Goss v. MAN Roland, et a l . 03-CV-513-SM 08/15/08 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Goss International Americas, Inc., Plaintiff
v.
MAN Roland, Inc. and MAN Roland Druckmaschinen AG, Defendants Civil N o .03-CV-513-SM Opinion No. 2008 DNH 147 MAN Roland, Inc. and MAN Roland Druckmaschinen AG, Counterclaim Plaintiffs
Goss International Americas, Inc., Counterclaim Defendant
O R D E R
MAN Roland moves in limine (document no. 540) to preclude
Goss "from introducing its damages expert Daniel McGavock's
opinion that Goss is entitled to damages based on the economic
value that MAN Roland's customers achieve by using the Rotoman S
press, as well as any related testimony or other evidence." Goss
objects.
Whether economic value to MAN Roland's customers resulting
from use of the infringing press constitutes a permissible
measure of damages in this case is a question of law for the court. Therefore, MAN Roland's motion is granted to the extent
it seeks to preclude Goss from eliciting Mr. McGavock's opinion
on that legal matter at trial. Moreover, because there is no
legal basis for awarding damages to Goss based upon the economic
value of the Rotoman S press realized by MAN Roland's customers
(presumably as compared to their use of previously operated
equipment), MAN Roland's motion is also granted to the extent it
seeks to preclude the introduction of opinions or evidence on
that factual matter.
Goss prevailed on its claims that MAN Roland infringed the
patents-in-suit by making and selling the Rotoman S press. Thus,
it is necessary to determine the proper framework for awarding
damages against MAN Roland for its infringement, to the extent it
fails to avoid liability on other grounds. The Patent Act
provides:
Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.
35 U.S.C. § 284 (emphasis added).
2 Given the compensatory nature of patent damages, a patent
owner will often seek, and be awarded, either lost profits or
"the royalty rate established by prior actual licenses for acts
comparable to those engaged in by the infringer without
authority." 7 D o n a l d S. C h i s u m , C h i s u m o n P a t e n t s § 20.03 [2] (2007).
On the other hand, "[t]he courts have developed the reasonable
royalty measure as a means of providing a just recovery to a
patent owner who could not, for evidentiary or other reasons,
prove lost profits or an established royalty." Id. at §
20.03[3]; see also Stickle v. Heublein, Inc.. 716 F.2d 1550,
1560-61 (Fed. Cir. 1983) (explaining applicability of reasonable
royalty as damages in situation where patent holder did not
practice the invention and, thus, had no lost profits). In
appropriate cicrcumstances, "[a] patent owner may recover as a
measure of damages . . . a reasonable royalty for the use made of
the invention by the infringer." 7 C h i s u m , supra, at § 20.03[3]
(emphasis added).
Goss is free to elect between an award of lost profits or a
reasonable royalty for MAN Roland's manufacture and sale of the
Rotoman S press. If a reasonable royalty would exceed lost
3 profits, then Goss is entitled to a reasonable royalty.1 See 35
U.S.C. § 284. However, the economic value of the Rotoman S press
to MAN Roland's customers has no place in the proper calculation
of either Goss's lost profits or a reasonable royalty as between
Goss and MAN Roland, which is the only infringer in this case.
Hence, evidence of the economic value of the Rotoman S to MAN
Roland's customers is not relevant.
Because Goss earns all of its Sunday press profits from the
price paid by its customers (Mot. in Limine (document no. 540),
Ex. 1 (Brown Dep.) at 171), and derives no revenue from the cost
savings or "enhanced value" realized by its customers (id.),
economic value to end users is irrelevant to determining Goss's
lost profits.
Evidence on that topic is also irrelevant to determining a
reasonable royalty. Section 284 provides that the damages
awarded to a successful infringement claimant must be "in no
event less than a reasonable royalty for the use made of the
invention by the infringer." Here, the only infringer is MAN
Roland, and MAN Roland's infringement consists of the manufacture
1 While the parties appear to agree on almost nothing, it seems clear that all would concur that there is no basis for an award based on an established royalty.
4 and sale of the Rotoman S press. Thus, a reasonable royalty in
this case would approximate the royalty MAN Roland ought to pay
for making and selling the Rotoman S press. MAN Roland has not
been found liable for infringing the suit patents by using the
Rotoman S to perform print jobs. The economic value of the
Rotoman S to customer-printers who infringe the suits-in-patent
by using that press might be a proper component of a reasonable
royalty that infringing printers ought to pay for using the
patented invention. But there are no infringing printers in this
case; MAN Roland's customers are not before the court. That the
damages Goss seeks might be recoverable from other defendants
does not make evidence of those damages relevant here.
