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 user 2010-11-03 at 9:25:12 am Views: 65
  • #24141
    STATIC CONTROL COMPONENTS, INC., Plaintiff/Counterclaim Defendant,
    v. LEXMARK INTERNATIONAL, INC., Defendant/Counterclaim Plaintiff.
    Civil Action No. 5:02-571, Consolidated, No. 5:04-84.United States District Court, E.D. Kentucky, Central Division, Lexington.
    October 28, 2010. MEMORANDUM OPINION & ORDER GREGORY F. VAN TATENHOVE, District Judge.

    matter is before the Court on Lexmark International, Inc.’s Motion for
    New Trial [R. 1458] pursuant to Federal Rule of Civil Procedure 59.
    Lexmark seeks a new trial on three grounds: (1) the jury’s verdict in
    Part I of the Special verdict form was against the weight of the
    evidence; (2) it was prejudiced before and during trial by various
    rulings of the Court; and (3) certain jury instructions were erroneous
    and prejudicial to Lexmark. [Id.] For the reasons set forth below,
    Lexmark’s motion will be denied.

    The facts of this case have often been repeated. Here, a brief summary of the facts most relevant to this opinion:
    International, Inc. (“Lexmark”), is a large producer of printers and
    toner cartridges for those printers. Static Control Components, Inc.
    (“Static Control”), is “a leading supplier to toner cartridge
    manufacturers.” [R. 172 at 16, Case No. 5:02-571.] The remanufacturers
    take used toner cartridges, refurbish them, refill the toner, and resell
    the cartridges to end-user consumers. Static Control sells to the
    remanufacturers parts and supplies for reworking the used toner
    cartridges, including replacement parts, toner, and microchips. [R. 1.]
    litigation began eight years ago when Lexmark filed suit against Static
    Control.1 [5:02-571, R.1.] The primary, though not only, theory on
    which Lexmark alleged direct patent infringement and inducement of
    patent infringement against Static Control was predicated on Lexmark’s
    employment of single-use restrictions on the majority of toner
    cartridges at issue. These “restricted” cartridges have been commonly
    referred to as “Prebate Cartridges” because Lexmark ran what it at one
    time called its “Prebate Program.” [R. 594 at 3 n. 4.] In that program,
    Lexmark’s customers could buy printer cartridges at an up-front discount
    in exchange for their agreement to use the cartridges only once and
    then return the empty cartridges to Lexmark. Lexmark continued to offer
    “regular” toner cartridges for those customers who chose not to purchase
    Prebate cartridges with their terms. [R. 2 at 8.] Therefore, “Prebate”
    is temporally the reverse of a rebate.
    After a six-week trial of this
    complex case in May and June of 2007, the jury found that Lexmark had
    not proved by a preponderance of the evidence that Static Control’s
    customers, other than Wazana Brothers International, Inc., NER Data
    Products, Inc., and Pendl Companies, Inc.,2 directly infringed one or
    more of Lexmark’s patents. [R. 1366 at 1.] Because direct infringement
    is a predicate to a finding of inducement of infringement, this verdict
    meant Static Control could not be liable for inducement as to these
    customers. [See id. at 2.] Additionally, the Jury found that Lexmark had
    not proved that Static Control induced Wazana Brothers, NER, and Pendl
    to infringe Lexmark’s patents. [Id. at 3.]
    In April of 2007, shortly
    before the trial, the Court found that Lexmark’s Prebate Program avoided
    the exhaustion of patent rights normally associated with a patented
    article’s first sale consistent with then-binding Federal Circuit
    precedent. See Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed.
    Cir. 1992). [R. 1008.] Upon Static Control’s Motion, however, the Court
    reversed this decision in March of 2009 in light of the Supreme Court’s
    subsequent holding and statement of the law regarding patent exhaustion
    in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008).
    [R. 1443.] Specifically, this Court held that because Lexmark’s patent
    rights in its toner cartridges were exhausted by the authorized,
    unconditional sales of the cartridges to end users, Lexmark’s attempt to
    impose single-use restrictions on the cartridges failed, and therefore
    Lexmark’s Prebate terms were not enforceable under patent law. [Id.] For
    the purposes of Lexmark’s motion for a new trial, however, the Court
    will assume that the Prebate Program is valid and enforceable under
    patent law, as that was the law of the case during the trial. Further,
    both parties largely made their arguments on this assumption. [See R.
    1458 at 3 n. 3.]
    Under Federal Rule of Civil Procedure 59(a),
    “a new trial is warranted when a jury has reached a `seriously erroneous
    result’ as evidenced by: (1) the verdict being against the weight of
    the evidence; (2) the damages being excessive; or (3) the trial being
    unfair to the moving party in some fashion, i.e., the proceedings being
    influenced by prejudice or bias.” Holmes v. City of Massillon, Ohio, 78
    F.3d 1041, 1045-46 (6th Cir. 1996) (citations omitted). Only the first
    and third on this list are at issue in Lexmark’s motion for a new trial.
    the grant or denial of a new trial is purely within the discretion of
    the trial court . . . .” Logan v. Dayton Hudson Corp., 865 F.2d 789, 790
    (6th Cir. 1989) (citations omitted). In particular, where “a trial
    court has improperly admitted evidence and a substantial right of a
    party has been affected,” the court may order a new trial on part or all
    of the issues. Id. With respect to motions for new trials premised on
    the notion that the verdict was against the weight of the evidence,
    however, the Sixth Circuit has cautioned:
    When no undesirable or
    pernicious element has occurred or been introduced into the trial and
    the trial judge nonetheless grants a new trial on the ground that the
    verdict was against the weight of the evidence, the trial judge in
    negating the jury’s verdict has, to some extent at least, substituted
    his judgment of the facts and credibility of the witnesses for that of
    the jury. Such an action effects a denigration of the jury system and to
    the extent that new trials are granted the judge takes over, if he does
    not usurp, the prime function of the jury as the trier of the facts.
    78 F.3d at 1047 (quoting Duncan v. Duncan, 377 F.2d 49, 54 (6th Cir.),
    cert. denied, 389 U.S. 913 (1967)). Accordingly, the Sixth Circuit “has
    determined that a jury’s verdict should not be overturned as being
    against the weight of the evidence unless the verdict was unreasonable.”
    Id. (citing Duncan, 377 F.2d at 52).
    Lexmark first
    argues that the jury’s answers to Question Nos. 1, 2.1, 2.2, 3.1, 3.2,
    and 4 of Part I of the Special Verdict Form were against the weight of
    the evidence. These questions related to Lexmark’s claims of direct
    infringement against Static Control’s customers and inducement of
    infringement against Static Control. [See R. 1366.] As noted previously,
    the jury’s verdicts on these claims were unfavorable to Lexmark. [See
    Lexmark raised a similar argument to the one advanced in its
    current motion before. During the trial, for example, Lexmark made a
    motion for judgment as a matter of law with respect to direct
    infringement and inducement of infringement. This motion was denied. [R.
    1356.] After the trial, Lexmark renewed it motion for judgment as a
    matter of law on these issues. Again, that motion was denied. [R. 1430.]
    noted by Lexmark, the standards for reviewing a motion for judgment as a
    matter of law are different from the standards for reviewing a motion
    for a new trial. Namely, in reviewing a motion for judgment as a matter
    of law, the Court must view the evidence in a light most favorable to
    the party against whom it is made, and the motion should be granted
    “[o]nly when it is clear that reasonable people could come to but one
    conclusion from the evidence . . . .” Hill v. McIntyre, 884 F.2d 271,
    274 (6th Cir. 1989) (citation omitted). Clearly, this is a more
    stringent standard than evaluating whether the verdict was against the
    weight of the evidence.
