Case: 23-1140 Document: 30 Page: 1 Filed: 03/20/2024
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
IN RE: CALIFORNIA EXPANDED METAL
PRODUCTS CO.,
Defendant-Appellant
______________________
2023-1140
______________________
Appeal from the United States District Court for the
Central District of California in No. 2:20-cv-10409-MCS-
JEM, Judge Mark C. Scarsi.
______________________
Decided: March 20, 2024
______________________
RAYMOND JOSEPH TROJAN, Trojan Law Offices, Beverly
Hills, CA, argued for appellant. Also represented by DYLAN
C. DANG.
______________________
Before DYK, MAYER, and TARANTO, Circuit Judges.
TARANTO, Circuit Judge.
California Expanded Metal Products Co. (CEMCO)
owns several patents that describe and claim fire-retardant
head-of-wall assemblies. In 2020, Seal4Safti, Inc. filed an
action in district court seeking a declaratory judgment of
noninfringement, unenforceability, and invalidity of sev-
eral of those patents, and CEMCO filed affirmative
Case: 23-1140 Document: 30 Page: 2 Filed: 03/20/2024
2 IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
defenses and counterclaims for patent infringement. In a
2022 trial, a jury determined that Seal4Safti had willfully
induced infringement of all asserted patent claims and
awarded CEMCO damages in the form of a reasonable roy-
alty. J.A. 1267–69. Subsequently, the district court denied
CEMCO’s request for a permanent injunction, J.A. 50–52,
and set aside the jury’s damages award on the ground that
CEMCO did not meet its burden to prove the amount of a
reasonable royalty, Seal4Safti, Inc. v. California Expanded
Metal Products Co., No. 20-cv-10409, 2022 WL 16710721,
at *3–4 (C.D. Cal. Oct. 3, 2022) (Post-Trial Order); see also
id. at *5–6 (finding case exceptional and declaring CEMCO
entitled to attorney’s fees). The court entered judgment for
CEMCO on all its claims and against Seal4Safti on all its
claims, but awarded “no monetary or injunctive relief.”
J.A. 1200.
On appeal, CEMCO challenges the denial of monetary
and injunctive relief. We affirm the district court’s setting
aside of the jury’s royalty award but vacate the denial of
the permanent injunction and remand the case for further
proceedings.
I
CEMCO is the current owner of the five patents at is-
sue in this case: U.S. Patent Nos. 7,681,365; 7,814,718;
8,136,314; 8,151,526; and 10,406,389. The patents gener-
ally describe and claim fire-retardant assemblies for the
top of a wall, the assemblies including an intumescent strip
that seals construction joints or gaps when exposed to heat.
E.g., ’365 patent, Abstract. At the time of trial, there were
two dominant participants in the market for fire-retardant
head-of-wall products that can be installed before construc-
tion of a wall is complete: CEMCO’s exclusive licensee,
Clarkwestern Dietrich Building Systems LLC (ClarkDie-
trich), and Seal4Safti. J.A. 43.
On November 13, 2020, Seal4Safti filed a complaint in
the United States District Court for the Central District of
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IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO. 3
California seeking declaratory judgments of noninfringe-
ment, unenforceability, and invalidity of the five above-
listed patents, and in response, CEMCO filed several af-
firmative defenses and counterclaims for patent infringe-
ment. The present litigation, originated by Seal4Safti,
followed previously initiated litigation in which CEMCO
and ClarkDietrich sought and obtained relief, based on sev-
eral of the patents at issue in the present case, against
Seal4Safti, individuals affiliated with Seal4Safti, and com-
panies having a relation to Seal4Safti. See Seal4Safti, Inc.
v. California Expanded Metal Products Co., No. 20-cv-
10409, 2022 WL 2199031, at *2 (C.D. Cal. Jan. 19, 2022)
(summarizing history of this case); California Expanded
Metal Products Co. v. Klein, No. 18-cv-00659, 2023 WL
8086968, at *1 (W.D. Wash. Nov. 21, 2023) (summarizing
parallel contempt proceedings).
In a May 2022 trial, a jury determined that CEMCO’s
asserted patents were not invalid, concluded that
Seal4Safti had willfully induced infringement of all as-
serted claims, and awarded damages of $156,000. J.A.
1264–72. The damages award was based on a hypothetical
royalty negotiation, which the jury determined would re-
sult in an ongoing royalty payment of 12% of $1,300,000 in
sales made by Seal4Safti. J.A. 1269. After the jury trial,
the district court held a bench trial on several remaining
equitable issues, and it ruled against Seal4Safti on those
issues, J.A. 45–50, except for denying CEMCO’s request for
a permanent injunction to bar Seal4Safti from selling and
advertising its firestopping products, J.A. 50–52. A few
weeks later, the district court resolved the parties’ post-
trial motions. As relevant here, the court granted
Seal4Safti’s request to amend the anticipated judgment to
set aside the jury’s damages award pursuant to Federal
Rule of Civil Procedure 59(e). Post-Trial Order, 2022 WL
16710721, at *3, *6.
