IP Law Daily, PATENT—W.D. Wis.: Willfulness finding upheld, damages enhanced in automotive sensor patent dispute, (Apr 22, 2025)

By Saurabh Kashyap, B.A., LL.B., LL.M.

Post-remand jury findings of willful infringement, copying, and customer deception supported enhanced damages, attorney fees, and permanent injunction in favor of prevailing patentee.

A federal district court in Wisconsin entered a comprehensive ruling favoring SSI Technologies, LLC, affirming a jury’s willfulness finding and $16.6 million damages award against Chinese automotive parts supplier Dongguan Zhengyang Electronic Mechanical Ltd. (DZEM) for infringement of a fuel system sensor patent. The court enhanced damages for willful infringement, awarded post-verdict interest, granted a permanent injunction, and declared the case exceptional, entitling SSI to recover attorney fees and non-taxable costs. The court also denied DZEM’s motions for judgment as a matter of law and for a new trial, finding that the jury’s verdict was well supported by evidence of copying, customer deception, and litigation misconduct (SSI Technologies, LLC v. Dongguan Zhengyang Electronic Mechanical Ltd., No. 3:20-cv-00019-jdp (W.D. Wis. Apr. 21, 2025)).

Background. The plaintiff, SSI Technologies, LLC, a U.S.-based manufacturer of vehicle sensors, owns U.S. Patent No. 9,210,038 (the ’038 patent), which covers a diesel exhaust fluid (DEF) sensor design incorporating a bubble-reducing filter structure. SSI had commercialized this technology and sold sensors in the U.S. market since before 2017.

The defendant, Dongguan Zhengyang Electronic Mechanical Ltd. (DZEM), is a Chinese automotive electronics firm that began offering similar DEF sensors around 2017. It entered into discussions with SSI over a potential joint venture but ultimately terminated negotiations and introduced its own sensor design. SSI filed suit in 2020, alleging that DZEM had copied its patented sensor design and sold infringing products to major truck manufacturers and suppliers in the U.S.

The ’038 patent claims a DEF sensor with a filter and chimney arrangement inside a rubber cover designed to minimize air bubbles during fluid sensing. These bubbles degrade the accuracy of ultrasonic sensors, and the patented design improved reliability, especially for heavy-duty diesel vehicles operating under variable conditions.

The district court initially granted summary judgment in favor of DZEM, adopting a narrow construction of the term “filter.” On appeal, the Federal Circuit reversed, construing the term more broadly and remanding for further proceedings. On remand, the district court granted summary judgment of infringement in favor of SSI. A jury trial was held to determine damages and willfulness. The jury awarded $16.6 million and found that DZEM’s infringement was willful during two distinct periods—before the initial 2021 summary judgment and after the 2024 summary judgment post-remand.

DZEM then moved for judgment as a matter of law or, alternatively, for a new trial, challenging the sufficiency of the evidence for willfulness, lost profits, and sales attributed to PACCAR Inc., one of DZEM’s customers.

Willfulness. The court found substantial evidence to support the jury’s determination that DZEM willfully infringed during two distinct phases: January 2019 to September 3, 2021, and May 23, 2024, through trial.

During the first period, the court rejected DZEM’s argument that its belief in non-infringement was objectively reasonable due to the district court’s initial claim construction. The court emphasized that willfulness depends on the infringer’s subjective belief, not judicial missteps. The jury heard evidence that DZEM was aware of the ’038 patent since 2017 but failed to disclose it to U.S. counsel when seeking freedom-to-operate opinions in 2018. DZEM then misrepresented those opinions to customers, falsely claiming they confirmed non-infringement.

The court also credited circumstantial evidence that DZEM copied the patented sensor structure. Following joint venture discussions and access to SSI’s technology, DZEM designed a rubber cover using a filter and chimney arrangement similar to SSI’s. Despite claiming independent development, DZEM lacked contemporaneous design records from 2015 and relied instead on a presentation prepared years later. The court concluded that a reasonable jury could find DZEM acted with reckless disregard.

For the second period, after the court’s renewed summary judgment finding infringement, DZEM continued sales while waiting for customer validation of a modified, coverless sensor. The court held that this was not a defense to willfulness, but rather a justification better suited to damages enhancement. Because DZEM continued selling infringing products with knowledge of infringement, the court found the jury’s verdict fully supported.

Infringing sales. DZEM argued that the damages award improperly included sales to PACCAR, asserting that only non-infringing coverless sensors had been sold to that customer. However, the court found otherwise. SSI presented deposition testimony from a DZEM executive estimating 23,000 “accused products” sold to PACCAR. Although DZEM sought to later reinterpret this statement, the jury was entitled to credit the original testimony. Further, testimony from other witnesses established that initial PACCAR purchases included the infringing rubber cover, and documentation proving otherwise was not introduced at trial.

The jury was instructed to resolve doubts in SSI’s favor where DZEM failed to maintain adequate records—a standard the court found met. The court therefore declined to disturb the inclusion of PACCAR sales in the damages base.

Lost profits. DZEM challenged SSI’s damages expert Richard Bero’s reliance on a market share approach, asserting that it had an acceptable non-infringing alternative. But the court upheld the methodology, noting that DZEM had negligible pre-2022 market presence and all its initial sales were of infringing sensors.

Bero presented evidence that SSI controlled 75% of the market before DZEM’s entry and that DZEM won contracts from SSI by selling the infringing design. The jury accepted Bero’s assumption that DZEM would not have succeeded in entering the market but for infringement, and the court found the analysis to be sound and supported by State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573 (Fed. Cir. 1989) and Grain Processing Corp. v. Am. Maize-Prods. Co., 185 F.3d 1341 (Fed. Cir. 1999).

Enhanced damages and exceptional case finding. The court trebled damages for the two willful infringement periods and doubled damages for the intervening period. It found that DZEM's behavior—falsifying freedom-to-operate claims, copying SSI’s design, and failing to promptly switch to non-infringing alternatives—warranted enhancement under Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93 (2016) and Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992). The court noted that DZEM’s revenue from infringing products exceeded $70 million, and enhancement was necessary to deter misconduct.

It also found the case exceptional under 35 U.S.C. § 285 due to the post-remand willfulness finding, discovery misconduct, and DZEM’s pattern of misleading customers. Attorney fees and non-taxable litigation costs incurred after the Federal Circuit’s February 2023 mandate were awarded.

Permanent injunction. The court enjoined DZEM from further infringement, finding that SSI and DZEM were direct competitors in the DEF sensor market and that money damages could not compensate for SSI’s lost market share, price erosion, and customer goodwill. The court found no substantial public interest concerns, as DZEM had transitioned customers to its non-infringing version by early 2025.

Thus, the court denied all of DZEM’s post-trial motions, awarded supplemental damages for post-verdict sales, granted SSI’s motion for enhanced damages, attorney fees, and non-taxable costs, and issued a permanent injunction.

The Case is No. 3:20-cv-00019-jdp.

Judge: Peterson, J.

Attorneys: Melanie J. Reichenberger (Michael Best & Friedrich, LLP) for SSI Technologies, LLC. Boyd Cloern (Steptoe LLP) for Dongguan Zhengyang Electronic Mechanical Ltd.

Companies: SSI Technologies, LLC; Dongguan Zhengyang Electronic Mechanical Ltd.

Cases: Patent TechnologyInternet WisconsinNews