    Although a different standard applies, the
    Court reaches the same result it reached in its disposition of Lexmark’s
    renewed motion for judgment as a matter of law. In that opinion, the
    Court stated with respect to Lexmark’s claims of direct infringement:
    though not required to do so, Lexmark presented little direct evidence
    of infringement by these customers [other than Wazana Brothers, NER, and
    Pendl] generally, and specifically, by implication, little direct
    evidence of infringement of the `015 patent covering encoder wheels3 and
    the `661 patent covering the wing-like guides on Lexmark’s toner
    cartridges. Instead, Lexmark chose to build its case around direct
    evidence of infringement by Wazana, NER, and Pendl, three
    remanufacturers that, as previously stated, this Court held liable for
    direct infringement as a matter of law. Lexmark then asked the jury to
    infer direct infringement by the entire class. The Court finds that it
    was reasonable for the jury to decide that Lexmark had not proven its
    case for infringement by the entire class of Static Control customers by
    a preponderance of the evidence.
    For example, when Static Control
    asked Lexmark witness Dr. Reinholtz whether he knew if any of Lexmark’s
    patents covered any cartridges remanufactured by specific Static Control
    customers, he responded in the negative. In the case, it was determined
    that repair and remanufacture of two types of Lexmark toner cartridges,
    “regular” or Non-Prebate cartridges and IBM Green cartridges, did not
    constitute patent infringement. Thus, in light of Dr. Reinholtz’s
    testimony, the jury reasonably could have concluded that Lexmark had not
    proven by a preponderance of the evidence that all of Static Control’s
    customers remanufactured Prebate or overseas cartridges, thereby
    infringing Lexmark’s patent rights.
    With respect to the `015 patent,
    the jury heard evidence that many IBM cartridges and “regular”
    Non-Prebate cartridges, all of which were sold with Lexmark encoder
    wheels, and encoder wheels made and sold by Static Control for some two
    years before the Lexmark `015 patent issued, were available to
    remanufacturers. These cartridges could be used without infringing the
    `015 patent. The jury reasonably could find in favor of Static Control
    for this reason as well.
    [R. 1430 at 7-9 (internal citations
    omitted).] Further, regarding Lexmark’s claim that Static Control
    induced infringement on the part of Wazana Brothers, NER, and Pendl, the
    Court stated that because Static Control’s microchips have
    non-infringing uses, the jury was reasonable not to infer or presume
    inducement of infringement based on their sale to remanufacturers. [Id.
    at 9-10]. The Court also found that it was reasonable for the jury to
    conclude that Static Control’s Anti-Prebate kit and other conversations
    with remanufacturers regarding the Prebate Program did not actually
    induce Wazana Brothers, NER, and Pendl to infringe Lexmark’s patents.
    [Id. at 10.] And the Court noted that the jury reasonably could have
    found that Static Control lacked the specific intent to induce
    infringement, as, for example, evidence was introduced that Static
    Control provided its customers with oral and written instructions
    regarding the lawful, non-infringing uses of its microchips. [Id. at
    For the same reasons, the Court finds that the jury’s verdict in
    Part I of the Special Verdict Form was, at the very least,
    reasonable.4See Holmes, 78 F.3d at 1047. Accordingly, the Court must
    deny Lexmark’s motion for a new trial on the ground that the verdict was
    against the weight of the evidence.5
    Lexmark next argues that
    several pretrial rulings resulted in irrelevant, inadmissible, and
    highly prejudicial evidence being presented to the jury. The Court
    First, Lexmark contends that the Court erred by
    denying Lexmark’s request to try the issues of liability for patent
    infringement and willfulness together, and by trying Static Control’s
    misuse and other equitable defenses at the same time as Lexmark’s
    underlying claims for patent infringement and inducement to commit
    patent infringement.
    In its February 2007 response to a motion by
    Wazana Brothers, NER, and Pendl to phase the trial into three parts,
    Lexmark submitted its own proposed organization of the trial. [R. 760.]
    Lexmark based its proposal on the organization of the trial in Hunter
    Douglas, Inc. v. Comfortex Corp., 44 F.Supp.2d 145 (N.D.N.Y. 1999).
    Under Lexmark’s trifurcated proposal, its patent claims, including
    willfulness, would be tried first, along with affirmative defenses to
    those claims, with the exception of misuse. [R. 760 at 4.6] Then, the
    jury would consider damages on Lexmark’s claims in the second phase of
    the trial. [Id.] Only in the third and final phase would the jury hear
    evidence relating to Lexmark’s opponents’ defense of misuse.7 [Id.]
    According to Lexmark, its trial plan would enhance convenience and
    economy, reduce juror confusion, and avoid prejudice to all parties.
    [Id. at 1.] Specifically, Lexmark argued that trying misuse along with
    its affirmative infringement claims would operate to prejudice Lexmark.
    [Id. at 19.] Additionally, Lexmark argued that because its evidence
    regarding liability for direct infringement and inducement of
    infringement substantially overlapped with its evidence regarding
    willful infringement, it would be most efficient to try the issues of
    liability and willfulness together. [Id. at 9.]
    Under Federal Rule of
    Civil Procedure 42(b), “[f]or convenience, to avoid prejudice, or to
    expedite and economize, the court may order a separate trial of one or
    more separate issues, claims, crossclaims, counterclaims, or third-party
    claims.” The Sixth Circuit has found that a district court has broad
    discretion to order separate trials. In re Bendectin Litigation, 857
    F.2d 290, 307 (6th Cir. 1988). In particular, a “district court has
    broad discretion to bifurcate the liability and damages phases of a
    trial.” Gafford v. General Elec. Co., 997 F.2d 150, 171-72 (6th Cir.
    1993), rev’d on other grounds by Hertz Corp. v. Friend, 130 S.Ct. 1181
    (2010). The decision regarding whether or not to bifurcate (or
    trifurcate) a trial is based on the specific facts of each case.
    Bendectin, 857 F.2d at 307. In making this decision, the “major
    consideration” is which course will most likely “result in a just final
    disposition of the litigation.” Id. at 307-8 (quoting In re Innotron
    Diagnostics, 800 F.2d 1077, 1084 (Fed. Cir. 1986)). Indeed, the other
    considerations of convenience, efficiency, and economy must yield to the
    consideration of fairness. Id. at 308.
    In the Final Trial Scheduling
    Order entered May 9, 2007, the Court set forth its decision to use two
    phases for the trial. [R. 1070 at 5.] In the first phase, the parties
    tried “all affirmative claims and related defenses, including
    infringement-related claims and issues, inducement to infringement
    claims and defenses . . . [and] patent misuse issues and defenses . . .
    .” [Id.] The second phase was to include damage-related issues,
    including willfulness. [Id.]
    The Court explained to the parties that
    its organization of the trial established “broad perimeters for the
    presentation of evidence” within which the parties were expected to
    structure their cases. [Id.] Specifically, the Court permitted the
    parties to do five-to ten-minute introductions and/or closings to each
    topic. [Id.] The Court further permitted the parties to structure those
    issues serving as both affirmative defenses and claims within whichever
    portion of the trial they determined to be most appropriate. [Id.]
    Despite these otherwise broad perimeters, the Court stated that Lexmark
    would lead phase one with its claims, followed by the other parties’
    defenses or their proof for their claims. [Id.]
