In this рatent infringement case, Combustion Engineering, Inc. (CE) appeals and Min-eo, Inc. cross-appeals a final decision of the United States District Court for the Eastern District of Tennessee. The patent at issue, 4,217,462 (the ’462 patent), claims a rotary furnace for fusing minerals. The district court found CE willfully infringed claims 3 and 4 of the ’462 patent. The court also found that these claims were neither invalid nor unenforceable and that laches did not apply. The court awarded damages of $3,455,329 and a reasonable royalty of $7,408,179.40. Because the infringement was willful, the court doubled the damages for an overall award of $21,727,016.80 plus attorneys fees and pre-judgment interest. Because the record supports the district court’s findings and conclusions, this court affirms.
*1113 BACKGROUND
As one way to fuse silica, an operator first puts high purity sand into a barrel-shaped, rotary furnace. External drive wheels then rotate the furnace to throw the sand against the furnace walls. Graphite electrodes then enter the furnace through openings at either end. These rods create a high energy arc which heats and fuses the silica. Finally, the operator dumps the ingot of fused silica out of the furnace. Once crushed, the fused silica has many applications, particularly in semiconductor technology.
CE and its predecessor produced fused silica and fused magnesia. During 1976-1977, CE used a rotary “jumbo kiln” to fuse these minerals. In July 1977, CE released Ken Jenkins, who then began experimenting in his bam to solve problems in fusion furnaces, such as CE’s jumbo kiln. With input from another former CE employee, William Rawles, Jenkins developed the claimed furnace. This new furnace more efficiently produced a better quality of fused silica than CE’s jumbo kiln.
In September 1977, Jenkins and his sister Verneil Richards formed Mineo, Inc. to produce fused silica. Ultimately, they used their new rotary furnace in that endeavor. Fused silica from their invention enjoyed substantial commercial success. The new furnace produced fused silica with less discoloration and lower iron contamination than CE’s product. Many purchasers found these qualities commercially attractive. Minco’s net sales increased annually from 1979 through 1985.
In May 1978, Jenkins and Rawles filed a patent application claiming, in claims 1 and 2, their rotary furnace. In April 1979, they filed a continuation-in-part application adding claims 3 and 4. These added claims covered a rotary furnace in combination with crane supports for lifting and tilting the furnace housing. In August 1980, the ’462 patent issued.
Before October 31, 1988, Mineo owned no rights in the ’462 patent. On February 23, 1988, Rawles assigned his interest in the ’462 patent to Richards, “including all rights of action and damages for past infringement.” On October 31, 1988, Mineo Acquisition Corporation (MAC), an investment group formed to acquire Mineo, purchased Mineo and the patent from Jenkins and Richards. This transaction included three documents:
(1) a long form patent assignment, assigning the ’462 patent from Jenkins and Richards to MAC;
(2) a short form of the first assignment for recording the assignment at the PTO; and
(3) an assignment of the ’462 patent from MAC to Mineo.
At the behest of CE and others, the patent underwent reexamination. During reexamination, the Patent and Trademark Office (PTO) found claims 1 and 2 — directed to only the rotary furnace — obvious in view of prior art. After modification, claims 3 and 4 issued to Mineo on October 12, 1993. These claims are directed to a rotary furnace “for the continuous electric heating and/or fusion of mineral bearing substances.” The furnace comprises a number of features including “a cylindrical housing, said housing having a first conical extension fixed to one end thereof and a second removeable conical extension detachably secured to an opposite end thereof.” The claims also specify “a crane support mounted upon each said housing and removable conical extension for lifting and tilting the housing to remove the contents thereof.” (Emphasis omitted). In allowing claims 3 and 4, the examiner reasoned: “[N]o prior art furnace ... teaches the use of a crane support on the cylindrical housing and a crane support on the removable conicаl end ... so that the [furnace] can be lifted and transported to dump the finished product through the removable end.”
Minco’s early success cut into CE’s market. In 1985, for instance, CE’s sales dropped approximately 20%. In response, CE tried to develop a comparable furnace but failed. In December 1983, CE obtained a copy of the ’462 patent. Later CE hired an outside consultant, Nick Valk, to design a kiln capable of matching Minco’s high quality silica. In an initial meeting with Valk, CE showed him a drawing similar to one in the ’462 patent. With Valk’s assistance, CE developed the accused RT kiln. In February *1114 of 1986, CE began to manufacture fused silica in its RT kiln. With fused silica from the RT kiln, CE’s sales volume increased annually.
