Page 36 - Intellectual Property Disputes

. . . . Accordingly, Medtronic asks us to hold that the requisite demand under the first Panduit
factor is demand for the specific feature (i.e., claim limitation) that distinguishes the patented
product from a noninfringing substitute, not simply demand for the patented product. We decline
Medtronic’s request. Medtronic’s argument unnecessarily conflates the first and second Panduit
factors. fn 17

The court, citing Rite-Hite Corp. v. Kelley Co., Inc., fn 18 concluded that "the focus on particular features
corresponding to individual claim limitations is unnecessary when considering whether demand exists
for a patented product under the first Panduit factor. Rather, the elimination or substitution of particular
features corresponding to one or more of the claim limitations goes to the availability of acceptable
noninfringing substitutes under the second Panduit factor..." fn 19

More recently, in 2017, the Federal Circuit again addressed the need for patent holders to establish
demand for the patented product as a whole, but in the context of both the demand and non-infringing
alternatives Panduit factors. In Mentor Graphics Corporation v. EVE-USA, Inc., fn 20 the court
concluded as follows:

We have explained the relationship between the first two Panduit factors. The first factor—
demand for the patented product—considers demand for the product as a whole. DePuy Spine,
Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1330-31 (Fed. Cir. 2009). The second
factor—the absence of non-infringing alternatives—considers demand for particular limitations
or features of the claimed invention. Id. at 1331. Together, requiring patentees to prove demand
for the product as a whole and the absence of noninfringing alternatives ties lost profit damages
to specific claim limitations and ensures that damages are commensurate with the value of the
patented features. See Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 702 F.3d 1351,
1361 (Fed. Cir. 2012) ("[P]roducts lacking the advantages of the patented invention can hardly
be termed a substitute acceptable to the customer who wants those advantages."

Factor 2 — Acceptable non-infringing substitutes. A heavily litigated issue involves whether
acceptable, non-infringing substitutes for the patented invention existed during the infringement period
(that is, the second Panduit factor). "The second factor, absence of acceptable non-infringing
alternatives, often proves the most difficult obstacle for patent holders. Under this factor, if there is a
non-infringing alternative, which any given purchaser would have found acceptable and bought, then the
patentee cannot obtain lost profits for that particular sale. For example, if the customer would have
bought the infringing product without the patented feature or with a different, non-infringing alternative
to the patented feature, then the patentee cannot establish entitlement to lost profits for that particular
sale. This determination is made on a customer-by-customer basis. For this reason, it is quite common to
see damage awards where...the patentee proves entitlement to lost profits for some of its sales, but not
others. fn 21

fn 17 Id.

fn 18 Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538 (Fed. Cir. 1995).

fn 19 DePuy Spine, 567 F.3d at 1314.

fn 20 Mentor Graphics Corporation v. EVE-USA, Inc., No. 15-1470 (Fed. Cir. Mar. 21, 2017) (Moore, J.)

fn 21 Mentor Graphics Corporation v. EVE-USA, Inc., No. 15-1470 (Fed. Cir. Mar. 21, 2017) (Moore, J.)

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