    In setting forth its
    decision to bifurcate the trial, the Court noted that it had considered
    the various proposals and arguments of each party regarding other forms
    of organization. [Id. at 4-5.] Additionally, the Court noted its
    responsibility to make fairness to the parties its paramount concern in
    reaching its decision. Specifically, the Court stated that
    of issues “should be resorted to only in the exercise of informed
    discretion and in a case and at a juncture which move the court to
    conclude that such action will really further convenience or avoid
    prejudice” and . . . that a “paramount consideration at all times in the
    administration of justice is a fair and impartial trial to all
    [Id. at 4 (citing Frasier v. Twentieth Century-Fox Film Corp., 119 F.Supp. 495, 497 (D. Neb. 1954)).]
    its motion for a new trial, Lexmark does not raise any arguments
    regarding the organization of the trial that were not already raised and
    considered by the Court when it entered the Final Trial Scheduling
    Order. Significantly, the Court adopted neither of the parties’ proposed
    plans [see R. 718, 760], instead crafting its own organizational
    structure for the trial. The Court believed then, and the Court
    continues to believe now, that its decision to bifurcate the trial into
    liability and damages phases served the interests of convenience,
    efficiency, and economy, without prejudicing Lexmark or any other party.
    Specifically, two of Lexmark’s main concerns about the plan set forth
    by Wazana Brothers, NER, and Pendl were the potential for jury confusion
    and prejudice to Lexmark that could result from trying its opponents’
    defenses, such as misuse, before trying Lexmark’s affirmative patent
    infringement claims. [See R. 760 at 17-18, 21.] Under the Court’s
    bifurcated plan, however, Lexmark was permitted to lead the first phase
    of the trial with its claims, and the parties were permitted to provide
    short introductions and closings to each topic. In this way, the Court
    addressed Lexmark’s concerns, guarding against jury confusion and
    prejudice. Accordingly, Lexmark’s motion for a new trial due to the
    Court’s organization of the trial will be denied.
    Lexmark also
    argues that the Court committed reversible error by trying all of Static
    Control’s equitable defenses to the jury in an advisory capacity.
    Pursuant to Federal Rule of Civil Procedure 39(c)(1), “[i]n an action
    not triable of right by a jury, the court . . . may try any issue with
    an advisory jury.” A court’s decision to try an issue to an advisory
    jury under Rule 39(c) is “entirely discretionary.” Starr Intern. Co. v.
    American Intern. Group, Inc., 623 F.Supp.2d 497, 502 (S.D.N.Y. 2009).
    “The Court, of course, will ultimately make its own independent findings
    of fact and draw its own conclusions of law as to matters that fall
    within its purview, but will also benefit from the parties’ arguments to
    the jury on these issues.” Id. (internal citation omitted). See also
    Hyde Properties v. McCoy, 507 F.2d 301, 306 (6th Cir. 1974) (noting that
    it is within the discretion of the trial court to accept or reject the
    verdict of an advisory jury).
    Here again, Lexmark does not raise any
    new arguments as it relates to the Court’s decision to try Static
    Control’s equitable defenses to an advisory jury, instead referencing
    its past pleadings and arguments on this issue. [See R. 1458 at 6.]
    Previously, Lexmark argued that submitting the issues of patent misuse,
    laches, and estoppel to the jury could prejudice its case, as it could
    “invite the jury to make decisions relating to Lexmark’s inducement
    claim based on [improper] `equitable considerations.’” [R. 1353 at 7.
    See also R. 1375 at 11-12 (Tr. June 19, 2007.] The Court did not accept
    this argument. [R. 1375 at 12: 13-14.] “[J]uries are presumed to follow
    their instructions.” Zafiro v. United States, 506 U.S. 534, 540 (1993)
    (citation and internal quotation marks omitted). See United States v.
    Tines, 70 F.3d 891, 898 (6th Cir. 1995). The Court had and has no reason
    to doubt that the jury properly followed and based its decisions on the
    instructions, including the inducement instruction, which set forth the
    four elements Lexmark had to prove in order to establish Static
    Control’s liability. [See R. 1365, Instruction No. 2.2.] Accordingly,
    Lexmark’s motion for a new trial on the ground that the Court
    erroneously tried Static Control’s equitable defenses to an advisory
    jury will be denied.
    Next, Lexmark summarily argues that a new
    trial is warranted because Static Control was allowed to ambush Lexmark
    by asserting entirely new theories of patent misuse on the eve of trial,
    and to pursue those theories at trial. Lexmark notes that it raised
    these arguments in its Motion to Preclude Certain Patent Misuse
    Allegations from Being Presented to the Jury [R. 1137] made shortly
    before trial. Specifically, Lexmark asked the Court to preclude Static
    Control from including in its opening statement or its evidence
    presented to the jury several categories of misuse that (1) were not
    viable in light of various rulings by the Court and/or (2) were asserted
    without fair notice to Lexmark. [Id.] According to Lexmark, this Motion
    was denied to its “severe prejudice.” [R. 1458 at 7.]
    As the Court
    explained in its Order [R. 1165] denying Lexmark’s motion, however,
    Static Control’s pretrial memorandum setting forth its misuse theories
    was filed before the Court ruled on several summary judgment motions.
    Thus, to the extent any of Static Control’s misuse theories were no
    longer viable, the Court expected Static Control to follow its
    substantive holdings in the case, but would not “preemptively order”
    Static Control to comply with the Court’s orders. [Id. at 2.]
    Additionally, with respect to Lexmark’s claim that it had insufficient
    notice of two of Static Control’s theories of misuse, the Court held
    that allowing those theories to go forward would not prejudice Lexmark
    because “Lexmark possesse[d] all the tools it[] need[ed], without
    further discovery or preparation, to fully rebut [Static Control]‘s
    proof, if any, of bad faith.” [Id. at 4.]
    The Court incorporates its
    prior Order [R. 1165] as if fully set forth herein. In light of its
    reasoning, the motion for a new trial on the ground that Static Control
    asserted theories of patent misuse without fair notice to Lexmark will
    be denied.
    Finally, Lexmark argues that the Court erred prior
    to trial by excluding reference to the Ninth Circuit’s opinion in
    Arizona Cartridge Remanufacturers’ Ass’n v. Lexmark, 421 F.3d 981 (9th
    Cir. 2005) (hereinafter “ACRA”), and to a Federal Trade Commission
    (“FTC”) letter.
    In ACRA, an association of wholesalers that sell
    remanufactured printer cartridges sued Lexmark, “alleging that several
    of the company’s statements regarding the terms and benefits associated
    with purchasing a Prebate cartridge are false and violate California’s
    unfair competition laws.” Id. at 984. Specifically, the association
    alleged that Lexmark “deceptively suggests that the conditions placed on
    the outside of the Prebate package create an enforceable agreement with
    consumers to return used cartridges.” Id. The association further
    claimed that Lexmark “misleads consumers by falsely promising that they
    will save money when purchasing Prebate cartridges, when in fact Lexmark
    cannot control the price charged by retailers.” Id. Third and finally,
    the association contended that Lexmark’s use of a “lock-out” chip on its
    cartridges constitutes an unfair business practice.” Id.
    district court granted summary judgment in favor of Lexmark on all of
    the association’s claims. Id. at 983. On appeal, the Ninth Circuit
    affirmed the district court’s decision. Id. In doing so, the court noted
    that the case involved the “consideration of important questions of
    patent and contract law . . . .” Id. at 985. According to the court,
    however, “at its core the dispute . . . reduce[d] to state claims of
    unfair competition and misleading business practices related to
    Lexmark’s advertising.” Id.
