Lost-profits damages are appropriate “whenever there is a reasonable probability that, but for the infringement, the patentee would have made the sales that were made by the infringer.” Versata Software v. SAP. A showing under the four-factor Panduit test establishes the required causation. These factors include: “(1) demand for the patented product, (2) absence of acceptable noninfringing alternatives, (3) capacity to exploit the demand, and (4) the amount of profit the patentee would have made.” Id. (citing Panduit v. Stahlin). This post will cover the third Panduit factor: capacity to exploit the demand.
Causation. “Damage awards cannot be based upon speculation or optimism, but must be established by evidence.” Hebert v. Lisle. However, under Panduit, plaintiffs “need not prove causation as a certainty.” King Instrument v. Otari (finding capacity to meet demand satisfied). Evidence which shows “a reasonable probability that [Plaintiff] would have made the infringing sales made by [Defendant] will suffice.” Id. A plaintiff “need[s] not meet the impossible burden of negating every possibility that a purchaser might not have bought another product or might not have bought any comparable product at all.” Id. A patentee may show capacity to exploit the demand with direct or circumstantial evidence. And a district court’s determination on capacity is reviewed for clear error. See id.; see also Datascope v. SMEC.
Patentee’s manufacturing capabilities. A patentee may show capacity to meet the demand for the patented product with evidence of its manufacturing capabilities during the infringement. In Fonar v. General Electric, the court found capacity met where testimony showed that “in 1988 [Plaintiff] could manufacture eight machines per month;…in 1989, [Plaintiff] had 600-650 employees and a fast growth rate;” and thus based on this growth rate, “[Plaintiff’s] capacity would have increased to 500 machines per year by 1992.” If direct evidence is lacking, capacity to meet the demand may be inferred from the totality of the circumstances. See, e.g., TEK Global v. Sealant (finding capacity met where (1) testimony showed that “[Plaintiff] lost a lot of business to [Defendant];” (2) “[Plaintiff] has 300 people working every day: Engineering, manufacturing, logistics;” and (3) “[Plaintiff] had been providing [a big client] with one hundred percent of its North American product before [Defendant] entered the marketplace”).
Patentee’s market presence. A patentee may show capacity to exploit the demand for the patented product with evidence of substantial market presence during the infringement. Substantial market share is persuasive evidence of capacity under Panduit. In King Instrument v. Otari, the plaintiff had the capacity to exploit the demand where “[t]here was evidence that at the time of [Defendant’s] infringing activities, [Plaintiff] was [Defendant’s] main competitor and the only other company capable of manufacturing under the claims of the … patent.” Similarly, in State Industries v. Mor-Flo, the court found capacity met becuase Plaintiff had “a 40% national market share,” and Defendant did “not seriously contend otherwise, or that [Plaintiff] did not have the capacity to produce enough [products] to satisfy at least 40% of [Defendant’s] sales.”
Patentee’s growth. A patentee may also show its capacity with evidence of aggressive growth in the relevant market at the time of the infringement. See Yarway v. Eur-Control USA (finding capacity met with evidence of the plaintiff “aggressively acting in the market, attempting to create a demand, and meeting it;” and evidence of the plaintiff manufacturing the products “whenever it [was] prudent”). However, the court may find inability to meet the demand where the plaintiff would have had to substantially increase output and where the record does not show its ability to do so at the time of the infringement. See Gargoyles v. U.S. (capacity not met where “[Plaintiff] would have had to increase its output and coordinate additional suppliers while maintaining quality control; and where “no testimony had been offered regarding the capacity of these other suppliers or their willingness to meet demand”).
Over cheap generic sildenafil the years, scientific research and clinical evidence have studied postcholecystectomy chronic diarrhea; they found that the water: Can promote the producing and discharge of digestive hormones; therefore, naturally regulate the digestive process in the entire gastrointestinal tract Restores the deficiency of necessary minerals and trace elements such as magnesium, potassium, sodium, selenium, zinc, etc., and bicarbonates supports secretion and elimination of pancreatic juices Enhances the activity of pancreatic enzymes in the duodenum. Erectile dysfunction-inability to reach an erection- is levitra overnight a common problem faced by men when they face erectile dysfunction. It uses the technique of inserting needles on body parts to facilitate energy and blood flow to particular organs in eradicating a viagra from india health condition. As part of their core competencies, chiropractors are trained to assess, diagnose and treat sports cialis online india injuries.
No manufacturing or sale during the infringement. “Normally, if the patentee is not selling a product, by definition there can be no lost profits. The only exception is where the patentee has the ability to manufacture and market a product, but for some legitimate reason does not.” Wechsler v. Macke. “[T]he burden on a patentee who has not begun to manufacture the patented product is commensurately heavy.” Hebert. In Wechsler, the plaintiff was not entitled to lost profits because it was “undisputed that [Plaintiff] did not produce a product until April 2001, approximately one year after the period of infringement ended.” The plaintiff’s “evidence of later manufacturing and marketing… [was] not dispositive to the determination of whether the patentee had the ability to do so during the period of infringement.” Wechsler. Rather, the evidence showed that “despite his later success manufacturing and marketing a product, [Plaintiff] lacked the capability to manufacture his device during the period of infringement… due to delays at his factory.” Id.; but see Otari (finding capacity based on Plaintiff’s “later development and sale” of the product, and on the competition between the parties at the time of the infringement). In Kearns v. Chrysler, the court found no capacity to meet demand where Plaintiff’s “plans for manufacture that were tentative, speculative and contingent;” and Plaintiff did “not suggest he ever made any sales of [the product] or had the manufacturing capability in hand to do so.”
Competition between the parties. A patentee need not have directly competed for every sale made by the infringer to receive lost profits as long as the patentee had the capacity to capture those sales. See Kaufman v. Lantech (“the fact that [Plaintiff] would not have competed for every infringing sale does not [negate] the inference that [Plaintiff] probably would have made the sale absent the infringement”). Similarly if the patentee was generally competitive in the national market, the fact that the patentee was relatively weaker in a regional market does not prevent the patentee from recovering lost profits from that regional market. See Mor-Flo (“[Plaintiff] was a nationally recognized leader in the industry…. [I]t is eminently reasonable for the district court to infer that [Plaintiff[ could have sold its market share of [Plaintiff’s] infringing sales wherever the opportunity occurred.”) However, where Plaintiff was only active in the domestic market, it may be unreasonable for it to recover international lost profits. See Datascope (affirming denial of international lost profits where “(1)… no sales representatives [of Plaintiff’s] were assigned to foreign customers; and (2) no attempt was ever made at making inroads in this area.”).
Customer preference for the infringer. Customer preference for the infringer does not prevent a patentee from seeking lost profits on those sales. Datascope. “That preference, if it exists, bears no relevance to element three of the Panduit test, which concerns only the manufacturing/marketing capability of the patentee to meet the demand.” Id.; see also Kaufman (“Had [Defendant] not infringed on [Plaintiff’s] patent rights, there would be no other supplier of … machines that customers could prefer over [Plaintiff].”).