PUBLIC VERSION

Case 6:21-cv-00222-ADA Document 353 Filed 06/25/21 Page 1 of 25

United States District Court

Western District of Texas
Waco Division

Performance Chemical Company

Plaintiff,

V. Case No. 6:21-cv-00222-ADA

True Chemical Solutions, LLC,

Defendant.

Defendant True Chemical Solutions, LLC’s Response in Opposition to

Performance Chemical Company’s Motion for Entry of a Damages Award
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Table of Contents

I. Introduction .....................................................................................................................1

II. Legal Standards ...............................................................................................................2

A. Default Judgment .....................................................................................................2

B. Summary Judgment .................................................................................................3

III. Argument .........................................................................................................................4

A. Default Judgment for Damages is Improper ............................................................5

B. Genuine Issues of Material Fact Preclude Summary Judgment Regarding Both

Entitlement to Lost Profits Damages and the Amount of Damages ........................7

1. PCC is Not Entitled to Summary Judgment on Damages............................7

2. Genuine Issues of Material Fact Exist Regarding PCC’s Lost Profits Claim
Under the Panduit Factors ............................................................................8

C. PCC Has Failed to Meet Its Burden on Marking ...................................................15

D. PCC’s Request for Enhanced Damages and Prejudgment Interest is Premature...17

E. Exceptional Case Finding and Attorneys’ Fee Award are Not Warranted ............18

IV. Conclusion .....................................................................................................................18

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Table of Authorities

Cases

Artic Cat Inc. v. Bombardier Recreational products Inc.,

876 F.3d 1350 (Fed. Cir. 2017)........................................................................................... 15, 16

BIC Leisure Prods., Inc. v. Windsurfing Int’l, Inc.,

1 F.3d 1214 (Fed. Cir. 1993)....................................................................................................... 9

Brooktree Corp. v. Advanced Micro Devices, Inc.,

977 F.2d 1555 (Fed. Cir. 1992)......................................................................................... 4, 8, 12

Celotex Corp. v. Catrett,

477 U.S. 317 (1986) ................................................................................................................ 3, 4

Chiuminatta Concrete Concepts, Inc. v. Cardinal Indus.,

1 Fed. Appx. 879 (Fed. Cir. 2001) .............................................................................................. 4

Comcast IP Holdings I LLC v. Sprint Communs. Co., L.P.,

850 F.3d 1302 (Fed. Cir. 2017)................................................................................................. 17

Crystal Semiconductor Corp. v. TriTech Microelecs. Int’l, Inc.,

246 F.3d 1336 (Fed. Cir. 2001)................................................................................................... 9

Enzo Biochem v. Gen-Probe, Inc.,

424 F.3d 1276 (Fed. Cir. 2005)................................................................................................... 8

Ericsson, Inc. v. Harris Corp.,

352 F.3d 1369 (Fed. Cir. 2003)................................................................................................... 9

FINALROD IP, LLC v. John Crane, Inc.,

No. 7:15-CV-00097-ADA 2019 U.S. Dist. LEXIS 149649 (W.D. Tex. May 30, 2019) ........... 4

Fontenot v. Upjohn Co.,

780 F.2d 1190 (5th Cir. 1986) .................................................................................................. 16

Garvin v. Arcturus Venture Partners Inc.,

No. 3:15-CV-2157-L, 2017 U.S. Dist. LEXIS 160611 (N.D. Tex. Sept. 28, 2017)................... 5

GM Corp. v. Devex Corp.,

461 U.S. 648 (1983) ................................................................................................................ 5, 8

Grain Processing Corp. v. Am. Maize-Prods. Co.,

185 F.3d 1341 (Fed. Cir. 1999)................................................................................................... 9

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Griffin v. United Parcel Serv., Inc.,

661 F.3d 216 (5th Cir. 2011) ...................................................................................................... 4

Intel Corp. v. U.S. Int’l Trade Comm’n,

946 F.2d 821 (Fed. Cir. 1991)................................................................................................... 14

J&J Sports Prods. v. Alvarez,

Case No. EP-16-CV-00294-DCG, 2017 U.S. Dist. LEXIS 229433 (W.D. Tex. July 24, 2017) 2

James v. Frame,
6 F.3d 307 (5th Cir. 1993) .......................................................................................................... 3

Mars, Inc. v. Coin Acceptors, Inc.,

527 F.3d 1359 (Fed. Cir. 2008)................................................................................................... 4

Mars, Inc. v. TruRX LLC,

No. 6:13-cv-526,RWS-KNM, 2016 U.S. Dist. LEXIS 121501 (E.D. Tex. March 14, 2016) .. 13

Mass Engineered Design, Inc. v. Ergotron, Inc.,

633 F. Supp. 2d 361 (E.D. Tex. 2009) ...................................................................................... 18

Maxwell v. J. Baker, Inc.,

86 F.3d 1098 (Fed. Cir. 1996)................................................................................................... 15

Minn. Min. & Mfg. Co. v. Johnson & Johnson Orth., Inc.,
976 F.2d 1559 (Fed. Cir. 1992)................................................................................................. 10

Motorola, Inc. v. United States,

729 F.2d 765 (Fed. Cir. 1984)................................................................................................... 16

