United States District Court, S.D. West Virginia, Bluefield
MEMORANDUM OPINION AND ORDER
A. Faber Senior United States District Judge.
before the court is plaintiff's motion for
reconsideration of this court's order granting
defendant's motion for a new trial as to damages. (ECF
No. 100). That motion has been fully briefed and a hearing on
the motion was held on June 13, 2018. For the reasons
discussed below, the motion for reconsideration is
Hafco Foundry and Machine Company, Inc. (“Hafco”)
filed the instant action for patent infringement on December
15, 2015. Hafco owns the patent for a Rock Dust Blower, U.S.
Design Patent No. D681, 684S. In 2014, Hafco entered into an
agreement with Pioneer Conveyor, an affiliate of GMS Mine
Repair and Maintenance, Inc. (“GMS”), by which
Pioneer Conveyor was to distribute Hafco rock dust blowers to
mining customers. The distribution agreement between Hafco
and Pioneer Conveyor was terminated in or around early May
2015. According to Hafco, following termination of the
aforementioned distribution agreement, GMS began selling
infringing rock dust blowers within the Southern District of
of this matter began on May 15, 2017. After a three-day
trial, the jury returned a verdict finding that GMS had
infringed Hafco's `684 patent and that the infringement
was willful. The jury awarded Hafco damages in the amount of
$123, 650.00. On May 18, 2017, the court entered judgment in
plaintiff's favor in the amount of $123, 650.00.
Memorandum Opinion and Order dated March 30, 2018, the court
granted GMS's motion for a new trial on the issue of
damages. In so doing, the court found that the jury's
award of $123, 650 was against the weight of the evidence and
that, on the evidence presented, $0 in compensatory damages
was the outermost award that could be sustained. The court
therefore reduced the award to $0 and granted a new trial
nisi remittitur at Hafco's option.
rejected the remittitur and filed the instant motion for
important not to lose sight of the fact that Hafco, as the
plaintiff, bore the burden of proving each and every element
of its case by a preponderance of the evidence.
In patent cases “[t]he burden of proving damages falls
on the patentee, ” Lucent Techonologies,
Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir.
2009), and “[t]he [patentee] must show his damages by
evidence, ” Philp v. Nock, 84 U.S. 460, 462,
17 Wall. 460, 21 L.Ed. 679 (1873). Damages “must not be
left to conjecture by the jury. They must be proved, and not
guessed at.” Id.
When a patentee seeks lost profits as the measure of damages,
“the patent holder bears the burden of proving the
amount of the award.” Minco, Inc. v.
Combustion Eng'g, Inc., 95 F.3d 1109, 1118 (Fed.
Cir. 1996) (emphasis added). “[T]he amount of a
prevailing party's damages is a finding of fact on which
the plaintiff bears the burden of proof by a preponderance of
the evidence.” Smith-Kline Diagnostics, Inc. v.
Helena Labs. Corp., 926 F.2d 1161, 1164 (Fed. Cir.
1991). “[T]he amount is normally provable by the facts
in evidence or as a factual inference from the
evidence.” Lindemann, 895 F.2d at 1406.
Promega Corp. v. Life Techs. Corp., 875 F.3d 651,
660 (Fed. Cir. 2017).
recover lost profits, Hafco had to prove a causal relation
between the GMS's infringement and its loss of profits.
Oiness v. Walgreen Co., 88 F.3d 1025, 1029 (Fed.
Cir. 1996). In other words, the burden rested on Hafco to
show a reasonable probability that “but for” the
infringing activity, it would have made GMS's sales.
See id. It is Hafco's failure of proof on this
point that led the court to grant a new trial on damages.
court noted in its Memorandum Opinion and Order of March 30,
To show causation and entitlement to lost profits, a patentee
must reconstruct the market to show “likely outcomes
with infringement factored out of the economic
picture.” Grain Processing Corp. v. Am.
Maize-Prods. Co., 185 F.3d 1341, 1350 (Fed. Cir. 1999)
(“Reconstructing the market, by definition a
hypothetical enterprise, requires the patentee to project
economic results that did not occur.”). “To
prevent the hypothetical from lapsing into pure speculation,
th[e] court requires sound economic proof of the nature of
the market.” Id. Lost profits awards have been
affirmed “based on a `wide variety of reconstruction
theories in which the patentee has presented reliable
economic evidence of `but for' causation.'”
Ericsson, Inc. v. Harris Corp., 352 F.3d 1369, 1377
(Fed. Cir. 2003) (quoting Crystal Semiconductor Corp. v.
TriTech Microelecs. Int'l, Inc., 246 F.3d 1336, 1355
(Fed. Cir. 2001)).
One “useful, but non-exclusive, way for a patentee to
prove entitlement to lost profits damages” is the
four-factor test articulated in Panduit Corp. v. Shahlin
Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978).
Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538,
1545 (Fed. Cir. 1995). “The Panduit test
requires that a patentee establish: (1) demand for the
patented product; (2) absence of acceptable non-infringing
substitutes; (3) manufacturing and marketing capability to
exploit the demand; and (4) the amount of profit it would
have made.” Id. “A showing under
Panduit permits a court to reasonably infer that the
lost profits claimed were in fact caused by the infringing
sales, thus establishing a patentee's prima facie case
with respect to `but for' causation.” Id.
Whether a patentee relies on Panduit or some other
means of showing entitlement to lost profit damages, it
“must reconstruct the market to determine what
profits the patentee would have made had the market developed
absent the infringement product.” Ericsson,
352 F.3d at 1377 (emphasis added). In a two-supplier market,
“lost profits for all sales made by an infringer are
easier to obtain because there are only two suppliers in the
market.” Water Techs. Corp. v. Calco, LTD.,
850 F.2d 660, 672 (Fed. Cir. 1988). However, “an
accurate reconstruction of the hypothetical `but for'
market takes into account any alternatives available to the
infringer.” Grain Processing Corp. v. American
Maize-Products Co., 185 F.3d 1341, 1351 (Fed. Cir.
In the instant case, there was no attempt to reconstruct the
market. “[Hafco] simply assumed that every sale made by
[GMS] would have been theirs in the absence of the
infringement.” Keg Techs., Inc. v. Laimer, 436
F.Supp.2d 1364, 1369 (N.D.Ga. 2006). The record is silent
with respect to the second and third Panduit factors
- absence of acceptable non-infringing substitutes and
manufacturing and marketing capability to exploit the demand.
Nor did Hafco show that it was a “two-supplier market
where any sale made by one competitor can be presumed
attributable to its opponent were it not for the
infringement.” Id. at 1369-70; see Lam,
Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed.
Cir. 1983) (“Where, as here, the patent owner and the
infringer were the only suppliers of the product, causation
may be inferred.”). Indeed, Hafco aggressively fought
to keep any mention of other can rock ...