Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-1_18-cv-01228/USCOURTS-alnd-1_18-cv-01228-4/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1338 Patent Infringement

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UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

EASTERN DIVISION

COPPERHEAD INDUSTRIAL, Inc.,

Plaintiff/Counter Defendant,

v.

CHANGER & DRESSER, Inc.

Defendant/Counter Claimant.

}

}

}

}

}

}

}

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Case No.: 1:18-cv-01228-ACA

MEMORANDUM OPINION AND ORDER

Before the court is Defendant Changer & Dresser, Inc.’s (“C&D”) motion 

for partial summary judgment on damages. (Doc. 163). 

C&D argues that if Plaintiff Copperhead Industrial, Inc. (“Copperhead”) 

prevails on its patent infringement claims against C&D, it cannot recover lost 

profits as a matter of law. C&D also asks the court to find as a matter of law that 

Copperhead’s recovery, if any, should be limited to a reasonable royalty.

The court GRANTS C&D’s motion to the extent C&D seeks to prohibit 

recovery of lost profits because the undisputed evidence is that Copperhead does 

not sell any products covered by the patents-in-suit. The court DENIES the 

motion to the extent C&D seeks to limit recovery to a reasonable royalty because 

lost profits and a reasonable royalty are not the only measures of damages for 

patent infringement. 

FILED

 2020 Jan-28 AM 10:07

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 1:18-cv-01228-ACA Document 181 Filed 01/28/20 Page 1 of 7
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I. RELEVANT BACKGROUND

On a motion for summary judgment, the court “draw[s] all inferences and 

review[s] all evidence in the light most favorable to the non-moving party.” 

Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318 (11th Cir. 2012) 

(quotation marks omitted). 

Copperhead is a Canadian company that distributes automotive 

manufacturing industry products including cap changers, tip dressers, sensors, 

weld gun covers, cutter blades and holders, and force gauges. (Doc. 171-2 at ¶ 5). 

Copperhead owns United States Patent Numbers 8,742,281; 9,168,609; 9,393,639; 

and 9,757,814 (the “patents-in-suit”). (Doc. 100 at ¶¶ 22–24; Doc. 171-2 at ¶ 5). 

The patents-in-suit concern, among other things, the design of spot-welding 

cap changers and their accompanying magazine. (Doc. 100-1 at 2). Copperhead 

does not manufacture or sell the cap changers or magazines allegedly covered by 

the patents-in-suit. (Sealed Doc. 165-2 at 5–6, 9; Sealed Doc. 165-3 at 3–5). JEC 

Distributors, Inc. (“JEC”)1 sells Copperhead cap changers and magazines under a 

license from Copperhead. (Sealed Doc. 165-2 at 3–4, 7–8; Doc. 179-2 at ¶ 7). 

When JEC distributes Copperhead cap changers, JEC makes a flat-fee 

payment to Copperhead for each unit sold. (Sealed Doc. 165-2 at 11). Joe 

 1 JEC was an original party plaintiff. The court has dismissed JEC’s claims, and JEC is 

no longer a party to this lawsuit. (See Docs. 139; 178). 

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Ruggerio, owner of both Copperhead and JEC, testified that the amount of the 

payment JEC makes to Copperhead for each sale was computed by calculating 

costs savings generated as a result of shifting manufacturing of the products from 

Europe to Canada. (Doc. 171-1 at 3–4). According to Mr. Ruggerio, JEC’s profits 

from sales of cap changers flow directly to Copperhead. (Doc. 179-2 at ¶ 8). 

II. DISCUSSION

C&D moves for summary judgment on the narrow issue of the measure of

damages that Copperhead might recover should Copperhead prevail on the merits 

of its patent infringement claims. (Doc. 163 at 1). 

The Patent Act provides that a patentee shall be awarded “damages adequate 

to compensate for infringement, but in no event less than a reasonable royalty for 

the use made of the invention by the infringer.” 35 U.S.C. § 284. “Despite the 

broad damages language of § 284, patentees tend to try to fit their damages cases 

into the ‘lost profits’ framework, or else fall back on the statutory grant of a 

reasonable royalty.” Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1366 (Fed. 

Cir. 2008), mandate recalled and amended on other grounds by Mars, Inc. v. Coin 

Acceptors, Inc., 557 F.3d 1377 (Fed. Cir. 2009).

To recover lost profits, “the patentee needs to have been selling some item, 

the profits of which have been lost due to infringing sales.” Poly-America, L.P. v. 

GSE Lining Technology, Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004). In addition, 

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“a patentee may not claim, as its own damages, the lost profits of a related 

company.” Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1375 (Fed. 

