III. LEGAL STANDARD
A. Pre-judgment Interest
According to the patent statute's damages provision, it is the job of
the court to fix interest and costs on a judgment. 35 U.S.C. § 284.
This includes pre-judgment interest, which according to the Supreme
Court, "should ordinarily be awarded where necessary to afford the
plaintiff full compensation for the infringement." General Motors Corp.
v. Devex Corp., 461 U.S. 648, 654 (1983). A court is afforded complete
discretion to decide the interest rate to be used. Studiengesellschaft
Kohle, m.b.H. v. Dart Indus., Inc., 862 F.2d 1564, 1580 (Fed. Cir.
B. Enhanced Damages
In addition, the court may, in its discretion, increase a jury's damage
award by up to three times if the jury finds that the infringement was
willful. 35 U.S.C. § 284. A court is not required to do so, however.
Odetics, Inc. v. Storage Tech. Corp., 185 F.3d 1259, 1274 (Fed. Cir.
1999) ("The law is clear that while willful infringement may allow
enhanced damages, such a finding does not compel the district court to
grant them."); State Indus. Inc. v. Mor-Flo Indus. Inc., 948 F.2d 1573,
1576 (Fed. Cir. 1991).
In deciding whether enhanced damages should be awarded, a court should
consider the totality of the circumstances including: 1) whether the
infringer deliberately copied the ideas or design of another; 2) whether
the infringer, when he knew of the other patent's protection,
investigated the scope of the patent and formed a good-faith belief that
it was invalid or that it was not infringed; 3) the infringer's behavior
as a party to the litigation; 4) defendant's size and financial
condition; 5) the closeness of the case; 6) the duration of defendant's
misconduct; 7) remedial action by the defendant; 8) defendant's
motivation for harm; and 9) whether defendant attempted to conceal its
misconduct. Read Corp. v. Portec, Inc., 970 F.2d 816, 826-27 (Fed. Cir.
1992), abrogated in part on other grounds by Markman v. Westview
Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995) (en banc) (internal
C. Attorney Fees
The patent law provides that "[t]he court in exceptional cases may
award reasonable attorney fees to the prevailing party."
35 U.S.C. § 285. Exceptional circumstances include "inequitable
conduct before the PTO; litigation misconduct; vexatious, unjustified,
and otherwise bad faith litigation; a frivolous suit or willful
infringement." Epcon Gas Sys., Inc. v. Bauer Compressors, Inc.,
279 F.3d 1022, 1034 (Fed. Cir. 2002) (citing Hoffmann-La Roche Inc. v.
Invamed Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000)).
A. Pre-judgment interest
The parties' primary dispute centers not around whether pre-judgment
interest should be awarded at all, but rather, the rate at which it
should be assessed. At a post-trial hearing held April 29, 2002, the
Court heard evidence from the parties and their experts on the
appropriate measure of pre-judgment interest. The Court has also
considered the parties' briefs submitted prior to the hearing.
Atmel argues that it should be awarded pre-judgment interest on its
$9,569,640 reasonable royalty judgment at the prime rate compounded
quarterly and pre-judgment interest on its $10,400,000 price erosion
judgment at the prime rate compounded monthly.*fn2 SST argues that it
should have to pay interest at the London Interbank Offer Rate,
("LIBOR"),*fn3 or at the very most, LIBOR plus one percent.
In its brief and at the hearing Atmel argued that the prime rate
reflects the approximate rate at which it had to borrow money during the
period of infringement. Atmel referred the Court to its 1994 and 1995
Annual Reports which indicate that the company was borrowing at rates
between 5.6 and 10 percent.*fn4 (Decl. of Steven G. Mason in Supp. of
Atmel's Prejudgment Interest Brief ("Mason Decl."), Ex. B:13, Ex.
C:13-14.) In those years, according to Plaintiff's research, the prime
rate fluctuated not far off, or between 6 and 9 percent. (Mason Decl.,
Ex. K.) For sake of comparison, during 1994 and 1995 LIBOR fluctuated
between 5.5 and 7 percent. (Amended Declaration of Paul K. Meyer in
Support of Def.'s Brief Respecting Pre-Judgment Interest ("Meyer Decl.",
SST sees things differently. SST claims that Atmel has never borrowed
at prime, but has consistently borrowed at lower rates closer to LIBOR.
As evidence, SST presented the testimony of its expert, Paul Meyer, who
studied Atmel's reports in detail and drew from them the conclusion that
Atmel borrowed at or around LIBOR during the years in question at amounts
ranging from $16 to $138 million. SST's theory is that any money it would
have owed Atmel during the damages period would have gone toward reducing
these debts. (4/29/02 Hearing, Tr. 36:2-5.)
As an initial matter, the Court finds it difficult, and indeed,
ineffectual, to attempt to extrapolate from Atmel's Annual Reports any
kind of accurate measure of the rate of interest that would have been
applied to the "loaned" judgment in question, given that the instruments
described in the reports arose under circumstances that vary from those
in this case; some of the loans described there were collateralized,
others were discounted, and still others reflect capital leases. Nor is
the Court inclined to guess at how Atmel might have used the money had it
benefitted from having it at the time. The Court will focus, instead, on
attempting to come up with a figure that best reflects the specific
circumstances of this case, what amounts to a $20 million loan to another
To begin with, the Court declines to entertain the possibility that the
straight LIBOR rate applies. SST's expert, Mr. Meyer, conceded as much
when he said "I believe that [Atmel] borrowed at LIBOR plus." (4/29/2002
Hearing, Tr. 48:22.) The only matter left to decide, therefore, is
whether the interest rate should be LIBOR "plus" or prime.
At the hearing, when asked to justify the prime rate as opposed to a
treasury bill, Atmel's royalties expert Stephen Degnan explained that the
prime rate reflects the amount of risk involved in corporate loans:
Well, it gets a little complicated, but it basically
is one of the elements that go into the risk of a
particular security. Obviously the federal government
has no risk; they can continue to print money. The
difference between the prime rate, generally, and the
T-Bill rate is that . . . businesses fail. And so
their interest is not — you don't get your
interest back. You don't get your principle back. You
don't get anything back.
And so that's the difference
between those, is the risk, the market risk and the
unique risk of the underlying company.
(4/29/2002 Hearing, Tr. 18:11-20.)