King Instruments Corporation v. Luciano Perego and Tapematic, Defendant/cross-Appellants

entitled, all, and were if at because of the condi- they employed were grievance, while they agree- under which worked while em- bargaining tions the collective subject Instead, ployed. The record does not state whether they that their entitle- assert ment. sought representation Appellants until the EDP did not arise refused, reached, past bargaining after their unit and were agreement was settlement any Appellants re- or whether of the acted to They state that their retirement. 7121(a)(1) However, employed. apply to secure EDP while can not striction grievance settlement of a on behalf of other them, they not have a claim while since did later, bargain- employees, years change some does not part of the they employed and were argument employees is of retired who did not that the status ing unit. We believe redress, during employment, claim seek their when incorrectly employees’ These focused. they alleg- their entitlement arose. worked to EDP arose when after edly contaminated environments AFFIRMED. regulations adopted with were statute contamination, not when respect to asbestos successfully settled on behalf grievance was employees, Appellants’ after retire- other

ment. they now exclud-

Appellants state that are grievance process, from access to the

ed Lo-

citing Allied Chemical & Alkali Workers Pittsburgh 1 v. Plate Glass Co. cal No. CORPORATION, INSTRUMENTS KING 30 L.Ed.2d 92 S.Ct. Plaintiff-Appellant, (“Nowhere (1971) history in the any Relations Act is there National Labor Tapematic, are to be con- that retired workers evidence Luciano PEREGO Defendant/Cross-Appellants. of the collective- as within the ambit sidered statute.”) obligations Al- bargaining 91-1125, 91-1132. Nos. proposition general states the lied Chemical to the bene- retired workers are entitled Appeals, States Court of United they negotiated while were active em- fits Circuit. Federal continuing benefits ployees, whereas their Sept. required by statute after retirement are not bargaining obligation of the to be within the at 393. 404 U.S. at

union. bargaining prohibit did not

Allied Chemical grievances representation

unit that arose employed. was The Feder-

while the retiree recognized in so Muniz:

al Circuit availability grievance and arbitra- machinery, expired an

tion either under employee under

contract or for a former contract, ongoing not uncommon. Authority Labor Relations

The Federal

(FLRA), agency charged with adminis- CSRA, recognized that

tering the has employees former based on dis-

claims of

putes arising under the contract are arbi-

trable. (citations omitted). at 1313 to the recov-

The issue this case relates

ery pay to the now-retired workers Brezner,

David J. Richard F. Treeartin Jr., Flehr, Hohbach, Doyle, P. and Richard Herbert, Francisco, Test, Albritton & San CA, plaintiff-appellant. on the brief for were Pandiscio, brief was Nicholas A. Also on the Kusmer, Schiller, Cambridge, & Pandiscio MA, of counsel. and

Edgar Haug, Adam L. Brookman H. Mullen, Curtis, Ann & Saf- Mary Morris G. P.C., ford, City, were on the of New York defendant/cross-appellants. brief for RADER, NEWMAN, NIES, and Before Judges. Circuit Judge court filed Circuit Opinion opinion filed Dissenting-in-part RADER. Judge NIES. Circuit RADER, Judge. Circuit (King) sued King Corporation Instrument (Tape- Perego Tapematic SrL Luciano matic) infringement of Patents into a Nos. cassette. The ’153 claims (the (the 3,637,153 3,825,461 patent), splicing swing ’461 mechanical block whose arms (the 3,997,123 patent), patent). bring magnetic tape into contact with tape. United District Court for the District States leader King damages of Massachusetts awarded patent manually The invention of the ’153 Tapematic’s patent. of the ’461 extracts the leader from the cassette Perego, Instrument places splicing over head. vacuum F.Supp. place holds the leader while a knife (D.Mass.1990) (King). The district court point, cuts it into two At sections. Tapematic infringe found that did not swings alignment moveable track out of the 153 or the 123 Id. stationary track. A second moveable Finding 1242-43. no clear error the dis holding magnetic track tape swings then infringement analysis, trict court’s and no alignment into tape. with the leader The abuse of discretion the district court’s applies splice invention between the leader damages, assessment of the amount of this tape magnetic tape and the are held court affirms.1 place by a vacuum. The vacuum then releas- tape es the and the machine turns the hub to BACKGROUND magnetic tape load into the cassette. When King’s patents loading mag- three relate to full, again the cassette is grabs the vacuum tape netic audio or video into closed cas- magnetic and a tape. knife cuts the The fullyA settes. loaded cassette contains two swinging brings arm magnetic the end of the types tape: magnetic audio or video tape back contact with the other end of the tape non-magnetic tape. and a leader The tape applies splice. leader The hubs magnetic tape tape called “use” tighten tape in complete —also the cassette to —func- permit play tions to customers to record or loading. recordings. non-magnetic back The leader tape clear, length plastic, short often The ’123 Patent —a tape magnetic both ends of tape. —leads patent winding The 123 claims a machine tape One end of the leader attaches to the fully which more automates the invention winding cassette; hub of the the other end disclosed in the 153 Instead of load- magnetic tape. attaches to the ing time, cassettes one at a produces tape The manufacturer patent closed operator enables an to load a any magnetic 30) tape. cassettes without Each (e.g., stack of cassettes 20 to into a tape closed cassette contains magazine. leader magazine cassette The advances winding connected to its two hubs. sequential The each cassette in loading order for magnetic tape manufacturer adds patent later the 153 device. The 123 splicing magnetic tape into the middle of the also claims a automatically mechanism for tape winding leader it into the extracting cassette. the leader from the cassette King Tapematic competing ma- and positioning splicing it on the blocks. automatically chines that splice and patent’s wind The 123 invention thus automates magnetic tape completed into patent’s otherwise video the 153 posi- manual extraction and cassettes. tioning functions. ’153

The Patent The ’461 Patent partially The ’153 discloses auto- The splicing assembly ’461 claims a mated loading magnetic tape machine for connecting magnetic tapes. and leader brought by King 1. In against lidity an earlier action infringed by of the 153 and found it Corporation, Otari Otari, court discussed similar Corporation. Otari See 767 F.2d at 857- King technology loading related to the of closed 59, 862-63. This court assumes the reader magnetic tape. King cassettes with See Instru entirety opinion familiar with the of this earlier 853, Corp. Corp., v. Otari 767 F.2d opinion as well as the district court in this case. (Fed.Cir.1985) (Otari), denied, USPQ 402 cert. King Perego, F.Supp. Instrument 1016, 106 S.Ct. 89 L.Ed.2d 312 (D.Mass.1990) (King). (1986). particular, upheld this court the va- splicing judge credibility trial assembly includes three splicing align the witnesses. of the three blocks shift to Two blocks. tape; the leader magnetic States, Heisig v. 719 F.2d See United stationary splicing block. third is (Fed.Cir.1983). Legal conclusions of the district court stand unless incorrect as a

