Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Damages In Design Patent Infringement Cases

By Matthew Siegal and Adam Sapper
November 02, 2015

The successful plaintiff in a design patent infringement case is entitled to recover the greater of the defendant's profits or its own damages, regardless of how the jury desires to apportion the award. Moreover, a plaintiff is not required to apportion those profits to the portion of the infringing device that is attributable to the patented design. Thus, in Nordock, Inc. v. Systems Inc., No. 2014-1762, 2015 WL 5710400 (Fed. Cir. Sept. 29, 2015), the Federal Circuit ordered a new damages trial on the grounds that the amount of defendant's profits assessed by the jury was not supported by the evidence or in accordance with the law. The Nordock decision also contains a warning that post-verdict motions should be made with sufficient specificity.

Successful patent plaintiffs are entitled to compensatory damages, but in no event less than a reasonable royalty. See, 35 U.S.C. '284. The Patent Act grants owners of design patents an additional alternative remedy: the infringer's total profit. See, 35 U.S.C. '289. The Federal Circuit has confirmed that it is inappropriate to apportion the infringer's profits between the patented design and the article bearing the design. See, Apple Inc. v. Samsung Elecs. Co., 786 F.3d 393, 1001-02 (Fed. Cir. 2005). In addition, the jury has no discretion; where plaintiff has sought a defendant's profits under '289, the jury may not elect to award the plaintiff its damages if those damages are less than the defendant's profits. Nordock, at 11.

In Nordock, the Federal Circuit reiterated that a prevailing design patentee may recover the greater of: “1) total profits from the infringer's sales under '289; or 2) damages in the form of the patentee's lost profits or a reasonable royalty under '284.” Nordock at 6 (emphasis added). This is not a matter for the jury's or judge's discretion. Therefore, after the jury verdict awarded damages and indicated that the amount of defendant's profits was $0, the Federal Circuit vacated the damages award and remanded the case for a new trial on damages.

Background

Nordock accused Systems of infringing U.S. Design Patent No. D579,754 (the D'754 Patent), which claims the ornamental design of a lip and hinge plate that is applied to a loading dock leveler. At trial, Systems' damages expert, Richard Bero, opined that $15 per dock leveler would be an appropriate royalty. Mr. Bero explained (improperly) that Systems' profit under '289 that was “associated with ' the ornamental design of the lip and hinge plate [wa]s approximately $15 or less per dock leveler.” Nordock , at 7. Specifically, Mr. Bero testified that: the cost savings that Systems received as a result of using that design are something again less than $15 per unit. So on that lip and hinge plate design the profitability attributable that Systems earned ' this is defendant's profits ' was something less than $15 per unit.'Nordock, at 7.

Thus, rather than calculating Systems' profit based on the entire dock leveler, Mr. Bero's “cost savings” methodology considered the profit attributable to the lip and hinge plate design only. Id.

Question 2 of the Jury Verdict sheet read: What total amount of money is Nordock entitled to receive from Systems for Systems' infringement '.” Question 4 required the jury to indicate how much of the damages award was attributed to: 1) Nordock's lost profits; 2) reasonable royalties; and/or 3) Systems' profits. Thus, rather than requesting the jury to determine each of these values separately, the verdict sheet first asked the jury to award a total amount of damages and then permitted the jury to apportion that award among different categories.

The jury awarded Nordock $46,825. The entire amount was indicated on the verdict sheet as representing a reasonable royalty award. The verdict sheet also indicated that Systems' profit from the sale of the infringing products was $0. This was even less than the $15 per item testified to by Mr. Bero. Nordock moved, inter alia, for a new damages trial and appealed the district court's denial of its request for a new trial on damages. See, Nordock, at 1. Systems appealed the jury's failure to find invalidity. Id.