To be sure, courts have considered economic advantages
conferred by the use of an infringing device for its intended
purpose when assessing a reasonable royalty, but those decisions
involve cases in which the patent holder has sued an end user for
its discrete acts of infringement. See, e.g.. Monsanto Co. v.
David. 516 F.3d 1009 (Fed. Cir. 2008) (defendant farmer infringed
plaintiff's patent by planting seeds produced by plants grown
from seeds containing plaintiff's patented genetic modification);
Hanson v. Alpine Valiev Ski Area. Inc.. 718 F.2d 1075 (Fed. Cir.
1983) (defendant ski area infringed plaintiff's patent in
5 snowmaking apparatus by making snow with machines incorporating
the patented invention); Stickle, 716 F.2d 1550 (defendant
infringed plaintiff's patent in taco-shell fryer by manufacturing
fryers and using them to make taco shells). Monsanto, Hanson,
and Stickle support the conclusion that a reasonable royalty
imposed upon an infringing end user ought to take into account
the economic value realized by its use of the invention. But MAN
Roland is not in the same position as the farmer in Monsanto, the
ski area in Hanson, or the taco-shell seller in Stickle. None of
those three cases supports the notion that a reasonable royalty
awarded as damages against a manufacturer and seller of an
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Goss v. MAN Roland, et a l . 03-CV-513-SM 08/15/08 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Goss International Americas, Inc., Plaintiff
v.
MAN Roland, Inc. and MAN Roland Druckmaschinen AG, Defendants Civil N o .03-CV-513-SM Opinion No. 2008 DNH 147 MAN Roland, Inc. and MAN Roland Druckmaschinen AG, Counterclaim Plaintiffs
Goss International Americas, Inc., Counterclaim Defendant
O R D E R
MAN Roland moves in limine (document no. 540) to preclude
Goss "from introducing its damages expert Daniel McGavock's
opinion that Goss is entitled to damages based on the economic
value that MAN Roland's customers achieve by using the Rotoman S
press, as well as any related testimony or other evidence." Goss
objects.
Whether economic value to MAN Roland's customers resulting
from use of the infringing press constitutes a permissible
measure of damages in this case is a question of law for the court. Therefore, MAN Roland's motion is granted to the extent
it seeks to preclude Goss from eliciting Mr. McGavock's opinion
on that legal matter at trial. Moreover, because there is no
legal basis for awarding damages to Goss based upon the economic
value of the Rotoman S press realized by MAN Roland's customers
(presumably as compared to their use of previously operated
equipment), MAN Roland's motion is also granted to the extent it
seeks to preclude the introduction of opinions or evidence on
that factual matter.
Goss prevailed on its claims that MAN Roland infringed the
patents-in-suit by making and selling the Rotoman S press. Thus,
it is necessary to determine the proper framework for awarding
damages against MAN Roland for its infringement, to the extent it
fails to avoid liability on other grounds. The Patent Act
provides:
Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.
35 U.S.C. § 284 (emphasis added).
2 Given the compensatory nature of patent damages, a patent
owner will often seek, and be awarded, either lost profits or
"the royalty rate established by prior actual licenses for acts
comparable to those engaged in by the infringer without
authority." 7 D o n a l d S. C h i s u m , C h i s u m o n P a t e n t s § 20.03 [2] (2007).
On the other hand, "[t]he courts have developed the reasonable
royalty measure as a means of providing a just recovery to a
patent owner who could not, for evidentiary or other reasons,
prove lost profits or an established royalty." Id. at §
20.03[3]; see also Stickle v. Heublein, Inc.. 716 F.2d 1550,
1560-61 (Fed. Cir. 1983) (explaining applicability of reasonable
royalty as damages in situation where patent holder did not
practice the invention and, thus, had no lost profits). In
appropriate cicrcumstances, "[a] patent owner may recover as a
measure of damages . . . a reasonable royalty for the use made of
the invention by the infringer." 7 C h i s u m , supra, at § 20.03[3]
(emphasis added).
Goss is free to elect between an award of lost profits or a
reasonable royalty for MAN Roland's manufacture and sale of the
Rotoman S press. If a reasonable royalty would exceed lost
3 profits, then Goss is entitled to a reasonable royalty.1 See 35
U.S.C. § 284. However, the economic value of the Rotoman S press
to MAN Roland's customers has no place in the proper calculation
of either Goss's lost profits or a reasonable royalty as between
Goss and MAN Roland, which is the only infringer in this case.
Hence, evidence of the economic value of the Rotoman S to MAN
Roland's customers is not relevant.
Because Goss earns all of its Sunday press profits from the
price paid by its customers (Mot. in Limine (document no. 540),
Ex. 1 (Brown Dep.) at 171), and derives no revenue from the cost
savings or "enhanced value" realized by its customers (id.),
economic value to end users is irrelevant to determining Goss's
lost profits.
