Judge determines Man Wah must pay Raffel Systems $15.1 million in damages related to patent, trade dress infringement

Parties expected to negotiate final settlement in the coming weeks that also will include attorneys fees and other costs

MILWAUKEE —  A judge for the U.S. District Court for the Eastern District of Wisconsin has agreed that motion upholstery manufacturer Man Wah Holdings must pay Raffel Systems $15.1 million plus attorneys fees related to a patent infringement case involving Raffel’s multifunctional lighted cupholders.

A jury found last June that the Chinese manufacturer had infringed on Raffel’s intellectual property by duplicating these cupholders that are commonly used in motion upholstery. It awarded $97.5 million in punitive damages and $8.7 million in actual damages for false marking and other claims related to the alleged theft of intellectual property.

In this week’s decision, Magistrate Judge Nancy Joseph said that Man Wah challenged nearly every aspect of the jury’s verdict. Joseph thus denied some of Man Wah’s motions and accepted others including its motion to reduce certain damages that were deemed duplicative.

Plus the overall amount awarded is much lower because of a $2 million cap on punitive damages in the state of Wisconsin.

The other amounts awarded are as follows:

+ $5.8 million in disgorgement of profits

+ $3.54 million in enhanced statutory damages for trade dress infringement

+ $1.35 million in prejudgment interest

+ $1.28 million in enhanced statutory damages for patent infringement

+ $1.18 million in actual damages

Raffel Systems also is entitled to attorneys fees and nontaxable costs for things like expert witness fees, hotels and travel. This would be in addition to the $15.1 million, and the parties have 45 days to provide the court an update on a settlement involving these costs.

“As anticipated, we are pleased that the judge reduced the settlement which adheres to the Wisconsin law,” said Gabriele Natale, chief executive officer in response to the decision. “At this point, we will access our options and decide on our next actions.”

Through legal counsel, Raffel officials indicated they were pleased with Thursday’s ruling.

“Raffel is pleased with the court’s decision to award us more than four and a half years in attorneys’ fees and our maximum in punitive damages under Wisconsin’s statutory cap,” said Raffel attorney John Scheller of Michael, Best & Friedrich LLP. “The decision confirms the jury verdict that not only did Man Wah infringe our patent and trade dress, but that it did so maliciously and willfully. It is our hope that Man Wah takes this as a lesson that theft of intellectual property, as found by the jury, is bad business in the United States and elsewhere, and that stealing is never acceptable.”

“Judge Joseph validated the jury’s findings on all counts, but was constrained from approving the punitive damage award due to Wisconsin’s statutory cap,” he added. “The court specifically emphasized, ‘Although the award must be reduced to reflect Wisconsin’s statutory cap, the jury awarded $97.5 million in punitive damages against Man Wah for misappropriation of Raffel’s trade dress. The jury was sending a strong message that it believed Man Wah’s conduct towards Raffel was particularly reprehensible. For all of these reasons, an award of attorneys’ fees is proper in this case.’”

Thomas Russell

Home News Now Editor-in-Chief Thomas Russell has covered the furniture industry for 25 years at various daily and weekly consumer and trade publications. He can be reached at tom@homenewsnow.com and at 336-508-4616.

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