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Patent owner’s lost profits, willfulness finding, and enhanced damages affirmed

Patent owner’s lost profits, willfulness finding, and enhanced damages affirmed

Georgetown Rail v. Holland was decided on August 1, 2017 on appeal from the Eastern District of Texas. A jury found that defendant Holland willfully infringed plaintiff Georgetown Rail’s patent and award lost profits. The district court then denied Holland’s motion for JMOL, and enhanced damages based on the finding of willfulness. Holland appealed.

The Federal Circuit affirmed the claim construction, the jury finding of infringement, the award of lost profits, and the award of enhanced damages.

The Panduit test for lost profits requires the patentee to show: “(1) demand for the patented product; (2) absence of acceptable noninfringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit that would have been made.” Holland challenged the sufficiency of evidence for factors one and four.

Substantial evidence supported the jury finding that demand for the patented product existed. The inquiry under the first Panduit factor “asks whether demand existed in the marketplace for the patented product, i.e., a product covered by the patent in suit or that directly competes with the infringing device.” Georgetown Rail submitted evidence that its product covering the patent “generated millions in revenue and was contracted out to four U.S. railroad companies in long-term contracts, exhibiting strong evidence of demand.” This evidence was sufficient despite that the evidence was from before 2011 and the allegedly infringing sales happened between 2012 and 2015. “All a patentee must do is sell some item, the profits of which have been lost due to infringing sales.” And it was undisputed that Georgetown Rail was selling its product between 2012 and 2015.

Substantial evidence supports the finding that the amount of lost profits would have been made by Georgetown Rail. The Federal Circuit has “affirmed lost profits awards based on a wide variety of reconstruction theories in which the patentee has presented reliable economic evidence of but for causation.” And here, Georgetown Rail’s lost profit calculation was based on “sound economic proof confirmed by the historical record.” Georgetown Rail submitted evidence that its lost profit calculation was based on a failure to secure a contract with a third party, who instead entered into a deal with Holland. Evidence supports the position that had the Holland deal not been implemented, the third party business would have gone to Georgetown Rail, and supports Georgetown Rail’s expert’s lost profit calculations based on this position. As such, Georgetown Rail “made a prima facie showing of lost profits and the burden shifted to Holland to prove that a different rate would have been more reasonable.” Holland didn’t make such a showing.
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The district court did not err in awarding enhanced damages. Substantial evidence supported the jury finding that “subjective recklessness led to willful infringement.” The jury heard evidence that Holland “was aware of” the patent prior to the litigation, and “believed that it was infringing the patent.” Such evidence included “evidence of the parties’ prior business dealings from which the jury could have inferred that Holland believed that it needed to acquire or license [Georgetown Rail’s product] to avoid infringement, and circumstantial evidence that Holland copied [Georgetown Rail’s] technology.” As for enhancement, the district court “made detailed factual findings which, taken together, support its award.” “It did not merely look at the jury’s finding of willfulness; rather, it applied and considered all nine Read factors.”

 

Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229 (Fed. Cir. 2017)