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 ... Read More
In this district court case, the Court ruled on summary judgment that Plaintiff ATEN was not entitled to lost profits damages. Plaintiff's expert acknowledged that there were competitors in the relevant market other than plaintiff and defendant, however, he stated that he was unable to identify market share data that would allow for a market share lost profits approach. Lacking such market share data, he calculated that plaintiff would capture 100% of the infringing sales. The judge rejects this, concluding that “ATEN cannot meet the reasonable probability standard for establishing lost profits.”
This ruling is a bit interesting for a couple reasons. First, courts have long taken the approach that doubts shall be resolved against the infringer. The infringer and their expert could make rebuttal arguments with their own market share estimates to correct the numbers. Second, failing to account for some smaller competitors doesn’t mean that lost profits shouldn’t be available; it merely means that they were overestimated. So defendants could use deposition or their expert to show how to correct the calculus and leave it to the jury.
But the ruling does note that defendants suggested (probably exaggerating) that even up to 50% of the market might consist of other ... Read More
A district court in Florida doubled the reasonable royalty rate awarded by a jury to arrive at a post-judgment royalty rate. The Court had already concluded that the jury’s royalty rate (for past damages) of $103 would set the floor on the parties’ negotiations of an ongoing rate. The Court also notes that defendant BRP conceded it continues to make and sell infringing products.
While plaintiff Arctic Cat argued for an ongoing rate of $205 (double the jury’s rate), Defendant argued that the jury rate should not be increased. The Court notes, citing Paice II (Paice LLC v. Toyota Motor Corp., 504 F.3d), that “once a judgment of validity and infringement has been entered, however, the calculus is markedly different because different economic factors are involved.” The court here had already awarded treble damages ($308 per unit), and Defendant BRP must consider that it “continues to willfully infringe” the patent-in-suit. The court also seems unimpressed that Defendant’s corporate representatives recently referred to the verdict as “unfounded” and “baseless” on several occasions, and that “such actions in fact demonstrate a lack of proper respect for the Court, the jury, and the U.S. patent system.” The Court ultimately accepts Plaintiff’s proposed ongoing rate ... Read More
In this patent infringement case about mobile handset digital watermarking technology, a Texas court rejected the royalty rate methodology of plaintiff’s expert because the expert failed to explain, mathematically, how his survey data led to his 10% factor to apportion the value of the handset to the patented technology. Further, he failed to show how the patented features compared to the features that were the subject of the surveys.
Here, plaintiff’s expert Leon Hawk Travis did not argue that the patented technology was the basis of customer demand for the mobile handsets, instead opining that the smallest salable unit of the accused product was the handset itself, not the internal chipset. He then set out to apportion the total value of the handsets to account for the patented technology, and arrived at an apportionment factor of 10%. In doing so, he relied upon two consumer surveys that indicate that consumers value broader security features. The court accepts that these surveys may not provide an exact analog for the patented technology, but leaves that as a question of the weight the jury gives his testimony. However, the court excludes the expert’s opinions for two reasons. First, he did not separate out the patented ... Read More
In Aqua Shield v. Inter Pool, the Federal Circuit explains in a bit more detail why an infringer’s profitability really, for sure, we-mean-it-this-time, definitely does not represent the ceiling on a reasonable royalty. It made the same point in its past decisions in Douglas Dynamics v. Buyers (Fed. Cir. 2013), Golight v. WalMart (Fed. Cir. 2004) and even back in the 1989 decision in State v. Mor-Flo (“There is no rule that a royalty be no higher than the infringer’s net profit margin.”).
The court first notes that an infringer’s actual profits are only relevant “in an indirect and limited way—as some evidence bearing on a directly relevant inquiry into anticipated profits.”
The court explains that “an especially inefficient infringer—e.g., one operating with needlessly high costs, wasteful practices, or poor management—is not entitled to an especially low royalty rate simply because that is all it can afford to pay without forfeiting or unduly limiting its profit if it uses the patented technology rather than alternatives.”
The court finds that “the district court did not err in considering [defendant’s] profits. But it did err in treating the profits [defendant] actually earned during the period of infringement as a royalty cap.” By incorrectly focusing on ... Read More