Apportionment of Lost Profits Damages Appears To Be Making a Comeback

The issue of damages remains a hot topic at the Federal Circuit, with patentees being continuously reminded that damages must be apportioned to account for the value of patented features, as opposed to unpatented features, of an accused product. See, e.g., Ericsson, Inc. v. D-Link Sys., 773 F.3d 1201 (Fed. Cir. 2014); VirnetX, Inc. v. Cisco Sys., 767 F.3d 1308 (Fed. Cir. 2014). However, the vast majority of these cases involve apportionment in the context of reasonable royalties. Very little has been said about apportionment in a lost profits analysis. Universal Elecs., Inc. v. Universal Remote Control, Inc., 34 F. Supp. 3d 1061, 1092 (C.D. Cal. 2014) (“While apportionment in the reasonable royalty context has been the topic of much recent discussion ' its application to the lost profits theory of recovery is less familiar.”). Perhaps this is because many plaintiffs do not have products for sale (e.g., non-practicing entities) or because they cannot meet the exacting standards for proving lost profits. See, Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978). The result is that few courts have addressed the issue of whether a plaintiff must apportion lost profits damages. In light of the Supreme Court's penchant for reversing long-standing Federal Circuit opinions that appear to conflict with earlier Supreme Court decisions, parties in patent litigation should evaluate whether lost profits damages have been apportioned to account for the value of patented features.