Nat’l Oilwell Varco, L.P. v. Sadagopan,

No. H-16-2261, 2018 U.S. Dist. LEXIS 136093 (S.D. Tex. Aug. 13, 2018) ......................... 3, 5

Nike, Inc. v. Wal-Mart Stores, Inc.,

138 F.3d 1437 (Fed. Cir. 1998)................................................................................................. 16

Orion IP, LLC v. Mercedes-Benz USA, LLC,

No. 6:05 CV 322, 2008 WL 8856865 (E.D. Tex. Mar. 28, 2008) ............................................ 18

PACT XPP Techs., AG v. Xilinx, Inc.,

2012 U.S. Dist. LEXIS 40651 (E.D. Tex. March 26, 2012) ..................................................... 16

Panduit Corp. v. Stahlin Brothers Fibre Works, Inc.,

575 F.2d 1152 (6th Cir. 1978) .................................................................................................. 10

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Park–In–Theatres, Inc. v. Perkins,

190 F.2d 137 (9th Cir. 1951) .................................................................................................... 18

Poly-America, L.P. v. GSE Lining Tech., Inc.,

383 F.3d 1303 (Fed. Cir. 2004)................................................................................................. 13

Rite-Hite Corp. v. Kelley Co.,

56 F.3d 1538 (Fed. Cir. 1995)................................................................................................... 12

Sindhi v. Raina,
No. 3:15-CV-3229-D, 2017 U.S. Dist. LEXIS 152719 (N.D. Tex. Sept. 20, 2017) .............. 3, 5

SmithKline Diagnostics, Inc. v. Helena Labs. Corp.,

926 F.2d 1161 (Fed. Cir. 1991)............................................................................................. 6, 14

Stragent, LLC v. Intel Corp.,

No. 6:11-cv-421, 2014 WL 6756304 (E.D. Tex. Aug. 6, 2014) ............................................... 18

Taser Int’l, Inc. v. Phazzer Elecs., Inc.,

No. 6:16-cv-366-Orl-40KRS, 2017 U.S. Dist. LEXIS 183006 (M.D. Fla. July 21, 2017) ........ 3

TWA v. Hughes,
449 F.2d 51 (2nd Cir. 1971), rev’d on other grounds, 409 U.S. 363 (1973) .............................. 2

Union Insurance Co. v. Smith,

124 U.S. 405 (1888) .................................................................................................................. 12

United States use of M-Co Constr., Inc. v. Shipco General, Inc.,

814 F.2d 1011 (5th Cir. 1987) .................................................................................................... 2

Waite v. United States, 2

82 U.S. 508 (1931) ...................................................................................................................... 8
 
Statutes

35 U.S.C. § 284 ............................................................................................................................. 17

35 U.S.C. § 285 ............................................................................................................................. 18

35 U.S.C. § 287 ............................................................................................................................. 15

Fed. R. Civ. P. 55(b)(2)(B) ............................................................................................................. 3

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Defendant True Chemical Solutions, LLC (“TrueChem”) files this Response in Opposition

to Plaintiff Performance Chemical Company’s (“PCC”) Motion for Entry of a Damages Award

(Dkt. 341) (“Motion”). TrueChem has dismissed its prior counsel, and this Response is filed by

new counsel, D. John Neese, Jr. of Meade & Neese LLP, who were not previously involved in

these proceedings.

Introduction

On May 21, 2021, the Court struck TrueChem’s infringement and invalidity defenses as

sanctions related to discovery. At the same time, the Court set this matter for a trial on damages

on July 19, 2021. Dkt. 340. Emboldened by the sanctions Order, and in an attempt to secure an

unfair damages award that is not supported by the evidence, PCC now seeks to avoid a damages

trial altogether. Specifically, PCC asks the Court to dispense with trial and enter judgment on

alleged lost profits damages in the amount of $5,644,156, purportedly under either Federal Rule

of Civil Procedure 55 as a default judgment or as a summary judgment under Rule 56. Moreover,

PCC, also without trial, asks that the Court treble any damages that may be awarded.

PCC’s Motion fails as a matter of law as it conflates the standards of default judgment and

summary judgment throughout, fails to prove that PCC is entitled to entry of a damages award

under either standard, and provides no justification for depriving TrueChem of its right to a jury

trial on damages. In fact, PCC is not entitled to a default judgment on damages and still bears the

burden to prove: 1) that PCC is entitled to any “lost profits” damages and 2) the amount of “lost

profits” damages. PCC is also not entitled to summary judgment on damages because, even after

an adjudication on liability, genuine issues of material fact exist regarding at least these same two

fundamental issues. As discussed herein, neither default judgment nor summary judgment on

damages is legally or factually justified.

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PCC’s request for enhanced damages and prejudgment interest is also premature at this

stage of the proceedings. The amount of enhanced damages, if any, is an issue that is not ripe for

consideration by the Court until the finder of fact has determined actual damages, if any.

TrueChem reserves its right to dispute enhancement of damages until after actual damages, if any,

have been decided by the finder of fact. Further, PCC’s request for an exceptional case finding and

attorneys’ fees should be denied considering the severe sanctions already awarded by the Court in

striking TrueChem’s infringement defenses and invalidity counterclaim for the same conduct for

which PCC now seeks an exceptional case finding. If the Court were to declare this an exceptional

case and award attorneys’ fees to PCC, such a finding and award would be cumulative, inequitable,

and would punish TrueChem twice for the same behavior. PCC’s Motion for Entry of a Damages

Award should be denied in all respects.