    In the instant case, Wazana Brothers,
    before it settled with Lexmark, moved to exclude from trial the Ninth
    Circuit’s holding in ACRA. [See R. 1082 at 5.] Lexmark opposed the
    motion. [See id. at 6.] This Court held that the ACRA opinion was
    admissible on the issue of the Defendants’ advice of counsel defense,
    but was inadmissible for any other purpose. [Id.] The Court explained:
    Court thinks that to the extent that Lexmark plans to use the ACRA
    litigation and holding as evidence of notice of patent infringement,
    this evidence must be allowed. This evidence is relevant evidence of the
    parties’ knowledge during the time period in which the advice of
    counsel defense is asserted. See Fed. R. Evid. 401. On the other hand,
    to the extent that Lexmark seeks to introduce the ACRA litigation for
    any other propositions, it must be excluded on relevance and prejudice
    grounds. See Fed. R. Evid. 403. As evidenced in the many summary
    judgment opinions from this Court . . ., this action is factually
    distinct from the ACRA case. Furthermore, the two cases are largely
    legally distinct: while the advice of counsel defense in this action is
    predicated on federal patent law, the ACRA action was based mostly in
    California’s state laws. The prior[] ACRA litigation is not, therefore,
    relevant to this litigation, but even if it were relevant, its many
    factual and legal[] difference[s] would make it too prejudicial to be
    [R. 1082 at 6.] At trial, the Court would not allow Lexmark
    to ask a direct question referencing the ACRA decision, stating that
    such a question “causes us to get into having to inform the jury of the
    law as it relates to that particular case. I do think that’s subject to a
    great deal of potential prejudice in terms of the ability to do that.”
    [R. 1269 at 82 (Tr. June 5, 2007).] The Court, however, allowed Lexmark
    “a little leeway” to ask “a general question” regarding ACRA, and
    particularly regarding the efforts taken by Static Control to determine
    the state of the law relating to the Prebate Program, when a witness
    opened the door to such questioning. [Id. at 82-3.]
    Thus, the Court
    believed then, and it continues to believe now, that the ACRA holding,
    because it related to particular California state law claims, was not
    relevant to the case at bar. Moreover, to the extent that it was
    relevant, its probative value was substantially outweighed by the danger
    of unfair prejudice and confusion of the issues. See Fed. R. Evid. 403.
    Accordingly, the Court properly limited use of the ACRA decision at
    The FTC letter relates to a finding by the FTC that Lexmark’s
    Prebate Program did not appear to call for antitrust enforcement action.
    [See R. 1458, Attach. 3 (filed under seal).] Again, Wazana Brothers
    moved for exclusion of the letter. [See R. 1082 at 5-6.] The Court found
    that the letter must be excluded if offered for its truth. [Id. at 7.]
    Citing In re High Fructose Corn Syrup Antitrust Litigation, 295 F.3d 651
    (7th Cir. 2002), the Court explained that Lexmark could not use the
    FTC’s decision not to take action as a sword because inaction on the
    part of the government cannot be used to prove innocence, and therefore
    such inaction is irrelevant. [R. 1082 at 7.]
    The Court also found, however, that the FTC letter could be used for impeachment purposes. [Id.] The Court stated,
    Wazana uses an expert whose credentials are based, at least in part, on
    his former employ at the FTC, then Wazana will have opened the door to
    Lexmark’s evidence related to any FTC investigation of the Prebate
    program which occurred during the expert’s tenure at the FTC. Lexmark
    may, therefore, use the letter for the limited purposes of impeachment.
    Wazana’s argument that its expert might not have had knowledge of the
    report or that the report lacks fundamental analysis crucial to the
    expert’s opinion goes to the weight of the impeachment material.
    [Id. (internal citation omitted).]
    Court finds no reason to reverse its decision with respect to the FTC
    letter. Lexmark’s motion for a new trial on the ground that the Court
    erred by excluding the ACRA decision and the FTC letter must therefore
    be denied.
    Lexmark also argues that the trial itself was unfair for several reasons. Again, the Court disagrees.
    argues that the trial was unfair because it was precluded from offering
    relevant opinion-of-counsel evidence that is admissible under
    controlling Federal Circuit law. Specifically, Lexmark contends that the
    Court precluded Lexmark from asking Static Control if it sought the
    advice of counsel in direct contravention of Broadcom Corp. v. Qualcomm
    Inc., 543 F.3d 683 (Fed. Cir. 2008), a decision that post-dates the
    trial of this matter in 2007. A review of the record, however, reveals
    that the Court’s rulings were consistent with Broadcom.
    In Broadcom,
    the Federal Circuit rejected Qualcomm’s argument that the district court
    erred by instructing the jury that it could “consider failure to obtain
    an opinion of counsel as a factor in determining whether Qualcomm had
    the requisite level of intent to induce infringement of Broadcom’s
    patents.” Id. at 699. The court explained that affirmative intent to
    induce infringement may be shown by establishing: (1) that the defendant
    intended to cause the acts that constitute direct infringement; and (2)
    that the defendant knew or should have known that its action[s] would
    cause direct infringement. Id. (citing DSU Medical Corp. V. JMS Co., 471
    F.3d 1293, 1305 (Fed. Cir. 2006)). Accordingly, the court held that
    opinion-of-counsel evidence is relevant to the second prong of this
    analysis, as it may reflect what the alleged infringer “knew or should
    have known.” Id. In particular, the court found that “the failure to
    procure such an opinion may be probative of intent in this context.” Id.
    The court reasoned that “[i]t would be manifestly unfair to allow
    opinion-of-counsel evidence to serve an exculpatory function . . . and
    yet not permit patentees to identify failures to procure such advice as
    circumstantial evidence of intent to infringe.” Id. The Broadcom court
    emphasized, however, that it remains improper to allow an adverse
    inference or evidentiary presumption that an opinion of counsel, if it
    had been procured, would have been unfavorable. Id. (citing Knorr-Bremse
    Systeme Fuer Nutzfahrzeuge, GmbH v. Dana Corp., 383 F.2d 1337, 1346
    (Fed. Cir. 2004) (en banc)). Thus, in brief, Broadcom stands for the
    proposition that whether or not a party who is alleged to have induced
    patent infringement sought the advice of an attorney is relevant to the
    determination of whether that party intended to induce infringement; if
    the party did not seek an opinion of counsel, however, it is error to
    allow the jury to infer that such an opinion would have been
    Here, Static Control and Wazana Brothers moved to
    exclude from trial any argument that a negative inference should be
    drawn from any party’s failure to obtain an exculpatory opinion of
    counsel. [See R. 1082 at 12.] The Court noted that, in the context of
    willful infringement, it is generally the job of the jury to draw
    negative inferences when necessary. [Id.] Consistent with Broadcom,
    however, the Court stated that the jury’s ability to make a negative
    inference in the context of a party’s failure to obtain an opinion of
    counsel is limited, in that the jury cannot infer that such an opinion
    would have been unfavorable. [Id. (citing Knorr-Bremse, 383 F.3d at
    1344-46).] Thus, the Court granted Static Control and Wazana Brothers’
    motion “to the extent articulated by Knorr-Bremse.” [Id.] The Court
    otherwise denied the motion. [Id.]
    During trial, the Court permitted
    Lexmark to question Static Control founder and CEO Ed Swartz about any
    opinions of counsel Static Control sought or received regarding the
    Prebate Program. For example, counsel for Lexmark and Mr. Swartz had the
    following exchange:
    Q. Did you seek out-and a yes-or-no answer-did
    you seek out any legal advice relating to prebate cartridges when it was
    introduced into the marketplace?
