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CAFC: Damage Apportionment in Action

By Two-Seventy-One Patent Blog

American Seating Company v. USSC Group, Inc. (2007-1112) January 39, 2007

USSC appealed a jury verdict which awarded American Seating damages for patent infringment relating to tie-down wheelchairs for mass transit transportation. Likewise, American Seating was appealing a JMOL that reduced damages due to convoyed sales being improperly included in the calculations.

A "convoyed sale" refers to the relationship between the sale of a patented product and a functionally associated non-patented product. A patentee may recover lost profits on unpatented components sold with a patented item, a convoyed sale, if both the patented and unpatented products "together were considered to be components of a single assembly or parts of a complete machine, or they together constituted a functional unit." A functional relationship will not exist when independently operating patented and unpatented products are purchased as a package solely because of customer demand.

In this case, the CAFC agreed with the district court that the damages were properly reduced, based on the language of the patent:

Tie-downs and passenger seats were usually but not always purchased by bus manufacturers from the same company; package sales were for reasons of convenience and "one-stop shopping," not because of an absolute requirement that the two items function together. Although the specification refers to a preferred embodiment in which the tie-down of the invention is located "adjacent chairs that fold against the side of the bus," . . . the claims make no mention of the passenger seats and the references to the "adjacent chairs" do not indicate any functional relation between the seats and the wheelchair tie-downs.

Also, the market demand was independent of the patented product:

A bus utilizing American Seating?s tie-down restraint system and outfitted by USSC?s passenger seats would be equally as functional as a bus furnished with only American Seating products. The evidence shows that passenger seats command a market value and serve a useful purpose independent of the patented product . . . Because it is clear that no interrelated or functional relationship inheres between the seats and the tie-down restraint system on a passenger bus, the district court was correct that the jury had no basis to conclude that lost profits on collateral sales of passenger seats were due American Seating.

AFFIRMED

Full post as published by Two-Seventy-One Patent Blog on January 31, 2008 (boomark / email).