Trim tab maker still may pursue ‘astounding’ legal fees from its seven-year battle with Lenco, Rinker
It took more than seven years, but trim tab manufacturer Bennett Marine has succeeded in convincing a federal court that a competitor infringed on one of its patents.
Bennett was awarded judgments totaling more than $250,000 from Lenco Marine, company president Richard DeVito Jr., and Rinker Boat Co. in a patent infringement case that dates from 2004. At issue in the lawsuit was Bennett’s patent for its auto tab retractor.
In September, U.S. District Judge Kenneth Marra in the Southern District of Florida ordered Lenco Marine and DeVito to pay $248,858 and Rinker to pay $27,680 to Bennett Marine.
Rinker was found liable for direct infringement of U.S. patent No. 5,113,780. Lenco Marine and DeVito were found liable for inducement to infringe on the patent, and Lenco Marine was found liable for breaching a 2003 settlement agreement between the parties.
Rinker president Kim Slocum was also named in the lawsuit, but no judgment was issued against him.
The auto tab retractor, for which Bennett was issued a patent in 1992, is a device that retracts the trim tabs when the boat’s ignition is turned to the off position. The judge found that Lenco received repeated notices of the patent and continued its infringing acts.
Bennett filed suit after learning that the product was being sold to builders and installed in a manner it said violated the patent.
“What this ruling means is that product innovation is still protected and that patent infringement won’t be tolerated in this industry,” Bennett Marine president Blake Bennett says. “Our customers can feel confident about doing business with a company that stands behind its products and defends the competitive advantage these products provide.”
Before the case went to trial in 2009, Bennett Marine said it was seeking $10 million in damages and attorneys’ fees. However, Blake Bennett says he is pleased with the recent ruling.
“Since it was never our desire to sue anyone, the size of the judgment does not affect our satisfaction with the verdict,” Bennett says. “The ruling brings the case to an updated status, for which we are grateful. The findings of willful patent violation open the door for us to seek repayment of an astounding amount of legal fees that were invested in this case.”
Calls to DeVito and other Lenco officials were not immediately returned. A spokesman for Rinker, which is owned by Nautic Global Group, said the company was not interested in commenting on the case.
The court case follows a 2003 settlement. At that time, Lenco paid Bennett royalties and damages of nearly $26,000 while not admitting infringement, according to court documents. In 2007, Lenco told Soundings Trade Only that its product differed from Bennett’s in that it is electronic and Bennett’s is hydraulic.
As part of the 2003 settlement, Lenco was to advise boatbuilders not to wire the products to ignitions in order to prevent the builders from violating the patent.
“The court does find, however, that in 2006 Lenco began manufacturing and selling infringing devices which are designed to be wired through the tachometer gauge, thereby indirectly resulting in the trim tabs retracting upon removal of electrical power from the engine,” Marra wrote in his decision.
“The court finds this conduct to constitute patent infringement. The court also finds that because of the design, manufacture and sale of these devices, which were developed for the specific purpose and intent of trying to circumvent the [patent] … Lenco induced infringement by Rinker and others,” the memorandum of decision says.
The court documents say DeVito and Lenco assured customers that there was “no patent problem” and that Bennett’s assertions were “not that huge of a deal.”
Court documents also show that in 2004 Lenco and Rinker entered into an indemnification agreement and that Rinker believed it was protected from suit.
“Since April 2007, Rinker has been wiring Lenco’s ATRs to the tachometer (gauge) instead of the key switch, as before, so that upon removal of power from the boat’s engine, the ATR still retracts,” the judge found. “Thus, Lenco’s actions encouraged and induced Rinker, and to the extent Lenco provided indemnification agreements and sold trim tab systems with instructions to wire them to the tachometer gauge, others to install and wire Lenco’s ATR in a matter that infringes the … patent.”
However, the judge found that automatic retraction is not the reason Rinker buys its trim tabs from Lenco and that automatic retraction is not the feature that drives the sale of trim tabs.
“This is best evidenced by the fact that, at least in Florida, only 10 percent of Bennett’s trim tab sales contain the retraction feature,” the judge wrote in his decision, “Rinker uses Lenco’s products for reasons unrelated to the retraction feature; namely, electric actuators rather than hydraulic, as well as installation and warranty issues.”
The court added, however, that lost profits were not an “appropriate measure” of damages, despite the testimony of Bennett’s damages expert.
“The court rejects Bennett’s contention that the royalty rate agreed to in the settlement agreement is a reasonable royalty rate,” Marra said in his decision. “The court concludes that the royalty rate contained in the settlement agreement is not a true reflection of market royalty rate since it was entered into under the threat of litigation. A reasonable royalty rate for any infringement by Lenco and Rinker is based on the discounted retail price of the ATR provided by Bennett to OEM boatbuilders.”
Based upon the “reasonable royalty” of $3 a unit, Bennett is entitled to receive $105,813 from Lenco and DeVito, the judge ruled. “Because the court has found that defendants engaged in willful conduct, the court, in the exercise of its discretion, will double the damage award to $211,626.”
The additional amount of the judgment comes from prejudgment interest.
Rinker’s judgment also was determined by this formula.
“Although plaintiff has proven infringement, there is no irreparable harm,” the judge wrote. “Monetary damages will adequately compensate Bennett for any harm suffered as a result of defendant’s actions.”
The judge also decided not to issue an injunction, saying “the public interest would not be served.”
This article originally appeared in the November 2011 issue.