The District Court matter of law. Id. Tapematic district court found This court does not review de novo infringed ’461 and awarded Medtronic, proceedings of the district court. F.Supp. 1242. The damages. King, 737 at Daig Corp., Inc. v. 789 F.2d infringe- not find willful district court did (Fed.Cir.), denied, cert. at 1241. The district court also ment. Id. 93 L.Ed.2d 355 validity patent, upheld the of the T53 id. party seeking reversal of a dis Tapematic found that did not but trict court decision bears the burden of show literally or under the doctrine of fringe, legal ing reversible error or clear factual pat- the ’153 or the 123 equivalents, either light errors in of the trial record. Carl ent. Id. Schenck, A.G. Nortron (Fed.Cir.1983). findings King appeals the district court’s entirety viewed in its Where the record ren patents noninfringement of the 153 and 123 court’s account of the evi ders district damages enhanced for willful and seeks plausible permissible dence or discloses two patent. Tapematic fringement of the 153 evidence, readings of the the fact-finder has infringement cross-appeals trial court’s Hybritech no error. Inc. v. committed clear challenges finding the ’461 and on Antibodies, Inc., 1367, F.2d Monoclonal 802 appeal Tapematic award. does not 1375, 81, (Fed.Cir.1986), 231 87 cert. findings validity trial court’s on the 153 denied, 480 107 S.Ct. 94 patent. L.Ed.2d 792 Appellate History Infringement I. panel argument heard oral This in The district court assessed cross-appeals August on 1991. More than fringement using the standard tests. See 13, 1994, later, January years two (citing King, F.Supp. 737 at 1231 Standard sponte to consider this court decided sua Co., Cyanamid 774 F.2d Co. v. American Oil appeal banc. The court then deferred en (Fed.Cir. 448, 452, USPQ 293, 295-96 227 appeal pending action on this en banc resolu- Barber, 1985); v. 755 F.2d Martin Co., Kelley of Rite-Hite tion (Fed.Cir.1985)). 234 225 involving damages appeal brought in 1992 “means-plus- King patents All contain three by Tape- overlapping with those raised issues King, F.Supp. at language. function” 737 15,1995, matie. On June the court issued means-plus-func construes 1231. This court resolving opinion in Rite-Hite correspond language tion claim “to cover the Co., Kelley Corp. v. 56 issues. Rite-Hite material, structure, in ing or acts described (Fed.Cir.1995) 1538, USPQ2d F.3d 35 1065 specification equivalents and thereof.” banc). (en 10, 1995, July the court re- On Indus., (1988); Inc. § 112 Valmont 35 U.S.C. appeal panel to this present turned the Mfg. v. Reinke disposition in accordance with Rite-Hite. (Fed.Cir.1993); USPQ2d John ston IVAC

DISCUSSION (Fed.Cir.1989). Thus, district court’s This court reviews the limitation to read means-plus-function for a 52(a): findings of fact under Fed.R.Civ.P. device, device the accused on an accused equivalent to fact, employ or must means identical Findings of whether based on oral material, structures, evidence, or acts described documentary shall not be set device erroneous, The accused patent specification. clearly and due aside unless function as perform the identical given opportunity of must also regard shall be Valmont, denied, specified in the claims. 983 F.2d at (1986), finding L.Ed.2d 312 which based

infringement upon a disclosure of the Otari A.The ’133 Patent patent specification. mechanism in the See King, F.Supp. n. 6. Because it Tapemat district held finding affirms the district court’s of nonin- infringe patent. King, ic the ’153 did fringement patent, on the 153 this court F.Supp. at 1242-43. The district court found need not address willfulness and enhanced aligns splices the accused device and on that tape differently than the claimed structure. Tapematic’s Id. at 1233. accused machines B. The ’123 Patent assembly

used a horizontal shift block align splice. The trial court found that The district court Tape- also held that literally this shift block device did not in infringe matic patent. King, did not the 123 fringe patent’s swing T53 arm claims. F.Supp. at 1242-43. The district court Id. 1234. Moreover the accused device compared the claims of the 123 operates “way” in such a different that the Tapematic each of the (Tape accused devices district court found under 900, 2,002, 3,000 Series). matic See id. equivalents. the doctrine of Id. at 1239. at 1237. The district court found that extracting leader positioning

Specifically, mecha the district court noted several Tapematic operate nisms machines differences between the ’153 claims and the very differently instance, from that recited in the accused device. For the ’153 Specifically, claims. Id. swing claims 1 and assembly pivots claims a arm 12 of single the 123 claim a single plane; mecha Tapematic the accused de- position nism to extract and the leader assembly vice’s shift block slides two single in a movement. planes. Tapematic ma sepa- The ’153 discloses three chines, hand, blocks, on the other splicing rate have at least two piv- one fixed and two components performing different oting; these tasks only splic- the accused device uses two blocks, substantially way. in a ing different one The 123 sliding. fixed and the other Finally, described extraction of the leader testimony by the trial court cited E. with a vacuum Tapematic’s device. (Tapematic’s expert), Blanco devices (King’s W. Isom (inventor Therefore, use a expert), mechanical extractor. King and J. of the 153 patent), correctly district court agreed concluded that who all that accused Tapematic product literally, machines did not differently worked nor un than the claimed equivalents, der the doctrine of infringe performing device. Id. at 1234. In its in- patent. fringement the 123 Id. at analysis, 1237-39. correctly the trial court construed claim 16 in connection with the

specification C. The Patent pivoting swing include the %61 assembly. arm correctly The trial court in- Although finding infringe no literal terpreted claims and 16 to encompass ment of patent, King, claim of the ’461 specification structure disclosed in the F.Supp. at the district court found that holding, aligning, splicing tapes —and 2,002’s splicer Tapematic reel equivalents thereof. changer literally infringed claim 12. Id. comparing

After 2,002 claimed device with Tapematic 1235-36. The is a “dual product, loader, i.e., the accused correctly pancake” the court de- chang includes a reel termined that the 153 assembly was not automatically er that switches to a fringed literally or magnetic under the doc- second reel of when the first —either equivalents. trine of Id. at Tapematic’s reel runs out. changer reel Moreover, finding the district spliced magnetic court’s of non- tape magnetic tape. Be infringement of the 153 is consistent claim 1 cause includes a structure for with this King court’s earlier decision in splicing magnetic tape In- tape, to leader strument v. Otari 767 F.2d district court Tapematic’s determined that (Fed.Cir.1985) 226 USPQ (Otari), assembly literally infringe cert. did claim 1. Language History however, A. The Patent no such limita- contained Claim Act— Moreover, require 12 does not claim tion. Title 35 the United States Code the leader “abutting” ends of alignment of provides patent grant confers “the magnetic tapes. making, using, right to exclude others from selling invention.” U.S.C. infringe- found properly The district court (West 154(a)(1) Supp.1995) (emphasis § add all limitations of claim 12 because ment of ed). infringement i.e., making, An act of — assembly of the splicing 12 read on the claim selling using, or 2,002’s changer. Id. at 1236. reel Tapematic 271(a) authority,” § 35 U.S.C. “without Therefore, affirms the district this court right to (1988) trespasses on this exclude. — infringed finding Tapematic court’s rights Title 35 redresses such violation the ’461 by “award[ing] the claimant ade compensate infringement.”

quate to for the 35 U.S.C. Profits II. Lost imposes no limitation on Section 284 Tape- court found that district types resulting infringe of harm patent. The district infringed the ’461

matic ment that the statute will redress. The sec caused court found that language broad awards tion’s injury in the form economic King to sustain any injury long as as it resulted from the words, “but for” the profits. In other of lost infringement. Though this section sets a royalty have sold more of infringement, lower limit of a reasonable Otari, recovery, it an amount amount of mandates product. 767 F.2d competing See “adequate compensate infringe 863; Mag Paper Converting Mach. Co. The Patent Act also includes ment.” Id. 11, 21, 223 na-Graphics Corp., 745 F.2d infringement or enhanced for willful (Fed.Cir.1984). The district attorney and for fees. 35 U.S.C. bad faith King’s into account that com court also took (1988); §§ Foods see Beatrice Co. embody the invention peting product did Printing Lithographing England New & Tapemat against of the ’461 asserted 1576, 1578, USPQ2d court, however, found reason ic. The district (Fed.Cir.1991). injury notwithstanding King’s to redress specifies compensation Section making from or King’s election to refrain “damages.” Congress and takes the form of Tapematic selling the invention. oppor- Supreme the Court have had several in challenges profits award of lost such the and construe this term tunities to define instance, alleging that lost instead under the Patent Act and section 284. Con- only to one who makes or can be awarded Act, the Patent nor gress has not amended patented device. sells the interpreted Supreme the term has the Court reject Tapematic’s require exploitation chal- “damages” This court must to Rite-Hite, recovery of lost sitting prerequisite as a to vention lenge. This court held Moreover, prerequisite runs profits. such a banc, has suf- that a owner who en his- contrary language and enactment profits is entitled to lost fered lost tory of section 284. damages regardless of whether made, used, or sold the owner has history Act shows long The of the Patent Rite-Hite, 1546, at 35 device. See require patentee language that its does Furthermore, lan- 1072.2 qualify at for patented invention to to make the 1946, history act and who guage damages. Before result, “in addi- require as demon- could recover policy proved sound by the profits to accounted for analysis. tion to the following strated § infringement, U.S.C. 284 35 of sate for 2. We remark on the dissent’s characterization (1988); royalty Congress as set the reasonable ruling in Rite-Hite. Rite-Hite the court's en banc floor, ceiling damages infringe- for depart require- and this decision do not from adequate compen- damages ment. shall be ment that 948