    A. We-we sought advice about prebate cartridges that had been either put into the landfill or were on the way to the landfill.
    Q. Was that all that you sought advice on?
    A. Yes, sir.
    Q. Cartridges in the landfill?
    A. Or on the way to the landfill.
    1269 at 94-95 (Tr. June 5, 2007).] Mr. Swartz went on to explain that
    Static Control sought advice from an attorney who was an expert on
    abandoned property, but his opinion did not deal with the application of
    patent law to the Prebate Program. [See id. at 105, 107.] Later, Static
    Control objected when Lexmark asked Mr. Swartz whether his company
    sought any legal advice specifically dealing with patent law or
    antitrust law. [See id. at 108.] The Court sustained the objection on
    the ground that Lexmark had already asked the more general question, not
    on the ground that Lexmark was prohibited from asking whether Static
    Control procured an opinion of counsel. [Id. at 109.]
    Thus, the Court
    did not prohibit Lexmark from introducing admissible opinion-of-counsel
    evidence.8 Lexmark’s motion for a new trial on this basis must be
    Lexmark next contends that Static Control was allowed
    to ambush Lexmark by presenting to the jury entirely new and previously
    undisclosed expert opinions that, despite taking 240 hours over six
    weeks by Static Control’s experts to prepare, Lexmark was forced to
    respond to in just four days. Lexmark refers to the testimony of Static
    Control’s expert economist Dr. Gregory Vistnes. A review of the record
    reveals that the Court took appropriate steps to assure that Lexmark was
    not prejudiced by Dr. Vistnes’s testimony.
    This Court held Dr.
    Vistnes’s testimony admissible in a written Order entered May 12, 2007.
    [See R. 1083.] During the trial in June, Lexmark stated that it had
    received some demonstratives from Static Control suggesting that Dr.
    Vistnes was rendering new opinions and performing analytical work that
    was not contained in his initial report. [R. 1313 at 18-19 (Tr. June 13,
    2007.] According to Lexmark, Dr. Vistnes’s opinions about the
    anticompetitive affect of Lexmark’s alleged patent misuse originally
    related to the Prebate Program;9 after the Court held Prebate valid and
    enforceable, however, he was forced to perform a different
    anticompetitive analysis. [Id. at 27.] Lexmark thus asked the Court to
    exclude Dr. Vistnes’s testimony.
    After hearing the parties arguments
    and taking a brief recess to review Dr. Vistnes’s report and his
    demonstratives, among other documents, the Court ruled as follows:
    the motion made by Lexmark this morning focuses our attention on a
    long-running discussion, actually, in this case as it relates to what
    constitutes misuse. There’s been some pas de deux, this dance that’s
    gone on for weeks where Lexmark has stood and said, “We don’t know what
    the allegations of misuse are here,” kind of fairly said that at the
    time. “We’re not sure exactly what the factual predicates for misuse are
    going to be.”
    [Static Control] [h]as said, “Well, we have started to
    identify these. They have developed, in part, in response to the
    Court’s opinions.”
    Assumptions that were made initially as to the
    factual predicates for misuse are no longer on the table because of my
    rulings, as I have ruled on the dispositive motions in this particular
    I think there’s been a bit of posturing, really on both sides.
    It’s hard for me to conceive that Lexmark comes to the table today
    shocked-shocked-that an expert by [Static Control] would be testifying
    as it relates to these factual predicates and making the anticompetitive
    analysis and providing the anticompetitive analysis that they are going
    to provide.
    On the other hand, I think this has been a developing
    theory as it relates to precisely what is misuse, what are the factual
    predicates as it relates to misuse on [Static Control]‘s side of the
    Now, my sense is that experts from time to time will
    provide analysis in the course of trial that relates to the development
    of the testimony at trial. It’s not unusual. Lexmark argued as it
    relates to their damages expert, Paul Myers, that the analysis might
    change based on testimony at trial. I don’t think that that’s
    necessarily an inappropriate position to have taken.
    But I have
    looked at Dr. Vistnes’[s] report, I have considered the arguments, I
    have reviewed the cases that both sides have identified; and I do think,
    based on the predicates to Dr. Vistnes’[s] testimony, that it would be
    prejudicial to Lexmark to call Dr. Vistnes as a witness today and to ask
    them to cross-examine him today.
    [Id. at 53-4.] Although the Court
    felt that it would be prejudicial to Lexmark to allow Static Control to
    call Dr. Vistnes to the stand that day, the Court did not exclude Dr.
    Vistnes’s testimony. Rather, the Court permitted Lexmark to depose Dr.
    Vistnes during the previously scheduled four-day recess, holding that he
    could be called when trial resumed. [Id. at 55.]
    Following the
    desposition, Lexmark re-raised its objection to Dr. Vistnes’s testimony.
    [See R. 1344.] After hearing arguments from both parties, the Court
    noted that Dr. Vistnes was a very important witness for Static Control,
    and thus excluding his testimony would be a sanction that would only be
    used in the rarest of circumstances. [R. 1520 at 23 (Tr. June 18,
    2007).] The Court further stated that Dr. Vistnes’s developing opinion
    was not of the sort that would prevent Lexmark from being able to
    respond through its own rebuttal case. [Id. at 24.] The Court therefore
    again decided not to exclude Dr. Vistnes’s testimony, explaining, “I
    think that the importance of this particular testimony outweighs any
    potential prejudice to Lexmark in proceeding, particularly given the
    continuance that we had, the opportunity that Lexmark has had to depose
    this particular witness.” [Id. at 26.] The Court did, however, impose
    sanctions against Static Control, recessing the trial for the day after
    Dr. Vistnes’s direct testimony so Lexmark would have a break before
    beginning its cross-examination and allowing Lexmark’s rebuttal expert
    to review Dr. Vistnes’s direct testimony in preparation for Lexmark’s
    rebuttal case. [See id. at 26-27.]
    The district court is granted
    broad discretion to decide whether exclusion is the proper remedy for
    the failure to properly disclose evidence. See Murphy v. Magnolia
    Electric Power Association, 639 F.2d 232, 234 (5th Cir. 1981); David v.
    Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir. 2003). Among the factors
    courts consider in determining whether exclusion is warranted are: “(1)
    the prejudice or surprise to the party against whom the evidence is
    offered; (2) the ability of the party to cure the prejudice; (3) the
    likelihood of disruption to the trial; and (4) the bad faith or
    willfulness involved in not disclosing the evidence at an earlier date.”
    David, 324 F.3d at 857. See also Murphy, 639 F.3d at 235 (listing other
    factors such as the need for time to prepare to meet the testimony and
    the possibility of a continuance).
    Here, the Court continues to
    believe that the harsh remedy of exclusion was not warranted for Static
    Control’s failure to supplement Dr. Vistnes’s report. Any prejudice or
    surprise was cured by the sanctions imposed by the Court. In particular,
    Lexmark was given time to depose Dr. Vistnes and otherwise prepare to
    cross-examine him. In In re BendectinLitigation, the Sixth Circuit
    stated that “[t]he care and legal skill demonstrated in their advocacy
    leads us to conclude that they perceived no prejudice in fact from the
    amount of time available to them to reform their strategy.” 857 F.3d at
    315. The Court expresses the same sentiment about Lexmark in this case.
    addition to challenging his testimony generally, Lexmark makes specific
    objections to certain statement made by Dr. Vistnes. First, Lexmark
    objects to Dr. Vistnes’s use of the term “locked-in” consumer. [See R.