The accused RT kiln has three sections: a main cylindrical housing, a fixed conical extension off of the main cylindrical housing, and another conical extension which detaches. After firing the silica, a crane lifts the furnace from the drive mechanism. The crane attaches to a support at the center of the cylindrical housing. The entire housing then moves to a sand pan. At the sand pan, an operator loosens the bolts and swings away the removable, conical extension. A crane, through the crane support, holds the extension during detachment. At that point, additional cranes lift and tilt the furnace to dump the ingot of fused silica. Regarding this operation, the trial court found: “[T]he crane support on the detachably secured conical extension ... performs the function of removing or lifting away the extension so that the remainder of the housing can be lifted and tilted via the crane support mounted on the cylindrical section of the housing.”
The parties tried the issues in this case to the bench from August 16 to August 23,1994. The trial court found in favor of Mineo. CE appealed to this court. CE contests the trial court’s judgment on infringement, intervening rights, best mode, pre-assignment damages, calculation of the reasonable royalty, entitlement to lost profits, and willful infringement. Minco’s cross-appeal challenges the trial сourt’s denial of price erosion damages and of lost profits on CE’s sale of its business, including the infringing kilns.
DISCUSSION
The trial court made ample findings of fact upon which this court relies in reaching its decision. Moreover, the trial court’s sound legal conclusions permit this court to abbreviate its presentation of many issues. For instance, this court affirms with respect to the willfulness of CE’s infringement based on the trial court’s findings and conclusions.
With regard to the central issue of nearly every patent appeal, claim construction, the district court reached an interpretation fully supported by the record.
See Markman v. Westview Instruments, Inc.,
— U.S. -, -,
The claim language and the patent specification support this interpretation. The claim language does not require each crane support to actually lift and tilt the furnace housing. The claims specify оnly use of the crane supports during lifting and tilting. Indeed, as is evident to one of ordinary skill in rotary furnace operations, crane supports alone do not lift a furnace. Rather a crane lifts the weight of the furnace. The supports, by their nature, only facilitate this lifting process by connecting the furnace to the crane.
The specification further supports the trial court’s construction. In relevant part, the specification provides: “[U]pon completion of the fusion process, the entire kiln is crane lifted from the driving cradle support 156 and the cone 120’ removed, whereupon the kiln is tilted and the formed ingot dumped.” This language in the specification discloses that removal of the detachable extension precedes the tilting process. Thus, the district court correctly determined that the patent does not require that the crane support on the detachable end receive force that directly tilts the housing. Rather, the specification suggests that this crane support plays a part in the lifting and tilting process.
In light of its correct claim construction, the district court found that the claims read on the accused RT kiln. This court detects no clear error in this finding of fact. Accordingly, this court affirms the trial court’s finding of literal infringement.
*1115 Intervening Rights
The district court denied CE’s request for intervening rights due to a change in the lаnguage of claim 3 during reexamination. Element D of that claim requires: “[A] crane support mounted upon each said housing and removable conical extension for lifting and tilting the housing to remove the contents thereof.” During reexamination, Mineo substituted the underlined word “housing” for the term “furnace.” Mineo made this change in response to the examiner’s suggestion that the crane did not lift the entire furnace system, including the external drive wheels.
Claims, though amended during reexamination, retain their original effective date unless changed in scope from the original patent.
Tennant Co. v. Hako Minuteman, Inc.,
Read in light of the specification, the original claims used the term “furnace” in both a broad sense — the entire apparatus including the drive system — and a narrow sense — the barrel-shaped housing alone. The disputed claim language used “furnace” in the narrow sense as clarified by the specification’s reference to lifting the “kiln” from the drive apparatus. Similarly, the specification states that the fusing charge may be “incrementally introduced into the interior of the furnace,” that the furnace may be lined with certain material, that a charge is introduced while the furnace is rotating, and that the electrodes are introducеd into the furnace. These passages clarify that the patent often used the term “furnace” in the narrow sense of the barrel-shaped housing.
