Design Patentees Are Entitled to Infringers’ Unapportioned Total Profits in Nordock Inc. v. Systems Inc.
In an opinion addressing the proper measure of damages for design patent infringement, the U.S. Court of Appeals for the Federal Circuit vacated and remanded a district court’s order denying a motion for a new trial on damages, finding that a design patentee is entitled to at least the infringer’s total profits. Nordock, Inc. v. Systems Inc., Case Nos. 14-1762, -1795 (Sept. 29, 2015) (O’Malley, J.).
Nordock and Systems are competitors in the loading dock device industry. Nordock sued Systems for patent infringement, alleging that Systems infringed a Nordock design patent for a dock leveler. At trial, Nordock’s damages expert testified that Systems’ profits for the accused products totaled over $900,000. Systems’ damages expert testified that the proper form of damages was a reasonable royalty of $15 per accused unit, for a total damages amount of roughly $90,000. Systems’ expert also testified that Systems’ apportioned profit—i.e., Systems’ profit on the portion of the accused device covered by the patent—was less than $15 per unit. The jury returned a mixed verdict, finding infringement for some but not all of the accused products and awarding Nordock roughly $47,000. The jury also indicated on the verdict form that Systems’ profits were $0. Nordock moved for a new trial on damages, arguing that, pursuant to 35 U.S.C. § 289, Nordock was entitled to recover all of Systems’ profits. The court denied Nordock’s motion, explaining that the jury was allowed to award either lost profits or a reasonable royalty and that the jury had reasonably based its verdict on the evidence presented. Nordock appealed.
The Federal Circuit reversed, finding that Nordock was entitled to a new trial on damages. When a design patent is infringed, a patentee can recover damages under either § 284 or § 289. Under § 289 a patentee is entitled “to the extent of [the infringer’s] total profit, but not less than $250.” The Federal Circuit explained that a design patentee may recover either the infringer’s total profits under § 289; the patentee’s lost profits or a reasonable royalty under § 284; or $250 in statutory damages under § 289, whichever is greater.
The Federal Circuit also explained that apportionment is inappropriate in a design patent case. In denying Nordock’s post-trial motion for a new trial on damages, the district court had relied on Systems’ expert’s methodology, which calculated the portion of the profit attributable to the infringement of the design patent. In rejecting this approach, the Federal Circuit explained § 289 provides for the recovery of the infringer’s total profit, which is based on gross revenue. Because no reasonable jury could believe that Systems’ total profit was less than $15 per unit, and because the district court erred in relying on an improper methodology, Nordock was entitled to a new trial on damages.