Legal Standards

A. Default Judgment

“A default judgment is a judgment on the merits that conclusively establishes the

defendant’s liability. But it does not establish the amount of damages.” United States use of M-Co

Constr., Inc. v. Shipco General, Inc., 814 F.2d 1011, 1014 (5th Cir. 1987) (quoting TWA v. Hughes,

449 F.2d 51 (2nd Cir. 1971), rev’d on other grounds, 409 U.S. 363 (1973). Moreover, in the entry

of a default judgment, “the plaintiff’s well-pleaded factual allegations are taken as true, except

regarding damages.” Shipco, 814 F.2d at 1014; see also J&J Sports Prods. v. Alvarez, Case No.

EP-16-CV-00294-DCG, 2017 U.S. Dist. LEXIS 229433 (W.D. Tex. July 24, 2017) (“The

complaint’s factual allegations regarding damages, even if well-pleaded, must still be proven”).

Patent damages are unliquidated damages, and “in the context of a default judgment,

unliquidated damages normally are not awarded without an evidentiary hearing.” See James v.

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Frame, 6 F.3d 307, 310 (5th Cir. 1993). Consequently, under Federal Rule of Civil Procedure 55,

courts typically hold a trial or at least an evidentiary hearing to determine the amount of damages

after default. Fed. R. Civ. P. 55(b)(2)(B); see, e.g., Sindhi v. Raina, No. 3:15-CV-3229-D, 2017

U.S. Dist. LEXIS 152719 (N.D. Tex. Sept. 20, 2017) (finding a hearing was necessary to determine

the amount of compensatory damages); Nat’l Oilwell Varco, L.P. v. Sadagopan, No. H-16-2261,

2018 U.S. Dist. LEXIS 136093, at *34 (S.D. Tex. Aug. 13, 2018) (noting that “the court held a

Rule 55(b)(2) hearing to determine the amount of damages” in the context of a default judgment);

Taser Int’l, Inc. v. Phazzer Elecs., Inc., No. 6:16-cv-366-Orl-40KRS, 2017 U.S. Dist. LEXIS

183006, at *9 (M.D. Fla. July 21, 2017) (setting a briefing and hearing schedule to determine

compensatory damages after “death penalty” sanctions against infringer), aff’d, 754 Fed. Appx.

955 (Fed. Cir. 2018).

B. Summary Judgment

Summary judgment should only be granted “if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a). The movant has the “initial responsibility of informing the district court for the basis

of its motion, and identifying those portions of the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, which it believes

demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986) (internal citations omitted). Once this initial burden is met, the burden shifts to

the nonmoving party, who “must set forth specific facts showing that there is a genuine issue for

trial.” Id. at 322, n. 3. In reviewing the evidence presented, the court “will view the summary

judgment evidence in the light most favorable to the non-movant.” FINALROD IP, LLC v. John

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Crane, Inc., No. 7:15-CV-00097-ADA, 2019 U.S. Dist. LEXIS 149649, at *5 (W.D. Tex. May 30,

2019) (citing Griffin v. United Parcel Serv., Inc., 661 F.3d 216, 221 (5th Cir. 2011)).

In the context of lost profit damages, summary judgment is inappropriate where, as here,

genuine issues of material fact exist regarding both: 1) the legal justification to recover lost profit

damages and 2) the amount of lost profit damages. See Chiuminatta Concrete Concepts, Inc. v.

Cardinal Indus., 1 Fed. Appx. 879, 883 (Fed. Cir. 2001). Entitlement to lost profit damages is a

question of law. Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1365 (Fed. Cir. 2008).

However, the measurement of the amount of patent damages is a question of fact. Brooktree Corp.

v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1578 (Fed. Cir. 1992) (“As in damage

determinations in general, the measure of actual damages is a question of fact”).

Argument

PCC asks this Court to deprive TrueChem of its right to a jury trial on damages, currently

set for July 19, 2021 and, without any type of evidentiary hearing, enter default judgment on

damages of the type (lost profits) and in the exact amount advocated by its hired damages expert.

To the extent PCC is unsuccessful in obtaining a default judgment on damages, PCC alternatively

requests that the Court enter summary judgment on damages and find that PCC is entitled to $5.6

million in lost profits. For the reasons discussed herein, as a matter of law, PCC is not entitled to

either a default judgment or a summary judgment on damages. Indeed, PCC has failed to meet its

burden of showing that no genuine issue of material fact exists regarding: 1) PCC’s entitlement to

lost profit damages or 2) the disputed damages amount in this case.

A. Default Judgment for Damages is Improper

As a threshold matter, PCC's default judgment argument fails regardless of the merits. The

Court has struck TrueChem's affirmative defense of non-infringement and counterclaim for

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invalidity. The Court has not, however, struck TrueChem's live answer, including that answer's

specific denials of PCC's allegations. Thus, TrueChem is not in default, and the Court has not

entered a default under Federal Rule of Civil Procedure 55(a). Without a default by TrueChem,

there can be no default judgment on damages. In fact, under the current state of the record, PCC

must prove both liability and damages like any other litigant.