Evidence on that topic is also irrelevant to determining a
reasonable royalty. Section 284 provides that the damages
awarded to a successful infringement claimant must be "in no
event less than a reasonable royalty for the use made of the
invention by the infringer." Here, the only infringer is MAN
Roland, and MAN Roland's infringement consists of the manufacture
1 While the parties appear to agree on almost nothing, it seems clear that all would concur that there is no basis for an award based on an established royalty.
4 and sale of the Rotoman S press. Thus, a reasonable royalty in
this case would approximate the royalty MAN Roland ought to pay
for making and selling the Rotoman S press. MAN Roland has not
been found liable for infringing the suit patents by using the
Rotoman S to perform print jobs. The economic value of the
Rotoman S to customer-printers who infringe the suits-in-patent
by using that press might be a proper component of a reasonable
royalty that infringing printers ought to pay for using the
patented invention. But there are no infringing printers in this
case; MAN Roland's customers are not before the court. That the
damages Goss seeks might be recoverable from other defendants
does not make evidence of those damages relevant here.
To be sure, courts have considered economic advantages
conferred by the use of an infringing device for its intended
purpose when assessing a reasonable royalty, but those decisions
involve cases in which the patent holder has sued an end user for
its discrete acts of infringement. See, e.g.. Monsanto Co. v.
David. 516 F.3d 1009 (Fed. Cir. 2008) (defendant farmer infringed
plaintiff's patent by planting seeds produced by plants grown
from seeds containing plaintiff's patented genetic modification);
Hanson v. Alpine Valiev Ski Area. Inc.. 718 F.2d 1075 (Fed. Cir.
1983) (defendant ski area infringed plaintiff's patent in
5 snowmaking apparatus by making snow with machines incorporating
the patented invention); Stickle, 716 F.2d 1550 (defendant
infringed plaintiff's patent in taco-shell fryer by manufacturing
fryers and using them to make taco shells). Monsanto, Hanson,
and Stickle support the conclusion that a reasonable royalty
imposed upon an infringing end user ought to take into account
the economic value realized by its use of the invention. But MAN
Roland is not in the same position as the farmer in Monsanto, the
ski area in Hanson, or the taco-shell seller in Stickle. None of
those three cases supports the notion that a reasonable royalty
awarded as damages against a manufacturer and seller of an
infringing device should include the cost savings realized by an
end user further down the distribution chain.
MAN Roland's customers do appear to be in a position
comparable to the farmer, ski area, and taco-shell seller, and
perhaps could, in the proper case, be held liable for a
reasonable royalty based in part on the economic benefits
attributable to use of the Rotoman S press. But, as noted, those
are issues for another day and other cases. Moreover, Goss
offers no support for its argument that MAN Roland is vicariously
liable for infringing uses of the Rotoman S press by its
customers. For reasons discussed more fully in an order to
6 follow, indirect infringement is not properly a part of this
case. It is possible that MAN Roland and its customers could be
joint tortfeasors, as Goss suggests, but not in a case, like
this, that includes no claims of infringement against those
customers. The only alleged and named infringer in this case is
MAN Roland, and the only infringement for which it has been held
liable is the manufacture and sale of the Rotoman S press. Goss
need not recover a share of the economic value MAN Roland's
customers realized by using the Rotoman S press to be fully and
fairly compensated for MAN Roland's acts of infringement. MAN
Roland's infringement, at worst, deprived Goss of the opportunity
to sell Sunday presses to Rotoman S customers. That injury will
be fully compensated when Goss recovers its lost profits
attributable to the infringing sales.
To conclude, the economic value of the Rotoman S press to
MAN Roland's customers is irrelevant to determining either Goss's
lost profits or a reasonable royalty MAN Roland ought to pay for
its manufacture and sale of the infringing Rotoman S press.
Evidence related to that factual matter is irrelevant.
Accordingly, MAN Roland's motion hn limine (document no. 540) is
granted.
7 SO ORDERED.
McAuliffe ''Chief Judge
August 15, 2 00 8
cc: Seth J. Atlas, Esq. Russell Beck, Esq. Bruce W. Felmly, Esq. Irvin D. Gordon, Esq. Richard S. Gresalfi, Esq. Mark A. Hannemann, Esq. Alfred H. Hemingway, Jr., Esq. Teodor J. Holmberg, Esq. Shari R. Lahlou, Esq. Hugh T. Lee, Esq. Michael J. Lennon, Esq. Richard D. Margiano, Esq. Steven F. Meyer, Esq. Martin B. Pavane, Esq. Tony v. Pezzano, Esq. George C. Reiboeck, Esq. Jonathan M. Shirley, Esq. Michael J. Songer, Esq. John F. Sweeney, Esq. T. Gy Walker, Esq. Daniel E. Will, Esq.