Motion to Stay Enforcement of Judgment Denied Where Defendant Was Found to be a Willful Infringer and Offered Inadequate Security

by Jeffer Mangels Butler & Mitchell LLP
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On May 16, 2014, the district court entered Judgment on a jury verdict in favor of Plaintiff Global Traffic Technologies, LLC ("GTT") in the amount of $5,052,118, enhanced damages in the amount of $2,526,059, and prejudgment interest in the amount of $923,965, plus $1,384.14 for each day after October 31, 2013. Defendants Morgan and KME requested that the district court stay execution of judgment and waive the supersedeas bond requirement. Defendant STC requested that the district court stay execution of judgment with an authorized bond of $100,000, together with pending patent applications in the field of traffic signal preemption.

As the district court explained, "[a]n appellant may obtain a stay of execution of judgment pending appeal when an appellant posts a supersedeas bond, "in the full amount of the judgment plus interests, costs, and damages for delay." Fed.R.Civ. P. 62(d); Corporate Comm'n of the Mille Lacs Band of Ojibwe Indians v. Money Ctrs. of Am., Inc., No. 12-1015, 2013 U.S. Dist. LEXIS 176796, at *2 (D. Minn. Dec. 17, 2013) (citing New Access Commc'ns LLC v. Qwest Corp., 378 F. Supp. 2d 1135, 1138 (D. Minn. 2005) (Tunheim, J.)). The Court maintains the discretion, however, to waive the bond requirement and stay enforcement of the judgment without a bond."

The district court found there was no justification to stay enforcement of the judgment. "Defendants have not shown justification for a stay of judgment and have not met their burden to waive any amount of the supersedeas bond required under Federal Rules of Civil Procedure, Rule 62. As an initial matter, Defendants' representations cannot be relied upon. In lieu of a bond, Morgan and KME offered as partial alternate security Canadian Patent #1,338,356, which they represented as remaining valid for another two years and estimated an approximate value of the remaining duration of the Canadian patent at $1.5 million. Morgan and KME now concede that this patent is expired. Morgan and KME also represent that they have a "chose in action," a lawsuit, against GTT, based on this now admittedly expired patent, which they represent has a value of approximately $3.8 million. The value of such a suit before resolution is always speculative, but there is also no evidence that this suit has been filed. Finally, KME offers as security its corporate stock. However, according to Morgan's bank filings, KME has essentially no assets. Thus, accepting Morgan and KME's offer of alternative security is no insurance that GTT will be able to ultimately collect the judgment."

Although STC has given the Court fewer reasons to distrust its representations than the other Defendants, STC has still failed to present sufficient and reliable evidence of its financial situation or of its ability to obtain a supersedeas bond. STC's only documentary evidence is an unaudited balance sheet from April 2014 showing a net worth of just under $1 million.

Finally, the district court noted that jury had "found Morgan, KME and STC willfully infringed on GTT's patent. The jury found that GTT was entitled to recover over $5 million in damages because of Defendants' sale of infringing products.

Accordingly, the district court denied the motion to stay enforcement of the judgment. "Defendants have not demonstrated sufficient reason for the Court to waive the requirement of a full supersedeas bond prescribed by Rule 62(d). Without a sufficient supersedeas bond, Defendant have not shown they are entitled to a stay of judgment pending appeal."

Global Traffic Technologies, LLC v. Rodney K. Morgan, Case No. 10-4110 ADM/JJG (D. Minn. July 16, 2014)

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