Court Opinion

ID: 6935062
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:27:23.315377+00
Date Added: 2024-06-11T16:07:24.947668
License: Public Domain

NIES, Circuit Judge,
with whom ARCHER, Chief Judge, SMITH, Senior Circuit Judge, and MAYER, Circuit Judge join, dissenting-in-part.
I.
SUMMARY
The majority uses the provision in 35 U.S.C. § 284 for “damages” as a tool to expand the property rights granted by a patent. I dissent.
No one disputes that Rite-Hite is entitled to “full compensation for any damages suffered as a result of the infringement.” General Motors Corp. v. Devex Corp., 461 U.S. 648, 653-54, 103 S.Ct. 2058, 2062, 76 L.Ed.2d 211 (1983). “Damages,” however, is a word of art. “Damages in a legal sense means the compensation which the law will award for an injury done.” Recovery in Patent Infringement Suits: Hearings on H.R. 5231 [later H.R. 5311] Before the Committee on Patents, 79th Cong., 2nd Sess. 9 (1946) (statement of Conder C. Henry, Asst. Comm’r of Patents) (hereinafter “House Hearings”). Thus, the question is, ‘What are the injuries for which full compensation must be paid?”.
The majority divorces “actual damages” from injury to patent rights.1 The majority holds that a patentee is entitled to recover its lost profits caused by the infringer’s competition with the patentee’s business in ADL restraints, products not incorporating the invention of the patent in suit but assertedly protected by other unlitigated patents. Indeed, the majority states a broader rule for the award of lost profits on any goods of the patentee with which the infringing device competes, even products in the public domain.
I would hold that the diversion of ADL-100 sales is not an injury to patentee’s property rights granted by the ’847 patent. To constitute legal injury for which lost profits may be awarded, the infringer must interfere with the patentee’s property right to an exclusive market in goods embodying the invention of the patent in suit. The patentee’s property rights do not extend to its market in other goods unprotected by the litigated patent. Rite-Hite was compensated for the lost profits for 80 sales associated with the MDL-55, the only product it sells embodying the ’847 invention. That is the totality of any possible entitlement to lost profits. Under 35 U.S.C. § 284, therefore, Rite-Hite is entitled to “damages” calculated as a reasonable royalty on the remainder of Kelley’s infringing restraints.
I also disagree that the calculations of a reasonable royalty may be based on a percentage of Rite-Hite’s lost profits. Under 35 U.S.C. § 284, a reasonable royalty must be attributed to Kelley’s “use of the invention.” A royalty must be based on the value of the patented hook, not on other features in the infringing device, e.g., the motors, which form no part of the patented invention used by Kelley. Further, the trial court discounted or excluded significant evidence and otherwise improperly calculated a reasonable royalty rate.
*1557Accordingly, for the reasons more fully presented below, I dissent from the majority on these issues. I concur in the result of part All and join part AHI. I take no position on the cross-appeal regarding interest (part B) which is irrelevant to this dissent.
II.
LOST PROFITS
As a matter of legal analysis, the majority treats the issue of “damages” for a patentee’s lost trade in competitive goods not embodying the invention of the patent in suit as one of first impression. It is not. The following outline sets out the established law:
(1) Patent “damages” are limited to legal injury to property rights created by the patent, not merely causation in fact.
(2) Under precedent in 1946, a patentee was entitled to recover, either at law or in equity, only the profits attributable to the invention. A patentee’s property rights were limited to its exclusivity in the market for the patented goods in suit. “Damages” were awardable only for injury to that trade, and only to the extent of the contribution of the invention to profits. Apportionment of profits and the entire market value rule reflect these principles. Injury to the patentee’s trade in other competitive products was deemed an indirect loss and not compensable. “Foreseeability” was not the test for legal injury for patent infringement.
(3) In 1946, Congress eliminated the remedy of an equitable accounting for a defendant’s profits and reenacted the provision for “damages” in 1946 and 1952. Congress made no change in the prece-dential law of “damages” except for prejudgment interest.
(4) Since 1946, the Supreme Court has not overturned its precedent on “damages.” Under the entire market value rule applicable to lost profits awards, a paten-tee must prove the invention in suit created consumer demand for the patented and infringing products.
(5) The majority’s decision creates a conflict with the law of patent “damages” in all other circuits.
(6) The majority decision cannot be reconciled with other provisions of the patent statute or with public policies.
A. The Insufficiency of “But-For” as the Sole Test
As a preliminary matter, I wish to state my reasons for rejecting the arguments made by appellee Rite-Hite in support of the district court’s judgment. The district court held, and Rite-Hite argues on appeal, supported by the amici, that the only restriction on the award of “actual damages” for patent infringement is proof of causation in fact, that is, satisfaction of a “but-for” test.2 Under that test, it would follow that Rite-Hite is entitled to any profits it lost due to the infringer’s competition, whether it lost sales of restraints embodying the invention in suit, or those protected by other patents, or even products in the public domain, i.e., never patented or the subject of expired patents. The district court applied a “but-for” standard to award lost profits on dock levelers as well.
In support of the district court’s ruling, Rite-Hite relies on the statement in Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 84 S.Ct. 1526, 12 L.Ed.2d 457 (1964), that a patentee’s damages under the statute must be measured by “the difference between his pecuniary condition after the infringement, and what his condition would have been if the infringement had not occurred.” 377 U.S. at 507, 84 S.Ct. at 1543 (plurality opinion) (quoting Yale Lock Mfg. *1558Co. v. Sargent, 117 U.S. 536, 552, 6 S.Ct. 934, 942, 29 L.Ed. 954 (1886)). However, one of the most common sources of error occurs from quotations taken from opinions out of context. One might just as well try to play music merely by reading the lyrics. In Aro, the quoted statement was made in connection with limiting the amount of damages which could be recovered. As further explained respecting damages for contributory infringement:
[A]fter a patentee has collected from or on behalf of 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 to the same infringement.
Aro, 377 U.S. at 512, 84 S.Ct. at 1545. The quotation from Aro on which Rite-Hite relies simply precludes double recovery. Aro does not mandate that a “but-for” test is the only restriction on recovery of patent infringement damages. Nor does Aro endorse the expansive view of damages adopted by the majority. In rejecting the patentee’s damages theory, the opinion stated, “It would enable the patentee to derive a profit not merely on unpatented rather than patented goods — an achievement proscribed by the Motion Picture Patents [v. Universal Film Mfg. Co., 243 U.S. 502, 37 S.Ct. 416, 61 L.Ed. 871 (1917) ] and Mercoid [Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376 (1944) ] cases — but on unpatented and patented goods.” 377 U.S. at 510, 84 S.Ct. at 1544-45 (plurality) (emphasis in original).
Rite-Hite’s principal authority from this court for its “but-for” theory is Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 219 USPQ 670 (Fed.Cir.1983). The Lam rule, according to Rite-Hite, similarly requires only that the court answer the question: “Had the Infringer not infringed, what would Patent Holder ... have made?’ ” Lam, 718 F.2d at 1064, 219 USPQ at 677 (quoting Aro, 377 U.S. at 507, 84 S.Ct. at 1543). However, lost profits in Lam were awarded for interference with the patentee’s sales of lamps which were “the embodiment of the claimed invention.” Lam, 718 F.2d at 1059, 219 USPQ at 671. In Lam, indeed, in all of our previous decisions on “lost profits,” we were addressing the factual issue of whether the patentee was entitled to its lost profits by reason of the infringer’s diversion of the patentee’s sales of products embodying the invention of the infringed patent.3 The issue of recovery for losses related to the marketing of a patentee’s competitive product protected, if at all, under a different patent, was not involved.
Over centuries of judge-made law, the term “damages” has become a word of art in the common law carrying both factual and legal limitations. The legal limitations (frequently called “proximate cause,” an unfortunate expression because of its confusing similarity to a but-for test) must be determined as a matter of law by the judge. W. Page Keeton, et ah, Prosser and Keeton on the Law of Torts § 41 (5th ed. 1984). Causation in fact of an injury (i.e., the but-for test) is applied after the legal determination is made that the asserted injury is a type which is legally compensable for the wrong. The but-for determination is a factual matter for the jury (or the judge in a bench trial). Thus, the common law term “damages” does not encompass any and all economic injury that one may suffer in fact from a wrong. Also, contrary to the district court’s view, “proximate” or “legal” causation of patent damages is not merely a more closely scrutinized causation in fact test determined by “the quality of plaintiffs’ proof.” 774 F.Supp. at 1537, 21 USPQ2d at 1819. In connection with a tort *1559created by a federal statute, the public purpose of the statute and the likely intent of Congress are the overriding considerations respeeting the types of injuries for which damages may legally be awarded. Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 274, 112 S.Ct. 1311, 1321, 117 L.Ed.2d 532 (1992); Associated Gen. Contractors, Inc. v. California State Council of Carpenters, 459 U.S. 519, 538-40, 103 S.Ct. 897, 909-10, 74 L.Ed.2d 723 (1983); see also Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977) (“[Plaintiff under section 7 of the Clayton Act] must prove more than injury causally linked to an illegal presence in the market. Plaintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent.”) Courts must be careful to discern and not exceed the purpose which the legislature intended. Cf. Keeton, et al., supra, § 36.
The term “damages” in the patent statute must be interpreted in light of the familiar common law principles of legal or proximate cause associated generally with that term. In rejecting a “but-for” standard for determining “damages” in the Clayton Act,4 the Supreme Court observed:
[A] number of judge-made rules circumscribed the availability of damages recoveries in both tort and contract litigation— doctrines such as foreseeability and proximate cause, directness of injury, certainty of damages, and privity of contract. Although particular common-law limitations were not debated in Congress, the frequent references to common-law principles imply that Congress simply assumed that antitrust damages litigation would be subject to constraints comparable to well-accepted common-law rules applied in corn-parable litigation.
Associated Gen. Contractors, 459 U.S. at 532-33, 103 S.Ct. at 905-06 (citations omitted).
The Supreme Court has recently applied a similar analysis of the civil action damages provision of RICO.5 Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 264-71, 112 S.Ct. 1311, 1316-19, 117 L.Ed.2d 532 (1992). As stated in Holmes respecting the overriding necessity for “proximate cause” for an injury to be compensable under a statute awarding “damages”:
[A] showing [must be made] not only that the defendant’s violation [of RICO] was a ‘but for’ cause of [the plaintiffs] injury, but was the proximate cause as well. [As further explained] proximate cause [is used] to label generically the judicial tools used to limit a person’s responsibility for the consequences of that person’s own acts.
503 U.S. at 265-68, 112 S.Ct. at 1316-18 (emphasis added).6
Under this Supreme Court precedent, the law is clear that proximate cause is applied as a legal limitation on “damages” in connection with the statutory torts which the Court has considered. A “but-for” test tells us nothing about whether the injury is legally one which is compensable. As above stated, the lack of proximate causation will preclude recovery for certain losses even though a *1560“but-for” standard of injury in fact is satisfied. See also Blue Shield of Va. v. McCready, 457 U.S. 465, 476-77, 102 S.Ct. 2540, 2547-48, 73 L.Ed.2d 149 (1982) (Clayton Act); Davis v. Avco Fin. Servs., Inc., 739 F.2d 1057, 1067 (6th Cir.1984), cert. denied, 470 U.S. 1005, 105 S.Ct. 1359, 84 L.Ed.2d 381 (1985) (“but-for” test may not be equated with “proximate cause”); Keeton, et al., supra, at 42.
Rite-Hite and the majority treat lost profits as the legal injury. However, lost profits is a way to measure compensation for a legal injury. Lost profits is not itself the legal injury. No rational basis is suggested by Rite-Hite or the amici for applying a different interpretation to the statutory term “damages” in connection with the tort of patent infringement. No legislative history even hints that patentees are so favored that a special or more expansive meaning was intended for patent “damages.” A “but-for” test for “damages,” which would mandate that all types of economic injury to a paten-tee’s business traceable to the infringement are compensable, is as legally deficient a standard for patent infringement “damages” as for “damages” under the Clayton Act or RICO. Causation in fact is not the sole test for determining compensable “damages” under 35 U.S.C. § 284.
That said, however, merely brings us to the issue of what are the legal limits on “damages” for patent infringement.
As will be shown, precedent before 1946 unequivocally established that compensable lost profits were restricted to those the pat-entee would have made from commercializing the invention. Further, Congress reenacted the provision for “damages” with that understanding.
B. Statutory Provisions
The question raised in this appeal is one of statutory construction, but it is of constitutional dimension. Article I, section 8 of the Constitution provides for a patent system which will “promote the Progress ... of the useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their Discoveries.” Congress has provided in 35 U.S.C. § 284 (1988):
Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.
When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed.
The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.
What stimulus, what financial rewards did Congress intend by the term “damages” to effect the purpose of promoting progress in the useful Arts?
The majority concludes that Congress enacted expansive language in § 284, providing “only a lower limit and no other limitation.” Op. at 1544.7 The majority finds support for its interpretation in the statement in Devex Corp., 461 U.S. at 653-54, 103 S.Ct. at 2061-62, that Congress sought to “ensure that the patent owner would, in fact, receive full compensation for ‘any damages’ [the patentee] suffered as a result of infringement” (quotation marks in original). The majority also states that the Devex Court cautioned against imposing limitations on patent infringement damages that were not explicit. Id. at 653, 103 S.Ct. at 2061. While true, that “caution” was only part of the Court’s analysis. In Devex, the question was the interpretation of the provision for “interest” added in 1946, later codified in § 284, with respect to which the Court explained:
This is not a ease in which Congress has reenacted statutory language that the courts had interpreted in a particular way. *1561In such a situation, it may well be appropriate to infer that Congress intended to adopt the established judicial interpretation.