    1520 at 103] Lexmark objected to Dr. Vistnes’s use of this term during
    his testimony at trial. [Id. at 103-104.] Specifically, at the bench and
    outside the presence of the jury, counsel for Lexmark objected on the
    ground that “locked-in” is a legal term with legal significance in
    analyzing aftermarkets, not an economic term. [Id.] As a remedy, the
    Court directed counsel for Static Control to ask Dr. Vistnes what he
    meant by the term, so it would be clear to the jury. [Id. at 104.]
    Counsel then asked, “Dr. Vistnes, you just used the term `locked-in,’
    `locked-in customers.’ Could you explain in a little more detail what
    that term means to you, as an economist?” [Id.] Dr. Vistnes explained
    that to him, a customer is “locked-in” if there is a large cost to
    switch brands or products. [Id.] Dr. Vistnes provided the example of a
    Lexmark printer owner who wants to purchase a Hewlett-Packard (“HP”)
    cartridge, but can only buy the cartridge if he purchases an HP printer
    it will be compatible with. [Id.] Thus, because he explained his use of
    the term to the jury, Lexmark was not prejudiced by Dr. Vistnes’s
    references to “locked-in” consumers or customers.
    Lexmark also
    objects to Dr. Vistnes’s use of the term “killer chip” to refer to the
    single-use chip in Lexmark’s Prebate cartridges. [See id. at 90.] The
    Court cautioned Static Control’s counsel against use of the term,
    noting, however, that it could not necessarily prevent the witness from
    responding with the phrase. [Id. at 93.] The Court also instructed
    Static Control’s counsel to ask Dr. Vistnes a question that would
    clarify for the jury that his reference to a “killer chip” was a
    reference to the single-use chip in Lexmark’s Prebate cartridges. [Id.
    at 94.] Counsel complied. [Id.] Accordingly, the Court does not find
    that Dr. Vistnes’s use of the term “killer chip” made the trial unfair
    to Lexmark.
    Lexmark next objects to Dr. Vistnes’s testimony regarding
    printer purchasing decisions, arguing that such testimony was beyond
    his expertise. Dr. Vistnes testified that, within a company, the people
    who decide what printer to purchase are often different from the people
    who decide what type of cartridge to purchase for the printer. [Id. at
    112-13.] He further testified about the implications of having different
    people making those purchasing decisions. [Id. at 113.] Dr. Vistnes’s
    statements on this subject were very brief, taking up less than two
    double-spaced pages in the transcript. After Dr. Vistnes finished giving
    this testimony, Lexmark objected on the ground that he was “talking
    about a subject far from his expertise.” [Id. at 114.] In response,
    counsel for Static Control stated that it in his “experience . . . as an
    economist and a lawyer, that kind of analysis about who actually made
    the purchasing decisions is given a great deal of weight.” [Id.] Counsel
    further stated that he was finished questioning Dr. Vistnes on the
    subject and would move along, and he then did so. [Id.] The Court finds
    no prejudice to Lexmark based on Dr. Vistnes’s testimony regarding
    printer and cartridge purchasing decisions, especially since Dr. Vistnes
    stated that this testimony was based in part on information he reviewed
    in Lexmark’s documents. [See id. at 112.]
    Lexmark’s final objection
    to Dr. Vistnes’s testimony relates to his statement that the
    unreasonable restraint on competition caused by any Lexmark patent
    misuse is significant in the market for Lexmark-compatible replacement
    toner cartridges. [See id. at 123.] At trial, Lexmark objected to this
    statement on the ground that it was not within the careful assumptions
    laid by Dr. Vistnes’s testimony. [Id.] The Court, however, found, and
    continues to find, that Dr. Vistnes’s testimony stayed within his
    assumptions. [See id. at 124.] Specifically, because he testified that
    the unreasonable restraint on competition caused by “any” patent misuse
    is significant, it was clear that he was assuming patent misuse on the
    part of Lexmark, and not forming an opinion as to misuse himself.
    both Lexmark’s general objection to the admissibility of Dr. Vistnes’s
    testimony and its specific objections to particular statements made by
    Dr. Vistnes must be overruled. A new trial is not warranted on these
    Lexmark’s third argument with respect to the trial is
    that Static Control was allowed to offer prejudicial evidence in support
    of its defense of estoppel, and Lexmark was not allowed to sufficiently
    rebut that evidence. On direct examination, Bill Swartz testified that
    he had a telephone conversation with former Lexmark employee Tom Lamb in
    March of 1999 in which Lamb stated, “We’ll let bygones be bygones . . .
    .”10 [R. 1269 at 201 (Tr. June 4, 2007).] On cross-examination, Lexmark
    effectively attacked Swartz’s credibility with respect to the alleged
    “bygones” statement. Lexmark elicited from Swartz, for example, that at
    the time the “bygones be bygones” statement was purportedly made, Static
    Control had a lawsuit pending against Lexmark in North Carolina, though
    it never served the complaint, that was ultimately dismissed in June of
    1999. [R. 1277 at 101 (Tr. June 5, 2007).] Lexmark further elicited
    that during the “time frame of letting bygones be bygones,” Static
    Control filed a declaratory judgment action against Dallas Semiconductor
    in North Carolina, and then added Lexmark as a defendant to the suit.
    [Id. at 102-104.]
    The Court, however, would not allow Lexmark to use a
    transcript of the conversation between Mr. Swartz and Mr. Lamb. The
    parties explained that Mr. Swartz taped the conversation and all other
    phone conversations at the time because he was in the middle of a
    custody battle with his ex-wife. [Id. at 8.] He then transcribed the
    conversation. [Id. at 10.] According to Lexmark, the transcript did not
    contain the “bygones” statement. [Id. at 9.] After reviewing the
    transcript, the Court excluded it on the following grounds: (1) that
    Lexmark designated the exhibit too late, particularly since Lexmark
    should have anticipated wanting to use it; and (2) that the potential
    prejudice from having to explain the context of the conversation, i.e.
    the custody battle that led to Mr. Swartz taping his phone calls,
    outweighed its probative value. [Id. at 14, 92.] The Court held that the
    transcript could not be used for any purpose, including impeachment.
    [See id. at 92.] The Court stands by its decision. Accordingly,
    Lexmark’s motion for a new trial on the ground that Static Control was
    allowed to offer prejudicial evidence regarding its estoppel defense
    that Lexmark was not allowed to sufficiently rebut must be denied.11
    Lexmark argues that Static Control was allowed to present a “good
    faith” defense to Lexmark’s inducement claim that is not recognized by
    law, irrelevant, and highly prejudicial. The record does not support
    this contention.
    Lexmark’s argument centers around Static Control’s
    references to North Carolina Statute § 75-36. This statute made “[a]ny
    provision in any agreement or contract that prohibits the reusing,
    remanufacturing, or refilling of a toner or inkjet cartridge . . . void
    and unenforceable as a matter of public policy.” N.C. Gen. Stat. Ann. §
    75-36 (West 2003). Static Control argued that the statute invalidated
    Lexmark’s Prebate Program in the state of North Carolina after the law
    took effect in October of 2003. [See R. 929.] Accordingly, Static
    Control claimed that it could inform its customers that they could
    lawfully remanufacture Prebate cartridges first sold in North Carolina
    after October 1, 2003, without inducing infringement of Lexmark’s
    patents. [See id.] Before trial, however, the Court ruled that § 75-36
    did not invalidate Lexmark’s single-use restriction on Prebate
    cartridges. [See R. 1081 at 10-12; R. 1365 at 15 (Jury Instruction
    Nevertheless, the Court permitted Static Control to reference
    § 75-36 as part of its argument to the jury that it had a good faith
    belief that it could sell its microchips for use in remanufacturing
    Prebate cartridges first sold in North Carolina after October 1, 2003,
    without inducing infringement of any of Lexmark’s patents. [See R. 1365
    at 19 (Jury Instruction 2.2).] The Court did so, however, not because it
    recognized a good faith defense to inducement, but because evidence of
    the statute was relevant to the jury’s determination of whether Static
    Control possessed the requisite specific intent to induce infringement.
