Lam, Inc. v. Johns-Manville Corp.
| Decision Date | 30 September 1983 |
| Docket Number | No. 83-776,JOHNS-MANVILLE,83-776 |
| Citation | 219 USPQ 670,718 F.2d 1056 |
| Parties | LAM, INC., Plaintiff-Appellee, v.CORPORATION and Johns-Manville Sales Corporation, Defendants-Appellants. Appeal |
| Court | U.S. Court of Appeals — Federal Circuit |
Charles F. Brega, Denver, Colo., argued for appellants. With him on the brief was J. Stephen McGuire, Denver, Colo.
Charles E. Pfund, Boston, Mass., argued for appellee. With him on the brief were Richard W. Daily and Donald E. Phillipson, Denver, Colo.
Before KASHIWA, BENNETT and MILLER, Circuit Judges.
This is an appeal from a judgment of the United States District Court for the District of Colorado (Civil Action No. 76-W-1216), entered December 3, 1982, and amended December 13, 1982. The judgment is on the accounting phase of a similarly-captioned case (Lam, Inc. v. Johns-Manville Corp., 668 F.2d 462, 213 USPQ 1061 (10th Cir.), cert. denied, 456 U.S. 1007, 102 S.Ct. 2298, 73 L.Ed.2d 1302 (1982)) that decided defendants-appellants' liability. The district court awarded plaintiff-appellee trebled damages of $1,334,769.00 and attorneys' fees and expenses of $436,365.21 for a total sum of $1,771,134.21. We affirm in part and reverse in part.
The defendants-appellants, Johns-Manville Corporation and Johns-Manville Sales Corporation (hereinafter "J-M"), infringed plaintiff-appellee's U.S. Patent No. 3,950,638, issued April 13, 1976, for a high intensity discharge lamp. The lamp is an interior, indirect lighting fixture. The infringing activities took place between 1976 and 1979. The district court found that J-M's CLASSPAK lamps infringed Lam's patent in suit the embodiment of the claimed invention being Lam's LUXXtra lamps. The district court also found willful infringement and assessed treble damages. Last, the district court awarded attorneys' fees and expenses. Accordingly, the district court issued an injunction against J-M on October 23, 1979.
During the trial of the instant case, Lam sought, inter alia, three types of damages. They are (1) profits from potential sales of its LUXXtra fixtures which were lost to J-M's actual sales of CLASSPAKs (hereinafter "lost profits"); (2) profits lost on its sales of LUXXtra fixtures the prices for which were reduced to meet J-M's competitive CLASSPAK prices (hereinafter "reduced profits"); and (3) profits from projected lost sales of its LUXXtra fixtures as a result of J-M's infringement (hereinafter "projected lost profits"). The projected lost profits claim did not include the lost profits claim.
In support of its claims, Lam calculated the incremental profit or "gross margin" for each LUXXtra lamp sold between 1976 and 1979. The gross margin equals the value of all the LUXXtra fixtures sold during the infringement period minus the direct cost of material, labor, commissions, and freight, with the resulting difference divided by the total number of LUXXtras sold. It then multiplied the gross margin for each year times the number of J-M units actually sold to arrive at the damage figure for the first type of losses. The number of J-M units actually sold, 944, was based on an estimate presented by J-M during a settlement hearing in 1979. The breakdown of Lam's lost profits is as follows:
LAM'S GROSS NUMBER OF
MARGIN PER J--M INFRINGING
YEARS UNIT UNITS SOLD TOTAL MARGIN
----- ----------- --------------- ------------
1976 $107 536 $57,352
1977 103 6 618
1978 101 182 18,382
1979 104 220 22,880
--- ------
TOTAL 944 $99,232
J-M, however, presented evidence showing that it sold 536 CLASSPAKs in 1976, 23 in 1977, 29 in 1978, and 231 in 1979 for a total of 819 units. 1 In addition, J-M attempted to show that Lam failed to deduct variable costs from its gross margin calculation.