Id.

The provision for “damages” in § 284, unlike that for “interest,” was reenacted language. While the statutory remedies have been modified over the years in other ways, a patentee has been entitled to recover actual damages at law since the beginning of the nineteenth century. See Seymour v. McCormick, 57 U.S. (16 How.) 480, 488-89, 14 L.Ed. 1024 (1853), for a review of the 1836 Act and earlier statutory provisions. See also Irah H. Donner, BIC Leisure v. Windsurfing, 4 Fed.Circuit Bar J. 167 (1994).
Immediately prior to 1946, the patent statute provided for recovery of the “damages” the patentee sustained, a remedy at law, which could, in appropriate cases, be the amount of a patentee’s lost profits by diversion of its sales of patented goods, the amount of an established royalty or a reasonably royalty.8 In addition, a patentee was entitled to an equitable accounting for profits made by the infringer from the invention. To simplify proceedings, both remedies were made available by statute in an equity court where infringement suits were generally brought in order to obtain injunctive relief. Patent Act of 1870, ch. 230, 16 Stat. 206-7 (1870). The provision for “damages” and for an accounting for profits did not, however, allow double recovery. Common law “damages” were recovered to the extent the amount exceeded a defendant’s profits.9
“By the 1946 amendments, [citation omitted] the statute was changed to its present form, whereby only ‘damages’ are recoverable.” Aro Mfg. Co., 377 U.S. at 505, 84 S.Ct. at 1542. This was effected by eliminating an accounting for an infringer’s profits. A specific provision for “damages” measured as a reasonably royalty was added, as well as a provision for prejudgment interest. Act of Aug. 1, 1946, ch. 726, § 1, 60 Stat. 778 (codified as amended at 35 U.S.C. §§ 281, 283-286, 290 (1988)). The 1952 codification of the patent statute did not change the substance of allowable “damages.” Its stated purpose was merely “reorganization in language to clarify the statement of the statutes.” Aro, 377 U.S. at 505 n. 20, 84 S.Ct. at 1542 n. 20 (quoting H.R.Rep. No. 1923, 82d Cong., 2d Sess. at 10, 29 (1952)). Thus, again “damages” is reenacted language and it would be reasonable to infer that Congress intended to adopt the established judicial interpretation. Id.
One need not rely on mere inference respecting the meaning Congress intended for the term “damages.” As explained to Congress in hearings on the 1946 statute by officials of the Patent Office and other witnesses endorsing the bill, “Damages in a legal sense means the compensation which the law will award for an injury done.” House Hearings at 9 (Henry statement). Respecting the restriction of profits to those created by the invention, all agreed “those [are] the only profits to which the patentee is entitled.” Id. at 3 (Fish letter introduced by Hon. Robert K. Henry, Member of Congress). Those statements correctly reflect the pre-1946 meaning of “damages” in the patent statute.
C. Property Rights Granted by Patent
An examination of pre-1946 Supreme Court precedent discloses that the legal scope of actual damages for patent infringement was limited to the extent of the defendant’s interference with the patentee’s market in goods embodying the invention of the patent in suit. This limitation reflects the underlying public policy of the patent statute to promote commerce in new products for the public’s benefit. More importantly, it protects the only property rights of a paten-tee which are protectable, namely those granted by the patent. The patentee obtained as its property an exclusive market in the patented goods. “[I]nfringement was a tortious taking of a part of that property.” *1562Dowagiac Mfg. Co. v. Minnesota Moline Plow Co., 235 U.S. 641, 648, 35 S.Ct. 221, 224, 59 L.Ed. 398 (1915). In theory the infringer was a trustee of profits it made off the invention and/or was liable for lost profits the patentee would have made from its own sales of the patented goods.
In Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 430, 28 S.Ct. 748, 756, 52 L.Ed. 1122 (1908), the Supreme Court advised: “From the character of the right of the patentee we may judge of his remedies.” Until the Act of 1952, the right granted to a patentee was stated in terms of the exclusive right to make and use and vend the protected invention.10 This language tracks the English Statute of Monopolies (1624) under which the Crown did give a monopoly to an inventor to make and work certain new manufactures within the realm for a limited period.11 The term “invention” itself meant the establishment of a new trade or industry. Thus, under the Statute of Monopolies, an “inventor” was anyone who developed an industry previously unknown in England. The period of exclusivity was given for the inventor to reap his reward in the marketplace without competition while thereby training others to make and use his invention at the end of the patent term.12 Indeed, failure to exploit in England was a basis for cancellation of the grant.
In contrast, in the United States, the grant of a patent did not convey to the inventor a right to make, use and vend his invention despite the statutory language originally to that effect. In interpreting a patentee’s rights in Crown Die & Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24, 26, 43 S.Ct. 254, 255, 67 L.Ed. 516 (1923), the Supreme Court explained that an inventor has a natural right to make, use and sell his invention, and that a patent augments an inventor’s position by making that natural right exclusive for a limited time. The statutory language was interpreted to give a right to preclude others from interfering with the patentee’s exclusivity in providing the patented goods to the public. Id. at 34, 43 S.Ct. at 256.13
An inventor is entitled to a patent by meeting the statutory requirements respecting disclosure of the invention. Prior commercialization of the invention has never been a requirement in our law to obtain a patent. An inventor is merely required to teach others his invention in his patent application. Thus, when faced with the question of whether a patentee was entitled to enjoin an infringer despite the patentee’s failure to use its invention, the Supreme Court held for the patentee. Continental Paper Bag, 210 U.S. at 424-430, 28 S.Ct. at 753-754. Congress provided a right to exclusive use and to deny that privilege would destroy that right. Id. at 430, 28 S.Ct. at 756. An injunction preserves the patentee’s exclusive right to market embodiments of the patented invention.
These clearly established principles, however, do not lead to the conclusion that the patentee’s failure to commercialize plays no role in determining damages. That the quid pro quo for obtaining a patent is disclosure of the invention does not dictate the answer to the question of the legal scope of damages. The patent system was not designed merely to build up a library of information by disclosure, valuable though that is, but to get new products into the marketplace during the period of exclusivity so that the public receives full benefits from the grant. The Congress of the fledgling country did not act so quickly in enacting the Patent Act of 1790 merely to further intellectual pursuits. As explained in an early text, “The patent laws *1563promote the progress in different ways, prominent among which are [inter alia ] by protecting the investment of capital in the development and working of a new invention from ruinous competition till the investment becomes remunerative.” Simonds, Summary of the Law of Patents 9 (1883). Better or cheaper products in the marketplace which promote competition is the goal.
In Bement v. National Harrow Co., the Supreme Court recognized that the patent system was designed to stimulate the paten-tee to put new products into the market where the public would benefit from them:
“If [the patentee] see fit, he may reserve to himself the exclusive use of his invention or discovery. If he will neither use his device nor permit others to use it, he has but suppressed his own. That the grant is made upon the reasonable expectation that he will either put his invention to practical use or permit others to avail themselves of it upon reasonable terms, is doubtless true. This expectation is based alone upon the supposition that the paten-tee’s interest will induce him to use, or let others use, his invention. The public has retained no other security to enforce such expectations.”
186 U.S. 70, 90, 22 S.Ct. 747, 755, 46 L.Ed. 1058 (1902) (quoting Heaton-Peninsular Co. v. Eureka Specialty Co., 77 F. 288, 294, 47 U.S.App. 146, 160 (6th Cir.1896)) (emphasis added). Other statements of the Court are of like import. In Woodbridge v. United States, 263 U.S. 50, 55-56, 44 S.Ct. 45, 47, 68 L.Ed. 159 (1923), the Court opined: “Congress relies for the public benefit to be derived from the invention during the monopoly [i.e., the term of a patentee’s exclusive market] on the natural motive for gain in the patentee to exploit his invention and to make, use and vend it or its products or to permit others to do so, for profit.” The grant of a period in which a patentee has exclusivity in commercialization of its patented product without competition from infringing products of others is provided in order to attract the necessary capital to start up a new business. Exclusivity in commercialization enables a patentee to recoup its investment in research, production, and marketing a new product. The merits of the invention will determine the patentee’s just reward from the public.
Thus, a patentee may withhold from the public the benefit of use of its invention during the patent term, and the public has no way to withdraw the grant for nonuse. Like the owner of a farm, a patentee may let his property lay fallow. In doing so, “he has but suppressed his own.” Bement, 186 U.S. at 90, 22 S.Ct. at 755. But it is anomalous to hold that Congress, by providing an incentive for the patentee to enter the market, intended the patentee to be rewarded the same for letting his property lay fallow during the term of the patent as for making the investment necessary to commercializing a new product or licensing others to do so, in order that the public benefits from the invention. The status quo may serve the patentee’s interest, but that is not the only consideration. The patent grant “was never designed for [an inventor’s] exclusive profit or advantage.” Kendall v. Winsor, 62 U.S. (21 How.) 322, 328, 16 L.Ed. 165 (1858).
D. Injury to a Patentee’s Market in Unprotected Goods is not a Patent Infringement Injury
The question of recovery of lost profits to compensate a patentee for injury to its business in competitive products not protected by the patent in suit (hereinafter “unprotected goods”) is not a new theory of damages. Over a hundred years ago, the Supreme Court expressed its view that damages in the form of lost profits must be based upon injury to the patentee’s trade in products embodying the patented invention. As stated in Crosby Steam Gage & Valve Co. v. Consolidated Safety Valve Co., 141 U.S. 441, 452-53, 12 S.Ct. 49, 53, 35 L.Ed. 809 (1891) (emphasis added):
If there had been an award of damages, and the loss of trade by the plaintiff, in consequence of the competition by the defendant, had been an element entering into those damages, it would have been a material fact to be shorn by the plaintiff that it was putting on the market goods embodying the [patented] invention.
*1564Faced with that statement by the Supreme Court, few patentees have had the temerity to seek damages for loss of trade in competitive unprotected devices and none have been successful in any other circuit.
Since Seymour v. McCormick, 57 U.S. (16 How.) 480, 487, 14 L.Ed. 1024 (1853), it had been an accepted tenet that actual “damages” depended on the infringer’s interference with the patentee’s commercial use of its invention either by exploiting the monopoly himself (that is, satisfying demand with his own patented goods) or by licensing the patent. Yale Lock Mfg. Co. v. Sargent, another frequently cited damages ease, rests on the tenet that the infringement interfered with the patentee’s marketing of the patented goods:
As the plaintiff, at the time of the infringement, availed himself of his exclusive right by keeping his patent a monopoly, and granting no licenses, the difference between his pecuniary condition after the infringement, and what his condition would have been if the infringement had not occurred, is to be measured, so far as his own sales of locks are concerned, by the difference between the money he would have realized from such sales if the infringement had not interfered with such monopoly, and the money he did realize from such sales.
117 U.S. at 552-53, 6 S.Ct. at 942-43 (emphasis added). Absent a patentee’s use of its invention or proof of an established license fee, infringement of a patent resulted in nominal damages. Rude v. Westcott, 130 U.S. 152, 165-67, 9 S.Ct. 463, 468-69, 32 L.Ed. 888 (1889); 3 William C. Robinson, The Law of Patents § 1052 (1890). See 1 T. Sedwick, Measure of Damages 80 (1880) (general principle of nominal damages applied to patent infringement).