One of ordinary skill in the art would understand, therefore, that the claims did not specify lifting and tilting of the entire furnace system, including the drive mechanisms. Rather, to one of ordinary skill in the rotary furnace art, the substitution of “housing” for “furnace” merely restated the scope of element D of claims 3 and 4. Accordingly, this court affirms the trial court’s decision to permit recovery of damages for the full period of infringement.
Best Mode
A patent specification must “set forth the best mode contemplated by the inventor for carrying out his invention.” 35 U.S.C. § 112 (1994). Compliance with the best mode requirement of section 112 focuses on the state of mind of the inventor at the time the inventor files the patent application.
Glaxo Inc. v. Novopharm Ltd.,
To invalidate a patent under the best mode requirement, an accused infringer must show by clear and convincing evidence that the inventor “both knew of and concealed a better mode of carrying out the claimed invention than was set forth in the specification.”
Transco,
In this case, the claims specify a crane support on both the housing and the detachable conical extension. The specification does not disclose a preferred number of crane supports. Figure 2 of the patent drawings depicts onе crane support off center to the left on the top of the housing and another crane support on the detachable extension.
Mineo operated a furnace based on the patent before the filing of claims 3 and 4. On this furnace, Jenkins used two crane supports on the cylindrical housing, one close to each end of the cylindrical housing. Jenkins testified that the dual crane supports kept the load level and steady during transportation of the housing. Jenkins did not build a kiln for Mineo with the crane support configuration depicted in the ’462 drawing.
Jenkins, however, testified that Minco’s crane support configuration was a production decision, not a superior method of operation. Mineo opted to use the two-crane-support system because it had added more tires to its drive system. One of ordinary skill in this art knows that the number of drive wheels varies according to the type of mineral in the furnace. In adding wheels to facilitate different minerals, Mineo could not locate a crane support off center, as depicted in the drawings. Furthermore, Jenkins specifically testified that he did not intend to conceal a best mode.
Consequently, the record does not show that the trial court committed clear error in finding CE did not prove concealment of the best mode by clear and convincing evidence. Before an inventor can conceal a best mode, the record must first show his appreciation of the superiority of one mode over those modes disclosed in the specification.
Glaxo,
Assignment of the Right to Sue for Past Damages
The patent assignment agreements transferring the ’462 patent from Jenkins and Richards to Mineo do not explicitly state that they include the right to sue for past infringement. That is, the grant clauses of the final assignment agreements do not contain so-called “magic words” — i.e. “I hereby assign the right to sue for past infringement.” Nonetheless, the trial court permitted Mineo to recover damages for infringement occurring prior to the date of assignment.
Under the Patent Act, only patentees may bring an action for infringement.
See
35 U.S.C. § 281 (1994). Patentees include not only the one to whom the patent issued but also any successors in title. 35 U.S.C. § 100(d) (1994). Parties may transfer patent rights by a lеgal agreement.
CMS Indus., Inc. v. L.P.S. Int'l Ltd.,
An assignee may bring an action to redress any violations of the exclusive rights conferred by the patent. 35 U.S.C. § 271 (1994). Infringement, however, harms only the owner of the patent at the time of the infringing acts.
See United States v. Loughrey, 172
U.S. 206, 211-12,
Determining whether the right to sue for prior infringement has been transferred turns on the proper construction of the assignment agreements, which is a matter of state contract law. In this case, the assignment documents specifically invoke the protections and standards of Tennessee law. In construing contractual language under Tennessee law, written words of intent receive their usual, natural, and ordinary meaning.
Taylor v. White Stores, Inc.,
The assignment documents show that Richards obtained by express language the right to sue for past infringement from Rawles. Therefore, both Jenkins and Richards held the right to sue for prior infringement when they entered into the transactions with MAC. Jenkins and Richards then assigned to MAC all of their rights in the ’462 patent, including the right to sue for past infringement. MAC, in turn, assigned all of its interest to Mineo. According to this chain of title, Mineo possessed the right to sue for infringement which occurred before it acquired title.
CE challenges one link in this chain — the assignment to MAC. The long form assignment from Jenkins and Richards to MAC transferred “all of Assignors’ right, title and interest.” Under the general rule, the bare reference to all right, title, and interest does not normally transfer the right to sue for past infringement.
Moore,
The patent assignment from MAC to Min-eo incorporated the terms of the MAC assignment. Thus, this series of agreements clearly transferred to Mineo the right to sue for past infringement.
