Page 42 - Intellectual Property Disputes

We reverse the district court’s conclusion that under a market share theory Calico would have
captured profits "but for" Acme’s infringement. fn 37

Available and substitute. An accused infringer’s ability to produce an acceptable non-infringing
substitute during the damages period may also defeat the patent holder’s recovery of lost profits.
"...[B]ecause ‘a rational would-be infringer is likely to offer an acceptable non-infringing alternative, if
available, to compete with the patent owner rather than leave the market altogether,’ the analysis must
consider the impact of such alternate technologies on the market as a whole." fn 38 The infringer may
attempt to show that it would have consummated some or all of the infringing product sales by selling
another available, non-infringing substitute in the relevant market. In other words, customers would
have selected the infringer’s available, non-infringing alternative, instead of the patented invention in
the absence of infringement. Acceptable non-infringing substitutes may also use the design-around
concept. The design-around concept refers to "mak[ing] something that performs the same function or
has the same physical properties as [a patented product or process] but in a way different enough from
the original that it does not infringe the patent." fn 39 The design-around alternative should provide the
same or comparable utility without infringing the patent.

In Grain Processing, the Federal Circuit held that if a patent holder offers proof of sales it would have
made but for the infringement, "an accurate reconstruction of the hypothetical ‘but-for’ market takes into
account any alternatives available to the infringer." fn 40 The Federal Circuit explained that a product or
process may qualify as an acceptable non-infringing substitute for purposes of defeating a lost profits
claim, even if it was not "on the market" or "for sale" during the period of the infringement. fn 41 In that
case, the accused infringer has the burden of showing that the alleged alternative would have been
available during the damage period. "Factors to consider include the ease with which a substitute was
eventually made available, the state of the technology, and the availability of input products and
equipment." fn 42

The defendant in the Grain Processing case supported its claim that its non-infringing process would
have been available during the infringement period. The defendant presented specific proof that it had
"the necessary equipment, know-how, and experience" fn 43 during such period to implement the non-
infringing process. The alleged infringer was also able to demonstrate that its non-infringing process
created a product acceptable to customers based, in part, on market data obtained after converting to the
non-infringing process but prior to the damages portion of the trial. fn 44 Notably, neither party to this
dispute had contended that the alternative process infringed the patent or that the alternative was not

fn 37 Calico Brand, Inc. v. Ameritec Imports, Inc. (Fed. Cir. 2013).

fn 38 SynQor, Inc. v. Artesyn Technologies, Inc. et al. (Fed. Cir. 2013).

fn 39 Bryan A. Garner, ed., Black’s Law Dictionary, Eighth Edition (St. Paul, MN: West Publishing Co, 2004), 478.

fn 40 Grain Processing, 185 F.3d at 1341, 1351.

fn 41 Id. at 1343.

fn 42 SynQor, Inc. v. Artesyn Technologies, Inc. et al. (Fed. Cir. 2013).

fn 43 Id. at 1354.

fn 44 Id. at 1355.

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