Commercialization of a patented invention can be accomplished by the patentee either (1) itself making, using or selling an embodiment of the invention or (2) licensing others to do so. Seymour, 57 U.S. (16 How.) at 489-90. Calculation of actual “damages” depended upon which of those two modes the patentee chose to secure the financial benefits from its invention. See McCormick v. Seymour, 15 F.Cas. 1329, 1335 (No. 8727) (C.C.N.D.N.Y.1854) (on remand). “Hence the first point on which proof should be offered in reference to actual damages is the use made of his patent privilege by the plaintiff; the second is the effect produced upon the value of such use by the wrongful acts of the defendant.” 3 Robinson § 1054 at 324. Evidence was not admissible of losses over the amount the patentee would have cleared by working or licensing the invention. Id. § 1061 at 339. Carter v. Baker, 5 F.Cas. 195, 201-02 (No. 2,472) (C.C.D.Cal.1871). As stated in 3 Robinson § 898 at 56, respecting damage awards:
The interest of the patentee is represented by the emoluments which he does or might receive from the practice of the invention by himself or others. Hence acts of infringement must attack the right of the patentee to those emoluments.
An attempt to recover actual damages for lost sales of a competitive unprotected product was made in Metallic Rubber Tire Co. v. Hartford Rubber Works Co., 275 F. 315, 323-24 (2d Cir.), cert. denied, 257 U.S. 650, 42 S.Ct. 57, 66 L.Ed. 416 (1921). The Second Circuit held there could be no award of lost profits where the patentee, a maker of competitive tires, never manufactured and sold a tire containing the invention of the patent in suit. Similarly, in Carter, 5 F.Cas. at 201-02, the court instructed the jury that a paten-tee’s loss by reason of its inability to sell plows other than those embodying the patent infringed were “[rjemote consequential damages” and not recoverable. As further explained in Carter, 5 F.Cas. at 202, the award of lost profits must be the “direct and legitimate fruits of that patent. They may have sustained damages from [loss of sales of a competing unprotected device], but they are too remote.” In Standard Mailing Machines Co. v. Postage Meter Co., 31 F.2d 459 (D.Mass.1929), the court limited the patentee to a reasonable royalty award because the patentee, although marketing a competitive product, was not “in the market during the infringing period, prepared to sell machines embodying the patented invention.” Id. at 462. In McComb v. Brodie, 15 F.Cas. 1290, 1295 (No. 8,708) (C.C.D.La.1872), the court *1565instructed the jury to award lost profits only if the patentee was ready to supply the market with patented goods and the infringer diverted those sales. See also Goodyear v. Bishop, 10 F.Cas. 642 (No. 5,559) (C.C.S.D.N.Y.1861) (jury charge); Buerk v. Imhaeuser, 4 F.Cas. 594, 595 (No. 2,107) (C.C.S.D.N.Y.1876) (equity court); Spaulding v. Page, 22 F.Cas. 892, 895 (No. 13,219) (C.C.D.Cal.1871).
Additionally, the commentary over the years supports this position. The current statement in 8 Ernest Bainbridge Lipscomb, Walker on Patents § 27:22 (1989) has been essentially unchanged since at least the 1940’s, before the present statute was enacted:
Indirect consequential damage cannot be recovered in a patent infringement action. [Footnote omitted. See, e.g., Velo-Bind, Inc. v. Minnesota Mining & Mfg. Co., 647 F.2d 965, 973, 211 USPQ 926, 934 (9th Cir.1981).] The instances in which such damages have been claimed are few, but it is advisable to mention such injuries as might probably be held to fall within such a category.
Pecuniary injury may result to a paten-tee from a particular infringement, in that it caused him to suffer competition and consequent loss in business outside of the patent infringed; or in that it so unexpectedly reduced the business in the patented article as to make it necessary for him to sell unpatented property at less than its real value, or to borrow money at more than a proper rate of interest in order to meet his pecuniary engagements; or in that it encouraged other persons to infringe from whom, by reason of insolvency or other obstacle, no recovery can be obtained; or in that such infringement caused the patentee so much trouble and anxiety that he incurred loss from inability to attend to other business. But pecuniary injury of any of these kinds would be such an indirect consequential matter as not to furnish any part of a proper basis for recoverable damages in an infringement suit. [Emphasis added.]
There is no dispute that parts of a paten-tee’s business not directed to commercializing the patented invention may indirectly benefit from the patentee’s ownership of that patent. An extant patent of which a paten-tee makes little or no commercial use may serve to impede competition in the field so that a patentee is able to maintain its market position for the patentee’s already established line of unprotected goods. However, where infringement of the patent interferes with that indirect benefit from the patent, the injury has heretofore been held to be an indirect consequential loss and not recoverable.
E. Precedent Respecting the Apportionment of Profits and the Entire Market Value Rule
The limitation of a patentee’s monetary recovery to profits created by the invention is also reflected in the extensive pre-1946 caselaw on apportionment of profits and the correlative entire market value rule. While patentees who commercialized the invention of the patent in suit might recover some amount of profits, the entire amount of profits would not be awarded where the invention was not of an entirely new device but amounted only to an improvement, unless the invention was the basis for demand for the entire device. Similarly, in equity a patentee was limited to an accounting for the defendants’ profits attributable to the invention. See Dobson v. Dornan, 118 U.S. 10, 6 S.Ct. 946, 30 L.Ed. 63 (1886) (involving both paten-tee’s lost profits and accounting for defendant’s profits; apportionment required); Dobson v. Hartford Carpet Co., 114 U.S. 439, 444-46, 5 S.Ct. 945, 947-49, 29 L.Ed. 177 (1885) (involving apportionment of the paten-tee’s lost profits; patentee must show “that the profits and damages are to be calculated on the whole machine for the reason that the entire value of the whole machine, as a marketable article, is properly and legally attributable to the patented feature- [T]o attribute, in law, the entire profit to the [invention] to the exclusion of the other merits, unless it is shown, by evidence, as a fact, that the profit ought to be so attributed, not only violates the statutory rules of ‘actual damages’ and of ‘profits to be accounted for,’ but confounds all distinctions between cause and *1566effect.”); Garretson v. Clark, 111 U.S. 120, 4 S.Ct. 291, 28 L.Ed. 371 (1884) (Patentee must apportion profits between patented and un-patented features or prove “damages are to be calculated on the whole machine for the reason that the entire value of the whole machine, as a marketable article, is properly and legally attributable to the patented feature.”); Seymour, 57 U.S. (16 How.) at 490 (same damage rule does not apply whether invention covers an entire machine or an improvement); Keystone Mfg. Co. v. Adams, 151 U.S. 139, 147-48, 14 S.Ct. 295, 298-99, 38 L.Ed. 103 (1894) (serious difficulties arise in determining measure of damages where “patented invention is but one feature in a machine embracing other devices that contribute to the profits made by the defendant”). The Supreme Court has long rejected the view that damages are recoupable for the profit attributable to other patents embodied in a competitive device of the paten-tee. Blake v. Robertson, 94 U.S. 728, 733, 734, 24 L.Ed. 245 (1877). Cf. Yale Lock Co., 117 U.S. at 553, 6 S.Ct. at 943 (patentee’s price-erosion award reduced where third party’s patented invention incorporated into infringing device).
Apportionment of profits so as to reflect the “fruits” of the patent was the problem that prompted the 1946 amendments of the statute. The legislative history repeatedly indicates that apportionment required protracted expensive litigation for both parties and, because it was virtually impossible to apportion profits with any exactitude, frequently produced unfair results. Yet the profits due to the invention are the only profits to which the patentee was entitled unless the patentee could prove that the entirety of the profits were due to the invention under the entire market value rule. Westinghouse Elec. & Mfg. Co. v. Wagner Elec. & Mfg. Co., 225 U.S. 604, 615, 32 S.Ct. 691, 694-95, 56 L.Ed. 1222 (1912). In Westinghouse, the Supreme Court went on to hold that if the patentee did all it could to attempt to apportion the defendant’s profits, the burden on apportionment shifted to the defendant in equitable accountings. Congress was told that, under the Westinghouse doctrine, the patentee “gets in very many cases enormously more than that to which he is really entitled.” The elimination of equitable ac-countings, the most commonly used remedy, was urged for that reason. House Hearings at 3 (Fish letter). Congress was persuaded and deleted the remedy of equitable account-ings for the defendant’s profits from the statute. Aro, 377 U.S. at 505, 84 S.Ct. at 1542.
Respecting “damages” at law, in Dowagiac Mfg. Co., supra, the Supreme Court endorsed the theory of a hypothetical reasonable royalty as “damages” where the paten-tee could not prove actual damages. This relief had been developed in several lower courts because of the unfairness to the paten-tee who, despite infringement, received only nominal damages. 235 U.S. at 648-50, 35 S.Ct. at 224-25. Where actual damages in the form of recoupment of a patentee’s “lost profits” or the amount of an established royalty could not be proved, the Dowagiac Court held that the patentee “was entitled to prove what would have been a reasonable royalty.” Dowagiac, 235 U.S. at 650, 35 S.Ct. at 224. Thus, to receive more than nominal damages, proof of actual losses was no longer required. Congress gave its specific approval to a reasonable royalty as statutory “damages” by enactment of the provision, “general damages ... not less than a reasonable royalty.”14
The 1946 amendments provide no basis for the majority’s expansive view that Congress intended a patentee to recoup all losses from infringement with “only a lower limit and no other limitation.” Op. at 1544. Indeed, Congress eliminated equitable accounting which, under Westinghouse, had favored patentees. Monetary relief was expanded to provide for the recovery of prejudgment interest. Respecting other forms of “damages,” Congress left the law intact. Faulkner v. Gibbs, 199 F.2d 635, 638 (9th Cir.1952). A patentee remained entitled to recover its own lost profits only to the extent that they were directly created by the invention of the pat*1567ent in suit and, thus, were the fruit of the invention. The scope of legal injury, that is, a patentee’s property right to an exclusive market in patented goods, was not enlarged.
F. Post-19%6 Precedent
The previously discussed decisions in Aro, which limited damages, and General Motors, which dealt with prejudgment interest, provide the only direct guidance from the Supreme Court on “damages” under the current statute. Neither overturns the established precedent that a patentee is entitled to its own lost profits only for diversion of sales which the patentee would have made from its goods using the invention of the litigated patent. Nor do they overturn the entire market value rule that the entirety of a patentee’s lost profits may be recovered as “damages” only where the patentee proves that use of the invention in suit in the paten-tee’s and infringer’s goods creates consumer demand for the entire product.
Between 1946 and 1982, every other circuit which addressed the issue adhered to the basic tenet that a patent protects a paten-tee’s market for its own goods embodying the invention and no other market. Moreover, lost profits on an entire product were recoverable only where the patented invention created the demand for that product. The following eases are illustrative:
Second Circuit:
Electric Pipe Line, Inc. v. Fluid Systems, Inc., 250 F.2d 697, 699, 116 USPQ 25, 27 (2nd Cir.1957) (Lost profits appropriate since patentee and infringer “were the only suppliers of this unique patented fuel storage and transportation system ... [and] but for [defendant’s] infringement, [paten-tee] would have made all these installations.”).
Third Circuit:
American Securit Co. v. Shatterproof Glass Corp., 268 F.2d 769, 777, 122 USPQ 167, 174 (3d Cir.), cert. denied, 361 U.S. 902, 80 S.Ct. 210, 4 L.Ed.2d 157 (1959) (“Each patent gives its owner a monopoly in respect to its disclosures, so much and no more. It is a grant of the exclusive right to manufacture, use and sell the invention which is disclosed. That invention is what the patent grant protects by the monopoly, not that invention plus some embellishment, improvement, or alternate product or process, which also happens to be patented.”);
Devex Corp. v. General Motors Corp., 667 F.2d 347, 361, 212 USPQ 643, 655 (3d Cir.1981) aff'd 461 U.S. 648, 103 S.Ct. 2058, 76 L.Ed.2d 211 (1983) (<cWhere a plaintiff itself uses the patented process in manufacturing, damages for infringement may take the form of lost profits, and the burden is on the plaintiff to show their amount. Where, as here, the party alleging infringement does not itself manufacture or use the patented process, compensation may take the form of a reasonable royalty for licensing the use of the patent.”) (Citations omitted.) (The majority cites Supreme Court decision as support for a more expansive view.)
Fourth Circuit:
Marvel Specialty Co. v. Bell Hosiery Mills, Inc., 386 F.2d 287, 155 USPQ 545 (4th Cir.1967) cert. denied 390 U.S. 1030, 88 S.Ct. 1409, 20 L.Ed.2d 286 (1968) (Pat-entee manufacturer could recover only established royalty for patented goods, not other established royalty for patented goods plus improvements not covered by patent).
