- Summary of LASERDYNAMICS, INC. v. QUANTA COMPUTER, INC., 2011-1440
- February 21, 2013
- Law Firm: Sughrue Mion PLLC - Washington Office
Federal Circuit, August 30th 2012, 2011-1440
In this case, the Court reviewed whether the district court properly granted a new trial on damages following the first jury verdict and whether the district court erred in finding that Quanta Computer, Inc (“QCI”) does not have an implied license to assemble and sell laptops. The Court also reviewed whether the district court erred by setting the hypothetical negotiation date.
In holding that the district court properly granted a new trial, the Court clarified the standard of proof a plaintiff must satisfy in order to obtain damages under an “entire market value” theory. Specifically, in applying the entire market value rule in any case involving multi-component products, patentees may not calculate damages based on sales of the entire product, as opposed to the smallest salable patent-practicing unit, without showing that the demand for the entire product is attributable to the patented feature. Stated differently, the patentee must show that the presence of the claimed functionality alone is what motivated the purchase of the product.
In holding that the district court erred in finding that QCI did not have an implied license, the Court distinguished facts of this case from E.I. Du Pont de Ne-mours & Co. v. Shell Oil Co 498 A.2d 1108, 1116 (Del. 1985). In so doing, the Court considered QCI’s activities to constitute permissible activities under the “have made” and “sell” rights under QCI’s existing license agreements. The Court noted that the distinction between a permissible use of a licensee’s have made and sell rights versus an impermissible sublicense is “whether the production is by or for the use of the original licensee or for the sublicensee himself or for someone else.”
Lastly, the Court clarified that the date of the “hypothetical negotiation” should begin for purposes of determining a reasonable royalty is the date of the first direct infringement, even in cases where the infringer would only be liable for inducement.