Opinion ID: 208638
Heading Depth: 4
Heading Rank: 1

Heading: Demand for the Patented Product

Text: Medtronic argues that the verdict cannot be upheld because DePuy failed to show, under the first Panduit factor, that the demand for DePuy's SummitTM and MountaineerTM pedicle screws was driven by the screws' top-loading feature. It is this top-loading feature, in Medtronic's view, that distinguishes DePuy's patented screws and Medtronic's infringing Vertex® screws from Medtronic's bottom-loading screws, which do not infringe the '678 patent and which are not at issue in the present appeal. See DePuy Spine I, 469 F.3d at 1022 (holding that Medtronic's bottom-loading screws, unlike its top-loading Vertex® screws, do not possess claim 1's opening limitation). Accordingly, Medtronic asks us to hold that the requisite demand under the first Panduit factor is demand for the specific feature (i.e., claim limitation) that distinguishes the patented product from a noninfringing substitute, not simply demand for the patented product. We decline Medtronic's request. Medtronic's argument unnecessarily conflates the first and second Panduit factors. All that the first factor states, and thus requires, is demand for the patented product. Panduit, 575 F.2d at 1156. This factor does not require any allocation of consumer demand among the various limitations recited in a patent claim. Instead, the first Panduit factor simply asks whether demand existed for the patented product, i.e., a product that is covered by the patent in suit or that directly competes with the infringing device. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1548-49 (Fed.Cir.1995) (en banc). In this case, Medtronic does not dispute that demand generally existed for the SummitTM and MountaineerTM pedicle screws and that those screws are covered by the '678 patent. Medtronic also concedes that demand for those screws was driven primarily by their polyaxial capability, a feature inherent in both Medtronic's accused Vertex® screws and DePuy's SummitTM and MountaineerTM screws. Because the jury heard testimony as to this fact, an evidentiary basis was thus presented from which the jury could have found demand for the patented product under the first Panduit factor. Medtronic argues that our prior decisions in Grain Processing, Slimfold, and Ferguson compel a different result. We disagree. In Grain Processing, the district court found that certain claim limitations could easily be omitted from the accused product in a manner that was perfectly acceptable to consumers. In particular, the court found that there was no specific demand for the features corresponding to the omitted claim limitations and that an acceptable noninfringing substitute was readily available. Grain Processing Corp. v. Am. Maize-Products Co., 979 F.Supp. 1233, 1237 (N.D.Ind.1997) (Easterbrook, J.), aff'd 185 F.3d 1341 (Fed.Cir.1999). On appeal, we affirmed the denial of lost profits, not because demand was absent under the first Panduit factor, but because acceptable noninfringing substitutes were available under the second Panduit factor. 185 F.3d at 1354-55 (holding that a noninfringing substitute was both available and acceptable during the accounting period, thus failing Panduit's second factor). Like our decision in Grain Processing, our decision in Slimfold affirmed a denial of lost profits, not because demand was lacking under the first Panduit factor, but because acceptable noninfringing substitutes were available under the second. Slimfold Mfg. Co., Inc. v. Kinkead Indus., Inc., 932 F.2d 1453, 1458 (Fed.Cir.1991). In that case, [w]ith respect to the availability of acceptable non-infringing substitutes i.e., the second Panduit factor the district court found that certain old hardware, previously used by the accused infringer, did not infringe the patent-in-suit and was both available and acceptable to consumers. Id. On appeal, the patentee argued that the old hardware was not acceptable to customers because it lacked features corresponding to claim limitations that were supposed advantages of the patented product. Id. We rejected that argument because the evidence showed that the supposed advantages of the patented product were not at all important to consumers, thus indicating that the old hardware was an acceptable noninfringing substitute under the second Panduit factor. Medtronic's reliance on Ferguson fares no better. Ferguson dealt with lost profits under the entire market value rule, which permits a patentee to recover the entire value of an apparatus that contains both patented and unpatented components, so long as the patented component is the basis for customer demand. Ferguson Beauregard/Logic Controls, Div. of Dover Res., Inc. v. Mega Sys., LLC, 350 F.3d 1327, 1346 (Fed.Cir.2003) (vacating and remanding lost profits award for entire value of a device containing a first component embodying a first patent, found infringed, as well as a second component embodying a second patent, found not infringed, where profits could fairly be allocated to customer demand for second component); see Rite-Hite, 56 F.3d at 1549 ([T]he entire market value rule permits recovery of damages based on the value of a patentee's entire apparatus containing several features when the patent-related feature is the `basis for customer demand.') (quoting State Indus., Inc. v. MorFlo Indus., Inc., 883 F.2d 1573, 1580 (Fed.Cir.1989)). In the present case, Medtronic challenges the lost-profits award for SummitTM and MountaineerTM pedicle screws under the Panduit factors, not under the entire market value rule. Ferguson is also factually distinguishable. As previously noted, the polyaxial capability of the patented pedicle screwsthe capability that Medtronic admits drove sales of SummitTM and MountaineerTM pedicle screwsis itself an inherent feature of the patented screws, not a feature of some other, unpatented device that may also be used in the surgery. As we have held, the focus on particular features corresponding to individual claim limitations is unnecessary when considering whether demand exists for a patented product under the first Panduit factor. Rather, the elimination or substitution of particular features corresponding to one or more claim limitations goes to the availability of acceptable noninfringing substitutes under the second Panduit factor, to which we now turn.