The district court entered final judgment on October 3,
2022. J.A. 1199–200. Seal4Safti timely filed a notice of
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4 IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
appeal and CEMCO timely filed a notice of cross-appeal.
Seal4Safti soon moved to dismiss its appeal, explaining
that it had decided to formally discontinue its operations,
and we granted the motion, leaving only CEMCO’s cross-
appeal. We have jurisdiction under 28 U.S.C. § 1295(a)(1).
II
A
We first consider the district court’s decision to set
aside the jury’s reasonable-royalty award. In reviewing the
court’s decision on a motion under Rule 59(e), we use the
standard of review applicable in the regional circuit. See
CODA Development S.R.O. v. Goodyear Tire & Rubber Co.,
916 F.3d 1350, 1357 (Fed. Cir. 2019). The Ninth Circuit
reviews a district court’s decision to alter or amend a judg-
ment pursuant to Rule 59(e) for abuse of discretion. Kauf-
mann v. Kijakazi, 32 F.4th 843, 847 (9th Cir. 2022).
A Rule 59(e) motion may be granted when “necessary
to correct manifest errors of law or fact upon which the
judgment rests.” Allstate Insurance Co. v. Herron, 634 F.3d
1101, 1111 (9th Cir. 2011). Here, the district court set
aside the jury’s damages award as a matter of law because
it determined that the jury “had no basis to arrive at a rea-
sonable royalty of 12%,” so the award was “based on imper-
missible speculation.” Post-Trial Order, 2022 WL
16710721, at *3 (citing Amgen Inc. v. Hospira, Inc., 944
F.3d 1327, 1341 (Fed. Cir. 2019) (“A jury’s damages award
‘must be upheld unless the amount is grossly excessive or
monstrous, clearly not supported by the evidence, or based
only on speculation or guesswork.’” (quoting Lucent Tech-
nologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1310 (Fed.
Cir. 2009)))). That ruling, we conclude, was not an abuse
of discretion.
At trial, CEMCO sought damages in the form of a rea-
sonable royalty and adopted a hypothetical-negotiation ap-
proach incorporating a familiar recitation of facts courts
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IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO. 5
have considered within that framework, set forth in Geor-
gia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116,
1120 (S.D.N.Y. 1970), modified on appeal sub nom. Geor-
gia-Pacific Corp. v. U.S. Plywood-Champion Papers Inc.,
446 F.2d 295 (2d Cir. 1971). CEMCO presented several
pieces of evidence corresponding to several Georgia-Pacific
considerations. See, e.g., J.A. 363 (testimony about Clark-
Dietrich’s sales under its license); J.A. 1131–32 (total sales
of Seal4Safti’s fire-retardant gasket products); J.A. 1147–
50 (inventor’s declaration discussing the benefits, commer-
cial success, and popularity of patent-covered products);
J.A. 1172–90 (profitability of similar products). But the
district court concluded that CEMCO did not provide ade-
quate testimony tying this evidence to any particular roy-
alty rate, and CEMCO has not identified such evidence on
appeal. 1 CEMCO first presented its proposed royalty rate
of 20% in its closing arguments, and its analysis of Georgia-
Pacific considerations was limited to attorney argument.
See, e.g., J.A. 293 (arguing ClarkDietrich’s dominance in
the market would “drive[] up” the reasonably royalty); J.A.
294–95 (arguing the commercial success of patent-covered
products “is significant”).
1 CEMCO notes in this court that it also sought to
introduce several prior licensing and settlement agree-
ments that, it says, would have provided evidence of com-
parable licensing rates. The district court excluded that
evidence due to deficiency of the disclosure required by
Federal Rule of Civil Procedure 26. J.A. 755–56. In this
court, CEMCO does no more than assert that the exclusion
of the evidence was improper; it does not develop an argu-
ment challenging the exclusion of the evidence. We there-
fore consider the argument forfeited. See Rodriguez v.
Department of Veterans Affairs, 8 F.4th 1290, 1305 (Fed.
Cir. 2021).
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6 IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
“The burden of proving damages falls on the patentee.”
Lucent, 580 F.3d at 1324. And when a party chooses to use
a hypothetical-negotiation framework, “while mathemati-
cal precision is not required, some explanation of both why
and generally to what extent the particular factor impacts
the royalty calculation is needed.” Whitserve, LLC v. Com-
puter Packages, Inc., 694 F.3d 10, 31 (Fed. Cir. 2012). We
find no error in the district court’s conclusion that, as a
matter of law, CEMCO failed to carry its burden to prove
damages for lack of such explanation of the proper royalty
rate in its evidence. See Exmark Manufacturing Co. v.