defendant, complainant change has other than attorney the addition of an § thereby.” Motors, R.S. 4921. Thus a fees sustained clause. General 461 U.S. at 655 9, [its] could recover “both own dam n. 103 S.Ct. 2062 n. 9. ages infringer’s profits.” and the General Supreme The Court has reinforced the 648, Corp. v. Devex Motors breadth of section 284 in interpret- two cases 654, 103 211, 76 S.Ct. L.Ed.2d 217 ing statutory provision. In General Mo- (1983). 1185, changed The law tors, case, the more recent the Court held provide recovery “general provided section 284 for the award of compensation shall be due for prejudgment interest necessary “where making, using, selling the invention.” Act plaintiff compensation afford the full 726, 778, August ch. 60 Stat. infringement.” 654, U.S. 103 S.Ct. at (1946). § U.S.C. amendment, 2062. Discussing the 1946 paten-

The 1946 amendment eliminated the Supreme “Congress sought Court stated: infringer’s “profits tee’s to recover the ensure that the owner would in fact ’ recovery damages only.” as such and allow compensation receive full ‘any damages Mfg. Top Replacement Aro v.Co. Convertible he suffered as a infringement.” result of the 476, 505-07, 1526, 654-55, S.Ct. Id. at (quoting S.Ct. at 2062 457, 12 L.Ed.2d H.R.Rep. Cong., No. 79th 2d 1-2 Sess. (1964); Motors, (1946)) 693-94 added). General 461 U.S. at (emphasis 103 S.Ct. at 2061-62. These Aro, And in interpretation the Court’s first were considered too difficult and cumber- of section the Court read the term prove in H.R.Rep. some to court. See No. “damages” broadly any to cover pecuniary (1946); Cong., 79th 2d 1-2 S.Rep. Sess. injuries: (1946). Cong., No. 79th 2d Sess. present statutory [T]he rule is that sought 1946 amendment thus to eliminate the “damages” may be recovered. These have delay protracted litigation and cost of to de- been defined “compensa- this Court as infringer’s profits. termine the Id. tion for pecuniary paten- loss he [the amendment, however, re infringement, tee] has suffered from the guarantee complete compensa tained the regard question without whether the tion for the infringement. gained defendant has or lost his unlaw- statutory language of the 1946 amend ful Coupe Royer, acts.” anticipated requirement 263], “ade 582 [15 S.Ct. 39 L.Ed. quate” compensation present They statute. have been said to constitute “the 284; See 35 U.S.C. see H.R.Rep. also No. pecuniary between his condition difference Cong., 79th 2d Sess. To infringement, and what his con- after expedite legal process, Congress amend dition would have been the infringement if provide ed “any damages the statute to had not Mfg. occurred.” Yale Lock Co. v. complainant prove.” Later, can Id.3 Sargent, 536, 934, 552 [6 S.Ct. 954], Patent 942, Act of 1952 consolidated existing 29 L.Ed. question to be provisions relating damages to into section determining asked in damages is “how 284. The 1952 Act effected no substantive much had the Patent Holder and Licensee types infringement 3. The of harm for which dam- infringement. direct and foreseeable result of not, however, ages complete- are recoverable are harm, profits Economic such as the lost on stiles broad, ly ages” Although unlimited. the term "dam- case, however, competing products in this is a Compensato- in the Patent Act has limits. infringement. direct and foreseeable result of (or actual) ry "damages” generally are those Indeed, infringer actively seeks to attract which are the natural result of the harmful act in away competitors. customers from Thus the in- question. (6th Dictionary Black’s Law 390 ed. fringer feign surprise cannot that the lost 1990). instance, patentee's For if the mother competitor of a are the direct and foreseeable died of a heart attack due to the shock of discov- infringement. result Lost economic ering infringing product supermarket, at the products competition infringing direct the Act wrong- would not authorize for products clearly ful death or are emotional distress. foreseeable and The unfortunate constitute harm, death would not be "damages.” economic nor the

949 Therefore, rights grant. do not that ment infringement. And by the suffered rights already in Infringer depend upon the exercise of had the primarily: question [is] Thus, possession. Patent Hold- the 1952 patentee’s would the infringed, what not Livesay right Win- made?” Act clarified that a confers the er-Licensee Industries, Inc., supra, Livesay exploiting v. an inven- dow Co. to exclude others 251 F.2d ^[469] 471 [5th Cir.1958]. tion. It does not confer the right to exploit already possessed by the inven- the invention (em- 507, Aro, 84 S.Ct. at 377 U.S. at tor. added; and third alterations second phasis Bros. Corp. v. Stahlin original); see Panduit understanding right protected This Works, Inc., 575 F.2d

Fibre purpose scope by section 284 informs the Aro). Cir.1978) (6th (quoting USPQ pro- damages provision. Section 284 “damages using phrase ade By exploit- right to exclude others from tects the provides Act eco compensate,” quate protection, ing an invention. To invoke that paten- to restore the sufficient nomic redress patentee need not have exercised its natu- the in rightful position absent to its tee use, make, or right ral to itself sell the Supreme § 284. The fringement. 35 U.S.C. section, section invention. The meaning of sec has underscored Court exclude, right right not protects the construing Similarly, section tion 284. qualifies exploit. patentee A permits record held: “If the this court infringement adequate compensate namely, the damages, of actual determination exploiting without infringe lost from the context, language, the the enact- Thus the ment, accurately mea that determination history, Supreme and the Court’s inter- Alpine patentee’s loss.” Hanson sures the clarify Patent Act that “dam- pretation of the Inc., Area, Valley Ski ages” encompasses an amount section (Fed.Cir.1983); see also any injury from necessary to redress direct Inc., Weinar Rollform Moreover, dam- infringement. the award of (Fed.Cir.1984), de cert. violation of the ages compensates nied, right to exclude others from mak- patentee’s (1985). L.Ed.2d ing, using, selling or the invention. adequate compensa- provides Section make, use, not or sell the patentee need rights. tion for right. injury to that to sustain an invention as protected rights explains nature of the protection. 284’s the breadth of section well Policy B. The Patent Act— Act, the Patent Act defined Before the 1952 injury result suffer “the patent rights in terms of the bundle of right to exclude use, ing from the violation of its make, and vend the right to exclusive The most infringing, competing products. § 40 discovery.” 35 U.S.C. violation, injury from such form of grant obvious wording defining This — above, invention, profits lost to as mentioned right to make the terms of the product. The infringer in market for the exclude others from than the rather competing product sale of a confusion. making the invention —caused patent within that by the covered Act, that a clarified The 1952 justifications for change policy does “to exclude oth patent empowered its owner they positions restoring parties to the selling” the inven making, using, or ers from infringe occupied the absent would have (1952) (emphasis § add tion. 35 U.S.C. ment. ed). should have cor The 1952 amendment patent for disclo- patentee A is awarded patent rights any mistaken belief that rected promote “[t]o invention patentable of a patentee’s exploi sure hinged upon the somehow Arts.” U.S. Progress of ... useful possess the Inventors of the invention. tation Const, I, need not patentee 8. A art cl. right exploit their inventions natural to the use, gain patent to make, an invention or sell in a (subject patent rights of others to the pro- of a Upon proper disclosure protection. any patent) apart from Govern- dominant invention, patentee acquires teetable the efficiently as infringer. as an In- right making, to others from using, deed, exclude infringer’s presence the in the market selling the invention. may preclude patentee from beginning or continuing patented manufacture of prod- the encouragement “The of investment-based Thus, uct. apparent case, as in this purpose risk patent is the of the fundamental patentee may acquire better returns on its grant, directly and is right based on the to innovation investment attempting to ex- exclude.” Mossinghoff, Patlex infringers clude from competing pat- F.2d (Fed.Cir.), nonpatented ent holder’s (Fed. substitute. modified, F.2d Cir.1985). patent “The federal system thus situation, Under this the Patent Act is carefully embodies a bargain crafted for en working patentee well. The deriving prop- couraging new, the creation and disclosure of er economic return on its investment in ac- useful, and nonobvious advances in technolo quiring patent right. public benefits gy design in return for exclusive from the disclosure of the invention and the right practice period invention for a ability exploit when the term Boats, years.” Bonito Inc. v. Thunder Craft expires. Supreme As the Court noted: Boats, Inc., 141, 150-51, 109 S.Ct. 971, 977, (1989). 103 L.Ed.2d 118 Congress, in the choice pro- of means of moting the by patent useful arts grants,