Even if there were a default, PCC would not be entitled to a default judgment for damages

because: 1) it has not proven that it is entitled to lost profits, the only measure of damages on which

it has provided any evidence and 2) because PCC has not proven the amount of damages to the

requisite level of certainty. In its Motion, PCC seeks recovery of purported lost profits caused by

TrueChem’s infringement in the amount of $5,644,156. Dkt. 341, Motion at 7; Dkt. 341-B at 6.

Specifically, PCC requests that, in addition to the “death penalty” sanctions already issued by the

Court on May 21, 2021, the Court impose additional sanctions by entering default judgment for

the full amount of PCC’s alleged lost profits, without requiring PCC to prove either that it is

entitled to lost profits or requiring PCC to prove the amount of damages by a preponderance of the

evidence.

PCC’s argument is both legally and factually flawed. First, entry of a default judgment for

damages without any type of evidentiary hearing is erroneous where, as here, the plaintiff seeks

unliquidated damages. See Garvin v. Arcturus Venture Partners Inc., No. 3:15-CV-2157-L, 2017

U.S. Dist. LEXIS 160611,*20 (N.D. Tex. Sept. 28, 2017). Here, PCC seeks lost profits damages.

Dkt. 341. Lost profits are undoubtedly “unliquidated” damages. See GM Corp. v. Devex Corp.,

461 U.S. 648, 655 (1983) (noting that lost profits are a form of unliquidated damages in patent

cases). Furthermore, courts routinely hold separate trials or hearings to determine the amount of

damages after a default judgment on liability. See, e.g., Sindhi, 2017 U.S. Dist. LEXIS 152719 at

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*17-18; Sadagopan, 2018 U.S. Dist. LEXIS 136093, at *34; Taser, 2017 U.S. Dist. LEXIS 183006

at *9, aff’d, 754 Fed. Appx. 955. Indeed, this Court noted during the March 26, 2021 sanctions

hearing that it is routine practice for courts to hold a separate trial for the determination of damages:

Tr. 13:14-17. Thus, in accordance with normal practice, and presumably in recognition that PCC

bears the burden to prove damages, the Court scheduled a jury trial on damages. See SmithKline

Diagnostics, Inc. v. Helena Labs. Corp., 926 F.2d 1161, 1164, n.2 (Fed. Cir. 1991) (“the plaintiff

bears the burden of proof [of damages] by a preponderance of the evidence”).

Second, PCC is unable to prove the requisite legal standard to recover lost profits damages.

PCC relies on the fact that its damages expert, Mr. Weingust, will be the only testifying expert at

trial. However, the fact that TrueChem will not be offering testimony from a paid damages expert

does not automatically entitle PCC to a default judgment on damages as PCC argues. TrueChem

will cross-examine Mr. Weingust at trial on the opinions in his expert report, many of which are

demonstrably wrong. TrueChem will offer further rebuttal evidence at trial from witnesses,

including PCC’s own fact witnesses, regarding PCC’s alleged damages, and PCC’s inability to

satisfy the legal standard for recovery of lost profits damages, which requires, for example, and

without limitation, proof of “but for” causation for damages, as discussed in detail below.

Indeed, counsel for PCC has already asked the Court to enter default judgment on damages

as an additional sanction during the March 26 hearing:

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Tr. 13:9-13.

Tr. 16:20-17:1. However, the Court did not include a default judgment for damages against

TrueChem in its May 21 order. See Dkt. 340 at 10. Rather, the Court properly set a jury trial to

determine damages. Id.

By setting a trial on damages, the Court correctly determined that trial on the disputed

issues of both: 1) PCC’s entitlement to “lost profits” damages and 2) the proper amount of damages

is warranted under applicable law. Accordingly, the Court should deny PCC’s Motion for Entry

of a Damages Award as a default judgment.

B. Genuine Issues of Material Fact Preclude Summary Judgment Regarding Both

Entitlement to Lost Profits Damages and the Amount of Damages.

PCC is not entitled to summary judgment because as described below, genuine issues of

material fact exist at least regarding: 1) PCC’s entitlement to “lost profits” damages and 2) the

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amount of damages related to infringement. Because genuine issues of material fact exist,

summary judgment is not appropriate, and the Court should deny PCC’s Motion.

1. PCC is Not Entitled to Summary Judgment on Damages

PCC suggests that it is entitled to summary judgment on damages simply because: 1) its

damages expert, Mr. Weingust, will be the only expert testifying on the amount of damages; 2) the

damages sought are purportedly “reasonable;” and 3) because “death penalty” sanctions somehow

confer “great degree of credence” to the testimony of Mr. Weingust. See Dkt. 341 at 6-8. All of

PCC’s arguments are wrong. PCC has cited no case for the proposition that “death penalty

sanctions” on liability remove the requirement that PCC prove damages when both the amount of

damages and the theory of damages recovery (“lost profits”) are disputed as they are here.

As discussed above, PCC bears the burden of proof on damages. TrueChem is not required

to offer rebuttal testimony through a paid expert on damages, and PCC has cited no case in support

of that proposition. Moreover, PCC ignores TrueChem’s right to a jury trial, the jury’s role in

judging credibility of witnesses, including that the jury may accept fact witness testimony over

PCC’s paid expert, and ignores the factual and legal failings of PCC’s damages theory.

