Rite-Hite Corp. v. Kelley Co., Inc.
| Citation | 35 USPQ2d 1065,56 F.3d 1538 |
| Decision Date | 15 June 1995 |
| Docket Number | Nos. 92-1206,92-1260,RITE-HITE,s. 92-1206 |
| Court | United States Courts of Appeals. United States Court of Appeals for the Federal Circuit |
| Parties | , 35 U.S.P.Q.2d 1065 CORPORATION, Acme Dock Specialists, Inc., Allied Equipment Corp., Applied Handling, Inc., Anderson Material Handling Co., Block-Dickson, Inc., Robert Lund d/b/a HMH Company, HOJ Engineering & Sales Co., Inc., Johnson Equipment Co., Johnl & Associates, Inc., Keller Equipment Co., Inc., Loading Dock Equipment, Inc., Metro Dock Specialists, Inc., McCormick Equipment Company, Inc., Mid-South Dock Systems, Inc., Harry Monohan, Niehaus Industrial Sales, Inc., Northway Material Handling Co., Inc., Pemco Material Handling, Inc., R.B. Curlin, Inc., Rice Equipment Company, Stokes Equipment Company, Inc., Robert Soper Limited, Timbers & Associates, Inc., Todd Equipment Corporation, Thayer Systems, Inc., and W.E. Carlson Corporation, Plaintiffs/Cross-Appellants, v. KELLEY COMPANY, INC., Defendant-Appellant. |
Richard Florsheim, Foley & Lardner, Milwaukee, WI, argued, for plaintiffs/cross-appellants. With him on the brief was Jeffrey N. Costakos. Also on the brief was Theodore W. Anderson, Leydig, Voit & Mayer, Chicago, IL.
Keith V. Rockey, Rockey, Rifkin & Ryther, Chicago, IL, argued, for defendant-appellant. With him on the brief was Thomas C. Elliott. Also on the brief were Thomas F. Ging, Thomas S. Malciauskas and Marcos Reilly, Hinshaw & Culbertson, Chicago, IL.
Geoffrey G. Gilbert, John P. Ryan, Jr. and Marc L. Fogelberg, McBride, Baker & Coles, Chicago, IL, were on the brief, for amicus curiae, Grain Processing Corp.
David J. Brezner, Richard F. Trecartin, Richard P. Doyle, Jr., and Laura L. Kulhanjian, Flehr, Hohbach, Test, Albritton & Herbert, San Francisco, CA, were on the brief, for amicus curiae, Otari Mfg. Corp.
Stanley L. Amberg, Davis, Hoxie, Faithful & Hapgood, New York City, and Harrie R. Samaras, Knobbe, Martens, Olson & Bear, Newport Beach, CA, were on the brief, for amicus curiae, Stanley L. Amberg and Harrie R. Samaras.
Before ARCHER, Chief Judge, RICH, Circuit Judge, SMITH, Senior Circuit Judge and NIES, NEWMAN, MAYER, MICHEL, PLAGER, LOURIE, CLEVENGER, RADER, and SCHALL, Circuit Judges. 1
Circuit Judge NIES filed an opinion, joined by Chief Judge ARCHER, Senior Circuit Judge EDWARD S. SMITH, and Circuit Judge MAYER, dissenting as to parts AI and AIV and concurring in result as to part AII. Circuit Judge PAULINE NEWMAN filed an opinion, joined by Circuit Judge RADER, concurring in part as to part AIV and dissenting as to parts AII and AIII.
Kelley Company appeals from a decision of the United States District Court for the Eastern District of Wisconsin, awarding damages for the infringement of U.S. Patent 4,373,847, owned by Rite-Hite Corporation. Rite-Hite Corp. v. Kelley Co., 774 F.Supp. 1514, 21 USPQ2d 1801 (E.D.Wis.1991). The district court determined, inter alia, that Rite-Hite was entitled to lost profits for lost sales of its devices that were in direct competition with the infringing devices, but which themselves were not covered by the patent in suit. The appeal has been taken in banc to determine whether such damages are legally compensable under 35 U.S.C. Sec. 284. We affirm in part, vacate in part, and remand.
On March 22, 1983, Rite-Hite sued Kelley, alleging that Kelley's "Truk Stop" vehicle restraint infringed Rite-Hite's U.S. Patent 4,373,847 ("the '847 patent"). 2 The '847 patent, issued February 15, 1983, is directed to a device for securing a vehicle to a loading dock to prevent the vehicle from separating from the dock during loading or unloading. Any such separation would create a gap between the vehicle and dock and create a danger for a forklift operator.
