Trio Process Corporation and Franklin Smelting & Refining Co., a Partnership v. L. Goldstein's Sons, Inc. And Metal Bank, Inc.

612 F.2d 1353, 66 A.L.R. Fed. 165, 204 U.S.P.Q. (BNA) 881, 1980 U.S. App. LEXIS 21703
CourtCourt of Appeals for the Third Circuit
DecidedJanuary 2, 1980
Docket78-2566
StatusPublished
Cited by19 cases

This text of 612 F.2d 1353 (Trio Process Corporation and Franklin Smelting & Refining Co., a Partnership v. L. Goldstein's Sons, Inc. And Metal Bank, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Trio Process Corporation and Franklin Smelting & Refining Co., a Partnership v. L. Goldstein's Sons, Inc. And Metal Bank, Inc., 612 F.2d 1353, 66 A.L.R. Fed. 165, 204 U.S.P.Q. (BNA) 881, 1980 U.S. App. LEXIS 21703 (3d Cir. 1980).

Opinions

OPINION OF THE COURT

ROSENN, Circuit Judge.

After a history of fourteen years of litigation in the district court and several appeals to this court, we are confronted again with an appeal in this patent infringement proceeding. The infringement has been established and is no longer at issue.1 We are, however, revisited with the troublesome issue of damages. When this case was last before us on appeal from the original determination of damages, we vacated the judgment and remanded to the district court with instructions to recalculate the damages.2 We are now asked to decide whether the district court’s action is consistent with our holding in that earlier appeal. We hold that it is not and, therefore, again vacate the district court’s judgment.

I.

At the heart of this controversy is a patented process for removing insulation from copper wire in order to allow the copper to be salvaged.3 This process is covered by United States Patent No. 3,076,421, owned by Trio Process Corporation (“Trio”). In 1972 we upheld the validity of the patent and determined that it had been willfully infringed by L. Goldstein’s Sons, Incorporated (“Goldstein”). Trio Process Corp. v. L. Goldstein’s Sons, Inc., 461 F.2d 66 (3d Cir.), cert. denied, 409 U.S. 997, 93 S.Ct. 319, 34 L.Ed.2d 262 (1972). The case was remanded to the district court for a determination of damages.

On remand the district court appointed a master to assist in the determination of damages. When we last reviewed the proceedings, we observed:

The master approached the damage issue by comparing Goldstein’s costs of operating the patented process with the costs of a similar, unpatented process. He found that use of the Trio process saved Gold-stein $52,791 per furnace year in labor costs alone, and that other, smaller savings accrued to Goldstein from use of the patented method as well.
In order to reach a “reasonable royalty” for use of the patent by the infringer, the master halved Goldstein’s savings in labor costs, and concluded that $26,390 was a reasonable royalty for each furnace year. Multiplying this figure by the number of furnace years of infringement [1356]*1356and making slight modifications, the master found damages of $1,564,804. The master recommended trebling this amount, as allowed by 35 U.S.C. § 284 (1970). After trebling and the addition of interest, the total damage figure proposed by the master was $5,062,954.
The district court viewed the damage computation not with regard to the money saved by the defendant as a result of the infringement, as the master had, but in terms of what Trio had lost. It looked first to the initial sum of $2,600 per furnace year — the amount actually charged by Trio for licenses in the 1960-1970 era. The district court then 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 year for the years prior to the decision by this Court on validity, a figure three times the rate charged by Trio during the 1960’s. Damages were set at $15,000 per furnace year for the period following the 1972 adjudication. The employment of these two figures resulted in total primary damages of $653,839. The trial judge then proceeded to use a double multiplier — in contrast to the master’s trebling figure — and denied attorneys’ fees. With interest, the total damages computed by the district court were $1,726,525.

Trio Process Corp. v. L. Goldstein’s Sons, Inc., 533 F.2d 126, 128 (3d Cir., 1976) (footnotes and citations omitted) (“Trio Process III”).

On appeal we affirmed in part and reversed in part. Trio Process III, supra. We 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.” Id. at 129. See Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476, 84 S.Ct. 1526, 12 L.Ed.2d 457 (1964). We also affirmed the district court in its finding “that the license rate established by Trio in the 1960’s may have been artificially depressed by Gold-stein’s ongoing infringement, and that the reasonable royalty should therefore be set at a level above the actual license rate.”4 Trio Process III, supra, 533 F.2d at 129 (emphasis added).

We held, however, that the district court had erred in two respects. First, it had calculated not one royalty rate but two: one for the period before our decision upholding the patent’s validity and the second for the period after.5 We held that a single reasonable royalty rate should be calculated for the entire period of infringement. The district court has done that and the point is no longer at issue. Second, and most importantly for purposes of deciding this appeal, there was a failure to articulate the reasons underlying the determination of the royalty rate. Thus, the cause was remanded to the trial court for reconsideration of the damages issue. We noted specifically that

[O]n remand, 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.

Trio Process III, supra, 533 F.2d at 130 (footnote omitted). This has not been done, [1357]*1357however, and we therefore vacate the determination of damages.6

II.

In calculating damages for patent infringement, a patent holder is entitled to receive compensation for the infringement but in no event less than a reasonable royalty. 35 U.S.C. § 284 (1976). An exhaustive list of factors relevant to the determination of a reasonable royalty can be found in Georgia-Pacific Corp. v. United States Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y.1970), modified, 446 F.2d 295 (2d Cir.), cert. denied, 404 U.S. 870, 92 S.Ct. 105, 30 L.Ed.2d 114 (1971). The district court in this case found a number of those factors to be relevant in its own calculation of damages:

[1] [TJhe existing value of the [patented] process to the licensor as a generator of sales of his non-patented items; and the extent of such derivative or convoyed sales.
[2] The duration of the patent and the term of the license.
[3] The established profitability of the product made under the patent; its commercial success; and its current popularity.

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Bluebook (online)
612 F.2d 1353, 66 A.L.R. Fed. 165, 204 U.S.P.Q. (BNA) 881, 1980 U.S. App. LEXIS 21703, Counsel Stack Legal Research, https://law.counselstack.com/opinion/trio-process-corporation-and-franklin-smelting-refining-co-a-ca3-1980.