On appeal after a $2.2 million jury award of lost profits, the Federal Circuit vacated the lost profits award, ruling that insufficient evidence regarding non-infringing alternatives supported the finding. While this ruling may not be particularly ground-breaking, it does add another data point as to how the Federal Circuit sees the issue of non-infringing alternatives.
Presidio had sued ATC for infringement of a patent related to a multilayer capacitor design. ATC sold two types of capacitors: the infringing 550 series, and the non-accused 560L. The question before the court is whether Presidio established its right to recover lost profits for its sales of the BB capacitors, which Presidio claimed were harmed by the infringement.
The court faults the district court for focusing on the shortcomings of the 560L relative to the 550, instead of comparing it to Plaintiff’s BB product, with which the 560L would have been competing in the but-for market. In concluding that the 560L was not an acceptable non-infringing alternative, “the district court stated that ‘ATC’s own witness testified that the 560 capacitors are not as good as the 550 capacitors.”
The court then explains:
“The correct inquiry under Panduit is whether a non-infringing alternative would be acceptable compared to the patent owner’s product, not whether it is a substitute for the infringing product. … The district court erred by relying on evidence about sales of the 560L capacitor in competition with the currently infringing product, rather than comparing the 560L capacitor to Presidio’s BB capacitor in a hypothetical market without the infringing 550 capacitor. There was not substantial evidence in the record upon which a jury could conclude that the 560L was not an acceptable, noninfringing alternative for Presidio’s BB capacitors. Undisputed evidence showed that the 560L capacitor was less expensive than Presidio’s BB capacitor and also had lower insertion loss for at least some frequencies, which indicates better performance.” [emphasis added]
The ruling also faults the lower court for focusing on the limited extent of 560L sales as support for the finding that it was not an available alternative. The district court had explained that the 560L was only sold to a single customer, was not listed on the website, and was sold in far fewer quantities than the infringing 550. The Federal Circuit explains that none of those proves that it was unavailable.
Presidio Components, Inc. v. American Technical Ceramics Corp., Nos. 2016-2607, 2016-2650 (Fed. Cir. Nov. 21, 2017)
For additional detail on the district court’s findings, see pp. 22-24 of:
Presidio Components, Inc. v. American Technical Ceramics Corp., 14-cv-02061-H-BGS (S.D. CA, Aug. 17, 2016, Opinion) (Huff) (entry #440)