Nordock, Inc. v. Systems Inc.
803 F.3d 1344
| Fed. Cir. | 2015Background
- Nordock owns U.S. Design Patent D579,754 for the ornamental design of a lip and hinge plate applied to a dock leveler; it sued Systems for infringement of hydraulic (LHP/LHD) and mechanical (LMP/LMD) levelers.
- The district court construed the single claim to include the depicted ornamental lug shapes and header/ lip configuration, but acknowledged functional elements (lugs, pin, header plate, lip) and denied summary judgment on functionality.
- At trial the jury found LHP/LHD (hydraulic) levelers infringing and D’754 not invalid, awarded Nordock $46,825 as a reasonable royalty, and indicated Systems’ profits were $0.
- Nordock moved for a new trial under Rule 59, arguing it was entitled to disgorgement of Systems’ total profits under 35 U.S.C. § 289; Systems sought amendment/JMOL on validity and on the 6½-foot leveler infringement.
- The district court denied most post-trial relief; on appeal the Federal Circuit vacated the damages award and remanded for a new trial on § 289 damages, affirming the district court on validity and on denial of relief as to the 6½-foot leveler.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Nordock was entitled to recover Systems’ total profits under 35 U.S.C. § 289 | § 289 entitles Nordock to Systems’ total profit on the infringing article (dock leveler), so jury should have measured profits by gross revenue minus allowable expenses | Systems’ expert apportioned profits to only the lip/hinge plate using a "cost savings" approach, yielding minimal per-unit profit; jury properly awarded a reasonable royalty | Vacated damages; remand for new trial on § 289 profits using proper gross-revenue methodology (total profit on the article of manufacture) |
| Whether the jury’s finding that Systems’ profits were $0 is supported by the evidence | Expert testimony showed substantial operating profit per unit (e.g., $433), implying total profits far above $0 | Jury could credit Systems’ expert that profits attributable to the ornamental lip/hinge were negligible; reasonable royalty chosen instead | Court held there was no credible evidence supporting $0 total profits; jury verdict on profits was against manifest weight of the evidence — new trial required |
| Proper interpretation and application of jury instructions regarding interplay of § 284 and § 289 damages | Jury must determine § 289 profits even if it awards § 284 damages; district court misread instructions to allow skipping of § 289 profit determination | Jury had option to award either compensatory damages under § 284 or profits under § 289; no error as instructions tracked the law | Court found the district court and jury were confused; on remand instructions must clearly require a § 289 profit determination when claimed and potentially greater than § 284 award |
| Validity of the D’754 design patent (functional vs. ornamental) | Nordock argued design contains ornamental aspects distinct from functional elements | Systems argued the design is primarily functional and thus invalid | Affirmed: substantial evidence supported jury finding that the overall design is not dictated solely by function; Systems failed to preserve sufficiency challenge properly for appeal |
Key Cases Cited
- Apple Inc. v. Samsung Elecs. Co., 786 F.3d 983 (Fed. Cir.) (design-patent § 289 authorizes award of total profit from article of manufacture)
- Nike Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437 (Fed. Cir.) (§ 289 requires disgorgement of infringer's profits; profits measured from gross revenue less allowable expenses)
- Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277 (Fed. Cir.) (design patentees may recover § 289 profits or § 284 damages but not both for the same sale)
- PHG Techs., LLC v. St. John Cos., 469 F.3d 1361 (Fed. Cir.) (test for when a design is primarily functional; factors to consider)
- OddzOn Prods., Inc. v. Just Toys, Inc., 122 F.3d 1396 (Fed. Cir.) (design patent protects novel, ornamental features)
- Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394 (U.S.) (Rule 50 standards and two-stage challenge to sufficiency of evidence)