    DSU Medical Corp. v. JMS Co., Ltd., the Federal Circuit stated that a
    party accused of inducing infringement “must be shown . . . to have
    knowingly induced infringement, not merely knowingly induced the acts
    that constitute direct infringement.” 471 F.3d 1293, 1306 (Fed. Cir.
    2006) (internal citation and quotation marks omitted) (emphasis in
    original). The court explained further:
    It must be established that
    the defendant possessed specific intent to encourage another’s
    infringement and not merely that the defendant had knowledge of the acts
    alleged to constitute inducement. The plaintiff has the burden of
    showing that the alleged infringer’s actions induced infringing acts and
    that he knew or should have known his actions would induce actual
    Id. (quoting Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544, 553 (Fed. Cir. 1990) (emphasis in original)).
    evidence of North Carolina’s statute was relevant to the question of
    whether Static Control knew or should have known that its actions would
    induce actual infringements of Lexmark’s patents, and whether it knew or
    should have known that, despite its warnings, remanufacturers used
    Static Control microchips on Prebate cartridges not originally sold in
    North Carolina after October 1, 2003. [See R. 1365 at 19 (Jury
    Instruction 2.2).] Accordingly, Lexmark’s motion for a new trial on the
    grounds that admission of the statute was irrelevant and prejudicial
    must be denied.
    Lexmark next claims that Static Control was
    allowed to present, and Lexmark was prevented from rebutting, evidence
    concerning its “mislabeling” theory of misuse which was irrelevant and
    highly prejudicial. To the extent Lexmark’s complaint about the
    mislabeling theory of patent misuse serves as a reiteration of its
    broader complaints about trying Static Control’s equitable defenses in
    the same phase of the trial as Lexmark’s underlying infringement claims
    and trying Static Control’s equitable defenses to the jury in an
    advisory capacity, those issues have already been discussed and ruled on
    by the Court. Further, Lexmark’s specific objections to the mislabeling
    evidence must be denied.
    Prior to trial, Lexmark filed a Motion to
    Preclude Certain Patent Misuse Allegations From Being Presented to the
    Jury [R. 1137], including Static Control’s mislabeling theory of misuse.
    Under this theory, Static Control alleged and attempted to prove that
    Lexmark exceeded the scope of its patent rights by stamping Prebate
    terms on non-Prebate cartridges. [See id. at 6-7.] The Court denied
    Lexmark’s motion, finding that Lexmark had not shown and could not show
    any prejudice from permitting Static Control to move forward with its
    mislabeling theory of patent misuse. [R. 1165 at 3-4.] The Court has not
    changed its mind.
    Lexmark argues that Static Control’s theory was
    not supported by any legitimate evidence because, for example, Lexmark
    demonstrated that the non-Prebate cartridge labels are clear and not
    misleading, and testimony from Static Control’s customers demonstrated
    that they under stood the non-Prebate labels. But this is really an
    argument that Static Control should not prevail on its claim of patent
    misuse, not an argument that the evidence presented on the mislabeling
    theory was irrelevant or prejudicial.12
    Lexmark also complains that
    it was precluded from showing the jury color versions of the Prebate and
    non-Prebate cartridge labels after Static Control attempted to
    demonstrate their confusing nature based on black-and-white exhibits.
    The Court did direct Lexmark to use the black-and-white photographs of
    the labels already in evidence, but it did so only after Lexmark
    displayed the actual cartridges themselves, in color, to the jury, and
    it noted that Lexmark made its “point well about the color” during its
    examination of Lexmark witness Janet M. Smith. [See R. 1197 at 231-36
    (Tr. May 23, 2007).]
    Lexmark contends that Smith was improperly
    prohibited from testifying regarding whether she believed that Static
    Control and others were confused by the Prebate and non-Prebate labels.
    The record reveals that Smith was allowed to respond when counsel for
    Lexmark asked her whether she had ever had a customer complain to her
    that the non-Prebate cartridge labels were confusing. [Id. at 247.] She
    was then properly prevented from responding when asked whether she
    believed Static Control knew the difference between a Prebate and a
    regular cartridge [ 247-48], as she would have no personal
    knowledge about what Static Control knew or did not know.
    In sum,
    evidence of Static Control’s mislabeling theory of patent misuse was
    neither irrelevant nor unfairly prejudicial to Lexmark, and Lexmark was
    permitted to effectively counter Static Control’s allegations on this
    issue. Therefore, a new trial is not warranted.
    Lexmark next
    contends that allowing evidence and argument as to Static Control’s
    other misuse theories was also highly prejudicial. Lexmark points
    specifically to testimony Static Control elicited from Lexmark witness
    Tony Zupancic that Lexmark burned and destroyed empty cartridges. The
    Court disagrees that allowing this evidence was error.
    During the
    trial, the Court entered a written Order [R. 1260] regarding Lexmark’s
    motion to limit the scope of Static Control’s affirmative defenses. As
    part of that motion, Lexmark sought to exclude evidence that Lexmark
    destroys toner cartridges returned to Lexmark that could have been
    remanufactured by third parties. [See id. at 3.] Lexmark argued that
    such evidence was irrelevant to Static Control’s misuse defense. [See
    The Court, however, denied Lexmark’s motion. The Court had
    previously held that Static Control had to establish that Lexmark’s
    misuse conduct unreasonably restrained competition in the relevant
    market in order to prevail on its misuse defense. Thus, evidence that
    Lexmark incinerated returned cartridges addressed Lexmark’s non-Prebate
    market-related power, and was therefore potentially relevant to proving
    misuse by Lexmark. [Id. at 3-4.] In particular, the Court found that
    Lexmark’s efforts to limit the availability of non-Prebate cartridges
    could be found to have eliminated the choice of remanufactured
    cartridges which customers would have reasonably expected to be able to
    purchase at the time they first purchased their printers. [Id. at 4
    (citing PSI Repair Services, Inc. v. Honeywell, Inc., 104 F.3d 811, 814
    (6th Cir. 1997).] In other words, these efforts could be found to have
    unreasonably restrained competition in the relevant market.
    Zupancic was called to testify, Lexmark renewed its objection to his
    testimony about Lexmark’s disposal of empty cartridges. [R. 1294 at
    165-66 (Tr. June 11, 2007).] The Court, after hearing argument from the
    parties at the bench, noted that Lexmark’s objection was well-preserved,
    but allowed the testimony to go forward. [Id. at 166-68.] Later, the
    Court reiterated that because Zupancic’s testimony related to what
    Lexmark does to affect the pool of cartridges available, it would be
    allowed. [Id. at 180.] Accordingly, for the reasons stated in the
    Court’s prior Order [R. 1260] and on the record at trial, no new trial
    is warranted based on the admission of testimony from Zupancic that
    Lexmark burns empty cartridges.
    Finally, Lexmark claims that it
    was prejudiced at trial by the inclusion of multiple irrelevant and
    highly prejudicial arguments in Static Control’s closing. Specifically,
    Lexmark points to the following statements made by Static Control:
    • Referring to Lexmark as a “monopolist.”13
    • Referring to Lexmark as having burned hundreds of thousands of cartridges.