Thus, the Patent Act creates an incentive provided could have grant that the should for innovation. The economic rewards dur- upon be conditioned ing patent- the use of period exclusivity are the carrot. invention, ed as in expends provide by owner fact it did resources in ex- pectation receiving the Act of Upon this reward. 1832.... Congress But was grant patent, only unpatented limitation on the aware that an invention could size of the carrot should be the dictates of suppressed be public and the thus de- the marketplace. attempts Section 284 prived of all knowledge or benefit of it. ensure deterring infringers result Special Coe, Equip. 370, 378, Co. v. recouping market lost value when deterrence (1945). 89 L.Ed. 1006 fails. Moreover, government simply can “take” Providing profits compensation lost in this invention where public warranted preserves case those constitutional incen- terest provide concerns and “adequate com- Moreover, tives. construing section 284 in pensation” holder. 28 U.S.C. harmony with the breadth of language its § 1498 market, allows courts, rather than dictate the This incentives. court should not long As patentee as the receives a presume to patentee determine how a should proper economic return on its investment in maximize its investing reward for in innova- the acquisition patent, of a the Act does not tion. Yet denying patentee provable require that return to come from the sale of any in this or case where the patented products.4 The supplies Act a car to market competing chooses non- rot the form of resulting economic rewards patented product would have this result. to exclude. The Act further guarantees adequate damages in may The market the form of well dictate best provable use of a is to prod- exclude underscore the value infringing ucts, rather than market invention and invention. incentive to innovate. patentee, perhaps burdened with costs The Act does not that a dictate development, may produce patented must manufacture its own invention to recov- 4. The “entire recognizes market value rule” profit based not from the economic greater value of a part, See, non-patented parts. but also on e.g., than the value part of the sales of the Indus., Indus., Inc., State Inc. v. Mor-Flo rule, alone. Under this courts have re- allowed (Fed. covery profits of lost or a royalty reasonable

951 paten- infringes in this and the situation itor of innovation.5 the costs er only royalty,” can recover a “reasonable tee the claimed exploitation of Requiring “adequate com- patentee does not receive profits would recovery lost for vention requires. The pensation” as the statute “damages failure to award systematic cause a anytime reasoning applies same infringe- for the compensate adequate to by excluding others more owner benefits could patent holder where in cases ment” licensing. by than exploi- Requiring prove causation. otherwise accept patent owners would force tation situations, profits if lost are such a reason- royalty in where cases reasonable simply patent hold available because the not In- inadequate compensation. royalty is able product pursuant to its does not market a er the windfall in effect receive fringers would may actually profit patent, infringement from the compulsory license of a retroactive (rather excluding) licensing than able. If owner. proven have more reward competitors would how an in- example shows hypothetical A ing patentee would have patentee, A a rule. profit such fringer could Instead, the dictated that licensed. product market a hypothetical patentee could way the best to recover innova exclusion was efficiently supply all by covered Limiting tion investments. competitor seek- product. demand however, royalty, recovery to a reasonable under would ing a license infringer the market give the what would by sup- profits more succeed. Fortunately the Patent license. denied —a by granting a than plying the demand itself to in does not create such incentives Act allow the com- which license on terms would Rather, guarantees damages ade fringe. reasonably operate. this situa- petitor to infringement— compensate for quate to Willing tion, royalty exists. no reasonable profits.6 provable include lost which in their assuming they both act negotiators, exploit infring- Requiring patentee interests, any agree to own best would profits prerequisite as a for ed claims exercising right to royalty. The value significant also two any create the value of greater than exclude is First, remedy problems. practical compet- If the economically royalty. feasible (Fed.Cir.1983). suggest- denied, Cir.1989), solutions S.Ct. 387 110 cert. 493 attorney damages, of treble ed include awards L.Ed.2d 744 107 interest, Fromson, prejudgment 853 fees and discretionary great- awards F.2d at this court Tapematic two where cites cases royalty: patentees who er than a reasonable held lost unavailable exploit patented invention. See Trell failed to may an amount of court award [T]he trial 1443, 1445, 16 F.2d Elecs. v. Marlee royally damages greater so than a reasonable (Fed.Cir.1990); USPQ2d Lindemann compensate "adequate that the award is Der American Hoist & GmbH v. Maschinenfabrik "[T|he infringer would infringement.” ... Div., Co., 895 F.2d Harris Press & Shear rick lose, gain everything to if nothing have USPQ2d 1874 n. n. normal, only paying he could count Lindemann, (Fed.Cir.1990). howev In Trell and might paid. royally non-infringers routine er, does not show that the record context, another As said pat- any product States. The United sold ‘heads-I-win, tails-you- infringer in a would be possible for a lost had no entee basis increase, position.” Such an lose' others, cases, merely reflect claim. These like as a reason- either be stated the trial court general are recoverable rule that lost infringer as an in- royally ... or able by adequate in the evidence if demonstrated royalty determined in the reasonable crease Supply Litho Plate & Fromson v. Western record. court, discretion. is left to its sound 1568, 1574, omitted; Stickle, (citation em- Area, F.2d at 1563 (Fed.Cir.1988); Valley Alpine Ski Hanson v. discretionary original). increases phasis Such Inc., 681- 718 F.2d plaintiffs appropriate cannot may be where (Fed.Cir.1983). damages in the prove direct and foreseeable plaintiffs estab- profits. But where form of compensation problem inadequate when 6. The probability, a lost profits with lish lost reasonable royalty has reasonable are based on a prefer- reflecting See, profits award actual recognized cases. expressly in several been arbitrary in a essentially increase Fromson, 1574-76; able to an Stickle e.g., 853 F.2d at Heublein, Inc., royalty. reasonable depend infringement partly would of infringement.” issue “reverse The inven- type by and of claims number selected tor have to patent’s would show that inventor, scope. rather than on their Sec- read on product, claims the inventor’s own ond, infringement trials would become more infringer while the try they would to show do complex cumbersome and a because not. again, precondition Once as a for lost prove would have to the claims cover profits, parties parse claims competitor’s product both its and its own. experts and call on to apply the claim lan- hypothetical again prob guage illustrates an unaccused device. useful, An originates lem. inventor nonob- language of The Act did not con- composed A, B, vious device of the elements template creation of an entire new issue of C, Qi. consisting and A device of ABC is infringement.” “reverse language The Qi well known. The signifi addition of is a recognizes Patent Act the value of a cant advance. The inventor or on someone claim patentee, to the and the extent of harm knows, however, the research team that ele infringement, depend do not on wheth- or element could function Q2 Q3 er the markets the claimed device. place Qj. device in Because differ adequately To compensate infringement ent Qi, Q2, characteristics of the elements exclude, as section 284 re- Q3, and language and the different necessary quires, “damages” profits elements, includes lost to describe these the three embodi competing products readily by ments are not comprehended covered the in- in a Thus, single fringed claim. claims. order to cover the subject independent matter of the three claims, ABCQi, ABCQ2, ABCQ3, and three Application III. of the “But For” Standard

