow, Rocket's motion is GRANTED.
A. Permanent Injunction
By stipulation dated March 29, 1999, the parties agreed to
submit all issues in the action to an American Arbitration
Association arbitration panel. On January 18, 2000, the parties
modified the arbitration agreement, and stipulated that the Court
would assess damages. The arbitration panel determined that
Rocket's '264 patent is valid and enforceable. In pertinent part, the arbitration panel held that,
the Florence and Marseille lines of products
(Claimant's Exhibits 4 and 5, which are reproduced
photographically in Claimant's Exhibits 6 and 7 of
the '264 Exhibit Book, respectively) infringe the
'264 Patent with the exception of those products
shown as items G ("Bracelet"), H ("Layout Watch"),
and J ("Pearl") in Claimant's Exhibits 6 and 7 of the
'264 Exhibit Book.
Award of Arbitrators, attached as Exh. 1 to Defendant's
Opposition to Plaintiff's Motion to Confirm Arbitration Award,
dated June 29, 2001. The arbitration panel also held that
Quality's infringement had been willful since February 5, 1999.
The Court may grant injunctive relief to address the violation
of Rocket's patent rights. See Roche Products, Inc. v. Bolar
Pharmaceutical Company, 733 F.2d 858 (Fed. Cir. 1984). On March
3, 2003, this Court permanently enjoined Quality from infringing
the '264 patent. The Court set forth two formulations of
injunctive relief: 1) "[t]he Court orders that Quality be
permanently enjoined from marketing the Florence and Marseille
lines of jewelry boxes, or any similar such boxes, which infringe
Rocket's '264 patent," and 2) "Quality is hereby permanently
enjoyed from selling any jewelry boxes similar to those sold
under the Florence and Marseille trademark." Rocket Jewelry Box,
Inc. v. Quality Intern. Packaging, Inc., 250 F. Supp. 2d 333,
339-41 (S.D.N.Y. 2003).
Quality appealed this Court's decision to the Court of Appeals
for the Federal Circuit ("Federal Circuit"). On February 12,
2004, the Federal Circuit affirmed the Court's grant of an
injunction, but held that injunction order did not comply with
Rule 65(d), Federal Rules of Civil Procedure. See Rocket
Jewelry Box, Inc. v. Quality Intern. Packaging, Inc.,
90 Fed. Appx. 543, 547-48 (Fed. Cir. 2004). In pertinent part, the Court
In addition to enjoining Quality from marketing and
selling the Florence and Marseille lines of jewelry boxes, the District Court
also enjoined Quality from marketing and selling "any
similar such boxes" and "any jewelry boxes similar to
those sold under the Florence and Marseille
trademarks . . . In so doing, however, the District
Court neither set forth the reasons for issuing this
broad injunction nor specified and described in
reasonable detail the parameters for determining the
extent of any such "similarity." Therefore the
District Court's Order does not comply with Rule
Id. at 547-48.
"Upon return of its mandate, the District Court cannot give
relief beyond the scope of that mandate, but it may act on
matters left open by the mandate." Laitram Corp. v. NEC Corp.,
115 F.3d 947 (Fed. Cir. 1997). Rocket asks the Court to adopt its
proposed injunction order. See Rocket's Proposed Injunction
Order, attached to Rocket's Mot. as Exh. C. In addition to
setting forth the language for a permanent injunction, the
proposed order directs Quality to deliver to Rocket within twenty
days all jewelry boxes that infringe the '264 patent, and
catalogs which contain illustrations of these jewelry boxes for
destruction. Id. The order also directs Quality to file two
sworn declarations, one listing the name and address of each
customer to whom Quality sold jewelry boxes, and a second setting
forth the manner in which it complied with the injunction order.
Quality opposes Rocket's proposed injunction order, and argues
that it includes additional relief the Court did not originally
grant. Quality's Memorandum of Law in Opposition to Rocket's
Motion for a Permanent Injunction ("Quality's Mem.") at 18.
Quality maintains that this additional relief was "not the
subject of a cross appeal to the Federal Circuit." Id. at 19.
It contends that the language in the Court's original injunction
is over broad, and argues that "by including within the scope of
its prohibition any `similar' boxes, the Court expanded the
breadth of the injunction so as to render it virtually impossible
for Quality to `design around' the accused products." Quality's Mem. at 18. More specifically, Quality
contends that "differences in jewelry boxes are highly discrete
and in many instances difficult to discern to the casual
observer," id. at 17, and that "any number of non-infringing
boxes in other lines . . . may be construes as `similar boxes'
and may arguably fall within the scope of the injunction." Id.
It asserts that "if [it] redesigned its boxes or `similar' boxes,
but marketed them under the Florence and Marseilles Trademark,
such activity would arguably fall within the prohibition of the
In light of the Federal Circuit's mandate, the Court concludes
that Quality's concerns have merit. The Court will limit the
injunction to those elements of the Marseilles and Florence lines
which were found by the arbitration panel to have infringed the
B. Prejudgment Interest
In the March 3, 2003 opinion, the Court awarded Rocket $65,905
as damages for Quality's willful infringement of the '264 patent.
The Court also awarded Rocket prejudgment interest to be
calculated from February 5, 1999. "Prejudgment interest serves to
make the patent owner whole, for damages properly include the
foregoing use of money of which the patentee was wrongly
deprived." Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566,
1574 (Fed. Cir. 1996). The Federal Circuit affirmed this Court's
granting of prejudgment interest. See Rocket Jewelry Box, Inc.
v. Quality Intern. Packaging, Inc., 90 Fed. Appx. at 547-8.