Damages
CE appeals the trial court’s damages award and finding of willful infringement. Mineo, in turn, appeals that court’s refusal to award lost profits for price erosion in the fused silica market and for compensatory damages for CE’s sale of its business, including the infringing RT kilns.
The Patent Act provides for “damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer.” 35 U.S.C. § 284 (1994). This court has clarified that adequate damages can include lost profits due to diverted sales, price erosion, and increased expenditures caused by infringement.
Lam, Inc. v. Johns-Manville Corp.,
To recover lost profits, however, the patent holder must show that the infringer actually caused the economic harm for which the patentee seeks compensation.
Rite-Hite Corp. v. Kelley Co.,
In addition to causаtion, the patent holder bears the burden of proving the amount of the award.
Id.
at 1164;
Otari,
In awarding both lost profits and a reasonable royalty, the trial court used the sale of fused silica as the baseline for measuring damages. The assessment of adequate damages under section 284 does not limit the patent holder to the amount of diverted sales of a commercial embodiment of the patented product. Rather, the patent holder may recover for an injury caused by the infringement if it “was or should have been reasonably foreseeable by an infringing competitor in the relevant market, broadly defined.”
Rite-Hite,
Lost Profits
The district court found that Mineo showed entitlement to lost profits on diverted *1119 sales of fused silica. In determining quantum, that court found that CE’s infringement caused Mineo to lose the sales of 26,201,956 pounds of fused silica, over the period from May 1988 through July 1990. These lost sales amounted to $3,455,329 in lost profits.
CE challenges these findings by asserting that the market featured non-infringing alternatives to the ’462 patent. A non-infringing alternative in the fused silica market would make it less likely that the patentee would have made the sales to CE’s customers without the infringement.
Rite-Hite,
CE’s damages expert testified that CE could easily have designed around the patent by employing a cradle apparatus that could tip the furnace after a clamp removed the detachable end. However, testimony that an infringer might have been able to design аround a patent does not, in itself, defeat a claim for lost profits. In spite of CE’s litigation protestations, evidence showed it chose to copy the Mineo kiln rather than pursue one of the plentiful, hypothetical, post hoc, non-infringing alternatives. In this case, CE’s expert based his opinion on the testimony of a CE witness who testified that CE knew that cradle support systems could substitute for the crane supports. The record, however, does not show the marketplace use of this purported substitute either by CE or any other fused silica manufacturer.
Based on the record in its entirety, the trial court did not err in concluding that absent the infringement, CE would not have been able to compete effectively against Min-eo. The record also supports the district court’s finding that Mineo would have been able to make the additional sales of 26,201,-956 pounds of fused silica during the 1987-1990 period. With these findings in place, the trial court properly awarded lost profits.
Reasonable- Royalty
The Patent Act permits damages awards to encompass both lost profits and a reasonable royalty on that portion of an infringer’s sales not included in the lost profit calculation.
State Indus., Inc. v. Mor-Flo Indus., Inc.,
In this case, the district court awarded a reasonable royalty on CE sales beyond 95% of Minco’s manufacturing capacity from May 1988 through July 1990. Mineo also received a reasonable royalty on CE sales from 1986 through April 1988, during which CE produced a blended fused silica. In total, the district court awarded a reasonable royalty on approximately 122,329,000 pounds of fused silica.
A district cоurt may calculate a reasonable royalty by postulating a hypothetical negotiation between a willing licensor and licensee at the time infringement commenced.
Mor-Flo,
In addition to the court’s other findings, because the industry enjoyed high profitability and the invention produced higher quality fused silica, this court detects no clear error in the district court’s royalty award. The economic evidence on this point supports the finding that these hypothetical negotiators might have entered a license calculаted at 20% of sales.
Price Erosion Damages
Mineo sought and the trial court denied further lost profits based on the decrease in the price of fused silica. To prove price erosion damages, a patentee must show that, but for the infringement, it would have been able to charge higher prices. BIG Leisure Prods., Inc. v. Windsurfing Int'l Inc., 1 F.3d 1214, 1220, 27 USPQ2d 1671, 1675 (Fed. Cir.1993).
