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JUNE 2017

 

On May 22, 2017, the Supreme Court issued its decision in TC Heartland LLC v. Kraft Food Group Brands LLC.  The case involved an interpretation of the venue provision for patent infringement lawsuits, 28 U.S.C. Section 1400(b).  The statute provides that patent infringement lawsuits “may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  In 1957, in Fourco Glass Co. v. Transmirra Products Corp., the Supreme Court held that, for purposes of Section 1400(b), a domestic corporation resides only in its state of incorporation.  At issue in TC Heartland was whether amendments to the general venue statute, 28 U.S.C. Section 1391, necessitated a change in the Fourco decision, which several lower courts had endorsed.  Ultimately, the court decided that no change was needed and affirmed its earlier decision in Fourco.

 

Commentators discussing TC Heartland believe that it will limit the ability of so-called “patent trolls” to bring patent infringement lawsuits in what they perceive to be favorable venues instead of the defendant’s state of incorporation.



MAY 2017

Lost Profit Calculations in Patent Cases Clarified In Recent Federal Circuit Decision

 

In March 2017, The Federal Circuit issued its decision in Mentor Graphics Corp. v. EVE-USA, Inc. 851 F.3d 1275 (Fed. Cir. 2017). This decision provides some needed guidance on how lost profits are calculated in patent cases, an area where there had been conflicting decisions in the district courts. The underlying dispute concerns a patent for a feature of an emulator, a machine that tests for bugs in computer chips.


This was a complex case with a long history. In the district court, the jury found that the defendant had infringed on two features of the plaintiff’s patent and awarded the plaintiff $36 million. On appeal, the defendant argued that the $36 million damage award was improper as it should have reflected an apportionment analysis that factored in non-infringing features for product sales. In other words, defendant argued that plaintiff was not entitled to the lost sales, but only the value attributable to plaintiff’s features of the emulator. The Federal Circuit disagreed and held that once the four Panduit test factors are met,[1] apportionment is taken into consideration as lost profits are tied to “specific claim limitations and ensure that damages are commensurate with the value of the patented features.” 851 F.3d at 1288. Thus it upheld the jury damages award. 

 

The defendant has sought a rehearing before the full panel. Stay tuned.



[1] A patentee is entitled to lost profits if it can establish (1) a demand for the patented product; (2) absence of acceptable non-infringing alternatives; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit it would have made. Panduit Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152, 1156 (6th Cir. 1978)

 

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