Fifth Circuit:
Baumstimler v. Rankin, 677 F.2d 1061, 1072, 215 USPQ 575, 584 (5th Cir.1982) (“Since [patentee] did not manufacture, sell or use the patented invention ... [paten-tee] technically had no lost profits”);
Livesay Window Co. v. Livesay Indus., Inc., 251 F.2d 469, 470, 116 USPQ 167, 168-89 (5th Cir.1958) (Lost profits determined based on sales of patented invention by exclusive licensee).
Sixth Circuit:
Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156, 197 USPQ 726, 730 (6th Cir.1978) (Patentee manufacturer must prove lost profits by showing: “1) demand for the patented product, 2) absence of acceptable nonin-fringing substitutes, 3) his manufacturing *1568and marketing capability to exploit the demand [for the patented product], and 4) the amount of profits he would have made.”)-15
Seventh Circuit:
Union Carbide Corp. v. Graver Tank & Mfg. Co., 282 F.2d 653, 665-68, 127 USPQ 3, 12-14 (7th Cir.1960), cert. denied, 365 U.S. 812, 81 S.Ct. 692, 5 L.Ed.2d 691 (1961) (Upholding special master’s conclusion of law which stated “Plaintiff ... has failed to prove ... [t]he amount of its damage from loss of profits it would have made on such additional sales of the patented composition”).
See also In re Universal Research Lab., Inc. 203 USPQ 984, 989, 1978 WL 21369 (N.D.Ill.1978).
Ninth Circuit:
Velo-Bind, Inc. v. Minnesota Mining & Mfg. Co., 647 F.2d 965, 973, 211 USPQ 926, 933-94 (9th Cir.), cert. denied, 454 U.S. 1093, 102 S.Ct. 658, 70 L.Ed.2d 631 (1981) (patentee manufacturer of invention denied lost profits on unpatented supplies: “where the patent creates only part of the profits, damages are limited to that part of the profits, which must be apportioned as between those created by the patent and those not so created, [citation omitted] The damages sustained by [patentee] are easily apportioned between patented and unpatented lost sales.”);
Faulkner v. Gibbs, 199 F.2d 635, 638 n. 7, 95 USPQ 400, 402 n. 7 (9th Cir.1952) (“Where, however, the patentee has himself engaged in the manufacture, use or sale of his patented article, he may be awarded damages for his loss of profits resulting from the infringement.”).16
Until this decision, the precedent of this court was consistent with other circuits. Lost profits have not been awarded except where the patentee lost sales of products in which the patentee used the claimed invention found to be infringed. See Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 549-51, 16 USPQ2d 1587, 1591-92 (Fed.Cir.1990); Kalman v. Berlyn Corp., 914 F.2d 1473, 1475-76, 16 USPQ2d 1093, 1094 (Fed.Cir.1990); State Indus., 883 F.2d at 1580, 12 USPQ2d at 1031; Ryco, Inc. v. Ag-Bag Corp., 857 F.2d 1418, 1422, 8 USPQ2d 1323, 1326 (Fed.Cir.1988); Hartness Int’l, Inc. v. Simplimatic Eng’g Co., 819 F.2d 1100, 1106, 2 USPQ2d 1826, 1829 (Fed.Cir.1987); Otari, 767 F.2d at 853, 226 USPQ at 402; Gyromat Corp. v. Champion Spark Plug Co., 735 F.2d 549, 554, 222 USPQ 4, 8 (Fed.Cir.1984); Lam, Inc., 718 F.2d 1056, 219 USPQ 670. Indeed, we have specifically endorsed the requirement of commercial use by the patentee of the invention in suit for an award of lost profits. In Trell v. Marlee Electronics Corp., 912 F.2d 1443, 1445, 16 USPQ2d 1059, 1061 (Fed.Cir.1990), this court stated, “[b]eeause Trell did not sell its invention in the United States, he could not seek damages on the basis of lost profits.” To the same effect is the statement in Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co., 895 F.2d 1403, 1406 n. 2, 13 USPQ2d 1871, 1874 n. 2 (Fed.Cir.1990) (emphasis added):
Because Lindemann did not compete in the sale of its invention in the United States, it did not, as it could not, seek damages on the basis of lost profits.
*1569Similarly, the need for the patentee to compete with a product using the patented invention to obtain lost profits underlies the statement in Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1322, 13 USPQ2d 1696, 1698 (Fed.Cir.1990), “[w]here the pat-entee produces or sells a product (or service) covered by the patent claims, the patentee may seek to recover damages based on a theory of lost profits ...”; and in Del Mar Avionics, 836 F.2d at 1326, 5 USPQ2d at 1260, “[t]he general rule of determining the actual damages to a patentee that is itself 'producing the patented item is to determine the sales and profits lost to the patentee because of the infringement” (emphasis added).
Moreover, under our precedent, lost profit awards have been dependent, inter alia, on proof that consumer demand for the paten-tee’s goods is created by the advantages of the patented invention. Slimfold Mfg. Co. v. Kinkead Indus., Inc., 932 F.2d 1453, 1458, 18 USPQ2d 1842, 1845 (Fed.Cir.1991) (“[Paten-tee] failed to show that buyers of bi-fold metal doors specifically want a door having the advantages of the Ford patent”). See also State Indus., 883 F.2d at 1576-80, 12 USPQ2d at 1028-31 (consumer demand went to patented method); Ryco, 857 F.2d at 1427-28, 8 USPQ2d at 1330-31 (patentee owner can meet demand for products covered by patent); Gyromat, 735 F.2d at 552, 222 USPQ at 6 (same).
The patentee’s willingness and ability to supply the patented invention during the period of infringement is the thread that runs through all precedent of this court respecting “lost profits” awards. See Kori Corp. v. Wilco Marsh Buggies & Draglines, Inc., 761 F.2d 649, 653, 225 USPQ 985, 987 (Fed.Cir.), cert. denied, 474 U.S. 902, 106 S.Ct. 230, 88 L.Ed.2d 229 (1985) (Patentee “is entitled to be compensated [for its lost profits] on the basis of its ability to exploit the patent”) (emphasis added). While the majority does not specifically overturn any of our precedent, the basic premises expressed therein are eviscerated.17
G. “Foreseeability” is not the Test for Patent Damages
The majority agrees that the types of com-pensable injury for patent infringement are not unlimited. The majority draws the line against recovery for an inventor’s heart attack or for the decrease in the value of stock of a corporate patentee. Its opinion holds:
We believe that under § 284 of the patent statute, the balance between full compensation, which is the meaning that the Supreme Court [in General Motors ] has attributed to the statute, and the reasonable limits of liability encompassed by general principles of law can best be viewed in terms of reasonable, objective foreseeability. If a particular injury was or should have been reasonably foreseeable by an infringing competitor in the relevant market, broadly defined, that injury is generally compensable.... Being responsible for lost sales of a competitive product is surely foreseeable; such losses constitute the full compensation set forth by Congress, as interpreted by the Supreme Court, while staying well within the traditional meaning of proximate cause.
Op. at 1546 (emphasis added).
In the majority’s view, the consideration of patent rights ends upon a finding of infringement. The separate question of damages under its test does not depend on patent rights but only on foreseeable competitive injury.18 This position cannot be squared with the premise that compensation is due only for injury to patent rights. Thus, the majority’s foreseeability standard contains a false premise, namely, that the “relevant *1570market” can be “broadly defined” to include all competitive track restraints made by the patentee. The relevant market for determining damages is confined to the market for the invention in which the patentee holds exclusive property rights. Livesay Window, 251 F.2d at 474 (cited with approval in Devex) (“The market under scrutiny then is confined to those products only which are patented or infringed.”). To paraphrase Brunswick Corp, 429 U.S. at 489, 97 S.Ct. at 697, “[Plaintiffs] must prove more than injury causally linked to any illegal presence in the market [i.e., the infringing goods]. Plaintiffs must prove [patent infringement] injury, which is to say injury of the type the [patent] laws were intended to prevent.” The injury, thus, must be to the protected market in goods made in accordance with the patent, not unprotected track restraints. In sum, patent rights determine not only infringement but also damages.
The majority does not give a passing nod to long-standing precedent restricting a pat-entee’s legal injury to diversion of sales it would have made of products containing the patented invention, much less does it explain why the precedent should be abandoned. It simply declares ipse dixit: “Whether a pat-entee sells its patented invention is not crucial in determining lost profits damages.” Op. at 1548. While proximate cause limitations are acknowledged, the majority sees no problem here because the infringing devices were designed to compete with the ADL-100 devices and the “clear purpose of the patent law [is] to redress competitive damages resulting from infringement of the patent.” Op. at 1551. This reasoning awards patent infringement damages as if for a kind of unfair competition with the patentee’s business. However, infringement of a patent is not a species of common law unfair competition; it is a distinct and independent federal statutory claim. Mars Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1373 (Fed.Cir.1994). Moreover, the clear purpose of the patent system is to stimulate a paten-tee to put new products into the marketplace during the patent term, not to compensate the patentee “fully” while the public benefit from the invention is delayed until the invention falls into the public domain. Compensation in the form of lost profits for injury to the exclusive market in patented goods has provided the incentive to achieve that objective.
Reiterating that objective, the Supreme Court stated in Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480, 94 S.Ct. 1879, 1885-86, 40 L.Ed.2d 315 (1974):
The productive effort thereby fostered [by the patent laws] will have a positive effect on society through the introduction of new products and processes of manufacturer into the economy, and the emanations by way of increased employment and better lives for our citizens.
Ignoring this objective, this decision expands the property rights afforded by a patent by broadening a patentee’s protected market and, as a consequence, provides a disincentive to a patentee’s commerce in the patented products.
Nothing in the statute supports the majority’s “foreseeability” rule as the sole basis for patent damages. To the contrary, no-fault liability is imposed on “innocent” infringers, those who have no knowledge of the existence of a patent until suit is filed. Damages are recoverable for up to six years of unknowing infringement before suit. 35 U.S.C. § 286 (1988). “Foreseeability” is a wholly anomalous concept to interject as the basis for determining legal injury for patent infringement. While unknowing infringers cannot “foresee” any injury to the patentee, they are subject to liability for damages, including lost profits, for competition with the patentee’s patented goods. Now they will be liable for diverting sales of the paten-tee’s unprotected competitive products as well.
The “foreseeability” standard also cannot be reconciled with the statutory requirement for a patentee to mark its patented goods with the patent number to prevent innocent infringement.19 The patent by itself does not *1571give notice that the patentee’s goods are protected. Wine Ry. Appliance v. Enterprise Ry. Equip., 297 U.S. 387, 393, 56 S.Ct. 528, 529, 80 L.Ed. 736 (1936). Failure to provide such notice cuts off a patentee’s recovery of damages until actual notice of infringement is given even from deliberate in-fringers who clearly can “foresee” legal injury. As stated in Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 162, 109 S.Ct. 971, 983, 103 L.Ed.2d 118 (1989) (alterations in original):
The availability of damages in an infringement action is made contingent upon affixing a notice of patent to the protected article. 35 U.S.C. § 287. The notice requirement is designed “for the information of the public,” Wine Railway Appliance Co. v. Enterprise Railway Equipment Co., 297 U.S. 387, 397 [56 S.Ct. 528, 531, 80 L.Ed. 736] (1936), and provides a ready means of discerning the status of the intellectual property embodied in an article of manufacture or design. The public may rely upon the lack of notice in exploiting shapes and designs accessible to all. See Devices for Medicine, Inc. v. Boehl, 822 F.2d 1062, 1066 (CA Fed.1987) (“Having sold the product unmarked, [the patentee] could hardly maintain entitlement to damages for its use by a purchaser uninformed that such use would violate [the] patent”).
Rite-Hite could not mark its ADL-100 restraints with notice of the ’847 patent. Such “notice” would constitute false marking under 35 U.S.C. § 292 (1988). To hold that a patentee may recover damages respecting injury to its business in products that do not embody the invention which are unmarked or marked with a different patent number would treat a patentee that does not practice its invention more favorably than a patentee that does. The marking statute generates absurd results when applied to damages tied to products not made under the patent in suit.