separate issue, patents could perhaps with differing inventive entities. Kap See In re To profits recover lan, (Fed.Cir. 789 F.2d patent infringement, the patent owner must 1986) (independently derived best mode cre show that it would have received the addi independently ated an patented invention profits tional “but for” infringement. though even it was described in an earlier The owner bears pres the burden to patent). ent evidence sufficient to show a reasonable probability that it would have The made the as inventor then markets a device cov- serted See, ABCQi. infringement. absent Competitors e.g., ered claim —unable Avionics, Quinton Del acquire Mar Inc. v. deliberately market Instr. de- license— literally infringe vices which USPQ2d claims ABCQ2 (Fed.Cir.1987). ABCQ3. According dissenting This prescribed has opinion, particular the inventor cannot one recover his lost method which the infringement. for this burden; The inventor owner must meet this “the method must, effect, instead grant compulsory ology assessing computing damages is license to infringers. Moreover, willful committed to the sound discretion of the infringers infringe incentive to Indus., district court.” State Inc. v. Mor- acquire what the market does supply, Indus., Inc., Flo mandatory license. (Fed.Cir.1989), cert. de nied, potential The increasing complexity L.Ed.2d 744 litigation especially disturbing. prove inventor would have to its product prevail own To appeal falls under the Infring- escape ers would amount of imposed, Tapematic acquire must mandatory show that showing license the district court the inventor’s committed an product discretion, is not within the claims. abuse of length, basing the award on cost, and complexity of an clearly findings, trial erroneous factual legal er would conceivably ror, double. or a manifest judgment. error of State phase of a trial would Industries, feature an entire new 883 F.2d at 1577. Accordingly, court affirms the dis- this of dam determining the amount sis. damages assessment. See State entitled, court’s the district trict King was ages to which Industries, 883 F.2d at considered: court (2) sales; gross (1) number of lost from King have obtained

receipts would CONCLUSION infringe- been no had lost sales there error, this Because it detects no clear (3) the cost of sales by Tapematic; ment finding of affirms the district court’s court (4) gross receipts; and deducted Similarly, infringement patent. ’461 sales. profit on the lost King’s error and affirms court detects clear this King, at 1241. F.Supp. findings Tapematic that district court’s King- that infringed the 153 or the 123 court not either The district determined has pri- market tapeloader Finally, detects no clear 70% of the this court patent. controlled The district and affirms Tapematic’s infringement. or abuse of discretion or to error sold 77 Tapematic damages assessment. found that court’s court also district 2,002). Model (Tapematic fringing machines that, ab- court determined

Id. The district COSTS 2,002, buy- infringing Model Tapematic’s sent for this party its own Each shall bear costs replacements ac- purchased have ers would appeal. share. cording to the other sellers’ market, King 70% of controlled Because AFFIRMED that initially determined court the district replace- made of those King could have 70% NIES, Judge, dissenting-in-part Circuit Id. at 1242. sales. ment Kelley Rite-Hite took into account court then The district (in banc), (Fed.Cir.1995) USPQ2d 1065 Tapematic Model between the differences damages from profit court divorced lost this Tape- The

