Rite-Hite Corporation v. Kelley Company, Inc.

56 F.3d 1538 (1995)

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Nature of the Case

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Facts

P sued D, alleging that D's 'Truk Stop' vehicle restraint infringed P's '847 patent. The invention is a device for securing a vehicle to a loading dock to prevent the vehicle from separating from the dock during loading or unloading. P distributed all its products through its wholly-owned and operated sales organizations and through independent sales organizations (ISOs). During the period of infringement, the P sales organizations accounted for approximately 30 percent of the retail dollar sales of P products, and the ISOs accounted for the remaining 70 percent. P sued for its lost profits at the wholesale level and for the lost retail profits of its own sales organizations. The court determined that the ISOs were exclusive licensees and accordingly permitted them to intervene. The ISOs sued for their lost retail profits. The district court found infringement by the manufacture, use, and sale of D's Truk Stop device. The court enjoined further infringement. The judgment of liability was affirmed and on remand, the damage issues were tried to the court. P sought damages for two types of vehicle restraints that it made and sold: the MDL-55, which incorporated the invention covered by the '847 patent, and the ADL-100, which was not covered by the patent in suit. The ADL-100 was covered by one or more patents other than the patent in suit. D's restraint was designed to compete primarily with P's ADL-100. Both employed an electric motor and functioned automatically, and each sold for $ 1,000-$ 1,500 at the wholesale level, in contrast to the MDL-55, which sold for one-third to one-half the price of the motorized devices. P does not assert that D's Truk Stop restraint infringed the patents covering the ADL-100. Of the 3,825 infringing devices sold by D, the court found that 'but for' D's infringement, P would have made 80 more sales of its MDL-55; 3,243 more sales of its ADL-100; and 1,692 more sales of dock levelers, a bridging platform sold with the restraints and used to bridge the edges of a vehicle and dock. The court awarded the wholesale profits that P lost on lost sales of the ADL-100 restraints, MDL-55 restraints, and restraint-leveler packages. It also awarded P as a retailer and to the ISOs reasonable royalty damages on lost ADL-100, MDL-55, and restraint-leveler sales. Prejudgment interest, calculated without compounding, was awarded. D appealed. D does not contest the damages for the MDL-55 restraints but argues that the patent statute does not provide for damages based on P's lost profits on ADL-100 restraints because the ADL-100s are not covered by the patent in suit and D contends that the lost profits on unpatented dock levelers are not attributable to demand for the '847 invention and, therefore, are not recoverable losses. D claims the ISOs have no standing to sue for patent infringement damages and the court erred in calculating a reasonable royalty based as a percentage of ADL-100 and dock leveler profits. Ps challenge the district court's refusal to award lost retail profits and its award of prejudgment interest at a simple, rather than a compound, rate. The appeal has been taken in banc to determine whether damages for products in direct competition with the infringing devices, but which themselves were not covered by the patent in suit are legally compensable under §284.