by Dennis Crouch
In this past summer’s Power Integrations v. Fairchild decision (Power Integrations I), the Federal Circuit held that the entire market value rule cannot be used to calculate infringement damages unless the patentee proves that the unpatented features in the accused product did not influence consumer demand. The patentee had not met that burden and so the $140 million verdict was vacated and remanded. Power Integrations, Inc. v. Fairchild Semiconductor Intl., Inc., 894 F.3d 1258 (Fed. Cir. June 3, 2018) (altered on rehearing)
On petition, the original panel has revised its opinion — but maintained its judgment vacating the damage award. Power Integrations II.
In the revised opinion, the court pulled back from the level of proof required. In particular, under the old language, the court required proof that the non-patented features were not relevant to and did not influence the consumer purchasing decision. The new formulation requires the patentee seeking EMVR damages show that the non-patented features “did not cause consumers to purchase the product.” The relevant blackline edits are in the following paragraph:
Where the accused infringer presents evidence that its accused product has other valuable features beyond the patented feature, the patent holder must establish that these features
are not relevant to consumer choicedo not cause consumers to purchase the product. . . . When the product contains other valuable features, the patentee must prove that those other features did not influence purchasing decisionsdo not cause consumers to purchase the product.
The result here is a revival of the EMVR as a way to calculate patent damages, although it will still be disfavored.
In the original opinion the panel had also provided an example situation where it “may be appropriate” to apply the entire market value rule — notably where the non-patented features of an accused product are “simply generic and/or conventional and hence of little distinguishing character.” In the revised opinion, the court added a tiny-bit more explanation with the example “such as the color of a particular product.”