The majority simply has the rule backwards. Heretofore, the first requirement to establish a patentee’s entitlement to actual damages in the form of lost profits has been proof that the patentee exercised its market place monopoly for its patented invention. Evidence of a patentee’s business losses not due to an infringer’s interference with the patentee’s marketing of the invention was immaterial in assessing damages. The patent affords no property rights which can be injured outside the market in goods protected by the asserted patent.
The majority goes on to find the award of damages for lost sales of ADL-100s a foreseeable injury for infringement of the ’847 patent. This is a remarkable finding. The facts are that Rite-Hite began marketing its ADL-100 motorized restraint in 1980. Kelley put out its Truk Stop restraint in June 1982. There is no dispute in this case20 that Kelley “designed around” the protection afforded by any patent related to the ADL-100 with which Kelley’s Truk Stop restraint was intended to compete. Two years later, the ’847 patent in suit issued on the later-developed alternative hook technology used in the MDL-55. Kelley would have to have had prescient vision to foresee that it would be held an infringer of the unknown claims of the subsequently issued ’847 patent and that its lawful competition with the ADL-100 would be transformed into a compensable injury.
Kelley would also have had to foresee that, for the first time in over 200 years of patent infringement suits, a court would extend protection to a part of a patentee’s business which is not dependent on the patentee’s use of the patented technology. Moreover, the Supreme Court and all sister circuits which have spoken on the legal scope of damages *1572have, without exception, rejected the majority’s expansive view that the only limitations on patent infringement damages are (1) satisfaction of a “but-for” test applied to “foreseeable” injuries, and (2) the amount must not be too low.
Under the entire market value rule, if Rite-Hite used the later improvement of the ’847 patent in the ADL-100 restraint, it would have been required to prove that demand for those restraints was created by that invention to receive lost profits on the entire device. The majority recognizes the entire market value rule, citing State Indus., 883 F.2d at 1580, 12 USPQ2d at 1031 (recovery of damages based on the value of the entire apparatus containing several features allowed where patented feature is basis for customer demand), but sees no inconsistency in not applying it here. This reasoning is difficult to follow. The majority agrees that if a patented improvement is used in a device of the patentee with which the infringer competes, to recover lost profits on the entire device, the patentee must prove that the patented feature is the basis for consumer demand for the entire product; but if the patentee substitutes other unprotected technology for the patented improvement, then the patentee is entitled to all of its lost profits. Surely this negates the stimulus for a patentee to put out products with the improvement.
The basic flaw in the majority’s ruling is its rejection of the premise that recovery must be tied to profits from the invention itself. Here the patentee would have made no profits from the patented invention by additional sales of the unprotected ADL-100. There is no reason for the entire market value analysis if a patentee is entitled to compensation for “competitive damages” to its business generally. The ’847 patent discloses and claims particular hook technology for a truck restraint. No part of the invention relates to motors. Indeed, the specification states that an advantage of the invention is that it requires no motor. No doubt the motorized features of the ADL-100 and the Truk-Stop which added to their price, by the same token, contributed to their profitability and salability as well. But because Rite-Hite did not use the ’847 invention in the ADL-100 restraint, it escaped having to prove consumer demand for the motorized restraint was attributable to the ’847 invention of an improved hook. It simply was awarded lost profits based on unpatented features and features protected by other patents. None of the lost profits on the ADL-100s are the fruit of the ’847 invention. It cannot be the law that they are recoverable.
If damages are awardable based on lost sales of a patentee’s business in established products not protected by the patent in suit, the patentee not only has an easier case as a matter of proof, but also would receive greater benefits in the form of lost profits on its established products than if the patentee had made the investment necessary to launch a new product. That lost profits on an established line are likely to be greater than on a new device cannot be gainsaid. See Continental Paper Bag, 210 U.S. at 429, 28 S.Ct. at 755-56. This result is not in accordance with the purpose of the patent statute. Actual damages are meant to compensate a patentee for losing the reward of the marketplace which the patentee’s use of the invention would otherwise reap. Without such loss, Congress has mandated compensation in the form of a reasonable royalty.
The old rule stimulated a patentee’s commerce in patented goods. The new rule makes it more profitable to the patentee to protect the status quo. The status quo is not “progress in the arts.” Article I, sec. 8. I conclude the majority’s rule is a wrong interpretation of the statute, indeed, may exceed the constitutional power to provide inventors with the exclusive right to their discoveries.
H. The ADL-100 Patents
Not only is the majority’s basic idea of legal injury unsound based on “foreseeability” but also its specific test is equally flawed. For convenience, I have referred to the ADL-100 as “unprotected,” meaning not covered by the patent in suit. However, a key factor in the majority’s decision awarding damages for lost sales of the ADL-100 is that the “device” is “patented”. The majority does not, nor did the parties, discuss what inventions the one or more patents on the *1573ADL-100 cover. Nevertheless, the majority declares the ADL-100 provides the only alternative technology. While it is inappropriate for an appellate court to make findings, the finding by the majority is erroneous if one examines the record independently. There are other mechanisms for securing trucks to loading docks. Indeed, the Patent Office considered Kelley’s Truk-Stop sufficiently different from the prior ’847 patent to grant Kelley its own patent. Unfortunately for Kelley, this court earlier upheld the finding that its different structure was sufficient similar to the ’847 patent to constitute infringement. 819 F.2d 1120, 2 USPQ2d 1915 (Fed.Cir.1987). But there were other alternatives which could be substituted. In any event, the one or more patents on technology used in the ADL-100 were never asserted against Kelley, and the validity of those patents is untested. If those patents are invalid, the majority’s analysis collapses. As stated in Lear, Inc. v. Adkins, 395 U.S. 653, 668, 89 S.Ct. 1902, 1910, 23 L.Ed.2d 610 (1969):
[Fjederal law requires that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent. [Emphasis added.]
Given that Kelley has had no legal basis for bringing a declaratory judgment action challenging the unlitigated patents (never having been charged with their infringement), the majority imposes liability and overlooks the unfairness in its theory. If the unlitigated patents are significant to damages, Kelley deserves an opportunity to defend against them. A clearer denial of due process is rarely seen. The award of damages for competition with Rite-Hite’s market for ADL-100s is no more supportable than an injunction against infringement of the ADL-100 patents.
If nothing else, the patent term limit provision of 35 U.S.C. § 154 is skewed by protecting the profits on goods made under one patent for infringement of another. Under the majority’s decision, the 17-year terms of the ADL-100 patents are meaningless. Rite-Hite is entitled to the add-on years provided by the later ’847 patent after the terms of the ADL-100 patents expire. Congress has provided the term and the basis for protection of ADL-100 restraints. An award of damages on ADL-100s based on infringement of the ’847 patent expands the term of protection as well as the basis for protection. Moreover, the majority would award damages for losses connected to the ADL-100 even if the patents on that device are invalid (albeit under a slight variation of a “but-for” test). If Rite-Hite had asserted infringement of the ADL-100 patents, it would receive no lost profits based on invalid ADL-100 patents but, nevertheless, is held entitled to lost profits on ADL-100s based on the ’847 patent. This construction of the statute seems patently absurd.
In short, Rite-Hite has obtained indirectly what it may or may not be entitled to recover directly by suit on the ADL-100 patents. Moreover, this was accomplished without putting the ADL-100 patents at risk to a challenge of invalidity. The unasserted patents provide no basis for sweeping the losses related to the ADL-100 into the scope of legal injury attributed to Kelley’s use of the ’847 invention.
The majority rejects what it called Kelley’s “antitrust” arguments that the award of lost profits on the ADL-100 unduly expanded rights in the ’847 patent on the rationale that this ease deals only with what injuries are compensable for infringement, not with violation of antitrust laws. This rationale cannot be squared with Ethyl Gasoline v. United States, in which the Supreme Court held:
The patent monopoly of one invention may no more be enlarged for the exploitation of a monopoly of another, than for the exploitation of an unpatented article, or for the exploitation or promotion of a business not embraced within the patent.
309 U.S. 436, 459, 60 S.Ct. 618, 626, 84 L.Ed. 852 (1940) (citations omitted). See Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 511-13, 37 S.Ct. 416, 418-19, 61 L.Ed. 871 (1917).
No one argues that Rite-Hite is violating the antitrust laws. However, an award of damages for infringement of one patent based on losses of sales of a product not within the protected market violates antitrust policies. Under those policies, Rite-Hite is not entitled to tribute for infringement of one *1574patent for losses in connection with a competitive product protected, if at all, only by other patents. This court has no license to elevate patent rights in the guise of damages over antitrust policies which preclude enlargement of the exclusive market provided by the ’847 patent to promote and exploit the business of a patentee in goods not embraced within the patent.
I. Reasonable Royalty is a Proper Measure of “Adequate” Damages
Finally, Rite-Hite argues that the highest possible damages should be imposed to deter infringers and that the district court, therefore, correctly assessed a higher lost profits award in lieu of a reasonable royalty. Rite-Hite also argues that a reasonable royalty creates a compulsory license. Both points are meritless. As indicated, a finding of infringement is not dependent on a finding of negligence or culpable intent by the wrongdoer. An infringement, like a trespass, may be committed unknowingly. In such situations, the amount of damages manifestly can have no effect to deter an unknowing in-fringer. Basic damages, which are at issue here, fall on the innocent and the culpable to the same extent. See Intel Corp. v. United States Int’l Trade Comm’n, 946 F.2d 821, 832, 20 USPQ2d 1161, 1171 (Fed.Cir.1991); Thurber Corp. v. Fairchild Motor Corp., 269 F.2d 841, 845, 122 USPQ 305, 308 (5th Cir.1959); see also Kansas City S. Ry. Co. v. Silica Prods. Co., 48 F.2d 503, 508, 8 USPQ 476, 481 (8th Cir.), cert. denied, 284 U.S. 626, 52 S.Ct. 11, 76 L.Ed. 533 (1931); Thompson v. N.T. Bushnell Co., 96 F. 238, 243 (2d Cir.1899). Cf. Seymour v. McCormick, 57 U.S. (16 How.) at 488. The provision for trebling damages is the deterrent against deliberate infringement.
The spectre of a compulsory patent license is raised. However, a damages award calculated as a reasonable royalty gives no mandatory license. If it did, relief by way of an injunction against future use makes no sense.21 A reasonable royalty is simply a measure of damages, not a license. Dowagiac, 235 U.S. at 649, 35 S.Ct. at 224; Fromson v. Western Litho Plate & Supply Co., 853 F.2d 1568, 1574-76 (Fed.Cir.1988). The remedy Congress itself selected cannot be condemned on the ground it conflicts with Congress’ views reflecting compulsory licenses. Obviously, it does not.22 A reasonable royalty is in fact a Congressional largesse for cases where a patentee might otherwise receive only nominal damages. A patentee is now statutorily entitled to a reasonable royalty even though it has not suffered or cannot prove a financial loss to its market in patented goods.
J. Conclusion
The majority holds that it has balanced the interests of the patentee and the infringer. I disagree. In Fogerty v. Fantasy, Inc., — U.S. -, -, 114 S.Ct. 1023, 1030, 127 L.Ed.2d 455 (1994) the Supreme Court stated:
Because copyright law ultimately serves the purpose of enriching the general public through access to creative works, it is peculiarly important that the boundaries of copyright law be demarcated as clearly as possible. To that end, defendants who seek to advance a variety of meritorious copyright defenses should be encouraged to litigate them to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement.... Thus a successful defense of a copyright infringement action may further the policies of the Copyright Act every bit as much as a successful prosecution of an infringement claim by the holder of a copyright.
