Opinion ID: 208066
Heading Depth: 3
Heading Rank: 2

Heading: The Royalty Award

Text: The district court ordered Fresenius to pay an ongoing royalty of 10% of the sales price for any infringing machines sold before January 1, 2009, and a royalty of 7% of the sales price for all disposable products linked to infringing machines that were sold from November 7, 2002, until the patents expire. Injunction Order, slip op. at 9–10. Fresenius argues the district court abused its discretion by imposing the ongoing royalty without explaining the bases for its royalty rate determinations. See Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315 (Fed. Cir. 2007) (remanding because, absent an explanation of the selection of the royalty rate, this court cannot determine whether the district court abused its discretion) (citing Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“It [is] important . . . for the district court to provide a concise but clear explanation of its reasons for the fee award.”)). We do not decide today whether the district court’s royalty award was proper. Instead, we vacate the royalty award and remand for the district court to consider whether the previous award is proper in light of this court’s modification of the district court’s judgment. In particular, we note that our reversal of JMOL may affect the district court’s consideration of the putative royalty rate that would result from a hypothetical negotiation between Baxter and Fresenius. That analysis is influenced by the Georgia Pacific factors, see Minks v. Polaris Indus., 546 F.3d 1364, 1372 (Fed. Cir. 2008), and 2008-1306, -1331 24 our decision here may affect how the district court weighs one of more of those factors, see Georgia-Pac. Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970). Fresenius also argues that the district court erred by imposing a royalty on postverdict sales of disposables linked to machines that were sold pre-verdict. According to Fresenius, that portion of the royalty is inappropriate because the jury had already awarded Baxter damages based on machines sold pre-verdict. We disagree because the district court acted within its discretion. A damages award for pre-verdict sales of the infringing product does not fully compensate the patentee because it fails to account for post-verdict sales of repair parts. See Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872, 881–82 (Fed. Cir. 1995). Although the jury had awarded damages for Fresenius’s pre-verdict sales of machines and disposable products, Fresenius cites no evidence indicating that the jury also considered post-verdict sales of disposable products linked to machines sold pre-verdict. The district court was within its discretion to impose a royalty on those sales of disposable products in order to fully compensate Baxter for the infringement.