The record discloses price fluctuations in the fused silica market. For instance, Minco’s average price for fused silica in 1988 was $0.269 per pound, an increase from $0.2530 in 1987. However, the price of fused silica decreased in 1989 to $0.255 and to $0.220 in 1990. CE converted to infringing kilns in November 1987. By April 1988, CE sold only fused silica from the RT kilns. Nevertheless, Minco’s average selling price increased in 1988. This evidence рermits the inference that market forces other than infringement influenced the price of fused silica. Furthermore, the record suggests that Mineo was the market leader in cutting prices. Although the trial court might have found that Mineo cut prices in response to CE’s infringement, the record allows other inferences as well. Moreover, the record lacks probative economic evidence that consumers would have tolerated higher prices in 1989 and 1990. Thus, the record supports the district court’s finding that price erosion damages were too speculative.
Minnesota Mining & Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc.,
In sum, the district court weighed the record evidence on the economic factors influencing price and determined that infringement did not cause those price decreases which occurred during the infringement period. This court detects no clear error in that finding.
Lost Profits on CE’s Sale of its Business
Finally, Mineo challenges the district court’s denial of compensatory damages for CE’s sale of its fused silica business to Ime-tal, a French corporation, on July 31, 1990. Mineo seeks as damages the difference between the sales price of CE’s business and its expert’s valuation of CE’s business without the infringing kilns. On this theory, Mineo seeks an additional $34,684,527. Alternatively, Mineo claims some damages on the sale to Imetal. The district court denied any recovery “based upon the lack of evidence in this case to support this element of damages.”
Minco’s theory values the sale of the infringing kilns, only a portion of CE’s assets, at approximately $34 million. According to Mineo, had CE not infringed its patent, Ime-tal would have purchased Mineo instead. While in theory Mineo might have bеen entitled to some recovery from CE’s sale of its business because it included the infringing kilns, the district court specifically determined that Mineo did not show that the infringing kilns were an important factor in the sale. Indeed, upon acquiring CE’s business, Imetal switched to its own patented furnace in December 1991. This switch un *1121 dermines Minco’s claim that the Mins drove the sale. The record contains no probative evidence of Imetal’s business motivations or the industry context. For example, Imetal might have paid a large premium for entry into the market or for CE’s trademark. Thus, Mineo did not prove Imetal would have purchased it absent CE’s infringement.
Furthermore, assuming that CE profited through its sale from the goodwill built uр through the use of the infringing kilns, Min-eo did not show entitlement to compensation beyond its proofs of lost profits and reasonable royalties. The district court’s reasonable royalty award already compensates Mineo for any goodwill CE garnered by infringement. The district court awarded Mineo a generous royalty rate precisely because Mineo and CE were head-to-head competitors. The district court reasoned that “CE’s desire to maintain its market share would compel [it] to accept [a high royalty].” Thus, the district court already acknowledged in its retroactive, hypothetical license that CE was paying in part for the goodwill acquired by infringеment.
The danger that an award stemming from the sale of CE would constitute a double recovery is apparent from an examination of the evidence relied on by Minco’s expert. In proffering his assessment of CE’s enhanced value, Mineo’s expert relied on the increase in CE’s gross profit percentage during infringement. However, the district court had already factored the invention’s ability to increase profits into its reasonable royalty calculation. Minco’s theory for recovery based on the sale of CE, presented at trial, ignored the goodwill that would have naturally inhered from CE’s licensing of the patent for the majority of its sales.
Viewed anothеr way, the trial court determined that, under a hypothetical royalty negotiation in 1986, CE might have paid a high royalty to Mineo for its use of the kilns in exchange for Minco’s agreement to receive no additional royalty should CE sell its business.
See Mahurkar,
Accordingly, this court detects no clear error in the trial court’s finding that Mineo did not show a basis for additional damages from CE’s sale of its business. Mineo has the burden of proving the amount, if any, of its entitlement.
See Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co.,
CONCLUSION
Because the decision of the trial court on the issues of claim construction, intervening rights, and the assignment of the right to sue for past damages is free of legal error, and because the record supports each of the findings of the trial court under the clearly erroneous standard of review, tMs court affirms its judgment.
COSTS
Each party shall bear its own costs.
AFFIRMED.
Notes
If the inventor appreciates a best mode for carrying out the invention, invalidity may result from the failure to disclose, regardless of whether the inventor specifically intended to conceal his or her best mode.
See United States Gypsum Co.,