Page 43 - Intellectual Property Disputes

acceptable to customers. In light of Grain Processing, defendants may attempt to make arguments
concerning "available alternatives" that may be less "available" than the option in that case.

In Micro Chemical, Inc. v. Lextron, Inc., the Federal Circuit overruled the lower court’s grant of
summary judgment with regard to lost profits. In overruling the lower court, the Federal Circuit stated
that "[t]he record shows that Lextron did not have the necessary equipment, know-how, and experience
to make the Type 5 machine at the time of the infringement . . . [and] [t]he effects of the changes also
were not well known or readily available." fn 45

In Mitutoyo Corp. v. Central Purchasing, LLC, fn 46 the appellate court affirmed the district court’s
decision that "Mitutoyo was not entitled to a lost profit award, either for infringement or breach of
contract, because it failed to establish any market overlap between its goods and Central’s." This ruling
was grounded in the evidence that Mitutoyo’s products were priced substantially higher and included
more advanced features than Central’s, coupled with the court’s conclusion that Mitutoyo failed "to
introduce any direct evidence of market overlap." The court cited BIC Leisure Products in noting that in
order to be entitled to lost profits, "a patent owner must prove a causal relation between the infringement
and its loss of profits. The patent owner must show that 'but for' the infringement, it would have made
the infringer's sales." fn 47 The existence of a causal relationship failed due to the price differential (and
additional features) between Mitutoyo’s and Central’s products.

In DSU Medical Corp. v. JMS Co., Ltd., the Federal Circuit upheld the trial court’s exclusion of
testimony proffered by DSU’s expert witness, whose testimony related to the "hypothetical existence or
hypothetical terms of a contract" between the accused infringer and a third party. fn 48 DSU’s expert
computed lost profit damages based on JMS’s sale of the accused Platypus guard as well as subsequent
sales of the non-infringing WingEater guard, based on an "accelerated market entry notion that [DSU]
would have captured the market in advance of the introduction of the WingEater, but for the infringing
sales of the Platypus." fn 49 The appellate court affirmed the trial court’s exclusion of the DSU expert
witness’s testimony with regard to lost profit damages, in part, because he "relied too heavily on
hypothesized contracts in hypothesized markets that lacked sound economic grounding." fn 50 In
addition, "[t]he trial court disallowed the [expert witness’] testimony on this subject because ‘sales of
acceptable non-infringing substitute products [could not] be the basis of legally compensable patent
damages,’ and the WingEater was an acceptable non-infringing substitute for the patented products." fn 51

According to the court, "[w]hile it may be possible for an infringement to have a foreseeable, and
therefore compensable, effect on future contracts, the trial court was correct to perceive that it could not

fn 45 Micro Chemical, Inc. v. Lextron, Inc., 318 F.3d 1119 (Fed. Cir. 2003).

fn 46 Mitutoyo Corp. v. Cent. Purchasing, LLC, 499 F.3d 1284 (Fed. Cir. 2007).

fn 47 Id. (citing BIC Leisure Prods. v. Windsurfing Int'l, Inc., 1 F.3d 1214, 1218 (Fed. Cir. 1993)).

fn 48 DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293 (Fed. Cir. 2006).

fn 49 Id. (citing In Limine Order, 296 F. Supp. 2d at 1151).

fn 50 Id.

fn 51 Id. (citing DSU Med., 296 F. Supp. 2d at 1140, 1159 (N.D. Cal. 2003) (In Limine Order)).

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