Show Me the Money: Reasonable Royalty Damages Vacated Due to Much Higher Infringer’s Total Profits

Author: Christopher B. McKinley
Editor: Lauren J. Dreyer

In Nordock v. Systems, No. 14-1762 (Fed. Cir. Sept. 29, 2015), the Federal Circuit affirmed that there is no apportionment of “total profits” awards under 35 U.S.C. § 289 in design patent infringement. In this case, Nordock sued Systems for infringing its design patent covering ornamental features of a header plate of a loading dock leveler. Nordock prevailed and the jury awarded it $46,825 in reasonable royalties, indicating that Systems’ profits were $0 because profit from the infringing leveler should be apportioned to just the header plate, and not the entire leveler.

Nordock appealed, arguing the court misapplied § 289, which provides that, as an alternative to reasonable royalties, design patent owners are entitled to the disgorgement of an infringer’s “total profit” attributable to an infringing product, which evidence at trial indicated was at least $600,000. The Federal Circuit agreed, holding that under § 289, “total profits” means the infringer’s total profit gleaned from sale of the product, not merely the profit apportioned to the infringing element. It also held that although disgorgement under § 289 and compensatory damages under 35 U.S.C. § 284 (i.e., reasonable royalty or lost profits) are awarded alternatively, a determination of both must be made in order to award the greater of the two. As result, the Court remanded for a new damages trial.

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