    • Referring to the alleged “bygones-be-bygones” statement.
    • Referring to Lexmark’s “killer chip.”
    • Comparing the size of Lexmark and Static Control.
    • Arguing that Static Control can “barely afford to fight this battle.”
    • Arguing that Lexmark pays money to prevent empty cartridges from being remanufacturable.

    Stating that, if Lexmark prevailed, “a lot of people will lose their
    jobs,” that “some of the people you saw testify lose their companies,”
    and “even Static Control could go out of business.”
    • Arguing any
    issues concerning Static Control’s equitable defenses that should never
    have been presented to the jury in the first place.
    [R. 1458 at 27-28.]
    the extent that Lexmark asks for a new trial based on Static Control’s
    argument related to its equitable defenses, or based on Static Control’s
    references to the alleged “bygones-be-bygones” statement and to
    Lexmark’s practice of burning empty cartridges, the Court has addressed
    those issues previously in this Opinion and will not address them again
    here. With respect to the other comments, however, the Sixth Circuit has
    stated that “where there is a reasonable probability that the verdict
    of a jury has been influenced by” prejudicial remarks made by counsel,
    “it should be set aside.” City of Cleveland v. Peter Kiewit Sons’ Co.,
    624 F.2d 749, 756 (6th Cir. 1980). Further, in determining whether there
    is a reasonable probability that the verdict has been influenced by
    improper conduct, “a court must examine, on a case-by-case basis, the
    totality of the circumstances, including the nature of the comments,
    their frequency, their possible relevancy to the real issues before the
    jury, the manner in which the parties and the court treated the
    comments, the strength of the case (e.g., whether it is a close case),
    and the verdict itself.” Id.
    The Court notes that Lexmark did not
    object to any of the statements it now claims were prejudicial. [See R.
    1379 at B-15, B-18, B-21, B-22, B-37-8, B-39, B-40, B-66, B-67.] While
    the failure to contemporaneously object to statements made by opposing
    counsel during closing arguments does not waive the right to raise an
    appeal on the issue, it does “raise the degree of prejudice which must
    be demonstrated in order to get a new trial on appeal.” Strickland
    v.Owens Corning, 142 F.3d 353, 358 (6th Cir. 1998). In Igo v. Coachmen
    Industries, Inc., 938 F.2d 650, 654 (6th Cir. 1991), a case cited by
    Lexmark, for example, the Sixth Circuit found that inappropriate
    statements by the plaintiffs’ counsel warranted a new trial even though
    counsel for the defendant failed to object. In that case, however, the
    court described the conduct of the plaintiffs’ counsel as “outrageous.”
    Id. In particular, the court noted that counsel for the plaintiffs
    stated that the defendant was only sorry that the plaintiffs had
    survived the motor vehicle accident giving rise to the lawsuit, and he
    further stated that the defendant had hoped the plaintiffs would not
    survive long enough to go to trial. Id. at 653. No such egregious
    conduct occurred here.
    Instead, this case is much more like
    Strickland. There, the defendant claimed that the plaintiff’s “closing
    argument constituted an improper appeal to class prejudice and pandering
    to the perception that corporations wield disparate power.” Strickland,
    142 F.2d at 359 (internal quotation marks omitted). The Sixth Circuit
    explained that “[i]t is true that an `us-against-them plea can have no
    appeal other than to prejudice by pitting “the community” against a
    nonresident corporation [and] is an improper distraction from the jury’s
    sworn duty to reach a fair, honest and just verdict.’” Id. (quoting
    Westbrook v. General Tire & Rubber Co., 754 F.2d 1233, 1238 (5th
    Cir. 1985)). The Sixth Circuit found, however, that “[a]lthough there
    was an `us-against-the-powerful-corporation’ flavor to” the plaintiff’s
    closing remarks, “those remarks were not so prejudicial as to mandate a
    new trial, especially where no objection was raised . . . .” Id.
    Similarly, here, assuming Static Control’s statements about Lexmark’s
    relative size and economic wealth were improper, under the totality of
    the circumstances they were not so prejudicial as to warrant a new
    trial. Nor were such remarks pervasive throughout the trial. SeeCity of
    Cleveland, 624 F.2d at 757-58 (granting a new trial where the
    plaintiff’s counsel made improper comments about the financial disparity
    between the parties that “permeated the entire trial” and were repeated
    even after the judge sustained the objections of the defendant and
    admonished the jury). Additionally, as pointed out by Static Control
    [see R. 1489 at 42], these statements were relevant to the jury’s
    determination of whether Static Control had the intent to induce
    infringement by its customers, as the jury could draw the inference that
    Static Control had no desire to expose itself to an expensive lawsuit.
    Accordingly, Lexmark’s motion for a new trial on the ground that Static
    Control made improper remarks during closing arguments must be denied.
    Lexmark argues that it is entitled to a new trial because the patent
    jury instruction on inducement of infringement was legally erroneous and
    prejudicial. This argument is without merit.
    “`The question of
    whether a jury instruction on an issue of patent law is erroneous is a
    matter of Federal Circuit law . . . .’” Eolas Technologies, Inc. v.
    Microsoft Corp., 399 F.3d 1325, 1332 (Fed. Cir. 2005) (quoting Sulzer
    Textil A.G. v. Picanol N.V., 358 F.3d 1356, 1363 (Fed. Cir. 2004)).
    Other issues with regard to jury instructions, however, remain subject
    to the law of the circuit in which the lawsuit was tried. See Serio-U.S.
    Idustries, Inc. v. Plastic Recovery Technologies Corp., 459 F.3d 1311,
    1317 (Fed. Cir. 2006). In the Sixth Circuit, “[a] judgment on a jury
    verdict may be vacated when the instructions, viewed as a whole, were
    confusing, misleading, and prejudicial.” Jones v. Consolidated Rail
    Corp., 800 F.2d 590, 592 (6th Cir. 1986) (citation omitted).
    claims that the inducement instruction was erroneous and prejudicial for
    at least four reasons. First, Lexmark contends that the instruction,
    after properly explaining the four elements Lexmark had to prove by a
    preponderance of the evidence to establish inducement, went on to
    improperly describe two lawful and non-infringing uses of Static
    Control’s microchips that do not directly infringe any Lexmark patent.
    According to Lexmark, while such non-infringing uses are theoretically
    relevant to Static Control’s exhaustion defense, they are legally
    irrelevant to Lexmark’s burden of proof with respect to its inducement
    But the non-infringing uses of Static Control’s microchips
    were relevant to two of the elements Lexmark had to prove as part of its
    inducement claim. The inducement instruction informed the jury that in
    order to hold Static Control liable for inducement of infringement of a
    Lexmark patent, Lexmark had to prove:
    First, Static Control encouraged or instructed a remanufacturer how to remanufacture Lexmark toner cartridges;
    a remanufacturer following the encouragement or instruction would
    necessarily infringe, or that one or more remanufacturers directly
    infringed, one or more of Lexmark’s patents;
    Third, Static Control intended to cause the acts that constitute direct infringement; and
    Static Control knew or should have known that its actions would induce
    actual infringement of one or more of Lexmark’s patents.
    [R. 1365 at
    17 (Jury Instruction 2.2).] The instruction then explained the two
    non-infringing uses of Static Control’s microchips: (1) for the
    remanufacture of non-Prebate cartridges first sold by Lexmark in the
    United States; and (2) for the remanufacture of any cart