In its calculation of prejudgment interest on the lost profits claim, Lam multiplied the "average prime rate" of each of the years 1977-1982 times the total margin for that year to produce an interest calculation of $67,999. The breakdown of the interest calculation is as follows:
Average Prime
Year Interest Rate $57,352 $618 $18,382 $22,880
------ ------------- ------- ---- ------- -------
1977 7.82% $4,485
1978 10.05% 5,764 62
1979 13.66% 7,834 84 2,511
1980 17.72% 10,163 110 3,257 4,054
1981 21.21% 12,164 131 3,899 4,853
1982 17.39% 4,987 54 1,598 1,989
------- ---- ------- -------
TOTALS $45,397 $441 $11,265 $10,896 $67,999
As for the reduced profits claim, Lam presented evidence showing a total of $4,584 that was lost in four sales. 2 J-M, however, stated that two of these sales (Hollybrook and Newberg) occurred after the December, 1979 injunction and the competitor in those sales was a different company. In addition, Lam claimed prejudgment interest of $2,330 on the reduced profits claim. 3
Last, Lam submitted Exhibit PX-6 to illustrate its projected lost profits claim. It is a graph showing (1) the number of LUXXtra lamps actually sold by Lam between 1973 and 1982; and (2) Lam's growth rate before infringement, i.e., before 1976, and after infringement, i.e., after 1979. PX-6 is reproduced below:
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE
The post-1979 growth rate is perceptively greater than that for the pre-1976 rate. The dotted line, extending from the lower left-hand corner of the graph to the upper right-hand corner, represents the amount of projected lost sales from 1976 to 1981. The solid line, extending from 1979 to 1982, represents Lam's growth rate after the infringement. The numerals at the right margin of the graph represent Lam's losses per year, from 1976 to 1981. The losses are computed by comparing the projected pre-1976 growth rate with actual sales. The total loss is $1.4 million. Mr. John Kluse, the vice president and treasurer of Lam, testified that the profit margin for the LUXXtra product line was at least 26%. To arrive at the projected lost profits, he first multiplied the number of CLASSPAKs sold by J-M (944) times Lam's average selling price for each unit of the comparable LUXXtra lamps to arrive at a figure of $246,784. This figure is then subtracted from the projected lost sales of $1.4 million to arrive at the amount of $1,153,220. Multiplying the 26% figure times $1,153,220 produced the projected lost profits claim figure of $299,837.
At trial, J-M, claimed that the projected lost sales figure included lamps manufactured by Lam which were not comparable to its infringing CLASSPAKs. In addition, J-M argued that Lam's decline in sales was caused by factors other than its infringement; factors such as Lam's own poor financial management and the severe industry-wide cost-price squeeze in 1978. Moreover, the amount of Lam's legal fees, about $30,000, was not a factor in diminishing its growth, especially in light of its gross sales exceeding $10 million in the first three years of the infringement.
The district court found that the actual damages suffered by Lam were $444,923.00. This amount is a summation of damages which were classified into three categories: (1) Lam's lost profits and the prejudgment interest on these lost profits; (2) Lam's reduced profits and the prejudgment interest on these reduced profits; and (3) Lam's projected lost profits. The breakdown of the actual damages is as follows:
In finding the Category One damages, the district court stated:
For a company the size of defendant to be unable to establish with exactness the number of units it manufactured or sold defies belief, but the number changed with the person vouching for it and with the records allegedly relied upon. * * * [W]hen an infringer can't come up with positive records, the punishment for the inaccuracies lies on the infringer, and that's the rule I apply here. At one stage of the proceedings defendant told plaintiff it had produced 944 CLASSPAK fixtures [a statement made under oath in a desposition [sic] of a responsible person employed by defendant] and plaintiff relied heavily on this testimony in the course of its preparation for the damage hearing. * * * I hold defendant to the sworn testimony of its own witness, and for the purposes of awarding damages, I find that 944 CLASSPAK fixtures is the number of units to be considered. [I do this with full recognition that at time of trial defendant had some testimony on other figures, including a low total of 843 fixtures testified to by one witness.]
