Nordock, Inc. v. Systems, Inc. et al.


Docket No. 2014-1762, -1795

O’MALLEY, REYNA, CHEN
September 29, 2015

Brief Summary: DC/jury damages award reversed and remanded since “a design patentee can recover either (1) total profits from the infringer’s sale under § 289, or (2) damages in the form of the patentee’s lost profits or a reasonable royalty under § 284, or (3) $250 in statutory damages under § 289, whichever is greater”, and § 289 damages are based on total profits (“apportioning profits in the context of design patent infringement is not appropriate”).

Summary: Jury found Nordock’s design patent (D579,754) claiming “the ornamental design of a lip and hinge plate for a dock leveler” infringed and not invalid, and awarded Nordock $46,825 as a reasonably royalty. Nordock requested a new trial on damages, which the DC denied; this decision was appealed here. Systems moved to amended the judgment with respect to the finding of infringement, which the DC denied; this decision was cross-appealed here. Nordock’s D’754 issued from a divisional application claiming priority to US utility application Ser. No. 10/328,279 (issued as US 6,834,409). The DC conducted a claim construction hearing, concluding that while “the design incorporates four primarily utilitarian elements[,]…there are ornamental aspects of the design” but would not grant Nordock’s motion for SJ and this went to the jury. It did grant Nordock’s motion for SJ with respect to anticipation, obviousness, prosecution estoppel, laches, equitable estoppel and unclean hands. The jury found D’754 valid, infringed and made the reasonably royalty award; Nordock unsuccessfully argued it was entitled to a new trial regarding lost profits under 35 USC § 289. This opinion explains that “a design patentee can recover either (1) total profits from the infringer’s sale under § 289, or (2) damages in the form of the patentee’s lost profits or a reasonable royalty under § 284, or (3) $250 in statutory damages under § 289, whichever is greater” (Catalina Lighting, FC 2002). And “[o]nly where § 289 damages are not sought, or are less than would be recoverable under § 284, is an award of § 284 damages appropriate.” It noted that it “has interpreted § 289 to require ‘the disgorgement of the infringers’ profits to the patent holder, such that the infringers retain no profit from their wrong” (Nike, FC 1998) and “total profits are based on the article of manufacture to which the [design patent, here D’754] is applied-not just a portion of that article of manufacture…apportioning profits in the context of design patent infringement is not appropriate…Section 289 explicitly authorizes the award of total profit from the article of manufacture bearing the patented design” (Apple, FC 2015). Systems’ expert and the jury only awarded apportioned damages (based on the expert’s “cost savings” approach); this damages award was therefore reversed and remaned for a new trial on damages (also noting “the evidence showed that Systems’ profits were over $630,000-a far cry from $0.”) The FC panel also found Systems’ oral challenge (under Rule 50(b)) of the jury’s finding of no invalidity was inadequate because counsel “failed to renew the motion…with sufficient particularity to satisfy the Seventh Circuit’s ‘reasonable specification’ standard”. Nonetheless, the opinion explained substantial evidence supported the jury finding of no invalidity, noting that a patented design that is “primarily functional rather than ornamental” is invalid (PHG Techs., FC 2006) and the determination “must ultimately rest on an analysis of its overall appearance” (Berry, FC 1997). The FC panel also found no error with the DC denial of Systems’ motion to amend the infringement judgment (“the jury could reasonably infer infringement based on the evidence submitted at trial”).

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