There is no factual or legal support for PCC’s assertions that its damages theory: 1) is

limited to PCC’s former customers and is, therefore, a “reasonable” conclusion of lost profits, and

2) the Court’s “death penalty” sanctions against TrueChem entitle PCC’s expert to greater

evidentiary weight. Not surprisingly, PCC has failed to cite any case law in support of these

attorney arguments. In fact, PCC’s attorney arguments are no substitute for evidence to support

summary judgment. See Enzo Biochem v. Gen-Probe, Inc., 424 F.3d 1276, 1284 (Fed. Cir. 2005).

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2. Genuine Issues of Material Fact Exist Regarding PCC’s Lost Profits Claim
Under the Panduit Factors

The ultimate measurement of patent damages is a question of fact. Brooktree, 977 F.2d

at1578. The damages sought here are unliquidated and are subject to dispute as demonstrated by

the evidence discussed herein. See Devex Corp., 461 U.S. at 655 (citing Waite v. United States,

282 U.S. 508 (1931) (stating that lost profits are a form of unliquidated damages in patent cases)).

Summary judgment is improper where, as here, the entitlement to and amount of patent damages

is a disputed issue of material fact.

Specifically, PCC seeks recovery of claimed lost profits in the amount of $5,644,156,

allegedly incurred from a period of December 5, 2017 through December 2019, based on the total

sales and services associated with all of TrueChem’s frac trailers, regardless of whether all such

trailers infringe the patents and regardless of whether PCC has proven entitlement to a “lost

profits” measure of damages for each sale. PCC does not seek a reasonable royalty for TrueChem’s

infringement, nor does its expert offer any opinion as to what a reasonable royalty would be.

Dkt. 341, Motion at 20. Instead, PCC puts all of its eggs in the “lost profits” basket, because lost

profits might provide PCC with the largest potential damages recovery—if PCC can prove lost

profits. However, PCC cannot prove entitlement to or the amount of alleged lost profits by default

or by summary judgment.

To recover lost profits, a patentee must show “a casual relation between the infringement

and its loss of profits.” BIC Leisure Prods., Inc. v. Windsurfing Int’l, Inc., 1 F.3d 1214, 1218 (Fed.

Cir. 1993). To demonstrate this causal relationship, a patentee must establish “a reasonable

probability that ‘but for’ the infringing activity, the patentee would have made the infringer’s

sales.” Crystal Semiconductor Corp. v. TriTech Microelecs. Int’l, Inc., 246 F.3d 1336, 1353 (Fed.

Cir. 2001). “To show ‘but for’ causation, the patentee must reconstruct the market to determine

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what profits [it] would have made had the market developed absent the infringing product.”

Ericsson, Inc. v. Harris Corp., 352 F.3d 1369, 1377 (Fed. Cir. 2003) (citing Grain Processing

Corp. v. Am. Maize-Prods. Co., 185 F.3d 1341, 1350 (Fed. Cir. 1999)). In its reconstruction of the

market, the patentee must provide “sound economic proof of the nature of the market and likely

outcomes with infringement factored out of the economic picture.” Grain Processing, 185 F.3d at

1350. In its motion, PCC has failed to establish the required “but for” causation, which dooms

recovery of lost profits in this case.

Under Panduit Corp. v. Stahlin Brothers Fibre Works, Inc., a patentee may obtain lost

profits as compensatory damages by proving: 1) demand for the patented product, 2) absence of

acceptable non-infringing substitutes, 3) [the patentees] manufacturing and marketing capability

to exploit the demand, and 4) the amount of the profit [the patentee] would have made. 575 F.2d

1152, 1156 (6th Cir. 1978). While the appropriateness of an award for lost profits is a question of

law, the underlying issues of the Panduit factors, such as the existence of any non-infringing

substitutes, are questions of fact. Minn. Min. & Mfg. Co. v. Johnson & Johnson Orth., Inc., 976

F.2d 1559, 1577 (Fed. Cir. 1992). As set forth below, PCC has failed to show that it is entitled to

judgment at least because genuine issues of material fact exist on the Panduit analysis for lost

profits.

a. Panduit Factor 2 – Absence of Non-Infringing Alternatives

PCC’s allegation that there are no acceptable non-infringing substitutes erroneously rests

solely on the testimony of its damages expert, Mr. Weingust. However, Mr. Weingust, is a

damages expert, not a technology expert, and performed no investigation regarding non-infringing

alternatives. Dkt. 341-A, Weingust Declaration; see also TrueChem Ex. 1, Depo. Tr of S.

Weingust, 151:1-17, 158:18-25. In fact, the evidence shows that Mr. Weingust ignored contrary

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evidence, including evidence from PCC, which establishes that non-infringing alternatives exist.

Dkt. 341-B, Weingust Report at. 22 (stating that he is not aware of any non-infringing substitutes

but providing the contradicting statement that he has assumed that some customers would opt to

use a third-party frac water treatment service).

Specifically, PCC’s owner, Burl Fuller, admitted that PCC competes with other oilfield

service providers such as Halliburton and Schlumberger in providing pumping services with frac

trailers, and each of whom provides their own pumping services products. See TrueChem Ex. 2,

Depo. Tr. of B. Fuller at 196:6-18 (discussing competing with Halliburton and Schlumberger).