Rite-Hite distributed all its products through its wholly-owned and operated sales organizations and through independent sales organizations (ISOs). During the period of infringement, the Rite-Hite sales organizations accounted for approximately 30 percent of the retail dollar sales of Rite-Hite products, and the ISOs accounted for the remaining 70 percent. Rite-Hite sued for its lost profits at the wholesale level and for the lost retail profits of its own sales organizations. Shortly after this action was filed, several ISOs moved to intervene, contending that they were "exclusive licensees" of the '847 patent by virtue of "Sales Representative Agreements" and "Dok-Lok Supplement" agreements between themselves and Rite-Hite. The court determined that the ISOs were exclusive licensees and accordingly, on August 31, 1984, permitted them to intervene. 3 The ISOs sued for their lost retail profits.
The district court bifurcated the liability and damage phases of the trial and, on March 5, 1986, held the '847 patent to be not invalid and to be infringed by the manufacture, use, and sale of Kelley's Truk Stop device. The court enjoined further infringement. Rite-Hite Corp. v. Kelley Co., 629 F.Supp. 1042, 231 USPQ 161 (E.D.Wis.1986). The judgment of liability was affirmed by this court. Rite-Hite Corp. v. Kelley Co., 819 F.2d 1120, 2 USPQ2d 1915 (Fed.Cir.1987).
On remand, the damage issues were tried to the court. Rite-Hite, 774 F.Supp. at 1514, 21 USPQ2d at 1801. Rite-Hite sought damages calculated as lost profits for two types of vehicle restraints that it made and sold: the "Manual Dok-Lok" model 55 (MDL-55), which incorporated the invention covered by the '847 patent, and the "Automatic Dok-Lok" model 100 (ADL-100), which was not covered by the patent in suit. The ADL-100 was the first vehicle restraint Rite-Hite put on the market and it was covered by one or more patents other than the patent in suit. The Kelley Truk Stop restraint was designed to compete primarily with Rite-Hite's ADL-100. Both employed an electric motor and functioned automatically, and each sold for $1,000-$1,500 at the wholesale level, in contrast to the MDL-55, which sold for one-third to one-half the price of the motorized devices. Rite-Hite does not assert that Kelley's Truk Stop restraint infringed the patents covering the ADL-100.
Of the 3,825 infringing Truk Stop devices sold by Kelley, the district court found that, "but for" Kelley's infringement, Rite-Hite would have made 80 more sales of its MDL-55; 3,243 more sales of its ADL-100; and 1,692 more sales of dock levelers, a bridging platform sold with the restraints and used to bridge the edges of a vehicle and dock. The court awarded Rite-Hite as a manufacturer the wholesale profits that it lost on lost sales of the ADL-100 restraints, MDL-55 restraints, and restraint-leveler packages. It also awarded to Rite-Hite as a retailer and to the ISOs reasonable royalty damages on lost ADL-100, MDL-55, and restraint-leveler sales caused by Kelley's infringing sales. Finally, prejudgment interest, calculated without compounding, was awarded. Kelley's infringement was found to be not willful.
On appeal, Kelley contends that the district court erred as a matter of law in its determination of damages. Kelley does not contest the award of damages for lost sales of the MDL-55 restraints; however, Kelley argues that (1) the patent statute does not provide for damages based on Rite-Hite's lost profits on ADL-100 restraints because the ADL-100s are not covered by the patent in suit; (2) lost profits on unpatented dock levelers are not attributable to demand for the '847 invention and, therefore, are not recoverable losses; (3) the ISOs have no standing to sue for patent infringement damages; and (4) the court erred in calculating a reasonable royalty based as a percentage of ADL-100 and dock leveler profits. Rite-Hite and the ISOs challenge the district court's refusal to award lost retail profits and its award of prejudgment interest at a simple, rather than a compound, rate.
We affirm the damage award with respect to Rite-Hite's lost profits as a manufacturer on its ADL-100 restraint sales, affirm the court's computation of a reasonable royalty rate, vacate the damage award based on the dock levelers, and vacate the damage award with respect to the ISOs because they lack standing. We remand for dismissal of the ISOs' claims and for a redetermination of damages consistent with this opinion. The issues raised by Rite-Hite are unpersuasive.
Because the technology, the '847 patent, and the history of the parties and their litigation are fully described in the opinions of the district court and that of the earlier panel of our court that affirmed the liability judgment, we will discuss the facts only to the extent necessary to discuss the issues raised in this appeal.
In order to prevail on appeal on an issue of damages, an appellant must convince us that the determination was based on an erroneous conclusion of law, clearly erroneous factual findings, or a clear error of judgment amounting to an abuse of discretion. Amstar Corp. v. Envirotech Corp., 823 F.2d
1538, 1542, 3 USPQ2d 1412, 1415 (Fed.Cir.1987); see also SmithKline Diagnostics, Inc. v. Helena Lab. Corp., 926 F.2d 1161, 1163-65 & n. 2, 17 USPQ2d 1922, 1924-25 & n. 2 (Fed.Cir.1991).