Briggs & Stratton Power Products Group, LLC, 879 F.3d
1332, 1350 (Fed. Cir. 2018) (requiring claimant to “care-
fully tie” Georgia-Pacific considerations “to the proposed
royalty rate”); see also Whitserve, 694 F.3d at 31–32.
B
We next turn to the district court’s denial of CEMCO’s
request for a permanent injunction. A plaintiff seeking a
permanent injunction “must demonstrate: (1) that it has
suffered an irreparable injury; (2) that remedies available
at law, such as monetary damages, are inadequate to com-
pensate for that injury; (3) that, considering the balance of
hardships between the plaintiff and defendant, a remedy
in equity is warranted; and (4) that the public interest
would not be disserved by a permanent injunction.” eBay
Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). We
review a district court’s denial of a permanent injunction
for abuse of discretion. Robert Bosch LLC v. Pylon Manu-
facturing Corp., 659 F.3d 1142, 1147 (Fed. Cir. 2011). A
district court abuses its discretion if it bases its ruling on
“‘an error of law or clearly erroneous factual findings’” or
commits “‘a clear error of judgment in weighing relevant
factors.’” Ecolab, Inc. v. FMC Corp., 569 F.3d 1335, 1352
(Fed. Cir. 2009) (quoting Innogenetics N.V. v. Abbott Labor-
atories, 512 F.3d 1363, 1379 (Fed. Cir. 2008)).
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IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO. 7
The district court based its denial of a permanent in-
junction solely on a finding that CEMCO had failed to
demonstrate an irreparable injury. J.A. 51. And it based
that finding solely on its reading of our decision in ActiveVi-
deo Networks, Inc. v. Verizon Communications, Inc., 694
F.3d 1312 (Fed. Cir. 2012). The district court read that de-
cision as standing for the proposition that “[w]henever a
patentee only stands to lose licensing fees for the sale of a
product when the licensee is not joined in the case,” an in-
junction should be denied because “‘[s]traightforward mon-
etary harm of this type is not irreparable harm.’” J.A. 51
(quoting ActiveVideo, 694 F.3d at 1338).
The district court gave too broad a reading to ActiveVi-
deo, which is materially different from the present case. In
ActiveVideo, the plaintiff patent owner was ActiveVideo,
and the injunction it obtained against defendant Verizon
(for infringement) was based on Verizon’s competition with
Cablevision, a licensee of ActiveVideo. See 694 F.3d at
1337–38. This court, holding the issuance of the injunction
to have been improper, id. at 1337–41, explained that “Ca-
blevision does not have an exclusive license to the patents
at issue,” id. at 1338, and that it was “conclud[ing] only
that in light of the record in this case, which shows exten-
sive licensing, licensing efforts, solicitation of the defend-
ant over a long period of time preceding and during
litigation, and no direct competition between [defendant
and plaintiff], it was clearly erroneous for the district court
to conclude that money damages would not adequately
compensate” the plaintiff, id. at 1340. The court did not
conclude that, on different facts, particularly where a pa-
tentee has granted an exclusive license to a third party to
sell patent-covered products, the patentee may not suffer
irreparable harm from infringement. Such an exclusive-
licensing patentee might well face harm beyond the simple
loss of reliably measurable licensing fees, including price
erosion, damage to intangible reputation, harm to brand
loyalty, and permanent loss of customers. See Robert
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8 IN RE: CALIFORNIA EXPANDED METAL PRODUCTS CO.
Bosch, 659 F.3d at 1152–55 (finding irreparable harm even
though neither the plaintiff nor defendant directly sold pa-
tent-covered products to customers). ActiveVideo does not
foreclose consideration of such issues in this case.
Because the district court based its denial of injunctive
relief solely on its erroneous conclusion that CEMCO stood
only to lose licensing fees and thus failed to demonstrate
an irreparable injury, the court did not make additional
findings necessary for the injunctive-relief inquiry. We
therefore vacate the court’s denial of injunctive relief and
remand for the court to reconsider the appropriateness of
CEMCO’s requested permanent injunction.
III
We have considered CEMCO’s additional arguments
and find them unpersuasive. For the foregoing reasons, we
affirm the district court’s decision to set aside the jury’s
damages award, vacate the court’s denial of injunctive re-
lief, and remand for further proceedings consistent with
this opinion.
CEMCO shall bear its own costs.
AFFIRMED IN PART, VACATED IN PART, AND
REMANDED