Trio Process Corporation v. L. Goldstein's Sons, Inc.

612 F.2d 1353 (1980)

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Nature of the Case

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Facts

This case involved fourteen years of litigation in the district court and several appeals. P owns the '421 patent which details a process for removing insulation from copper wire in order to allow the copper to be salvaged. Through litigation the patent was determined to be valid and that it had been willfully infringed by D. The case was remanded to the district court for a determination of damages. The district court appointed a master to assist in the determination of damages. The master compared D's costs of operating the patented process with the costs of a similar, unpatented process. He found that use of the P process saved D $52,791 per furnace year in labor costs alone, and that other, smaller savings accrued from the use of the patented method as well. To reach a 'reasonable royalty,' the master halved D's savings in labor costs and concluded that $26,390 was a reasonable royalty for each furnace year. The master found damages of $1,564,804. The master recommended trebling this amount with the total damage figure proposed by the master being $5,062,954. The district court viewed the damage computation in terms of what P had lost. It took the initial sum of $2,600 per furnace per year which was the amount actually charged by P for licenses in the 1960-1970 time frame. It increased the $2,600 figure on the assumption that the open infringement had reduced the market price of the license, and proceeded to set damages at $7,800 per furnace per year prior to the determination of infringement. Damages were set at $15,000 per furnace per year for the period following the 1972 adjudication. This resulted in a total of $653,839. The trial judge used a doubled multiplier and denied attorneys' fees. It computed damages to be $1,726,525. The appeals court affirmed in part and reversed in part. It held that there was 'no error in the first step of the district court's damage calculation, namely, focusing upon the losses suffered by the patent holder rather than upon the profits illegally made by the patent infringer.' It affirmed the district court in its finding 'that the license rate established by P in the 1960's May have been artificially depressed by D's ongoing infringement, and that the reasonable royalty should be set at a level above the actual license rate.' It then held that the district court should calculate a reasonable royalty rate for the entire period of infringement and not two rates, one before and one after the judicial determination of infringement. Most importantly it held that there was a failure to articulate the reasons underlying the determination of the royalty rate. The cause was remanded to the trial court for reconsideration of the damages issue: the district court should give proper regard to the rule that the extent of the deviation of existing license fees from a reasonable royalty must be determined solely on the basis of the submitted evidence and upon an evaluation of the factors that could affect the reasonable royalty rate, not upon mere conjecture. The court made determinations and once again they were appealed. (We put the District Court remand determinations into the holding.)