Opinion ID: 454957
Heading Depth: 2
Heading Rank: 2

Heading: Damages for spare parts.

Text: 62 Otari also assigns error in the district court's award of damages based on spare parts. We hold that the evidence found in the present record is insufficient to support the district court's conclusory finding that [t]he lost profits from the sale of parts incurred by plaintiff is $438,810. 63 King asserts that it presented evidence at the trial that the proportion of spare parts sold with respect to tape loading machines was generally 20% of the machine's cost. This evidence, based on the direct testimony by King's Vice President and Sales Manager, Cline, is revealing for what it fails to state: 64 Q: (By Mr. Albritton) I think you also testified that spare parts sales by your company normally ran at about twenty percent of gross. 65 A: That's the average, yes, sir. 66 Q: So if you were to take twenty percent of $2,358,275 [sic], what would you get for spare parts? 67 A: $471,655 [sic]. 68 This is the only testimony pertaining to spare parts that we were able to find--King did not cite nor were we able to find the antecedent testimony referred to by Mr. Albritton. The sole documentary evidence which we found (without the aid of the parties) appeared in the May 22, 1970 offer from King to Morningstar. Item 2 in the description in that offer consisted of a 69 Spare automatic splicer for quick replacement when splicer on machine needs sharpening or over haul. Recommend 1 spare automatic splicer each three loaders. 70 The price quoted for the spare splicer was $490, while the price for the overall King Turbo-matic loader was $6,995. In light of the recommendation of one spare splicer per three machines, the spare part sale embodied in the Morningstar offer constitutes less than 2 1/2% of the gross (for the three machines). 71 The entire market value rule allows for the recovery of damages based on the value of an entire apparatus including non-patented parts, even though only one of the features in the apparatus is patented. Paper Converting Machine Co. v. Magna Graphics Corp., 745 F.2d 11, 22, 223 UPSQ 591, 599 (Fed.Cir.1984). This court has recognized that under this rule, it is 'the financial and marketing dependence on the patented item under standard marketing procedures' which determines whether the non-patented features of a machine should be included in calculating compensation for infringement. Kori, supra, at 656 (citing Leesona Corp. v. United States, 599 F.2d 958, 974, 202 USPQ 424, 439 (Ct.Cl.), cert. denied, 444 U.S. 991, 100 S.Ct. 522, 62 L.Ed.2d 420 (1979)). The controlling touchstone in determining whether to include the non-patented spare part in a damage award is whether the patentee can normally anticipate the sale of the non-patented component together with the sale of the patented components. Kori, supra, at 656; Paper Converting, 745 F.2d at 23, 223 USPQ at 599; and Tektronix, Inc. v. United States, 552 F.2d 343, 351, 193 USPQ 385, 393 (Ct.Cl.1977). 72 As support for the district court's finding, King asserts that its spare parts are not consumable supplies for which no recovery is possible, but are parts which it normally sells with the patented swing arm machine. Such a simplistic outlook fails to perceive the underlying significance of the entire market value rule, which was accurately applied by one of our predecessor courts in Leesona Corp. v. United States, supra. In defining those spare parts for which a patent owner may recover, the Court of Claims recognized that parts for such items that experience had shown might be destroyed during the normal use of a device should be distinguished from parts which derive their existence and value from the patent. 559 F.2d at 974, 202 USPQ at 439. (A)fter a patentee has collected from ... a direct infringer damages sufficient to put him in the position he would have occupied had there been no infringement, he cannot thereafter collect actual damages from a person liable only for contributing [i.e., by the sale of spare parts] to the same infringement. Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 512, 84 S.Ct. 1526, 1545, 12 L.Ed.2d 457, 141 USPQ 681, 696 (1964) (Aro II ). The only recoverable position the patent owner would have occupied had there been no infringement is one where he normally would have anticipated the sale of the spare parts. In other words, the question is whether King would have made the sale of spare parts but for Otari's infringement. An affirmative answer to this question is illustrated in Leesona where a patented battery system envisioned that many parts (i.e., anodes) would be necessary to keep the battery in operation. During the normal life cycle of a battery, the 22 anodes for each battery would be replaced approximately 50 times. The battery's very uniqueness was found in the replacement of the anodes rather than in the reliance on a cumbersome recharging device. 599 F.2d at 975, 202 USPQ at 440. 73 Whether King would anticipate additional income from the sale of spare parts is a finding which we cannot disturb unless it is clearly erroneous. Paper Converting, supra, 745 F.2d at 23, 223 USPQ at 600. We agree with Otari, however, that on the record before this court, there is no evidence, other than unsupported arguments made by counsel, that King normally anticipated selling spare parts as part of the overall swing arm package. 11 In addition, we are unable to find any evidence that the availability of spare parts is critical to the uniqueness of the '153 swing arm device. As we have seen, spare parts in and of itself is an unclear term capable of more than one definition. Only when a spare part falls under the entire market value rule may the patentee recover. On the basis of the evidence before us, we cannot find a sufficient basis for the bare conclusion that King would have made the sales of spare parts but for Otari's infringing sales. Accordingly, we vacate the district court's award of lost profits based on spare parts and remand for a determination of whether King's spare parts are of the type for which it may properly recover. 74