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No lost profits when patent owned by parent but practiced by subsidiary

By McKee, Voorhees & Sease, P.L.C.

In a decision this week, the Federal Circuit affirmed a district court's grant of summary judgment in the damages phase of a patent infringement case denying recovery for lost profits.  The patentee's wholly-owned subsidiary actually practiced the claimed invention, but the subsidiary paid a standard license royalty to the patentee for use of the invention, and the subsidiary's profits did not "flow inexorably" to the patentee.  As a result, the court rejected the argument that lost profits were available, but did not decide whether lost profits would be available if proof of such inexorable flow of profits existed.

The court also found no abuse of discretion in a reasonable royalty of 7%, but held the patentee lacked standing for a period of the infringement, and thus held damages were unavailable during that period.  The patentee assigned the patent to the subsidiary that practiced the invention, and then purportedly assigned it back, but the court found the later "reassignment" ineffective.

More detail of Mars, Inc. v. Coin Acceptors, Inc. after the jump.

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Full post as published by FileWrapper on June 04, 2008 (boomark / email).