Facts
- Edward J. Kennedy, Henry Martinez, Herman Paprzycki, and Dominick Stabilito owned patents covering article-counting and loading machines.
- The patent holders licensed Lakso Company, Inc. to make machines under the patents.
- The pleadings reflected that the license ran from March 27, 1962 until October 5, 1965, when (according to the patent holders) the agreement was terminated.
- The patent holders alleged that after termination Lakso continued to make and sell machines similar to those previously made under the license, thereby infringing the patents.
- On November 29, 1967, the patent holders sued in federal district court for patent infringement.
- The complaint requested: (1) an injunction; (2) an “accounting” for profits and damages from infringement; (3) a money judgment of $200,000 if profits were less than that amount; (4) treble damages; (5) surrender for destruction of infringing machines; and (6) costs and attorney fees.
- The complaint included a demand for a jury trial.
- After the pleadings closed, Lakso moved to strike the jury demand, arguing the action was essentially equitable because it sought injunctive relief and an accounting.
- The district court granted the motion and struck the jury demand on the ground that an action for injunctive relief was equitable and therefore not triable by jury.
- The patent holders appealed to the United States Court of Appeals for the Third Circuit.
Issues
- In a patent infringement action seeking both injunctive relief and monetary recovery (damages and/or profits labeled as an “accounting”), does the Seventh Amendment entitle the plaintiff to a jury trial on the legal issues?
Decision
- The Third Circuit reversed the order striking the jury demand and remanded.
- The court held that the patent holders were entitled to a jury trial on issues that are legal in nature, including the factual issues tied to monetary recovery for infringement.
- The presence of equitable requests (such as an injunction, destruction of infringing machines, and an accounting label) did not eliminate the jury-trial right for legal claims.
Legal Principles
- The Seventh Amendment preserves the right to a jury trial for claims that are legal in nature, even when legal and equitable remedies are sought in the same lawsuit.
- Historically, patent infringement damages were recoverable through an “action on the case” at law, making the damages remedy jury-triable; the Patent Act of 1952 did not remove that jury-trial entitlement for damages issues.
- Under Beacon Theatres and Dairy Queen, when legal and equitable issues are joined, courts must protect the jury right on the legal issues; equitable adjudication cannot be used to avoid a jury on legal claims.
- A plaintiff’s use of the term “accounting” does not control the jury-trial analysis; when the substance of the request is a money award (damages and/or profits), the legal issues remain triable to a jury.
- When both legal and equitable relief are pursued, the legal issues should be tried to a jury, and the court may then address equitable relief in a manner consistent with the jury’s factual findings.
Conclusion
Kennedy v. Lakso Co. holds that a patent infringement plaintiff who seeks monetary recovery (damages and/or profits) along with equitable remedies such as an injunction retains a Seventh Amendment right to a jury trial on the legal issues, and a court may not strike a jury demand merely by characterizing the suit as primarily equitable or by treating a money request as an “accounting.”