Although unnecessary given PCC’s failure to meet its burden of proof, TrueChem’s

technical expert Mr. Patrick Steele, (whose opinion on non-infringing alternatives have not been

struck), discussed non-infringing alternatives in his rebuttal report and deposition. See TrueChem

Ex. 3, Expert Report of P. Steele at 18-19; TrueChem Ex. 4, Depo. Tr. of P. Steele at 205:8-18.

The evidence in the record regarding non-infringing alternatives raises genuine issues of material

fact for trial that should be subject to cross-examination and consideration by the jury.

Mr. Steele’s report on “non-infringing alternatives” lays out several non-infringing options

available in the market to perform the same function as products covered by the patent. See

TrueChem Ex. 3 at 18-19. Mr. Steele further discussed these non-infringing alternatives in his

deposition in rebuttal to PCC’s expert, testifying that non-infringing alternatives existed in the

market with regard to alternative flatbed trailers that include the remaining features of the patented

invention. See TrueChem Ex. 4, Depo. Tr. of P. Steele at 203:1-205:18. Contrary to PCC’s

assertion, Mr. Steele’s opinions on non-infringing alternatives have not been struck. See Dkt. 325

at 3 (limiting striking of expert testimony to Mr. Steele’s opinions on inequitable conduct).

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Additionally, third-party Donny Susan testified that several other companies provide the types of

trailers at issue in this case. Ex. 5, Depo. Tr. of D. Susan at 45:15-23.

Accordingly, Mr. Fuller’s, Mr. Susan’s, and Mr. Steele’s testimony alone are sufficient to

raise genuine issues of material fact on non-infringing alternatives and directly contradict Mr.

Weingust’s conclusory opinions. As a result, PCC has failed to establish that no genuine issues of

material fact exist on the issue of acceptable, non-infringing alternatives, and summary judgment

should be denied.

b. Panduit Factor 4 -- Quantification of Lost Profits

Summary judgment is also improper because a genuine issue of material fact exists on the

quantification of lost profit damages. Indeed, courts routinely deny motions for summary judgment

when the parties dispute the amount of damages. Under applicable law, even if PCC proves that it

is entitled to recover lost profits damages, which is denied, PCC still has the burden to prove

causation of the amount of its lost profits damages by a preponderance of the evidence. SmithKline

Diagnostics, 926 F.2d at 1164-65. For the reasons discussed in detail below, a genuine issue of

material fact exists as to the date of first infringement upon which PCC is first entitled to damages,

and to the amount of alleged lost profits.

c. Causation of Lost Profits

In the context of a lost profits analysis, “causation is a classical jury question.” Brooktree,

977 F.2d at 1578 (citing Union Insurance Co. v. Smith, 124 U.S. 405, 423 (1888)). As discussed

above, a patentee may create an inference of the requisite “but for” causation necessary to obtain

lost profit damages under the Panduit test. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545

(Fed. Cir. 1995) (en banc). To rebut the patentee’s inference of ‘but for’ causation, an infringer

carries the burden “to show that the “but for” causation claim is unreasonable for some or all of

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the lost sales.” Id. at 1544. Since PCC has failed to meet its initial burden of proof on the Panduit

factors, including “but for” causation, the burden never shifts to TrueChem to rebut causation. Id.

However, even assuming that PCC had met its initial burden, PCC’s lost profits claim still fails

because PCC’s claim to some or all of the alleged lost sales is unreasonable.

Specifically, PCC seeks the lost profits associated with four of TrueChem’s customers with

which PCC asserts it had a “prior relationship.” Dkt. 341 at. 13. PCC entirely relies on the nature

of its “prior relationship” with these customers to support its theory of ‘but for’ causation and

foreseeability of lost profits. PCC assumes that, but for TrueChem’s infringement, PCC would

have automatically kept and profited from these former customers.

However, the question of whether PCC would have made sales of frac trailers and services

purportedly encompassed by the patents-in-suit to those customers is a dispute issue of material

fact. Specifically, at least one customer’s representative, , testified to the poor

performance by PCC in his deposition, citing it as the reason he moved the business to TrueChem.

Ex. 5, Depo. Tr. of D. Susan at 53:4-58:25. Indeed, TrueChem’s Second Supplemental Response

to PCC’s Second Set of Interrogatories is corroborated by these facts. See TrueChem Ex. 6,

Response to Interrogatory No. 28 (True Chem contends that PCC could not service that customer

because PCC was fired from working on its frac jobs after PCC employee, , was caught

sleeping on the job and had also been caught violating the MSA by having his girlfriend on its

fracking location).

In addition to skipping over its obligation to prove “but for” causation, PCC makes another

fundamental mistake related to causation in its novel and legally erroneous “capable of infringing”

argument, which PCC uses to try to grab each and every trailer owned by TrueChem. Specifically,

to be entitled to lost profits, PCC must prove, by a preponderance of the evidence, that each sale

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for which it seeks lost profit damages by TrueChem used an infringing trailer, meaning it must

meet each and every limitation of the asserted claims. See, e.g., Mars, Inc. v. TruRX LLC, No.