Rocket has an "arrangement with one of its banks for a line of
credit that it can draw upon." Rocket's Mot. at 2. "The average
interest rate that Rocket paid on such loans during the period
from February 5, 1999 through March 1, 2004 was seven and 12/100
(7.12) per cent." Id. Rocket contends that the only way it can
be made whole is by setting the rate on prejudgment interest at 7.12 per cent, the average interest rate paid on
loans from its bank. Id. at 3. Quality argues that "Rocket's
costs of borrowing money from Feb. 5, 1999 to March 1, 2004 is
entirely irrelevant to this Court's calculation of prejudgment
interest." Quality's Mem. at 7. Quality contends that an award at
the United States treasury bill rate, compounded annually, will
adequately compensate Rocket. Id. Quality cites only one case
supporting its position. See Laitram Corp. v. NEC Corp.,
115 F. 3d 947, 955 (Fed. Cir. 1997). Laitram, however, can be
distinguished by its facts. In that case, the Court found that
there was no evidence that the patentee borrowed money at a
higher interest rate, or what that rate was, and that while
interest awarded at the treasury bill rate is appropriate in
cases, no evidence justified a higher rate. Id. at 955. In
contrast, Rocket filed an affidavit from its accountant
supporting the higher interest rate claimed.
The Court is afforded wide latitude and discretion in its
selection of the appropriate interest rate to be applied, and a
rate above the prime rate may be used. Uniroyal, Inc. v.
Ruskin-Wiley Corp., 939 F.2d 1540, 1545 (Fed. Cir. 1991); see
also Michaels v. Art Betterley Enterprises, Inc., 1996 WL
722007 (W.D.N.Y. Dec. 13, 1996). Moreover, as a wilful infringer,
Quality is required to compensate Rocket for its infringement.
See Oiness v. Walgreen Co., 88 F.3d 1025, 1033 (Fed. Cir.
1996). Based on the record, and after reviewing the parties
arguments, the Court finds that an award of prejudgment interest
at the 7.12 per cent rate sought by Rocket is justified, and
necessary to fully compensate Rocket for its loss. Rocket's
proposed interest rate is, therefore, GRANTED. Rocket also
proposes that the interest should be computed daily and annually.
Rocket's Mot. at 3. Since Quality does not object, Rocket's
request is GRANTED, and the rate is to be compounded daily and
annually from February 5, 1999.
Pursuant to Rule 54, Federal Rules of Civil Procedure, costs
other than attorney's fees shall be allowed as of course to the
prevailing party. A party prevails when actual relief on the
merits of the claim materially alters the legal relationship
between the parties by modifying the behavior of one party in a
way that directly benefits the other. See In re Omeprazole
Patent Litigation, 2004 WL 1782547 at *1 (S.D.N.Y. Aug. 9,
2004); see also Cosgrove v. Sears, Roebuck & Co.,
191 F.3d 98, 101-02 (2d Cir. 1999). "Ascertaining which party prevailed
requires the Court to look at the substance of the litigation to
determine whether an applicant has substantially prevailed in its
position, and not merely the technical disposition of the case or
motion. In effect, substance should prevail over form." In re
Omeprazole Patent Litigation, 2004 WL 1782547 at *1 (citations
Rocket argues that it was the prevailing party in this action
because the Court has confirmed the award of the arbitration
panel holding that the '264 patent was valid, and had been
willfully infringed by Quality. Rocket's Mot. at 3-4. Quality
contends that it was the prevailing party because Rocket's Paris
Line patents were held to be invalid by the arbitration panel,
and asks the Court to award costs with respect to the first and
second causes of action in the second amended complaint.
Quality's Mot. at 11-12. Quality cites Manildra Milling Corp. v.
Ogilvie Mills, Inc., 76 F.3d 1178, 1183 (Fed. Cir. 1996), for
the proposition that it should be considered a prevailing party
because it successfully invalidated Rocket's Paris Line patent.
The Manildra holding, however, "cannot be read to mean that a
party automatically must be considered prevailing under Rule
54(d) so long as [it] has one of [its] competitor's patents
invalidated." In re Omeprazole Patent Litigation, 2004 WL 1782547 at *2. The
Federal Circuit "has never held that a defendant that invalidates
a patent is the prevailing party when other patents are
succesfully asserted against it." Id. Accordingly, the Court
finds that Rocket is the prevailing party, and its request for an
award of costs is GRANTED.
A. INTEREST RATE AND COSTS
Rocket's proposed 7.12 per cent interest rate, to be compounded
daily and annually from February 5, 1999, is GRANTED.
Furthermore, the Court finds that Rocket is the prevailing party,
and its request for an award of costs is GRANTED.
B. PERMANENT INJUNCTION
Quality's officers, agents, servants, employees, and attorneys,
and those persons in active concert or participation with Quality
who receive actual notice of this order by personal service or
otherwise are hereby permanently enjoined from infringing
Rocket's '264 patent, and from manufacturing, selling, offering
to sell, advertising, or marketing Marseilles and Florence items
A ("single ring"), B ("single earring"), C ("double ring"), D
("pendant"), E ("large pendant/earring"), F ("universal"), and I
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