Page 44 - Intellectual Property Disputes

occur when the future contract was itself for a non-infringing substitute." fn 52 However, with respect to
DSU’s ability to secure sales of accused products through multiyear contracts, the court sustained the
jury’s lost profit award.

In SynQor v. Artesyn Tech, the Federal Circuit affirmed the district court’s exclusion of certain evidence
relevant to the assessment of the availability of non-infringing alternatives during the damage period.

As the district court noted, "uncontroverted" evidence demonstrated that significant
improvements in fully-regulated converter performance characteristics had just been made in
2010...As such, the input components necessary to develop the replacement converters were not
readily available during the infringement period, and there is "no basis to conclude that the high
performing fully-regulated converters that Defendants were working on in late 2010 could have
been developed any earlier." Moreover, the record shows that, even with the benefit of recent
component improvements, it took Defendants nearly a year, if not longer, to make the
replacement converters available for commercial use. fn 53

Factor 3 — Manufacturing and marketing capability to exploit demand. Manufacturing and
marketing capacity and capability, the third Panduit factor, requires the patent holder to prove that the
infringed sales could have been made by the patent holder within the relevant time period. This factor
may be proven in a variety of ways. For example, the patent holder may demonstrate manufacturing
capacity by showing that its facilities were capable (or could have been made capable of) producing the
number of patented inventions demanded fn 54 or that the manufacturing could have been subcontracted
to another manufacturing facility. fn 55 The patent owner typically will attempt to demonstrate the
financial capacity, sales and marketing capacity, and management strength necessary to produce the
additional units.

The Federal Circuit has stated that "[t]he demand which a patentee must have the capacity to meet is
measured by the total sales, by the patentee and the infringer, of the patented product." fn 56 The
following factors may assist in determining capacity to meet such demand:

• The relative number of lost units compared to the historic sales of the patent holder. The larger
the volume of lost sales claimed by the patent holder compared to the historic sales volume, the
more difficult it may be to demonstrate capacity.

• It may have been necessary for the patent holder to increase production capacity. The patent
holder would need to demonstrate the ability (financial and technical) to increase production
within the required time period. In addition, it may be necessary to adjust the calculation of the
incremental profit margin to reflect the additional investment by the patent holder in increased
capacity.

fn 52 Id.

fn 53 SynQor, Inc. v. Artesyn Technologies, Inc. et al. (Fed. Cir. 2013).

fn 54 Bio-Rad Lab., Inc. v. Nicolet Instrument Corp., 739 F.2d 604, 616 (Fed. Cir. 1984).

fn 55 Gyromat Corp. v. Champion Spark Plug Co., 735 F.2d 549, 554 (Fed. Cir. 1984).

fn 56 Datascope Corp. v. SMEC, Inc., 879 F.2d 820, 825 (Fed. Cir. 1989).

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