Mentor Graphics Corporation v. Eve-Usa, Inc.
870 F.3d 1298
Fed. Cir.2017Background
- Mentor Graphics sued Synopsys/EVE for patent infringement over features in an emulator system; a jury awarded lost profits to Mentor.
- The jury found Intel would not have purchased the accused Synopsys emulator without two patented features and that no acceptable noninfringing alternatives existed.
- The panel affirmed the award, holding that where patented features drive demand for a multi-component product, apportionment to the patented feature is satisfied and lost profits can be based on the entire product value.
- Appellants sought rehearing en banc arguing the panel effectively eliminated apportionment for lost-profits awards; the court denied rehearing en banc.
- Separate concurrences (Stoll; Moore joined by Chen) defended the panel’s consistency with precedent on apportionment and declined to abolish assignor estoppel.
- A dissent (Dyk, joined by Hughes) argued the panel’s approach collapses apportionment into Panduit’s but‑for demand test and contradicts longstanding Supreme Court authority requiring explicit apportionment between patented and unpatented features.
Issues
| Issue | Plaintiff's Argument (Mentor) | Defendant's Argument (Synopsys/EVE) | Held |
|---|---|---|---|
| Apportionment for lost profits when product has patented and unpatented features | Panduit factors (demand and absence of substitutes) show but‑for causation; where patented features cause the buyer to purchase, additional apportionment is unnecessary | Apportionment must separately allocate damages to patented features; Panduit but‑for proof does not substitute for apportionment | Panel and concurring judges: Where jury found patented features drove demand (Panduit factors), apportionment requirement is satisfied and entire‑product value may be used for lost‑profits damages in that narrow factual setting |
| Scope and application of the entire‑market‑value rule (EMVR) | EMVR applies when the patented feature is the basis for customer demand; jury findings established that here | EVE: District court precluded apportionment evidence; panel failed to require EMVR proof or permit defendant to show other features drove demand | Panel treated Panduit findings as establishing the predicate for using entire product value; dissent disagrees that this equals EMVR proof and faults exclusion of apportionment evidence |
| Whether the panel decision eliminates apportionment for lost profits generally | Mentor: apportionment still required normally; this case is narrow where apportionment is met by Panduit findings | Synopsys: Panel’s rationale effectively forecloses apportionment in future lost‑profits cases | Court denied rehearing en banc; concurrences assert the holding is narrow and consistent with precedent; dissent warns of broad, incorrect rule |
| Assignor estoppel — whether it should be abolished | (Not asserted by Mentor as a central issue) | Synopsys urged abolition of assignor estoppel citing Lear; argued doctrine undermines employee mobility | Concurring judges (Moore, Stoll): decline to abolish assignor estoppel here; Westinghouse and related precedent bind the court and record does not support overruling the doctrine now |
Key Cases Cited
- Garretson v. Clark, 111 U.S. 120 (establishes apportionment requirement between patented and unpatented features)
- LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51 (EMVR: entire product value permissible only if patented feature drives demand)
- Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201 (apportionment required for non‑royalty damages including lost profits)
- VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308 (patentee must seek damages attributable to infringing features)
- Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir.) (four‑factor test for lost profits: demand, absence of acceptable noninfringing substitutes, manufacturing/marketing capability, and profit amount)
- Seymour v. McCormick, 57 U.S. (early Supreme Court articulation that profits of whole product are not measure of damages for an improvement)
- Dobson v. Hartford Carpet Co., 114 U.S. 439 (damages must reflect value contributed by design feature, not entire product profit)
- Blake v. Robertson, 94 U.S. 728 (error to award whole machine profits when patented improvement contribution not shown)
- Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342 (supports assignor estoppel by analogy to estoppel by deed)
- Lear, Inc. v. Adkins, 395 U.S. 653 (abolition of licensee estoppel; argued by Synopsys but distinguished by concurring judges)
- Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (EMVR requires proof that patent‑related feature is basis for customer demand)