Page 58 - Intellectual Property Disputes

The Federal Circuit ruled that the fixations did not meet the requirements for convoyed sales and,
therefore, were not recoverable as lost profits.

Warsaw failed to prove a functional relationship necessary to support a jury verdict awarding lost
profits for convoyed sales. Warsaw points to its marketing material, in which it touted the kits’
‘comprehensive set of instruments and implants including fully integrated neuromonitoring,
streamlined access instrumentation, anatomically designed implants and percutaneous fixation
systems...This does not establish a functional relationship. This is the precise sort of convenience
or business strategy excluded by American Seating...Warsaw never presented testimony that the
fixations it sold to MSD had no independent function — that is, that they would not work well in
other surgeries not involving the patented technologies. Therefore, the district court erred in
denying Nuvasive’s JMOL motion on this issue. fn 117

Lost Revenues and Profits in Copyright Cases

To perform a lost profits calculation in a copyright case, the copyright owner can (a) analyze sales for a
period before the infringement and compare that to the sales subsequent to the infringement or (b) use
the infringer’s sales as a base. These techniques are merely a means to an end, namely, a determination
of the magnitude of sales the copyright holder would have made absent the infringement.

To use the infringer’s sales as a measure of lost sales, the infringing work and the copyrighted work
must at least (a) compete in the same market and (b) sell for the same price. However, both factors are
rarely met in copyright matters because such factors as pricing, packaging, advertising, efficiency, cost,
production techniques, and goodwill may differ. Such differences may preclude use of the infringer’s
sales as a measure of the copyright owner’s lost sales. fn 118 In essence, to justify a one-to-one
substitution of the infringer’s sales for the copyright owner’s lost sales, the copyright owner should
attempt to show that all of the infringer’s customers would have bought the copyrighted work but for the
availability of the infringing product. fn 119 Should the factors be met under this measure, the copyright
owner’s actual damages are typically determined by multiplying the copyright owner’s profit on one sale
by the number of sales made by the defendant.

Even if the copyright owner is not able to use the infringer’s sales as a measure of its own lost profits,
the owner still may be able to recover the infringer’s profits. For example, in Stevens Linen Associates,
Inc. v. Mastercraft Corp., the court allowed the copyright owner the choice between (a) lost profits
based on all the defendant’s sales made to customers that had purchased from the copyright owner in the
past or (b) lost profits determined by the percentage difference in sales of the infringed product
compared with the percentage difference in sales of all other non-infringing products of the copyright
owner. fn 120

fn 117 Id.

fn 118 Mary Ellen Enterprises, Inc. v. Camex, Inc., 68 F.3d 1065, 1070 (8th Cir. 1995).
fn 119 M.A. Glick, L.A. Reymann, and R. Hoffman, Intellectual Property Damages: Guidelines and Analysis (Hoboken, N.J.: John
Wiley & Sons, Inc., 2003), 318.

fn 120 Stevens Linen Assocs., Inc. v. Mastercraft Corp., 656 F.2d 11 (2d Cir. 1981).

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