Nam Jin Yeu and Namjin Industries, Inc.,plaintiffs/counterclaim-defendants/appellants, v. Douglas S. T. Kim, Individually and D/b/a J.h. Upsun Companyand Upsun Corporation, Defendants/counterclaimants/appellees, v. Michael Park A/k/a Hwa Taek Park and Michael Park's Trading& Sales, Inc., Counterclaim-defendants/appellants, v. S.a. Sales, Inc., Intervening Counterclaimant, 940 F.2d 678 (Fed. Cir. 1991)

Nam Jin Yeu and NamJin Industries, Inc. (collectively, "NamJin"), Michael Park ("Park"), and Michael Park's Trading & Sales, Inc. (the "Park Company") appeal the judgment of the United States District Court for the District of Hawaii, entered after bifurcated bench trials on liability and damages, holding that U.S. Patent No. 4,545,775, directed to a mechanical hula doll, and a copyright on the doll's design, were willfully infringed, awarding treble damages, interest and attorney fees to Douglas S.T. Kim, the J.H. Upsun Company, and Upsun Corp. (collectively "Kim"), and enjoining NamJin, Park, and the Park Company from further infringement.¹  Yeu v. Kim, No. 85-1119 (D. Haw. Aug. 8, 1990). Because the patent-related holdings are, with one exception as to Park, correct, we affirm-in-part. But because, as a matter of law, the personal liability of Park was not established, we reverse-in-part. And because the district court did not make findings under the correct theory as to copyright ownership, or otherwise indicate it had applied the correct legal test, and because the court appears to have erred calculating damages, we vacate-in-part. Since copyright infringement must be redetermined, and damages may need to be recalculated, for these purposes only, we remand.

DISCUSSION

All appellants--NamJin, Park, and the Park Company--raise two issues for our consideration: (1) whether the district court erred in concluding Kim held sole legal title to the copyright, and (2) whether the court's finding of doctrine of equivalents infringement is clearly erroneous.²  Additionally, appellants Park and the Park Company argue (3) that the court erred in holding Park personally liable, and (4) that the finding of willfulness is clearly erroneous.³  We also consider, sua sponte, (5) whether the district court's calculation of damages was correct.

In Community for Creative Non-Violence v. Reid, 490 U.S. 730, 10 USPQ2d 1985 (1989), the Supreme Court held that in determining whether something was "prepared by an employee within the scope of his or her employment," and is therefore a "work made for hire" under 17 U.S.C. § 101 (1988), a court should apply "principles of general common law of agency" to determine whether the work was prepared by an employee or by an independent contractor. Id. at 751, 10 USPQ2d at 1994. In Reid, the Court held that a sculptor, who created a statue on commission, was an independent contractor and that the sculpture therefore was not a "work made for hire." Id. at 752, 10 USPQ2d at 1995.

Here, the issue is whether the hula doll was a work made for hire. The district court's March 1988 liability decision in this case found Kim to be the sole owner, but did so with an analysis that focused (quite understandably) on the "motivating factor" test. This test was rejected by the Supreme Court in Reid, but not until over a year later, on June 5, 1989. Thus the district court did not make findings as to common law agency, which the Supreme Court now requires as the test to be applied under Sec. 101. On August 2, 1989, when the district court denied a motion to reconsider its decision in light of Reid, it once again made no agency findings.

Because it neither explained why it left its copyright decision unchanged nor made new findings under Reid, we vacate the finding of copyright infringement and remand for new findings consistent with this opinion and with Reid.

NamJin, Park, and the Park Company argue that our previous decision of May 3, 1990, stating that prosecution history estoppel was not timely raised in the trial court, is not the law of the case because that decision was based on an erroneous belief that the issue was not raised at trial. They argue that the prosecution history clearly establishes that the trial court's range of equivalents--equating a "lever arm" with a "connecting rod"--is too broad, and that in fact this issue was timely raised, if somewhat unartfully, in that two opinions discussing, inter alia, prosecution history estoppel were attached to a trial memorandum they submitted to the court.

We disagree. Attaching opinions which discuss, somewhere within them, the issue of prosecution history estoppel does not fairly constitute "raising" that issue so as to require its disposition. Nor does the fact that the district court cited, on other grounds, the submitted cases in its decision indicate that it considered prosecution history estoppel, or that we even were aware that defendants thought it was an issue in the case. Therefore, our earlier decision that "Park failed to timely argue and support its prosecution history estoppel defense in the district court," Yeu v. Kim, No. 90-1070, slip op. at 3 (Fed. Cir. May 3, 1990) (affirming preliminary injunction), was correct and is the law of the case.

Citing Lear Siegler, Inc. v. Sealy Mattress Co., 873 F.2d 1422, 10 USPQ2d 1767 (Fed. Cir. 1989) and Nestier Corp. v. Menasha Corp.-Lewisystems Div., 739 F.2d 1576, 222 USPQ 747 (Fed. Cir. 1984), cert. denied, 470 U.S. 1053 (1985), appellants also argue that Kim did not present specific argument as to the doctrine of equivalents. But the holding in Lear Siegler and the dicta in Nestier were limited to jury trials and whether there was sufficient evidence for the issue of infringement by equivalents to go to the jury, and therefore the rule requiring particularized evidence or linking arguments has no application in this case, which did not involve a jury trial.

Appellants further argue that the district court ignored the effect of the prior art in considering the doctrine of equivalents because, though " [t]he district court stated that it had reviewed the prosecution history of the '775 patent," its "decision is bereft of any analysis supporting this statement." Brief for Appellant Nam Jin Yeu at 10. But as we have repeatedly said, we review judgments, not opinions, and a court's failure to discuss does not imply a failure to consider. We have reviewed the prior art cited by appellants and determine that it does not preclude a range of equivalents broad enough to read on the accused dolls.