The Federal Circuit held that the district court erred in relying on Mr. Bero's “cost savings” methodology for calculating Systems' profits under '289. As the court explained, Mr. Bero's “cost savings” methodology only accounted for the patented portion of the dock levelers and ignored the remainder of the “article of manufacture bearing the patented design.” Id. at 8. Because the article was an entire dock leveler, the court concluded that no reasonable juror could have believed that Systems' profit was less than $15 and remanded for a new trial on '289 damages with the instruction that Systems' profits should be determined “based on the appropriate gross revenue methodology, not the so-called 'cost savings' approach.” Id.

The Federal Circuit also concluded that the record contained no evidence supporting the jury's finding that Systems' profit was $0. The Federal Circuit held that the “manifest weight of the evidence show[ed] that Systems' profits were over $600,000 for its infringing LHP/LHD levelers.” Nordock, at 9. Although the two opposing experts' numbers differed, even according to Mr. Bero's calculations, Systems' total profit for the entire infringing devices was approximately $630,000. Although a jury is “entitled to believe one expert over the other,” the Federal Circuit explained that the jury was not permitted to use Mr. Bero's improper “cost savings” methodology and limit profits to only the “lip and hinge plate” in contravention of '289. Id. The Federal Circuit also recognized that there was “no credible evidence that Systems' profits on its sales of the 1,457 infringing levelers were $0.” Id.

The Federal Circuit also agreed with Nordock that the district court misinterpreted the jury instructions relating to damages. The court explained that the district court was wrong to the extent it believed the jury could choose either awarding damages under '284 or awarding damages under '289. Rather, the jury was obligated to determine the amount of Systems' total profits for purposes of determining damages under '289. Nordock, at 11. “Only where '289 damages are not sought, or are less than would be recoverable under '284, is an award of '284 damages appropriate.” Id.

Systems' Cross Appeal

Also at issue was Systems' cross-appeal from the district court's denial of Systems' JMOL motions. The Federal Circuit held that Systems' Rule 50(b) motion challenging the sufficiency of Nordock's evidence of validity was insufficiently specific. The court acknowledged that Systems had made a proper Rule 50(a) motion before the case went to the jury, and that post-verdict motions may be made orally. However, the Federal Circuit considered Systems' post-verdict motion to be overly conclusory: “[We are re-making] whatever motions we made during the trial, JMOL and so forth, we would renew those motions to the extent that they are necessary.” Id. at 13. The Federal Circuit held that statement to be insufficiently specific to renew the motion for JMOL under the Seventh Circuit's “reasonable specification” standard. Nordock, at 13-14. The Federal Circuit held that merely stating that a party was “renewing 'whatever w[as] said before' is inadequate, particularly when qualified with the statements that the renewal is only 'to the extent necessary' and that counsel is unaware of what the motions were.” Id., at 14. Because “[a] party's failure to comply with Rule 50(b) forecloses any challenge to the sufficiency of the evidence on appeal,” Systems failed to preserve its invalidity arguments for appeal. Id., at 12.

Conclusion

The Federal Circuit made clear that courts calculating an infringer's profit pursuant to '289 should calculate the infringer's profit for the “entire article of manufacture bearing the patented design,” not merely that portion of the profit attributable to the patented design. Moreover, where a plaintiff has sought defendant's profits under '289, a jury is not permitted to pick between an award of plaintiff's damages and defendant's profits. Rather, a successful plaintiff is entitled to the larger amount and, if contested, a jury verdict should include calculations of both amounts. Finally, the court's ruling serves as a lesson that, at least under Seventh Circuit law, a blanket statement renewing “all previous unspecified motions” will not always qualify as a proper Rule 50(b) motion for the purposes of preserving arguments on appeal.


Matthew Siegal is a Partner in the Intellectual Property Practice Group of Stroock & Stroock & Lavan LLP and a member of this newsletter's Board of Editors. He can be reached at [email protected]. Adam J. Sapper is an Associate in the Intellectual Property Practice Group with the firm.