2,002 King Model 790. and the goods patentee’s business injury to the double, pancake 2,002 single, a matic paten- by infringed protected Therefore, argued that Tapematic loader. on based was held entitled tee bought single not have customers would goods protected under in its lost trade King Model 790. like the pancake loader competed patent unlitigated which argument, weight to this Giving some case, panel goods. In this infringing King’s number of reduced the district court require the Rite-Hite majority eliminates also awarded The district court sales. out, least, put patentee to for the spare parts for the profits on King lost infringing counterpart competitive Tapemat- for but machines it would sold decision, any economic Under product. Id. infringement. ic’s legally is held patentee’s business loss infringe for compensable as that ma- found district court also twice declared The court has now sales, ment. which, Tapematic’s chines but provided of dam remedy Congress has companies other have been sold royalty are ages calculated as reasonable noninfringing al- acceptable King were than a better judicially fashions inadequate and court determined The district ternatives. the ma conforms to patentees which one royal- a reasonable King was entitled to public interest. view of the jority’s price and the Tapematie’s sales ty on based Finally, the dis- number of these machines. the district majority panel holds interest at gave King prejudgment court trict its discretion”1 did not “abuse rate of 11%. awarding the loader King’s share error or abuse based court finds no clear This market, Tapemat- time of it held analy- court’s careful in the district discretion 1924-25 of review a discussion of the standard 1. For court, (Fed.Cir.1991). damages applied our see Smith- Corp., 926 Diagnostics, Inc. Helena Lab. Kline 3,825,461 ic’s protected U.S. Patent No. were in suit but (the patent). infringed ’461 ’461 an unasserted “legally were com- splicer assembly covers a head for use as pensable.” The Rite-Hite decision went on part of a (albeit loader. The award was calcu dicta) opine that a profit margin lated on the King’s based on goods lost public sales of in domain the were loader, model 790 a device which does equally compensable if customers would not technology not use the of the ’461 In patent. goods obtained such party. from a third addition, profits spare lost were on awarded reject I change patent in damages law. parts King’s unpatented for machines. For My fully reasons are explained more in my convenience I refer to King’s will 790 dissenting Rite-Hite, opinion in 56 F.3d at “unpatented,” loader as meaning that it does 1556-78, (in 35 at 1078-96 which embody not the infring invention of the Archer, Judge Chief Senior Circuit Judge However, ed ’461 the 790 machine Smith and Judge Mayer joined). Circuit I may by extant, be covered expired, other or patent conclude that infringement damages patents invalidated King’s portfolio. See for depend loss of trade injury Instrument Corp., Otari 767 patentee’s goods market in utilizing the in- (Fed.Cir.1985), F.2d 226 402 cert. infringed patent. vention of the patent A denied, 475 U.S. S.Ct. grants patentee the legal right a protect- to a (1986) (“Otari”) (U.S. L.Ed.2d 312 Patent No. only ed patented market goods. for patent 3,737,358on a splicer “shift block” held inval grant does not patentee the a to a id.). protected market in unpatented goods. A court patent Rite-Hite ruled that entitles the owner to the fruits fringement damages § under 35 U.S.C. invention, not paten- the fruits of the encompass profits by patentee the in its generally. sum, tee’s business profits goods business in compete which with the legal are a injury, only but a measure of infringer patentee’s or not goods whether the damages legal injury. for a To constitute embody the invention of in suit. legal injury patentee’s to a business for The in rejected banc argument court which lost be awarded for legal injury for loss of trade limited was infringement, patentee must have a mar- to diversion of business from the patentee’s patented ket in goods from which sales patented market in goods in issue. Un- by were diverted infringer. Further, decision, der the patentee may Rite-Hite a proved that, must be but for the infringer’s awarded lost without proving that acts, the customers bought would have the invention created consumer for demand patented goods patentee from the because of goods patentee which the would have the customer patented demand inven- for satisfied but infringement. The in tion. proof, Absent such patentee is banc court interpreted the provide statute to entitled to damages calculated as a reason- “only a lower limit of royalty a reasonable royalty able for the use of the invention made and no other limitation” on infringe- by infringer. 35 U.S.C. 284. Such damages. Rite-Hite, at 1544. award satisfies requirement for “full The in banc court also policy declared compensation” recognized in General Motors encouraging patentee to commercialize Corp. v. Devex 653-54, patented inventions the “carrot” of dam- 2058, 2061-62, 103 S.Ct. 76 L.Ed.2d ages injury to its patented market 1187-88 goods is meaningful persuasive.2 or Re- jecting all arguments statute, based on the Supreme Court principle stated the prior precedent, policy logic, years the Rite- ago over 100 Crosby Steam-Gage & Hite court ruled that lost paten- sales in the Valve Co. v. Safety Consolidated Valve tee’s business competitive goods 441, 452-53, U.S. 2. The encouragement practice found is deliberate. Use of the invention possibility invention in the injunc- of denial anof merely injunction others because is in tion, a possibility so remote as to be ludicrous. place is reality. outside the world Moreover, treble are assessable where counterpart. patentee offers no that, of which the (1891), to recover loss L.Ed. invention, head, only addition, splicer is “putting prove it was trade, must majority [patent changer. The embodying part the reel goods also, Seymour requirement proof v. McCor that the ignores the See invention.” ed] (16 How.) 480, mick, 14 L.Ed. provides head the commer patented splicer (1853) (actual depends on magnetism for the entire device. Where cial prod exploitation part of the commercial demand satisfying the market machine, either uct must show infringing “ Westcott, 130 U.S. licensing); Rude v. are to be ‘that the 32 L.Ed. 165-67, 9 S.Ct. machine, for the on the whole calculated Sargent, 117 U.S. (1889); Mfg. v. Yale Lock of the whole the entire value reason that 934, 942-43, 552-53, 536, L.Ed. 6 S.Ct. article, machine, properly is as a marketable majority this the of Apparently, the fea legally attributable to and Supreme Court would that the assumes Clark, 120, [4 v. U.S. ture.’ Garretson of the state precedent because this overturn Westinghouse L.Ed. Co. 371].” S.Ct. that, above ease cited in the Devex Mfg. Wagner Act, is patent a owner present under the (1912) (empha 56 L.Ed. 1222 S.Ct. ‘any dam compensation for to “full entitled added); Marconi Wireless Tele sis accord infringe as result ages’ he suffered a States, 320 U.S. graph Co. v. United However, has Supreme Court the ment.” (1943) (defen 1393, 1416,87 L.Ed. 1731 S.Ct. legal in expansion the pronounced date “non-infringing and valu liable for dant not circuits, except “damages,” all which scope of improvements which had contributed able this one, It ill behooves followed.3 this profits.”); also Sheldon making of the see Supreme Court anticipate that court to Metro-Goldwyn Corp., 400- precedent. Rodri controlling overturn will (1940) 681, 685-87, L.Ed. 825 S.Ct. Ex Quijas v. guez de Shearson/American damages). copyright (analyzing Inc., press, rule,” as market value The “entire (“If (1989) a 1921-22, 104 prece L.Ed.2d 526 in the known, only in footnote a surfaces in a application has direct of this Court dent applied. Howev majority opinion and is not case, rejected appears to on reasons yet rest Rite-Hite, er, in 56 F.3d at as reaffirmed decisions, of of Court in other line some 1549-50, permits rule market value entire directly the case which Appeals should follow of an en damages on value recovery of preroga controls, leaving to this Court patent-related only where the tire machine decisions.”). Su overruling own its tive of for demand. the basis customer feature is holds unequivocally precedent preme Court strangely opinion is majority panel solely are reserved profits awards that ruling banc justification of the in devoted to infringer’s injuries an interfer caused for which, course, of in Rite-Hite on goods in trade owner’s with ence panel. by this endorsement needs no infringed pat embodying of the invention virtually silent on contrast, majority is ent. of lost for the award justification appeal, remanded banc court The in which I turn. this ease to of on the facts banc, for deci- also had been taken which by the Rite-Hite in accordance with sion The Facts However, majority of panel. original Tapematie market machines King and leap from Rite-Hite quantum a panel makes cut, splice and wind that loaders tape called injuries for legal scope expanding cas- into closed tape or video magnetic audio fully infringement. As will more spliced magnetic tape must be settes. The in an patent is used infringed explained, the winding hubs affixed tape leader infringer’s tape accessory optional for in- charged Tapematie with King accessory for cassette. loader, changer, an reel patentee's for protects Rite-Hite, See embodying J., goods the invention (Nies, dissenting), reviewing deci- those fringed patent. 1087-88 uniformly hold other circuits sions 3,637,153 fringement of its U.S. Patent Nos. tape its own Similarly, loader. the award 3,997,123 respectively directed tape to a of lost unpatented on spare parts for to a loader and more automated unpatented version machine does not meet the majority Tapemat- thereof. The requirement affirms proof Rite-Hite compe- tape ie’s infringements loaders are not tition unpatented between the product and patents. those goods of infringer. allega- There is no tion finding Tapematie competed with uninfringed addition to the ’153and ’123 spare parts. Thus, the awards of lost patents, King charged Tapematie also expand here upon ruling. the Rite-Hite infringement of patent, a third U.S. Patent (’461 3,825,461 No. patent), which is directed particular to a splicing assembly head The Entire Market Value Rule connecting magnetic tape tape to leader in a When a either seeks tape loader. Tapematie Neither nor an entire machine where covers use this invention in a loader. As an only patented component or seeks optional loader, accessory Tape- to its for lost sales of unpatented goods along sold provides matic changer a reel that automati- with a (“convoyed” sales), device cally splices switches a second reel of satisfy must the entire market value magnetic tape audio video when the first rule, is, that prove must that Obviously, reel runs out. changer reel patent-related feature is the basis for splices magnetic tape magnetic tape. A customer unpatented demand for the parts to splice different type of is used in proce- this which it seeks to damages. extend its West required dure from splicing magnetic that inghouse, 225 U.S. at 32 S.Ct. at 694-95. tape tape in leader the tape loader. How- In Rite-Hite, the in banc court reaffirmed ever, majority construes one claim of viability of the entire market value rule patent, the ’461 which is in written broad imposed a further limitation that “con (35 “means-plus-function” terms U.S.C. voyed” sales must bear a functional relation ¶ 112, 6), § splicing to cover the magnetic of ship patented with goods. Rite-Hite, tape magnetic tape in a changer. reel profits lost were patentee’s awarded for the splicing in Tapematic’s head used chang- reel lost restraints, sales of truck a device which er is equivalent found to be an of the splicing (even holds a vehicle loading dock, to a assembly

head in disclosed the ’461 though protected only an under unasserted and is held to be an within the patent) profits and lost were denied on “con gives construction it language claim un- voyed” sales of a loading dock leveler. ¶6. der section Perhaps panel majority here did not Competitive

