Past Discord Between the Parties Supported High 29.2% Reasonable Royalty Patent Damages Award

Case: Mitutoyo Corp. v. Cent. Purchasing, LLC, Fed. Cir. No. 2006-1312, 2006-1343 (9/5/07)

The One Sentence Summary: A jury's award of a 29.2% royalty rate for patent infringement "reasonable royalty" damages was appropriate in light of defendant's high profit margin and the contentious history of the parties.



Federal Circuit Holdings:

• The trial court's infringement finding was affirmed over a claim interpretation challenge concerning whether a comparison of phase must be direct or indirect. As the trial court found, an indirect comparison was sufficient for infringement due to statements in the specification which allowed that interpretation of the claim language.
• The trial court erred in dismissing the willful infringement claim for failure to prosecute it. Plaintiff's failure to move for summary judgment on the claim did not constitute a waiver of the claim.
• A distributor who had a license to resell plaintiff's products made under the '902 patent in the United States did not have standing to sue under the patent because another company also distributed goods under the patent.
• The trial court correctly ruled that there was no market overlap between plaintiff's high-end calipers and defendant's inexpensive infringing calipers, so no lost profits damages could be awarded by a jury.
• The trial court's award of a 29.2% royalty rate (plaintiff's profit margin on its sales) was reasonable as the result of a hypothetical negotiation given defendant's 70% profit margin and the contentious history between the parties.
• The trial court erred in calculating lost royalties using the sales of a company unrelated to defendant when there was no evidence to show defendant would have agreed to pay such royalties.