6:13-cv-526,RWS-KNM, 2016 U.S. Dist. LEXIS 121501, at *30-31 (E.D. Tex. March 14, 2016)

(discussing plaintiff’s requirement to tie lost profits to defendant’s infringement); see also Poly-

America, L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004) (plaintiff must show

the profits lost due to infringing sales) (emphasis added). PCC’s argument that infringing trailers

includes those that do not meet all claim limitations, but that are “capable of infringing” is

contrary to the law. See Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321, 1329 (Fed. Cir. 2010) (Federal

Circuit noting that it has “held that it is not enough to simply show that a product is capable of

infringement; the patent owner must show evidence of specific instances of direct infringement”);

Intel Corp. v. U.S. Int’l Trade Comm’n, 946 F.2d 821, 832 (Fed. Cir. 1991)). For instance, Claim 1

of the ’452 Patent requires:

An automated water treatment trailer for processing multiple fluids

simultaneously, each fluid with a fluid characteristic and a specific
gravity, the automated water treatment trailer comprising:

[claim limitations omitted]

k. a controller in communication with each pump of the

plurality of pumps and a network to communicate with at least
one client device for remote monitoring and control;

[additional claim limitations omitted] (emphasis added)

U.S. Patent No 9,834,452 at Claim 1; see also U.S. Patent No. 10,011,501, at Claim 1, element h

(requiring “a controller in communication with each pump … wherein the controller is configured

to connect to a network”).

Accordingly, to prove damages causation, PCC must prove that each trailer for which it

seeks damages meets each asserted claim limitation, including “a controller in communication

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with each pump … and a network to communicate with at least one client device for remote

monitoring and control.” ’452 Patent, Claim 1; see SmithKline Diagnostics, 926 F.2d at 1164-65.

PCC’s attempt to seek damages for sales using any and all trailers “owned by TrueChem” that are

“capable of infringing” is not only directly contrary to the law, but is completely illogical.1 Indeed,

PCC has cited no case for the proposition that a default on liability also satisfies a plaintiff’s burden

of proof on causation for damages. The number of infringing trailers and the profits attributable to

each remain disputed issues of material fact for which either summary judgment or default

judgment is not appropriate.

Moreover, the date that damages begin to accrue for TrueChem’s infringement is also an

issue of disputed material fact. PCC asserts that the damages period for TrueChem’s infringement

begins on December 5, 2017 and runs through December 2019. See Dkt. 341-B, Weingust Report

at 7. However, the deposition testimony of third-party witnesses supports that the first infringing

sale did not occur until a much later point in time, summer 2019. See, e.g., TrueChem Ex. 7, Depo.

Tr. of Joshua Bittler at 13:12-16:15 (B&H employee worked on installation of a PLC only on the

T-9 trailer beginning in the summer of 2019); TrueChem Ex. 8, Depo. of B. Walter at 7:3-23,

27:21-28:5.

Because disputed issues of material fact exist as to “but for” damages causation of PCC’s

lost profits and as to damages causation regarding the number of infringing trailers and the lost

profits attributable to each, summary judgment on damages would be improper.

C. PCC Has Failed to Meet Its Burden on Marking

PCC is not entitled to summary judgment on the issue of damages because a genuine issue

of material fact exists as to whether PCC complied with 35 U.S.C. § 287. Under Section 287, “no

1
Indeed, under PCC’s over-reaching definition of an “infringing trailer,” any trailer owned by PCC would
constitute an “infringing trailer,” even a flatbed equipment trailer or a cattle trailer with no valves or pumps.

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damages shall be recovered by the patentee in any action for infringement, except on proof that

the infringer was notified of the infringement and continued to infringe thereafter in which event

damages may be recovered only for infringement occurring after such notice.” 35 U.S.C. § 287.

A patentee always bears the burden of pleading and proving it complied with the marking

requirements of Section 287. Artic Cat Inc. v. Bombardier Recreational products Inc., 876 F.3d

1350, 1366 (Fed. Cir. 2017) (“Artic Cat I”) (citing Maxwell v. J. Baker, Inc., 86 F.3d 1098, 1111-

12 (Fed. Cir. 1996)). However, an alleged infringer who challenges the patentee’s compliance with

§ 287 bears the initial burden to articulate the products it believes are unmarked. Artic Cat I, 876

F.3d at 1368. After the alleged infringer plausibly identifies the unmarked products, the burden

shifts to the patentee to prove the product do not practice the patents-at-issue. Id. at 1369.

PCC ignores the applicability of the marking statute, 35 U.S.C. 287, to its damages model.

Mr. Weingust fails to address it entirely, but “[t]he Federal Circuit has held that a patentee's failure

to comply with the marking statute is not a defense to patent infringement [that must be proven by

a defendant] but is instead a limitation on the patentee's recovery of damages when [the patentee]

fails to plead and prove compliance with the marking statute.” PACT XPP Techs., AG v. Xilinx,

Inc., 2012 U.S. Dist. LEXIS 40651, *11-12 (E.D. Tex. March 26, 2012) (citing Motorola, Inc. v.

United States, 729 F.2d 765, 769-771 (Fed. Cir. 1984)). Therefore, PCC will have the burden at

trial to prove that it has complied with 35 U.S.C. § 287 by a preponderance of the evidence. Id.