There being no basis for reversing this finding of infringement under the doctrine of equivalents, we must and do sustain it.

The district court judgment holds Michael Park, the president of Michael Park's Trading & Sales, Inc., personally liable for his company's damages to Kim. But none of the court's opinions include any discussion whatever of Park's activities in his personal, as opposed to corporate, capacity or otherwise explain why he should be held personally liable.

Kim argues that such an imposition of personal liability for direct infringement under 35 U.S.C. § 271(a) is nevertheless proper because " [t]he evidence at trial established that Michael Park was acting personally and as the President of Michael Park's Trading and Sales, Inc.," and because "he was directly responsible for and controlled all corporation decisions regarding purchase and sale of hula dolls, and was the only one who stood to benefit from the infringing sales." Brief for Appellees at 14-15. But as we held in Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 552, 16 USPQ2d 1587, 1593 (Fed. Cir. 1990), for corporate officers to be personally liable for infringement under Sec. 271(a), "there must be evidence to justify piercing the corporate veil." The general rule is to recognize the independence of the corporate entity, "unless specific, unusual circumstances call for an exception." Id. Thus, the corporate veil may be pierced where the corporation was shown to be "merely the alter ego of its officers," or where it is necessary to "prevent fraud, illegality, injustice, a contravention of public policy, or prevent the corporation from shielding someone from criminal liability." Id. And "unless there is at least 'specific intent to escape liability for a specific tort ... the cause of justice does not require disregarding the corporate entity.' " Id. (quoting Zubik v. Zubik, 384 F.2d 267, 271-72 (3d Cir. 1967), cert. denied, 390 U.S. 988 (1968)).

Here the district court made no findings as to the personal liability of Park: It did not find Park to be an alter-ego of the corporation, did not find that piercing the veil was needed to prevent fraud, injustice, etc., and did not find that Park had intended to use the corporation to escape liability for a particular tort.⁴  Indeed, the failure to make such findings in accordance with Rule 52(a) could alone make this aspect of the judgment unsustainable. But we need not so decide because Kim has not pointed to any specific evidence in the record on which the district court could have impliedly relied to justify piercing the corporate veil.⁵  This lack of supportive evidence is fatal to a finding of direct infringement under Sec. 271(a) by Park personally, and the judgment against Park personally in these circumstances must therefore be reversed.

Kim had the burden of proving infringement, by a preponderance of the evidence, as to each defendant named. Although he had an opportunity to establish the personal liability of Park at trial, he can point to no evidence introduced there as to Park's activities in a personal, as opposed to as a corporate, capacity. He should not get another chance to do so. Therefore, vacating and remanding for a retrial on this issue would not be appropriate.

The Park Company argues that it cannot have been a willful infringer because it relied on NamJin's assurances that the patent was invalid and because it waited until after NamJin filed a declaratory judgment suit before it started selling the infringing dolls. These arguments are meritless, and indeed border on frivolous.

Our cases establish that good-faith reliance on competent advice of counsel is a defense to a charge of willful infringement. See, e.g., Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1390, 219 USPQ 569, 576 (Fed. Cir. 1983). Reliance on the opinion of a co-infringer, however, is not a defense.

Similarly, the mere fact that another party has filed a suit seeking to invalidate a patent is not the same as an adjudication of invalidity; it cannot serve to rebut the presumption of validity the patent enjoys. The Park Company was not entitled to rely on NamJin's filing suit, and thus any purported "reliance" on the filing of the lawsuit, even if proven, cannot support overturning the finding of willfulness.

Accordingly, the finding of willfulness must be sustained.

Damages for patent infringement may be based either on a reasonable royalty for the patented invention, or, if greater and if proven, on the profits the patentee actually lost because of the infringing sales. 35 U.S.C. § 284 (1988). Damages for copyright infringement can include the owner's actual damages and any additional profits of the infringer. 17 U.S.C. § 504(b) (1988).

Here, the district court awarded $42,507.00 as a reasonable royalty, apparently as actual damages for both patent and copyright infringement. The court also awarded $10,485.06 and $42,507.00, constituting each infringer's profits on its sales, an additional award available only under copyright. The court then trebled both awards, although the copyright law provides no authority for multiplying an award of "actual damages and profits" under Sec. 504(b). It thereby committed legal error.

Because it is not entirely clear which theory of recovery the court relied on in awarding various damages, and because in any event the copyright finding has been vacated and remanded, we vacate the damages award in its entirety. On remand, the court should recalculate the damages against NamJin and the Park Company in light of its new findings as to copyright ownership and infringement, and specify carefully which damages are allocable to copyright infringement, if any, and which to patent infringement. If the court awards any damages recoverable only under a copyright infringement theory, those damages may not be trebled.

CONCLUSION

For the foregoing reasons, the judgment is vacated and remanded as to the finding of copyright infringement, and reversed as to the imposition of personal liability on Michael Park. The finding of willful infringement by NamJin and the Park Company is upheld. However, the determination of the amount of actual damages to be awarded against NamJin and the Park Company is vacated and remanded for recalculation consistent with this opinion.

We also affirm the issuance of an injunction, forbidding NamJin and the Park Company from "infringing and interfering in any manner with Kim's United States Utility Patent 4,545,775" and from "making selling or distributing the Doll ... taught by [the '775] patent." However, that portion of the injunction directed to Park personally is vacated, since the underlying finding of personal infringement has been reversed, and the district court is to amend its injunction accordingly.

COSTS

Each party is to bear its own costs.