No Products attempt to apply the entire market value rule Assuming that the finding Tapemat- profits to a lost involving award patentee’s ic’s splicing changer head its reel infringes unpatented goods because it makes no sense. correct,4 the ’461 claim it does not follow This is a classic case where apportionment of profits that lost are awardable under Rite- ill-gained profits defendant’s equita in an King’s Hite for losses sales of its ble accounting patentee’s and of a claim for Rite-Hite, loader. Under King would have its own profits as “damages” actual to, least, offer a reel changer. King offers would required have been earlier under statu no reel changer competitive or otherwise— Darnan, tes.5 v. Dobson — Tapematie 4. challenges expansive legal 1876) inter- only Act of patentee’s when a actual pretation given scope the claim of under losses profits. exceeded the defendant's See infringe. which it is found to Georgia-Pacific Corp. Plywood v. United States 500, 516-46, F.Supp. panel implies prior (S.D.N.Y.1965), 242-54 analysis for an extended could recover under R.S. 4921 both its own statutory remedies in successive stat- infringer’s profits. and the Not so. No utes. recovery double court equity was ever allowed. The (the "damages" equity award courts given were special power "damages” to award (1886); profits unpatented goods on its claim for lost Dobson L.Ed. 63 S.Ct. 444-46, only the defendant’s device contains S.Ct. Hartford, 114 U.S. feature, context, I pat- infringing as here. Because 29 L.Ed. 177 application of an entire market value find only to the defendant’s entitled entee was Obviously patented mind-boggling. rule profits to the own lost its and/or invention, splicer head did not create demand to its attributable extent King’s tape type spli loader because impossibility of the virtual and because patentee’s goods. is not used at all to reflect that cer apportionment difficulties meant that change Assuming the in banc court amount, persuaded to Congress was entirety away patentee gets the of its lost expressly did Congress the statute.6 product if competitive unpatented accountings defen on a for the equitable starting patented component is the basis for consum usual was the profits, which dant’s (the infringer’s goods logic At demand for the compensation. er place for determination me), escapes profit then the lost time, of which Congress provided that dam the same Indeed, proof. royal here fails for lack of a reasonable award calculated as ages be attempt prove, and King did not does was not other The statute ty in all eases. argue, cre even that the “damages.” Either changed respecting wise infringer’s changer, reel apportion ated demand to maintain Congress intended loader, spare or for the intended that much less “damages” or it ment of actual royal parts. The district court found that numer “damages” awarded as a reasonable noninfringing products available. ous were Congress did apportionment. ty in lieu Perego, appor King Instrument prior restriction not eliminate (D.Mass.1990). ar F.Supp. calcu of a tionment competition Devex, for” the gues that “but lating “damages.” See tape admittedly improved reeler Tapematic’s to infer 663, (“appropriate 2061 103 S.Ct. at pancake” changer, the “dual de adopt with a reel to the estab Congress intended that vice, kept of King have its share judicial interpretation.”) lished “single pancake” its loade market with law, pre-Rite-Hite, dealt of case Our King proved actual loss of sales to rs.7 only value rule the entire market course with infringer public’s demand because claim for patentee’s with the in connection technology. patented splicer goods of which the profits on its own lost profits patentee’s lost on The award of the part. “[T]he a entire patented invention was unpatented re- recovery parts its machine spare of for permits rule ... market value change in the law [patentee’s] the full extent of a veals damages based on the value Otari, features, supra, which in- panel. In containing apparatus several entire pat- King patent, one of the volved the ’153 is the basis patent related feature where King infringed, here but not Indus. v. ents asserted demand.” State for consumer 1573, 1580, its loader Indus., lost 12 was awarded F.2d Mor-Flo 883 (Fed.Cir.1989); embody ’153 invention. 1026, did TWM which 1031 addition, 895, King sought profits on sales of F.2d 900- v. Dura 789 Mfg. Co. (Fed.Cir.), parts expected it to sell 525, unpatented spare cert. de 528 229 tape loader. In over- along patented nied, L.Ed.2d with 93 S.Ct. connecting (1986). turning the awarded court did not The Rite-Hite business, injury King’s spare parts to value rule with explain the entire market how explained: this court dealing patentee’s work when should (Fish Robert K. Hen- introduced Hon. Congressional hearings stat- letter of the 1946 6. At the Congress). ute, ry, of explained Member "[d]am- Office officials Patent compensation legal ages means the in a sense injury done.” approved the law will award for share which has market 7. While this court respect Hearings profits, to the re- market share at 9. With heretofore the House award of lost invention, patentee’s there share of the market created was based striction augmented by patented products shares agreement [are] the based on that "those was total Indus., supra. infringers State and licensees. entitled.” Id. at profits which the is to spare parts right asserts that its ... The to are remains exclude to enforceable normally parts pat- sells with the which trespasser its fullest. A injury can inflict swing simplistic arm ented machine. Such only on the property trespass on which the perceive outlook fails to the underlying committed, example by for cutting the trees. significance of the entire market value Similarly, patent infringer injure cannot rule, accurately applied by which was itself, one only property rights but predecessor Corp. of our courts in Leesona protected by patent, namely, paten- States, supra. defining v. United those tee’s exclusive patented goods. market for spare parts owner majority states that “inventors have a recover, recognized the Court of Claims right natural exploit to their apart inventions parts ... [must] derive their existence any government Therefore, from grant. pat- and value from the rights ent depend do not upon the exercise Otari, USPQ 411; 767 F.2d at See rights already patentee’s possession. States, also Leesona v. United patent] right [A does not confer exploit to Ct.Cl. already possessed by the inven- denied, 991, 100 cert. S.Ct. Slip op. However, tor.” p. 949. if an inven- (award (1979) compensa L.Ed.2d 420 merely tor his right exercises natural to ex- unpatented replacement tion made on anodes ploit his invention patent, without once the part value where “bat product market, is in the competitors all tery’s very uniqueness ... in replacing lies right. the same Bonito Boats v. Thunder recharged”). Having just anodes to be reen- Boats, S.Ct. Craft rule, dorsed the entire market value it is 103 L.Ed.2d patent pro- anomalous the extreme that this court now vides what an right inventor’s natural does approves injury King’s namely, a right exclusivity in the not — spare parts unpatented business for an ma place during term. The chine when this court Otari denied dam right exclusivity is far different ages injury King’s spare parts business the natural exploit an invention. for its machine. entire market jettisoned value simply rule is in this ease. panel majority proclaims next However, panel change has no license to requiring “exploitation of the prior precedent. claimed recovery a prof- of lost its would cause a systematic failure to award Additional Comments ‘damages adequate compensate to for the respect panel’s With to this substitute infringement.’” Slip op. at 951. Such a analysis Rite-Hite, of the statute for that of requirement, according majority, to the a few comments are in order. “would force accept owners to a rea- panel majority posits The the lan- royalty sonable in cases where a reasonable guage of section 154 of royalty the Act of 1952 inadequate is compensation” and patent empowers clarified that a its owner to would amount compulsory to a license. At practicing exclude others from the invention the same time majority approves damages action, 284, and that section anathema compulsory of a license in this protects exclude, right to right not the to Damages ease. are calculated as a reason- exploit.8 correct, damages, While actual nev- royalty able percent Tapematic’s of ertheless, depend manner sales for which lost profits were not awarded. i.e., exploitation, of manufacturing or licens- The short answer is that the award aof ing. right “injured” The by exclude is not royalty reasonable damages as is not li-a infringer, anymore than cense, a landowner’s but is simply a calculating method of “injured” exclude is trespasser. a damages. Co., Dowagiac Mfg. at Co., Mfg. 8. See Aro Top Inc. v. Convertible present § Re- in the purpose 284. The stated was 476, placement 505, 20, n. 84 S.Ct. merely 'reorganization language clarify ” 20, 457, n. USPQ L.Ed.2d statutes,’ quoting statement of the H.R.Rep. (1964) (“In codification, n. 20 the 1952 1923, (1952)). No. Cong., 