The same policy statement applies equally to patent law enacted under the complementary *1575provision of Article I, section 8 of the Constitution. Challengers who have meritorious defenses to a charge of patent infringement should be encouraged to litigate them without fear of ruinous damage awards. Kelley mounted a substantial and legitimate challenge to the validity and its infringement of the ’847 patent in suit. Kelley was held to be wrong on both points, but its infringement was not willful. The district court stated that “the Kelley people [acted] in the spirit of good competition” and “certainly did not intend to infringe.” 629 F.Supp. 1042, 1045, 231 USPQ 160, 161. The consequence of expansion of legal injury in this case is that the patentee’s major competitor, an innocent infringer, has been forced into bankruptcy by the lost profits award on unprotected goods. This result does not further the policies of the patent statute. Patentees are a favored class but this decision goes too far in the scope of protection. It is not the remedy Congress understood and intended to provide.
Commercialization of inventions in the fast changing world of today is at least as viable a purpose of the patent statute as under the prior statutes. For our patent system to fully serve its goal of promoting economic growth, innovations must make it to market during the patent term. The period of exclusivity, a monopoly in the market place, is granted to that end.
The Senate Report on the legislation that culminated in this court’s creation cites the following testimony of Harry F. Manbeek, Jr., then General Patent Counsel for the General Electric Company and later Commissioner of Patents and Trademarks:
Patents, in my judgment, are a stimulus to the innovative process, which includes not only investment in research and development but also a far greater investment in facilities for producing and distributing goods. Certainly, it is important to those who must make these investment decisions that we decrease unnecessary uncertainties in the patent system
The Federal Courts Improvement Act of 1981, S.Rep. No. 97-275, 97th Cong., 1st Sess., 6 (1981).
The Senate Report on the 1980 Reexamination statute cites the following testimony of then Commissioner of Patents and Trademarks Sidney Diamond:
Indeed, the patent system was established to provide certain incentives for the conduct of activities critical to our economic and technological prosperity — the invention of new and improved technology, the disclosure of this technology to the public, and the investment in its commercialization.
Patent Reexamination, S.Rep. No. 96-617, 96th Cong., 2d Sess., 9 (1980). These are but two examples emphasizing the present day importance of patents as an incentive for investment in marketing the products for which the exclusive market is given. An exhaustive treatment would occupy a sizeable tome.
It cannot be disputed that Congress intended that the patent grant provide an incentive to make investments in patented products during the patent term. If a paten-tee is rewarded with lost profits on its established products, the incentive is dulled if not destroyed. Why make the investment to produce and market a new drug if the patent on the new discovery not only protects the status quo in the market but also provides lost profits for the old?
For the foregoing reasons, I would hold that an injury to the patentee’s marketing of products protected only by other patents — if at all — does not fall within the grant of rights protected by the ’847 patent in suit and is not compensable. Thus, I would vacate the award of lost profits on 3,283 sales based on Rite-Hite’s loss of business in ADL-100 restraints and remand for damages to be assessed on the basis of a reasonable royalty for those infringements.
III.
LEVELER SALES
I agree with the majority that under the entire market value rule, Rite-Hite is not entitled to lost profits on dock levelers, sold in conjunction with patented or unpatented restraints. However, I disagree with the majority’s reasoning. The entire market val*1576ue rule is based on a realistic evaluation of the commercial magnetism of the patented invention, not on whether components in a machine — or auxiliary goods — function together. I will not lengthen this already lengthy opinion but merely note that the majority proffers strained interpretations of the cited precedent. I would deny the award because the sales of levelers were not attributable to consumer demand for the invention of the ’847 patent.
IV.
CALCULATION OF A REASONABLE ROYALTY
The district court awarded damages in the form of a reasonable royalty for 502 infringing sales based on lost profits on Rite-Hite’s restraints and restraint leveler packages. This “reasonable royalty,” which totals $1,045.00 per infringing restraint, is more than the price of Rite-Hite’s patented MDL-55, more than 75 percent of the average net sale price of Kelley’s Truk-Stop, and 33 times greater than Kelley’s net profit on its entire machine. If lost profits on ADL-100’s were not recoverable as such, the court said it would have raised the amount of the reasonable royalty to include all of Rite-Hite’s anticipated profits on ADL-100 units and packages. Rite-Hite, 774 F.Supp. at 1540 n. 22, 21 USPQ2d at 1821 n. 22.
In determining a reasonable royalty, the district court started with basically wrong ideas even if ADL-100s and levelers were protected by the ’847 patent. The court erroneously believed Kelley had to pay a reasonable royalty on ADL-100 sales if lost profits were not awarded. Id. This is a fundamental misunderstanding. Rite-Hite is entitled to a reasonable royalty on Kelley’s sales of infringing devices. Rite-Hite would be entitled to a reasonable royalty on those sales even if it made no sales of a competing product. Further, where a patentee is not entitled to lost profit damages, lost profits may not, in effect, be awarded by merely labelling the basis of the award a reasonable royalty. See SmithKline Diagnostics, Inc. v. Helena Labs. Corp., 926 F.2d 1161, 1165, 1168, 17 USPQ2d 1922, 1925, 1928 (Fed.Cir.1991) (rejecting SKD’s proposed use of its lost profits figure as a “reasonable royalty”).
A “reasonable royalty” is a hypothetical royalty for the use of the patented technology by the infringer, calculated as if the parties negotiated at arm’s length as a willing li-censor and a willing licensee on the date when the infringement began. State Indus., 883 F.2d at 1580, 12 USPQ2d at 1031; Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1079, 219 USPQ 679, 682 (Fed.Cir.1983). While frequently spoken of as willing negotiations, Beatrice Foods Co. v. New England Printing & Lithographing Co., 923 F.2d 1576, 1580, 17 USPQ2d 1553, 1556 (Fed.Cir.1991); 5 Donald S. Chisum, Patents, § 20.03[4][b] (1992), the result has more of the character of a forced settlement where neither party gets all it would wish.
The focus of a reasonable royalty determination is on the value of the invention in the marketplace. As the statute states, a reasonable royalty is an award “for the use of the invention by the infringer.” 35 U.S.C. § 284. Rite-Hite’s lost profits on ADL-100s and levelers are not factors in calculating that value for the same reasons lost profits are not awardable for the goods. Neither is part of the exclusive market granted by the ’847 patent. The ’847 patent may not be used “for the exploitation or promotion of a business not embraced within the patent.” Ethyl Gasoline, 309 U.S. at 459, 60 S.Ct. at 626. A royalty based on unprotected goods unlawfully exploits the patent. I would, therefore, remand with instructions to disregarded injury to this part of Rite-Hite’s business in determining a reasonable royalty.
A reasonable royalty requires a balancing of the interests of the parties. It would be proper, therefore, to consider Rite-Hite’s policy of not licensing direct competitors like Kelley, but this factor cannot justify the rate here. See Panduit, 575 F.2d at 1164, 197 USPQ at 736. In particular, Rite-Hite’s claim that Kelley needed a license of the ’847 technology to make any restraint is clearly fallacious. The ADL-100 itself did not use that technology and there were numerous non-infringing mechanical alternatives. That they were not yet commercialized is irrelevant respecting a royalty. Kelley would like*1577ly have turned to the other technology to design around the ’847 invention if the royalty were too high.
It is apparent that the district court limited its assessment to Rite-Hite’s side of the hypothetical negotiating table rather than to balance the interests of both parties. Kelley presented extensive evidence of royalty rates prevalent in the industry, which is relevant to determining a reasonable royalty. Georgia-Pacific Corp. v. United States Plywood Corp., 318 F.Supp. at 1120, 166 USPQ at 238 (factor 2: “The rates paid by the licensee for the use of other patents comparable to the patent in suit.”). This evidence included a 0.9 percent royalty paid by Rite-Hite to Kelley to settle a suit for infringement of Kelley’s leveler patents. Although licenses extracted under the penumbra of threatened litigation as to the validity and/or infringement are, as the district court stated, “not an accurate gauge of a reasonable royalty,” Rite Hite, 774 F.Supp. at 1535, 21 USPQ2d at 1817, this rule does not apply where, as here, validity and infringement appear to have been settled in the licensor’s favor when the license was entered. See Snellman v. Ricoh Co., 862 F.2d 283, 289, 8 USPQ2d 1996, 2001 (Fed.Cir.1988), cert. denied, 491 U.S. 910, 109 S.Ct. 3199, 105 L.Ed.2d 707 (1989). The district court also dismissed other testimony favorable to Kelley as being “of limited relevance, because it is based upon royalties contained in settlement agreements.” Yet two of these licenses (Abon/MHW and Metz/Serco) were not the product of litigation. Rite-Hite’s current CEO (Mike White) took a license under the ’847 patent when he bought Rite-Hite from his father. Although the district court found this intra-family deal “too dissimilar” from a true hypothetical negotiation, White himself testified that the transaction was arms length and that he paid a fair price for the license.
The evidence of record negates a finding that the dock equipment industry is so lucrative that net profits in the 50-75 percent range could be anticipated. Rite-Hite’s net profits during the period of infringement were in the 6-10 percent range and Kelley’s only 2.3 percent. This evidence of actual profitability forcefully negates the anticipation by either party of profits of 50-75 percent on their devices and was improperly disregarded in the district court’s determination of what royalty Kelley would have agreed to pay. Lindemann Maschinenfabrik, 895 F.2d at 1408, 13 USPQ2d at 1875 (characterizing as “absurd” expert testimony that infringer “would agree to pay a royalty in excess of what it expected to make in profit”); Hughes Tool Co. v. Dresser, 816 F.2d 1549, 1558, 2 USPQ2d 1396, 1403-04 (Fed.Cir.1987); Trans-World Mfg. Corp. v. Al Nyman & Sons, Inc., 750 F.2d 1552, 1568, 224 USPQ 259, 269 (Fed.Cir.1984). Although this court has sanctioned royalty awards that exceeded the infringer’s actual net profits, we have done so only when there was evidence that the infringer actually anticipated greater net profits. Snellman, 862 F.2d 283, 8 USPQ2d 1996; TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 229 USPQ 525 (Fed.Cir.), cert. denied, 479 U.S. 852, 107 S.Ct. 183, 93 L.Ed.2d 117 (1986). Kelley is not guaranteed a profit, of course, but anticipated profit is a factor in hypothetical negotiations. Hanson, 718 F.2d at 1081, 219 USPQ at 684 (“a reasonable royalty would leave an infringer with reasonable profit”); Panduit, 575 F.2d at 1164, 197 USPQ at 736 (court should determine “the customary profit allowed licensees in the electrical duet industry”); see also Trans-World Mfg. Corp. 750 F.2d at 1568, 224 USPQ at 269. A royalty which on any reasonable projections respecting the innocent infringer’s business would be confiscatory violates that balance. It is simply beyond reality to infer that the management for the five hundred employee-owners of Kelley would have negotiated a royalty which, it was evident at the time, would destroy their business and jobs.23
Although the determination of a fair and reasonable royalty is a difficult judicial chore, seeming often to involve more the talents of *1578a conjurer than those of a judge, Fromson, 853 F.2d at 1574, 7 USPQ2d at 1612, the finding in this case of a reasonable royalty in the amount of $1,045 per unit on a $1,345.79 item of which the patented ’847 technology was merely a replaceable feature should be vacated because of legal error in the factors and evidence considered.
V.
CONCLUSION
This court was created to bring uniformity to the law; but where uniform precedent exists, it was given no mandate to ignore established law. It was not given a blank legal slate on which to write greatly enlarged property rights for patentees. In view of this court’s exclusive jurisdiction, however, the majority has effectively set new precedent for all awards of damages in future patent cases.24
The majority justifies its expansion of patent protection with the explanation that the Supreme Court has provided no definitive ruling on the proper scope of damages. I conclude the Supreme Court has repeatedly stressed that actual damages for patent infringement must be based on interference with the patentee’s market for its own goods embodying the invention in suit. Thus, I must respectfully dissent.

