## Facts

- Exmark Manufacturing Company (Exmark) prevailed in a patent-infringement action against Briggs & Stratton Corporation (Briggs).
- The court’s damages award included royalty amounts owed to Exmark, and the court determined that prejudgment interest should be added under 35 U.S.C. § 284 to account for the delay in payment.
- During the time prejudgment interest accrued, short-term U.S. Treasury yields were close to zero, while commercial borrowing rates (including the prime rate) were substantially higher.
- Briggs argued that the court should apply the U.S. Treasury rate to all prejudgment interest, characterizing that rate as an appropriate benchmark.
- Exmark argued for a split approach: applying the Treasury rate for the period before suit was filed and applying the prime rate from the filing of the complaint through entry of judgment.
- Exmark supported its request with evidence that its borrowing costs during the relevant period were higher than both the Treasury rate and the prime rate.
- The district court considered which rate (or rates) would best serve § 284’s compensatory function.

## Issues

1. What prejudgment interest rate should a court apply to a reasonable-royalty patent damages award under 35 U.S.C. § 284 when Treasury yields during the prejudgment period are near zero?
2. May the court apply different prejudgment interest rates for different segments of the prejudgment period (such as pre-filing versus post-filing) when the record supports doing so?

## Decision

- The court declined to apply the Treasury rate for the entire prejudgment period because, given near-zero Treasury yields, that approach would not adequately compensate Exmark for the lost use of the money.
- The court accepted a two-rate approach that tracked Exmark’s proposal: the Treasury rate for the period before the lawsuit was filed and the prime rate for the period after filing through judgment.
- The court relied on record evidence showing that Exmark’s cost of borrowing exceeded both benchmarks, supporting the conclusion that a purely risk-free rate would fall short of making Exmark whole.

## Legal Principles

- Under 35 U.S.C. § 284, prejudgment interest is generally awarded in patent cases to provide full compensation for infringement by accounting for the time value of money.
- District courts have discretion to select the interest rate and methodology that best fits the record and the compensatory purpose of prejudgment interest.
- A Treasury-based rate can be used as a benchmark, but it is not required where it would materially undercompensate the patent owner.
- Commercial rates such as the prime rate may be appropriate where supported by evidence that the patentee’s economic cost from delayed payment was closer to commercial borrowing costs than to risk-free Treasury yields.
- A court may use different interest rates for different portions of the prejudgment period when the record justifies treating those periods differently.

## Conclusion

Exmark Manufacturing Co. v. Briggs & Stratton Corp. holds that, in setting prejudgment interest on royalty-based patent damages under § 284, a district court may depart from near-zero Treasury yields and may use different rates for different time periods—such as Treasury before filing and prime after filing—when that approach better compensates the patent owner for the delay in payment.


Exmark Manufacturing Co. v. Briggs & Stratton Corp., 2019 WL 1596822 (2019)