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Federal Circuit Clarifies Role of Consumer Demand in Terms of Entire Market Value

The US Court of Appeals for the Federal Circuit denied a patent holder’s petition for rehearing en bancbut issued a modified opinion finding that to invoke the entire market value rule, the patent holder must show that the non-patented features do not cause consumers to purchase the product. Power Integrations, Inc. v. Fairchild Semiconductor International Inc.Case Nos. 16-2691, 17-1875 (Fed. Cir. Sept. 20, 2018) (Dyk, J).

The Federal Circuit issued its original opinion on July 3, 2018, finding that in order to invoke the entire market value rule, “[w]here the accused infringer presents evidence that its accused product has other valuable features beyond the patented feature, the patent holder must establish that these features are not relevant to consumer choice,” and “[w]hen the product contains other valuable features, the patentee must prove that those other features did not influence purchasing decisions” (IP Update, Vol. 21, No. 8).

After the original decision, Power Integrations filed for rehearing en banc, arguing that the Federal Circuit had announced a new test for the entire market value rule, which for the first time requires the patentee to prove a negative: “[w]hen a product contains other valuable features, the patentee must prove that those features did not influence purchasing decisions.” Power Integrations argued that this test had never been stated previously by the Court, was not supported by precedent, and overruled the holdings of at least three prior panel decisions. Thus, Power Integrations requested en banc review to reconcile the panel split. Fairchild opposed the petition for rehearing en banc.

The Federal Circuit denied the petition for rehearing en banc but issued a modified opinion. The modifications address the concerns raised by Power Integrations by only requiring that the patent holder show that the non-patented features do not cause consumers to purchase the product. The specific changes to the opinion are as follows:

  • “Where the accused infringer presents evidence that its accused product has other valuable features beyond the patented feature, the patent holder must establish that these features are not relevant to consumer choice do not cause consumers to purchase the product.”
  • “When the product contains other valuable features, the patentee must prove that those other features did not influence purchasing decisions do not cause consumers to purchase the product.”

Practice Note: Under the modified ruling, in order to satisfy the entire market value rule, patent holders must show that non-patented features do not cause consumers to purchase the product. This appears to be a less stringent standard than the holding in the original opinion, which required patent holders to prove that non-patented features did not influence purchasing decisions.

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About this Author

Amol Parikh, McDermott Will Emery, Chicago, patent lawyer, Intellectual Property Litigation Attorney
Associate

Amol Parikh is an associate in the law firm of McDermott Will & Emery LLP and is based in the Firm's Chicago office.  He focuses his practice on IP litigation, counseling and prosecution. Amol has been recognized as a 2011 Illinois Rising Star in Intellectual Property by Law & Politics.  Rising Stars are lawyers under the age of 40 that have been in practice for 10 years or less.  No more than 2.5 percent of the lawyers in Illinois are named as Rising Stars.

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