. The term "actual damages” is used to distinguish from an award based on a hypothetical reasonable royalty. In the majority view, this dissent "confuses” the patent right to exclude with the separate determination of actual damages for patent infringement. Contrary to the majority, both determinations depend on injury to patent rights. The patent defines the metes and bounds of legal injury. As the Supreme Court stated in Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 430, 28 S.Ct. 748, 756, 52 L.Ed. 1122 (1908): “From the character of the right of the patentee we may judge of his remedies.” The majority and the dissent do not merely quibble over "line-drawing” by reason of "remoteness” of an injury but rather fundamentally disagree over the legal scope of the market protected by a patent.

. Rite-Hite Corp. v. Kelley Co., 774 F.Supp. 1514, 1537, 21 USPQ2d 1801, 1819 (E.D.Wis.1991):
In order to recover lost profits damages, "a patentee must show a reasonable probability that, but for the infringement, it would have made the sales that were made by the infringer.” Id.; see also Panduit Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152, 197 U.S.P.Q. 726 (6th Cir.1978). The issue of whether a court should award lost profits damages or a reasonable royalty under § 284 thus turns primarily upon the quality of plaintiffs' proof of lost profits. Neither § 284 nor controlling case law restricts the recovery of lost profits damages any further.

. The majority also finds support for its decision here in decisions of this court which applied a but-for test to determine liability for lost profits in connection with the patentee's business in goods embodying the patented invention in suit, namely, State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1577, 12 USPQ2d 1026, 1028 (Fed.Cir.1989), cert. denied, 493 U.S. 1022, 110 S.Ct. 725, 107 L.Ed.2d 744 (1990); Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320, 1326, 5 USPQ2d 1255, 1260 (Fed.Cir.1987); King Instrument Corp. v. Otari Corp., 767 F.2d 853, 863, 226 USPQ 402, 409 (Fed.Cir.1985), cert. denied, 475 U.S. 1016, 106 S.Ct. 1197, 89 L.Ed.2d 312 (1986). There was no question in those cases that the injury to a paten-tee's business in patented goods was compensa-ble. The question was sufficiency of proof that the patentee would have made the sales but for the infringement.

