Opinion ID: 286288
Heading Depth: 1
Heading Rank: 1

Heading: Damages for Patent Infringement

Text: 16 In our opinion holding appellee's patent valid and infringed by appellants, we directed an accounting to ascertain the 'damages sustained and profits lost   by reason of the fraudulent practices,' described in our opinion, 'up to the time of discontinuance of such practices   ' (269 F.2d at 277). The special master awarded appellee damages in the sum of $48,666.87 for patent infringement for the period June 24, 1952 (notice of infringement having been given on June 23) to August 17, 1954, the day that the valid patent expired. This award was affirmed by the district court. 17 Appellee produces a collar pressing machine which is used by shirt manufacturers. 'The two claims in suit covered a part of the machine known as the die assembly. It consists of an upper and lower die, a yoke (pressure applying means) pivotally mounted on a shaft, and a spring which stresses the upper die towards the lower die.' (Report of Special Master, Appendix to Appellant's Brief, p. 13a) The die assembly rests on a table or frame, which is unattached, and the die assembly may be removed from the table and replaced by another die made for a different collar design. The complete machine is used for pressing a quarter-collar and is referred to as 1/4 collar pressing machine and die assembly. Another machine presses halfcollars and is known as the 1/2 collar pressing machine. 18 Appellants manufactured two machines, the A-type 'which simulated (appellee's) machine in close detail,' and the B-type which was 'a sufficient enough departure from its Type-A machine    to warrant the issuance' of a patent (16a). 19 The tables or frames were not covered by appellee's patent. Some of the tables manufactured by defendants were sold separate from the die assemblies, although all sales were made to manufacturers who had previously purchased appellants' machines or die assemblies. 20 The award for damages made by the special master, and affirmed by the district court, represented appellee's lost profits on sales by appellants of both A-type and B-type machines, one-half and one-quarter collar die assemblies, and tables or frames sold without dies. Appellants contend that (a) their A-type tables sold independently of their die assemblies should have been excluded, (b) the apportionment rule should have been applied to their complete machines, (c) lost profits on the sale of one-half collar die assemblies and machines should have been limited to profits on the one-quarter die assembly, and (d) damages on sales of B-type machines should have been apportioned and limited to profits from the sale of one-quarter die assemblies. 21 Appellants sold tables as parts of complete A-type machines, as parts of complete B-type machines, and independently of die assemblies. The master and district court found that the unpatented table was 'useless' and 'unmarketable' without the patented die assembly. On this basis the entire market rule was applied in awarding damages for the sales of all tables. 22 In affirming the district court's application of the entire market rule in Electric Pipe Line, Inc. v. Fluid Systems, Inc., 2 Cir. 1957, 250 F.2d 697, 700, this court said: 'Further the patent here involved gave value to the components which otherwise would have been useless for the purposes involved and would not have been sold by Electric Pipe or anyone else. As Judge Anderson said (Electric Pipe Line, Inc. v. Fluid Systems) D.C. 146 F.Supp. 262, 263, 264: 'The facts and circumstances of this case come under the rule that where the entire marketable value of the thing sold is dependent on the patent, its entire value is included in computing infringement damages' (citing cases)'. 4 23 The factual situation supporting its conclusion that the entire market rule is applicable in this case was well summarized by the district court as follows: 24 'The situation,    is not one where defendants sold only tables. In certain cases, at a minimum, it clearly appears that defendants sold the unattached tables precisely to those who had previously purchased their machines or die assemblies. PX-23. Now, considering that defendants are plaintiff's sole competitor, 5 that die assemblies are easily removable from the tables, that manufacturers maintain 4 1/2 assemblies to each table and that manufacturers, therefore, have occasion to purchase tables independently of assemblies, it becomes apparent that defendants' infringing sales of machines and assemblies created the market for the sale of tables separate from assemblies. This situation is thus analogous to that where tables are sold as parts of complete machines. Defendants are accountable for these independent sales.' (Opinion, Appendix to Appellant's Brief, p. 53a) 25 We agree and hold that the entire market rule was properly applied. 26 Appellants question the allowance of lost profits for appellants' sale of B-type machines. While it is true that appellee itself did not make or sell the B-type machine, the special master and district court specifically found that appellants sold their B-type machines in infringement of appellee's patent. 6 On this point the district court said in part: 27 '   this position (of appeallants) disregards the facts that B-type machines were infringing because they performed a function identical to that performed by plaintiff's machines through the use of plaintiff's invention and that defendants were plaintiff's sole competitor. It follows that but for defendants' sale of B-type machines, purchasers would have bought from plaintiff in order to supply their need for collar shaping and pressing machines' (54a). 28 Nor do we find merit in appellants' contention that infringement damages should be limited to the sales of their 1/4 collar machines and die assemblies and should not be assessed against the sales of their 1/2 collar forming machines and die assemblies. It is true that the 1/2 collar die assembly, as later developed by appellee, included features held to be unpatentable, but these features were in addition to the novel double pivot feature arrangement characterized by this court as an 'ingenious contrivance' (269 F.2d at 263), 7 and which was used in the 1/2 collar die assembly as well as the 1/4 collar die assembly. 29 We hold that the damages for patent infringement were properly computed by the special master and district court.