In addition, the district court held that, in a two-supplier market as it existed in this case, the patent owner may recover lost profits he would have made but for the infringement. He need not be limited to recovering only the reasonable royalty. After accepting the figure of 944 units sold which produced a total margin of $99,232, the district court said:
Giving the defendant the benefit of the doubt, I reduce by 10% the units sold and the dollars lost on sales made by Manville. I make no effort to allocate between years and I find that over the 4 year period, had it not been for defendant's wrongful conduct, plaintiff would have sold 850 fixtures, the margin on which would have been $89,309. Defendants vigorously disputs [sic] that there would have been a...
To continue reading
Request your trial
-
E2interactive, Inc. v. Blackhawk Network, Inc.
...Cir. 1995) (en banc); Del Mar Anionics, Inc. v. Quintan Instr. Co., 835 F.2d 1320, 1326-28 (Fed. Cir. 1987); Lam Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed. Cir. 1983). 2. The damage award must be intended to compensate the patent holder, not to punish the infringer. Integra Lif......
-
Apple, Inc. v. Samsung Elecs. Co.
...1345-46 (Fed. Cir. 2003); Central Soya Co. v. George A. Hormel & Co, 723 F.2d 1573, 1579 (Fed. Cir. 1983); Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed. Cir. 1983); Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545, 1548-49 (Fed. Cir. 1995) (en banc); Siemens Med. Solutions U......
-
Matter of Mahurkar Double Lumen Litigation
...reducing award because of reduction in output); Kalman v. Berlyn Corp., 914 F.2d 1473, 1485 (Fed.Cir.1990); Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1067 (Fed.Cir.1983). As IMPRA sees things Quinton and Mahurkar surrendered any entitlement to use a price erosion approach. They did ......
-
Ziggity Systems, Inc. v. Val Watering Systems
...Plug Co., 735 F.2d 549, 556 (Fed.Cir. 1984); (2) lost profits on sales that the patent owner actually made, Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed.Cir.1983); and (3) a reasonable royalty on infringing sales even if the patent owner would not have obtained these sales, B......
-
Table Of Cases
...292 (Fed. Cir. 1986), 61. Laitram Machine v. Carnitech A/S, 901 F. Supp. 1155 (E.D. La. 1995), 105. Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056 (Fed. Cir. 1983), 58, 61. Landis v. N. Am. Co., 299 U.S. 248 (1936), 66. Lannom Mfg. Co. v. U.S. Int’l Trade Comm’n, 799 F.2d 1572 (Fed. Cir. ......
-
Basics of Intellectual Property Laws for the Antitrust Practitioner
...Indus. , 883 F.2d at 1577. 281. Kaufman Co. v. Lantech, Inc., 926 F.2d 1136, 1141 (Fed. Cir. 1991); Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed. Cir. 1983). 282. Minco, Inc. v. Combustion Eng’g, 95 F.3d 1109, 1120 (Fed. Cir. 1996); BIC Leisure Prods. v. Windsurfing Int’l, 1 ......
-
Chapter §20.06 Attorney Fees in Exceptional Cases
...Cir. 2005) (citing Rambus Inc. v. Infineon Techs. AG, 318 F.3d 1081, 1088 (Fed. Cir. 2003)).[1110] Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1068 (Fed. Cir. 1983).[1111] Read Corp. v. Portec, Inc., 970 F.2d 816, 831 (Fed. Cir. 1992) (citing Beckman Instruments, Inc. v. LKB Produkter......
-
Lost Profits Damages for Multicomponent Products: Clarifying the Debate.
...& Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., 976 F.2d 1559, 1579 (Fed. Cir. 1992); Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed. Cir. (37.) See Lemley, supra note 28, at 657; see also Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 197......