Page 56 - Intellectual Property Disputes

Regardless of the terminology used, the test for damages remains the same. That is, the intellectual
property holder may recover damages for convoyed sales if the intellectual property owner can prove
that it would have made those sales but for the infringement.

Under the entire market value rule and convoyed sales doctrine, an intellectual property owner is not
permitted to recover losses for products that are sold with the patented item merely for a business or
marketing advantage. In Rite-Hite, the Federal Circuit stated that it would not extend liability "to include
items that have essentially no functional relationship to the patented invention and that may have been
sold with an infringing device only as a matter of convenience or business advantage." fn 108 Further,
there should be a reasonable probability that the sale of the patented item would have caused the sale of
the non-patented accessory. But all facts and circumstances should be carefully analyzed. For example,
in King Instrument Corp. v. Otari Corp., the court stated that the "infringer had acquired an implied
license to sell unpatented repair parts through payment of damages as to past infringing machine sales
and could not be enjoined from selling any spare parts." fn 109

An intellectual property holder may recover damages for lost sales of services related to the patented
invention. In Ristvedt-Johnson, Inc. v. Brandt, Inc., the court awarded the patent holder lost profits on
machine sales, repair services, preventive maintenance inspection agreements, and supplies. The
plaintiff was able to demonstrate that the one-year maintenance agreements were normally purchased
when a customer bought the patented coin sorter. However, the court restricted the award for the
contracts to the period during which the infringement occurred. fn 110

In DePuy Spine, the Federal Circuit reversed the award of $77.2 million in lost profits on unpatented
pull-through products. The Federal Circuit concluded that the patent holder was "not legally entitled to
recover lost profits on ... unpatented products" because "it is undisputed that DePuy’s unpatented pull-
through products neither compete nor function with its patented SummitTM and MountaineerTM
devices and were sold (i.e., ‘pulled-through’) only by virtue of DePuy’s business relationship with
surgeons." fn 111

The court noted that "[i]n contrast to such functionally-integrated components that are properly subject
to lost profits, ‘there is no basis for extending that recovery to include damages for [unpatented] items
that are neither competitive with nor function with the patented invention.’" The Federal Circuit stated
that "lost profits cannot be recovered on unpatented items ‘that have essentially no functional
relationship to the patented invention and that may have been sold with an infringing device only as a
matter of convenience or business advantage.’" fn 112

In American Seating, the patent was directed to a wheelchair restraint system that complied with the
Americans with Disabilities Act for use in mass transit vehicles. The patent at issue did not cover either
flip-up or fixed passenger seats. The trial court granted USSC’s motion "to set aside the verdict for
convoyed sales because the record evidence, viewed in the light most favorable to American Seating,

fn 108 Rite-Hite, 56 F.3d at 1538, 1550.

fn 109 King Instrument Corp. v. Otari Corp., 814 F.2d 1560 (Fed. Cir. 1995).

fn 110 Ristvedt-Johnson, Inc. v. Brandt, Inc., 805 F. Supp. 557, 565 (N.D. Ill. 1992).

fn 111 DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314 (Fed. Cir. 2009).

fn 112 Id. (citing Rite-Hite, 56 F.3d at 1551).

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