(also citing Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1446 (Fed. Cir. 1998)).

PCC has not shown an absence of material fact with respect to the marking statute. In fact,

the evidence from at least PCC’s principal Burl Fuller tends to show that PCC practiced the

patents-in-suit as early as 2017. TrueChem Ex. 2, Depo. Tr. of B. Fuller at 132:7-136:6. If PCC

failed to mark its trailers with the patent numbers, PCC’s damages may be significantly reduced.

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At the summary judgment stage, PCC must prove its compliance with the marking statute “beyond

peradventure.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). To show its

entitlement to summary judgment on damages, PCC must show that no issue of material fact exists

regarding whether it made, offered for sale, sold, or imported any unmarked patented trailers

within the United States prior to the lawsuit. PCC has failed to even address that burden.

D. PCC’s Request for Enhanced Damages and Prejudgment Interest is Premature

PCC’s request for enhanced damages is premature because PCC has not yet proved that it

is entitled to recovery of any damages. Indeed, the law provides that “the court may increase the

damages up to three times the amount found or assessed.” 35 U.S.C. § 284 (emphasis added). As

discussed above, entry of lost profit damages against TrueChem for $5.6 million is not legally or

factually justified. Similarly, the finder of fact has not yet assessed the damages in this case, and

therefore the Court cannot yet enhance any damages or calculate an amount of prejudgment

interest.

In addition, PCC is not entitled to the prejudgment interest it seeks on the total amount of

any damages award that may be rendered. Rather, prejudgment interest is determined from the

earliest date of infringement. See Comcast IP Holdings I LLC v. Sprint Communs. Co., L.P., 850

F.3d 1302, 1315 (Fed. Cir. 2017) (“Prejudgment interest runs from the earliest date of infringement

for any patent issued at the time of the hypothetical negotiation”).

PCC fails to provide any evidence regarding the earliest date of infringement, and the

asserted date of December 5, 2017 is contrary to the evidence that the only trailer even arguably

containing the limitation in each patent of “a controller in communication with each pump of the

plurality of pumps and a network to communicate with at least one client device for remote

monitoring and control” did not exist until the summer of 2019. TrueChem Ex. 7, Depo. Tr. of

Joshua Bittler at 13:12-16:15.

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Motions for enhanced damages and prejudgment interest should be deferred for briefing

and determination until after such time as a final liability finding and damages award, if any, has

been entered in favor of PCC by the trier of fact.

E. Exceptional Case Finding and Attorneys’ Fee Award are Not Warranted

The Patent Act provides that the Court may award reasonable attorneys’ fees only in

exceptional cases. 35 U.S.C. § 285. However, an exceptional case finding is inappropriate based

on “[i]ndividual actions or arguments in the course of litigation” that have already been addressed

by the Court. Stragent, LLC v. Intel Corp., No. 6:11-cv-421, 2014 WL 6756304, at *4 (E.D. Tex.

Aug. 6, 2014) (quoting Park–In–Theatres, Inc. v. Perkins, 190 F.2d 137, 142 (9th Cir. 1951)); see

also Orion IP, LLC v. Mercedes-Benz USA, LLC, No. 6:05 CV 322, 2008 WL 8856865, at *5–6

(E.D. Tex. Mar. 28, 2008) (“As the Court has already sanctioned, or refused to sanction,

[defendant] for any misconduct, awarding attorneys' fees for this same conduct would be

inappropriate”). Considering the severe sanctions already awarded by the Court in striking

TrueChem’s infringement defenses and invalidity counterclaim for the same conduct for which

PCC now seeks an exceptional case finding, such an award would be cumulative, inequitable and

would punish TrueChem twice for the same behavior. Mass Engineered Design, Inc. v. Ergotron,

Inc., 633 F. Supp. 2d 361, 391 (E.D. Tex. 2009) (“Basing an enhancement or award of attorneys'

fees on misconduct that has previously been sanctioned would be unnecessarily cumulative and

inequitable”); Orion IP, 2008 WL 8856865 at *6. TrueChem has already suffered significant

sanctions from the Court. Additional sanctions in the form of an exceptional case finding and an

award of attorneys’ fees against TrueChem amount to cumulative punishment.

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Conclusion

For at least the foregoing reasons, TrueChem respectfully requests the Court deny Plaintiff

PCC’s Motion for Entry of a Damages Award.

Respectfully submitted,

Meade & Neese LLP

/s/ D. John Neese, Jr.

D. John Neese, Jr.
Texas Bar No. 24002678
Federal Bar No. 22641
Andrew K. Meade
Texas Bar No. 24032854
Federal Bar No. 32811
Samuel B. Haren
Texas Bar No. 24059899
Federal Bar No. 1743266
Holly H. Barnes
Texas Bar No. 24045451
Federal Bar No. 570020
2118 Smith Street
Houston, Texas 77002
713-355-1200
713-658-9010 (Neese direct)
[email protected]
[email protected]
[email protected]
[email protected]

Counsel for Defendant

True Chemical Solutions, LLC

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Certificate of Service

A true and correct copy of the foregoing was served on all counsel of record via the Court’s

CM/ECF system, in accordance with L.R. CV-5, on June 21, 2021.

/s/ D. John Neese, Jr.

D. John Neese, Jr.

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