Page 54 - Intellectual Property Disputes

attached to the spacecraft with the patented device. The court, however, found that Hughes could not
reasonably have anticipated the sale of the satellite if it had been granted the contract to build the
infringing spacecraft. As the satellite and the spacecraft did not constitute a functional unit, application
of the entire market value rule was unwarranted. fn 101

Further, in Juicy Whip, Inc. v. Orange Bang, Inc., the patent related to a device that dispensed
beverages. The device contained a transparent bowl that provided a large capacity for beverage sales and
was also resistant to bacterial growth. The district court did not allow the patentee to present evidence
that the defendant’s conduct caused enhanced damages because it affected the patentee’s sales of
related, non-patented juice syrup. The Federal Circuit held that the "district court abused its discretion
by disallowing Juicy Whip's presentation of factual support for the theory of lost profits" on non-
patented juice syrup sales. fn 102

The Federal Circuit concluded that the district court "was clearly erroneous in determining that there
was no functional relationship between Juicy Whip’s dispenser and the syrup; on the contrary, it is clear
that there is such a relationship, and Juicy Whip should be entitled to prove damages with respect to lost
profits from lost syrup sales." The Federal Circuit’s opinion was that the district court incorrectly
applied the entire market value rule because, in fact, the dispenser and syrup were analogous to parts of
a single assembly or a complete machine. The Federal Circuit cites Rite-Hite in noting that the entire
market value rule "has been extended to allow inclusion of physically separate unpatented components
normally sold with the patented components" with the stipulation that both are "considered to be
components of a single assembly or parts of a complete machine, or they together constituted a
functional unit." fn 103

The entire market value rule may also apply to the determination of a reasonable royalty. See the
section, "Entire Market Value Rule — Reasonable Royalty," in this chapter.

Discussion of the entire market value rule may also lead to a discussion of apportionment. In Mentor
Graphics Corporation v. EVE-USA, Inc., the Federal Circuit addressed whether there is a need for
apportionment in instances in which there is infringement of a patented component or feature in a multi-
component product that includes other non-patented components or features. Here, the court considered
Mentor’s lost profits claim in connection with infringing sales of emulators, of which, defendants
argued, the "allegedly infringing features were just two features of emulators that comprise thousands of
hardware and software features." Defendants argued that Mentor should be entitled to recover only "the
amount of profit properly attributable to its patented features," rather than the profit associated with the
lost emulator sales. In response to the defendants’ argument in favor of apportionment, the Federal
Circuit claimed

We agree with Synopsys that apportionment is an important component of damages law
generally, and we believe it is necessary in both reasonable royalty and lost profits analysis. See
Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014) ("Apportionment is

fn 101 Hughes Aircraft Co. v. United States, 31 Fed. Cl. 464 (Fed. Cir. 1994).

fn 102 Juicy Whip, Inc. v. Orange Bang, Inc., 382 F.3d 1367 (Fed. Cir. 2004).

fn 103 Rite-Hite, 56 F.3d at 1538, 1543.

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