The district court's decision to award lost profits damages pursuant to 35 U.S.C. Sec. 284 turned primarily upon the quality of Rite-Hite's proof of actual lost profits. The court found that, "but for" Kelley's infringing Truk Stop competition, Rite-Hite would have sold 3,243 additional ADL-100 restraints and 80 additional MDL-55 restraints. The court reasoned that awarding lost profits fulfilled the patent statute's goal of affording complete compensation for infringement and compensated...
To continue reading
Request your trial
-
Eastman Kodak Co. v. Agfa-Gevaert N.V.
...patents had expired, and that consequently they cannot be liable for any infringement by that product. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1549 n. 8 (Fed.Cir.1995) (en banc), cert. denied, 516 U.S. 867, 116 S.Ct. 184, 133 L.Ed.2d 122 35 U.S.C. § 287(a) provides generally that where......
-
E2interactive, Inc. v. Blackhawk Network, Inc.
...Cir. 2003); Grain Processing Corp. v. American Maize-Prod. Co., 185 F.3d 1341, 1349 (Fed. Cir. 1999); Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545 (Fed. 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-Manvil......
-
Verinata Health, Inc. v. Ariosa Diagnostics, Inc.
...recognized that the lost profits must come from the lost sales of a product or service the patentee itself was selling. As we explained in Rite-Hite , "[n]ormally, if the patentee is not selling a product, by definition there can be no lost profits." Id. (quoting Rite–Hite , 56 F.3d at 1548......
-
Presidio Components Inc. v. American Technical Ceramics Corp..
...suit” or that “directly competes with the infringing device.” See DePuy Spine, 567 F.3d at 1330 (citing Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1548-49 (Fed.Cir.1995) (en banc)). The main inquiry is whether the patentee can demonstrate a “but for” causation traceable to patent infringe......
-
Clearance: Proskauer's Quarterly Antitrust Update - Winter 2013
...Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962)). Id. at 1347. Id. at 1345. Id. at 1347-48 (citing Rite-Hite Corp. v. Kelly Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en Id. at 1347. Id. at 1347-48. Id. at 1348 (citing Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1435 (9th Ci......
-
The 'Read' 'Enhanced Damages' Standard Must Be Applied Separately From The 'Seagate' 'Willful Infringement' Standard
...or so outrageously low as to be unsupportable as an estimation of a reasonable royalty." Id. at 14 (quoting Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554 (Fed. Cir. 1995) (en banc)). The Court also noted that, in accordance with 35 U.S.C. § 284, the damages awarded should be "in no even......
-
A Primer On Patent Apportionment
...whole There is no unpatented or non-infringing feature of the product."). 12. Garretson, 111 S. at 121. 13. Rite-Hite v. Kelley Co., Inc., 56 F.3d 1538, 1549 (Fed. Cir. 14. LaserDynamics, 694 3d at 67. 15. Id. at 68. 16. Id. at 69. See also Lucent, 580 F.3d at 1336 (asking whether "the feat......
-
Foreign Parent Could Not Seek Lost Profits Based On Sales Lost By Its United States Subsidiary
...received 'but for' Tellabs infringement." [Dkt. No. 683, page 121 In the en banc opinion in Rite-Hite Corporation v. Kelley Co., Inc., 56 F.3d 1538 (Fed. Cir. 1994), Judge Lourie writing for the majority upheld certain of the district court's determinations on damages awarded to patent owne......
-
Commonly Used Experts
...of the nature of the market and likely outcomes with the alleged infringement out of the economic picture. Rite Hite Corp. v. Kelley Co ., 56 F.3d 1538 (Fed. Cir. 1995), stated that while 35 U.S.C.S. §284 states tersely that a patentee receive “adequate” damages, the Supreme Court has inter......
-
Table Of Cases
...2d (BNA) 1823 (Fed. Cir. 1998), 174. Richardson v. Suzuki Motor Co., 868 F.2d 1226 (Fed. Cir. 1989), 63. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995), 29, 59, 60, 61, 63. Robintech, Inc. v. Chemidus Wavin, Ltd., 628 F.2d 142 (D.C. Cir. 1980), 122. Robotic Vision Sys. v. View......
-
Tesla, Marconi, and the great radio controversy: awarding patent damages without chilling a defendant's incentive to innovate.
...Cir. 2006). (21.) Grain Processing Corp. v. Am. Maize-Prods. Co., 185 F.3d 1341, 1352 (Fed. Cir. 1999); Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1544-45 (Fed. Cir. 1995) (en (22.) Golight, Inc. v. Wal-Mart Stores, Inc., 355 F.3d 1327, 1338 (Fed. Cir. 2004). (23.) Eric E. Bensen & Da......
-
Commonly Used Experts
...of the nature of the market and likely outcomes with the alleged infringement out of the economic picture. Rite Hite Corp. v. Kelley Co ., 56 F.3d 1538 (Fed. Cir. 1995), stated that while 35 U.S.C.S. §284 states tersely that a patentee receive “adequate” damages, the Supreme Court has inter......