Cir. 2015), judgment vacated on other grounds by Medtronic Sofamor Danek USA, 

Inc. v. NuVasive, Inc., 136 S. Ct. 893 (2016). 

Copperhead does not contest these general rules. (Doc. 172-1 at 6–8). And 

the evidence is undisputed that Copperhead does not sell the patented products. 

(Sealed Doc. 165-2 at 5–6, 9; Sealed Doc. 165-3 at 3–5; Doc. 179-2 at ¶ 6). 

Nevertheless, Copperhead argues that Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 

1359 (Fed. Cir. 2008), left open the possibility that Copperhead may “recover 

profits that otherwise belong to JEC” for sale of the patented devices under an 

“inexorable flow” theory. (Doc. 172-1 at 6–9) (citing Mars, 527 F.3d at 1367). 

The court disagrees. 

In Mars, the patentee argued that a subsidiary’s profits flowed inexorably to 

the patentee, and therefore, the patentee could recover the lost profits that the 

subsidiary would have made absent infringement of the patent. Mars, 527 F.3d at 

1367. The Federal Circuit rejected this argument because the patentee did not 

identify evidence that it received profit or revenue from the subsidiary apart from 

license royalty payments. Id. Therefore, the Federal Circuit stated that it “need 

not decide whether a parent company can recover on a lost profits theory when 

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profits of a subsidiary actually do flow inexorably up to the parent.” Id. (emphasis 

in original). 

Copperhead argues that Mars “left open the possibility for a patent holder to 

recover the lost profits of a related company if the profits from that related 

company ‘flow inexorably’ to the patent holder.” (Doc. 172 at 6–7). To the extent 

that is true, in cases decided after Mars, the Federal Circuit reiterated its position 

that a patent owner cannot recover lost profits from a related company where, as 

here, the patent owner itself does not sell any of the patented products. See 

Warsaw, 778 F.3d at 1375 (“Under our case law a patentee may not claim, as its 

own damages, the lost profits of a related company.”); Spine Sols., Inc. v. 

Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305, 1319 (Fed. Cir. 2010) 

(because patent owner did not sell any products, patent owner was not entitled to 

lost profits damages for any lost profits suffered by sister companies that sold 

patented products).

Because the Federal Circuit has not adopted the inexorable flow theory,2 and 

because Copperhead does not sell any patented product, it may not recover lost 

profits—its own or JEC’s. See Warsaw, 778 F.3d at 1375; Spine Sols., 620 F.3d at 

1319; Poly-America, 383 F.3d at 1311.

 2 Copperhead cites a number of decisions in which district courts have applied the 

inexorable flow theory. (Doc. 172 at 7). The court is neither bound nor persuaded by those 

decisions. Rather, the court will follow binding Federal Circuit precedent which has not 

endorsed the inexorable flow theory. 

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Having decided that Copperhead may not recover lost profits, C&D asks the 

court to find as a matter of law that Copperhead’s damages, if any, are limited to a 

reasonable royalty. (Sealed Doc. 164-1 at 7). C&D’s position is too extreme and 

unsupported by law. The Patent Act establishes a reasonable royalty as the floor 

for damages for patent infringement. See 35 U.S.C. § 285. And the Federal 

Circuit has recognized that “patentees may be entitled to damages above a 

reasonable royalty on theories entirely distinct from lost profits.” Mars, 527 F.3d 

at 1366. In the operative complaint, Copperhead seeks “all damages caused by 

C&D’s infringement pursuant to 35 USC § 285, to the extent allowable by law.” 

(Doc. 100 at 9). Therefore, Copperhead has not foreclosed the possibility that it 

may request and recover some measure of damages above a reasonable royalty but 

less than lost profits.3

Accordingly, C&D has not established as a matter of law that Copperhead is 

limited to a reasonable royalty only should Copperhead prevail on its patent 

infringement claims. 

III. CONCLUSION 

The court GRANTS C&D’s motion for partial summary judgment as to 

Copperhead’s ability to recover lost profits. Should Copperhead prevail on its 

 3 Whether Copperhead advances a such a theory of damages should it prevail on its 

claims is a question for another day. 

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patent infringement claims, Copperhead may not recover its lost profits or the lost 

profits of any company selling the patented products.

The court DENIES C&D’s motion for partial summary judgment to the 

extent C&D seeks to limit Copperhead’s recovery to a reasonable royalty only. 

DONE and ORDERED this January 28, 2020.

 _________________________________

 ANNEMARIE CARNEY AXON

 UNITED STATES DISTRICT JUDGE

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