The successful plaintiff in a design patent infringement case is entitled to recover the greater of the defendant's profits or its own damages, regardless of how the jury desires to apportion the award. Moreover, a plaintiff is not required to apportion those profits to the portion of the infringing device that is attributable to the patented design. Thus, in Nordock, Inc. v. Systems Inc., No. 2014-1762, 2015 WL 5710400 (Fed. Cir. Sept. 29, 2015), the Federal Circuit ordered a new damages trial on the grounds that the amount of defendant's profits assessed by the jury was not supported by the evidence or in accordance with the law. The Nordock decision also contains a warning that post-verdict motions should be made with sufficient specificity.

Successful patent plaintiffs are entitled to compensatory damages, but in no event less than a reasonable royalty. See, 35 U.S.C. '284. The Patent Act grants owners of design patents an additional alternative remedy: the infringer's total profit. See, 35 U.S.C. '289. The Federal Circuit has confirmed that it is inappropriate to apportion the infringer's profits between the patented design and the article bearing the design. See, Apple Inc. v. Samsung Elecs. Co., 786 F.3d 393, 1001-02 (Fed. Cir. 2005). In addition, the jury has no discretion; where plaintiff has sought a defendant's profits under '289, the jury may not elect to award the plaintiff its damages if those damages are less than the defendant's profits. Nordock, at 11.

In Nordock, the Federal Circuit reiterated that a prevailing design patentee may recover the greater of: “1) total profits from the infringer's sales under '289; or 2) damages in the form of the patentee's lost profits or a reasonable royalty under '284.” Nordock at 6 (emphasis added). This is not a matter for the jury's or judge's discretion. Therefore, after the jury verdict awarded damages and indicated that the amount of defendant's profits was $0, the Federal Circuit vacated the damages award and remanded the case for a new trial on damages.

Background

Nordock accused Systems of infringing U.S. Design Patent No. D579,754 (the D'754 Patent), which claims the ornamental design of a lip and hinge plate that is applied to a loading dock leveler. At trial, Systems' damages expert, Richard Bero, opined that $15 per dock leveler would be an appropriate royalty. Mr. Bero explained (improperly) that Systems' profit under '289 that was “associated with ' the ornamental design of the lip and hinge plate [wa]s approximately $15 or less per dock leveler.” Nordock , at 7. Specifically, Mr. Bero testified that: the cost savings that Systems received as a result of using that design are something again less than $15 per unit. So on that lip and hinge plate design the profitability attributable that Systems earned ' this is defendant's profits ' was something less than $15 per unit.'Nordock, at 7.

Thus, rather than calculating Systems' profit based on the entire dock leveler, Mr. Bero's “cost savings” methodology considered the profit attributable to the lip and hinge plate design only. Id.

Question 2 of the Jury Verdict sheet read: What total amount of money is Nordock entitled to receive from Systems for Systems' infringement '.” Question 4 required the jury to indicate how much of the damages award was attributed to: 1) Nordock's lost profits; 2) reasonable royalties; and/or 3) Systems' profits. Thus, rather than requesting the jury to determine each of these values separately, the verdict sheet first asked the jury to award a total amount of damages and then permitted the jury to apportion that award among different categories.

The jury awarded Nordock $46,825. The entire amount was indicated on the verdict sheet as representing a reasonable royalty award. The verdict sheet also indicated that Systems' profit from the sale of the infringing products was $0. This was even less than the $15 per item testified to by Mr. Bero. Nordock moved, inter alia, for a new damages trial and appealed the district court's denial of its request for a new trial on damages. See, Nordock, at 1. Systems appealed the jury's failure to find invalidity. Id.

The Federal Circuit held that the district court erred in relying on Mr. Bero's “cost savings” methodology for calculating Systems' profits under '289. As the court explained, Mr. Bero's “cost savings” methodology only accounted for the patented portion of the dock levelers and ignored the remainder of the “article of manufacture bearing the patented design.” Id. at 8. Because the article was an entire dock leveler, the court concluded that no reasonable juror could have believed that Systems' profit was less than $15 and remanded for a new trial on '289 damages with the instruction that Systems' profits should be determined “based on the appropriate gross revenue methodology, not the so-called 'cost savings' approach.” Id.

