St. Louis patent attorney Bryan Wheelock spoke to Law360 reporter Matthew Bultman today regarding patent damages in Exmark Manufacturing Co. Inc. v. Briggs & Stratton Power Products Group LLC.
The Federal Circuit recently vacated a Nebraska federal court’s decision ordering Briggs & Stratton to pay $48 million in damages for infringing a lawn mower patent held by Exmark. While the Federal Circuit’s ruling also threw out the actual finding of patent infringement, patent owners are more focused on the direction the Court provided in relation to how damages are calculated when only one aspect of a product is infringed.
Two different angles have been noted by attorneys: on the positive side for patent owners, the decision has the potential to lead to larger awards for damages. On the other side, it may now be harder to calculate damages based on the entire patented product, which will likely lead to increased apportionment.
Apportioning takes place when a single feature of a multi-component product is infringed and patent owners must then separate the value of that feature from the value of the rest of the product. Typically, damages are calculated using both a base (usually a dollar amount based on sales revenue) and a rate (a percentage based on other determining factors). The Federal Circuit suggests here that either the base or the rate can be apportioned.
For example, if a multi-component, patented product that retails for $500 each is infringed, one could use $500 as the base. Any given patent owner would certainly fight for this. More frequently, however, only one aspect of a given product will be infringed. How does one pick a starting point for deciding that apportionment?
Very carefully, it should be advised. Not only will damages experts have to explain their methodology at trial, but it will have to be clear enough for juries to understand.
This was Exmark’s problem; their base (for which they used the full retail price) and their rate did not jibe with the appeals court.
The decision validates the patent-drafters practice of claiming the largest commercial unit in which the invention can be incorporated, as the Federal Circuit noted that Exmark’s claims were directed to the entire lawn mower, and not merely the inventive baffle plate.
But how will this lead to increased damages for patent owners? Even though proper apportionment should lead to the same number using either method, by using a large number for the base and apportioning through the rate. In Exmark, for example, “if they’re going to give you a fraction on the price of the whole lawn mower you’re probably going to end up with more money than if it’s a fraction, even a high fraction, of that little baffle plate [innovation],” Wheelock said.
Regarding transparency in the apportionment calculation, Wheelock was quick to point out that the case will serve as a “warning call to all patentees when they try a case not to just have a number that sounds OK, but have a number that you can show is OK.”
Read Bryan Wheelock’s previous post on patent damages in Exmark v. Briggs & Stratton.
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