. Section 4 of the Clayton Act, 15 U.S.C. § 15 (1988) provides (emphasis added):
[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefore in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.

. RICO’s civil action provision, 18 U.S.C. § 1964(c) (1988), reads (emphasis added):
Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefore in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee.

.These principles were stated in the context of a party’s standing to sue. However, the Court drew upon principles respecting the limitation of “proximate cause” on recoverable damages. See Associated Gen. Contractors, 459 U.S. at 536, 103 S.Ct. at 907-08 ("It is common ground [respecting damages and standing] that the judicial remedy cannot encompass every conceivable harm that can be traced to alleged wrongdoing.”)

. The majority construes "adequate” as an expansive term. If anything the term "adequate" suggests moderation, the standard definition of the term being "reasonably sufficient,” Webster’s Ninth New Collegiate Dictionary, 56 (9th ed. 1983), or even "barely sufficient," The American Heritage Dictionary 15 (10th ed. 1981).

. Other types of actual damages, e.g., price erosion on the patentee's patented goods, are not involved here.

. See Georgia-Pacific Corp. v. United States Plywood Corp., 243 F.Supp. 500, 516-46, 146 USPQ 228, 242-54 (S.D.N.Y.1965), for an extended analysis of statutory remedies in successive patent statutes.

. See, e.g., Acts of 1790, 1793, and 1870.

. The Statute of Monopolies remained the only statute on patents in England well into the 19th Century.

. See Edward C. Walterscheid, The Early Evolution of the United States Patent Law: Antecedents (Part 2), 76 J. Pat. & Trademark Off. Soc'y, 849, 870-71 (1994). The original period of exclusivity was 14 years. Why that term was provided is unknown. It may have some relationship to the terms of successive apprenticeships. Id.

.The current statute provides expressly in 35 U.S.C. § 154:
Every patent shall contain ... a grant to the patentee ... of the right to exclude others from making, using, or selling the invention throughout the United States.

. Although the Patent Act of 1922, 42 Stat. 392 (1922), contained no specific provision for a reasonable royalty, it was interpreted to allow this form of damages. See Georgia-Pacific Corp. v. United States Plywood, 243 F.Supp. at 519-20.

. The majority misstates the record and grossly distorts the Panduit test. First, contrary to the majority's statement that “Kelley does not challenge that Rite-Hite meets the Panduit test,” op. at 1545, Kelley's supplemental brief at 11 states: "If the trial court’s decision is good law, then Panduit is not.... Affirming Rite-Hite v. Kelley will mean effectively overruling Panduit.” See also Kelley's opening brief at 14. Second, the Panduit factors were not met. There is no proof anyone bought either the Rite-Hite or Kelley restraints because of the patented hook technology and the ADL-100 itself is an acceptable substitute not within the patent claims, i.e., a nonin-fringing acceptable substitute.

. See also Note, Remedies Against Patent Infringement, 72 Harv.L.Rev. 328, 344-45 (1958) ("If a patentee who sells his invention discovers ... that an infringer seller has diverted some of his potential sales,” such a patentee may recover lost profits.); Note, Recovery in Patent Suits, 60 Colum.L.Rev. 840, 846-48 (1960) ("When a pat-entee has exploited his grant by manufacturing and selling the patented article rather than licensing others to do so, profits lost by the paten-tee as a direct result of an infringer’s competing sales may be the measure of his damages.”).

. If the majority would limit the entire market value rule precedent to “convoyed” sales, op. at 1548, note 7, this is clearly unwarranted. See, e.g., Kori, 761 F.2d at 655-56, 225 USPQ at 989 (profits on entire device awarded because patented feature created demand for patentee's entire device). The entire market value rule originated and continues to apply to a damage claim for lost profits on a patentee's device incorporating a patented improvement. Indeed, it may be noted that the Supreme Court has never approved extension of this rule to convoyed sales.

. The majority cites no Supreme Court or other precedent for its proposition that "foreseeability” alone is the key to legal causation of patent damages and there is none.

. 35 U.S.C. § 287(a):
Patentees, and persons making or selling any patented article for or under them, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation "pat.”, together with the num-
*1571ber of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

. Rite-Hite, however, is not foreclosed by this litigation from suing Kelley on the ADL-100 patents and asserting collateral estoppel respecting the attribution of its ADL-100 losses to Kelley.

. The analysis is confused with the situation where the patentee is a licensing patentee who offers paid-up licenses to all who desire them. See 3 Robinson § 1058 at 331 and cases cited therein.

. Indeed, Congressman Lanham embraced the reasonable royalty provision as the preferred remedy on the facts of this case, stating:
Of course, in a case of an innocent infringement, it is to be presumed that the court would assess no more than a reasonable royalty for such time as the patent was infringed by the innocent user.
92 Cong.Rec. 1857 (1946). See also House Hearings at 19-21.

. Here, the amount of damages for nonwillful infringement awarded or proposed to be awarded as a royalty is so great that it has forced Kelley to file for bankruptcy. Kelley, an employee-owned business, would now likely be out of business had we not granted its motion for stay of execution of the district court’s judgment. This case therefore illustrates the mischief and misery that can accompany the over enforcement of patents rights.

. Another case awarding damages on the paten-tee's unpatented goods is already waiting in the wings.