82nd 2d Sess. at §§ 67 and 70 of the Code were consolidated (S.D.N.Y.1970) (reasonable Devex, 224; at 652 at 35 S.Ct. margin). That was royalty profit a As I stated n. 5. leaves at 2060 103 S.Ct. n. evil, Rite-Hite, Congress made. choice 56 F.3d discerned, infringe- a royalty knowing is fact was Congress reasonable “[a] willful, a for cases where largesse infringement is dam- Congressional ment. Where only nomi- receive might up otherwise times. patentee increased to three ages be statutorily now patentee A is damages. Here, infringement nal are damages for innocent though royalty even a reasonable entitled stat- than ten times over the increased more prove a financial cannot has not suffered or utory entitlement.10 goods.” market loss to its damages reasonably royalty is adequate of majority’s discussion panel pat- is in the with a where royalty concludes in the form of reasonable competitive non- goods along with ented but reasonable pronouncement with the would have infringing substitutes which infringement quotes encourages royalty sales, infringing Corp. v. Panduit shared Inc., Heublein, Stickle Works, Inc., 575 F.2d Fibre Stahlin Bros. (Fed.Cir.1983). Noting lan (6th Cir.1978), as as for 1157-60 well author, must as I to me guage is attributable exploit market for patentees do not who my of of some acknowledge the inartfulness Congress has patented goods. Id. What However, says no more Stickle language. inadequate. cannot fixed statute so infring royalty for an than that a reasonable normal, routine, or established not a er is panel that all eco- In decrees note dam precedent on Supreme Court royalty.9 compensable nomic harm reasonably royalty bet ages as a calculated and foreseeable result as “a direct Dowagiac concept. See explains the ter Congress disagrees. To re- fringement.” at 224-25. Mfg., 235 U.S. at profits or a reason- any cover —lost event, infringement is innocent any where manufacturing patentee must royalty able —a oper here, damages cannot as the amount notice products mark “deterrent,” except as a brake ate as infringe- actual notice of rights provide charge infringe challenges to legitimate products § 287 ment. 35 U.S.C. hangs like the sword patent now ment. A profit receives on which unpatented competition with over Damocles could be marked are not marked powerful means as a goods and serves protected they are with notice contrast, Congress provid has extortion. Further, notice of actual the ’461 penalties system of rational ed a balanced given patent was the ’461 infringement of infringers are liable All and rewards. damages are date from which prior to the royalty statutory or a damages, either actual sec- conflicts with award here awarded. The theoretically Innocent award. tion 287. damages calcu are profitable be where Paper In comment. Continental (See One final royalty. Hanson as a reasonable lated Co., Paper Bag Bag v. Eastern Inc., Co. Area, Valley 718 Alpine Ski 753-56, 424-430, 52 L.Ed. (Fed.Cir. 684 219 (1908), Supreme held the Court royalty 1983)) (it implicit that a reasonable is was not of an invention commercialization profit); a reasonable infringer with leaves an infringe injunction against necessary for an Ply States v. United Georgia-Pacific eq- majority another panel cites ment. The F.Supp. Corp., 318 wood absence In the omitted]. [citation occurred. to from its reference majority the omits 9. What holder, patent however, relating exploitation the Stickle, to my comments are of awardable. damages: would be added). Stickle, (emphasis F.2d at 1560-61 argument, dam- Contrary defendant's] [the to simply be patent cannot ages holder to the $1,100 per at royalty was fixed 10. A reasonable determining dif- 'the in all calculated cases sales, infringing whereas unit of pecuniary after condition between his ference $14,400 King, per unit. amounted infringement, what his condition and the F.Supp. at 1242. not if the had would been uity patent held that a case which could Supreme not the Contrary Court. ground might be refused be Co., used majority, Mfg. 505-507, Aro 377 U.S. at only protect patented another invention of 1542-43, USPQ 693-94, S.Ct. at did part. Special Equipment which it was a Co. expand the basis actual “to Coe, Patents, Comm’r U.S. of any injuries” cover pecuniary patentee’s to a (1945). 741, 89 L.Ed. 1006 S.Ct. majority including business unpatented on of the court believes it follows that disclosure goods majority as the Slip op. asserts. at 11. is, itself, of an invention sufficient for rejecting In expansive patent view of patentee’s to a unpat- business in infringement damages, the Aro Court stated However, goods. injunction ented is di- damages theory “would equity rected to the of power the court and patentee enable the profit derive a ... on Rite-Hite, may be denied. 56 F.3d at 1547- unpatented patented rather goods than —an Damages provided by 48. are a rule of law proscribed by achievement the Motion Pic- respecting legal injury what constitutes and ture [243 Patents 502] U.S. and Mercoid [320 may not be refused aas matter of the court’s Aro, 661] U.S. cases.” majority discretion. compares The apples (plurality). Aro, S.Ct. at 1544 As stated in oranges. amplify To the words of the prior Supreme precedent, Court paten- panel appropriate inserts: “The eco- tee is unequivocally prof- not entitled to lost nomic [from rewards invention] unpatented its on goods.11 during period exclusivity are the car- patent rot. expends owner resources in Congress policy made the choice that the expectation receiving Upon this reward. “carrot” of an pat exclusive market for the grant patent, limitation on the goods ented encourage patentees would size of the carrot should the dictates of protected commercialize the inventions so marketplace [for the inven- public that the enjoy the benefits of Slip op. present tion].” In ease, technology during new term provided while the market has a carrot that exchange granting a limited mo disdains, King panel majority, contrary nopoly. words, public other expected to its admonition to let the market determine during benefits ‘“the embarrassment of an rewards, furnishes with a full course ” exclusive put as Jefferson it.’ Gra Despite meal. years two hundred of our ham 1, 10-11, v. John Deere patent system awards, such without there is S.Ct. 15 L.Ed.2d 545 As systematic no evidence of a failure which the Boats, stated Bonito 489 U.S. at majority elevates to one of constitutional di- 109 S.Ct. at 977: mension. If anything, systemic failure goes now way. the other public is de- system federal thus embodies prived of the benefits of the invention during carefully bargain crafted for encouraging term of the patentee while the the creation new, useful, and disclosure of assured its market unpat- share and nonobvious technology advances in goods ented keeps if it the invention from the design in return for the exclusive public. bargain This is not the Congress practice the period invention for a by granting intended an exclu- years. sive market for patented goods. added.) (Emphasis If view, did majority “[u]nder this situa- commercialize the invention directly tion [an award of connected to un- license, until products], now the the Patent Act is could not work- ing prove Slip op. p. damages but, well.” actual nevertheless, I disagree. Only 950. was if one patentees elevates entitled rewards to remedies of over calculat- public other interests could one reach this ed as a royalty injunction. reasonable and an conclusion. And it is not espoused the view Now the as, is rewarded the same point 11. I must out that Aro is a case on statements in precedent. other 56 F.3d at law, damages, not antitrust the basis on at 1069-70. majority in Rite-Hite discounted similar fully set out at 56 which is U.S.C. than, made the invest- indeed, if it had more I 1556-78, USPQ2d at 1078-96. into the market.12 bring goods pro- However, has ever been that the dissent and the legislation only point out will patentee for losses compensate many Supreme same majority rely posed correct in order to absolutely business unpatented them but derive from Court eases majority in the sees inadequacies the higher conflicting tenets. Clarification have hereto- damages which legal scope of scope protec- authority is needed on the simply This court has awardable. fore been meaning by patent and the tion afforded expansion legislated judicially infringement “damages.” protection of an exclusive rights from paten- protection of the goods to as well. The unpatented business tee’s Congress deter- away with the “carrot”

does into the econ- get products new

mined

omy. by fuller opinion

I will not burden “damages” under meaning of

analysis of the recoup development speaks costs margin on an profit determined King's was devoid of here is of the invention. record line where an established basis on incremental respecting majority such recouped. evidence costs. been costs had fixed

Case Details

Case Name: King Instruments Corporation v. Luciano Perego and Tapematic, Defendant/cross-Appellants

Court Name: Court of Appeals for the Federal Circuit

Date Published: Dec 5, 1995

Citation: 65 F.3d 941

Docket Number: 91-1125, 91-1132

Court Abbreviation: Fed. Cir.