The Federal Circuit also concluded that the record contained no evidence supporting the jury's finding that Systems' profit was $0. The Federal Circuit held that the “manifest weight of the evidence show[ed] that Systems' profits were over $600,000 for its infringing LHP/LHD levelers.” Nordock, at 9. Although the two opposing experts' numbers differed, even according to Mr. Bero's calculations, Systems' total profit for the entire infringing devices was approximately $630,000. Although a jury is “entitled to believe one expert over the other,” the Federal Circuit explained that the jury was not permitted to use Mr. Bero's improper “cost savings” methodology and limit profits to only the “lip and hinge plate” in contravention of '289. Id. The Federal Circuit also recognized that there was “no credible evidence that Systems' profits on its sales of the 1,457 infringing levelers were $0.” Id.

The Federal Circuit also agreed with Nordock that the district court misinterpreted the jury instructions relating to damages. The court explained that the district court was wrong to the extent it believed the jury could choose either awarding damages under '284 or awarding damages under '289. Rather, the jury was obligated to determine the amount of Systems' total profits for purposes of determining damages under '289. Nordock, at 11. “Only where '289 damages are not sought, or are less than would be recoverable under '284, is an award of '284 damages appropriate.” Id.

Systems' Cross Appeal

Also at issue was Systems' cross-appeal from the district court's denial of Systems' JMOL motions. The Federal Circuit held that Systems' Rule 50(b) motion challenging the sufficiency of Nordock's evidence of validity was insufficiently specific. The court acknowledged that Systems had made a proper Rule 50(a) motion before the case went to the jury, and that post-verdict motions may be made orally. However, the Federal Circuit considered Systems' post-verdict motion to be overly conclusory: “[We are re-making] whatever motions we made during the trial, JMOL and so forth, we would renew those motions to the extent that they are necessary.” Id. at 13. The Federal Circuit held that statement to be insufficiently specific to renew the motion for JMOL under the Seventh Circuit's “reasonable specification” standard. Nordock, at 13-14. The Federal Circuit held that merely stating that a party was “renewing 'whatever w[as] said before' is inadequate, particularly when qualified with the statements that the renewal is only 'to the extent necessary' and that counsel is unaware of what the motions were.” Id., at 14. Because “[a] party's failure to comply with Rule 50(b) forecloses any challenge to the sufficiency of the evidence on appeal,” Systems failed to preserve its invalidity arguments for appeal. Id., at 12.

Conclusion

The Federal Circuit made clear that courts calculating an infringer's profit pursuant to '289 should calculate the infringer's profit for the “entire article of manufacture bearing the patented design,” not merely that portion of the profit attributable to the patented design. Moreover, where a plaintiff has sought defendant's profits under '289, a jury is not permitted to pick between an award of plaintiff's damages and defendant's profits. Rather, a successful plaintiff is entitled to the larger amount and, if contested, a jury verdict should include calculations of both amounts. Finally, the court's ruling serves as a lesson that, at least under Seventh Circuit law, a blanket statement renewing “all previous unspecified motions” will not always qualify as a proper Rule 50(b) motion for the purposes of preserving arguments on appeal.


Matthew Siegal is a Partner in the Intellectual Property Practice Group of Stroock & Stroock & Lavan LLP and a member of this newsletter's Board of Editors. He can be reached at [email protected]. Adam J. Sapper is an Associate in the Intellectual Property Practice Group with the firm.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
'Huguenot LLC v. Megalith Capital Group Fund I, L.P.': A Tutorial On Contract Liability for Real Estate Purchasers Image

In June 2024, the First Department decided Huguenot LLC v. Megalith Capital Group Fund I, L.P., which resolved a question of liability for a group of condominium apartment buyers and in so doing, touched on a wide range of issues about how contracts can obligate purchasers of real property.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

CoStar Wins Injunction for Breach-of-Contract Damages In CRE Database Access Lawsuit Image

Latham & Watkins helped the largest U.S. commercial real estate research company prevail in a breach-of-contract dispute in District of Columbia federal court.

Fresh Filings Image

Notable recent court filings in entertainment law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.