First published in LES Insights
Under 35 U.S.C. § 284, infringers may be liable for lost profits or a reasonable royalty. A separate category of damages also exists for design patents. Under 35 U.S.C. § 289, entitled "[a]dditional remedy for infringement of design patent," infringers may be liable for total profits on sales of "any article of manufacture" that incorporate the patented design and are not limited to the portion of the infringing product subject to the design.
Nordock, Inc.1 (Nordock) filed suit against Systems, Inc. (Systems) alleging infringement of a U.S. design patent for a mechanical device used to bridge the gap between a truck bed and loading dock. After a district court trial, the jury found Nordock's patent valid and infringed by Systems. But despite Systems' expert's testimony that it sold 1,457 infringing products at a profit of $433 per unit, the jury also found that Systems had not profited at all from sales of the infringing device and only awarded Nordock about $50,000 in damages, plus interest. The district court denied Nordock's request for a new trial on damages, so Nordock appealed to the Federal Circuit.
The Nordock Decision
Under 35 U.S.C. § 284, patentees are entitled to damages for patent infringement of either their lost profits or a reasonable royalty on the infringer's sales of the infringing product. Under 35 U.S.C. § 289, however, aggrieved holders of design patents are entitled to recover an infringer's total profit on sales of any article of manufacture that incorporates the patented design. Against that backdrop, Nordock asked the Federal Circuit for a new trial to determine the correct amount of damages under 35 U.S.C. § 289 in light of Systems' expert testimony that it did in fact profit from its sale of products that infringed Nordock's design patent.
Addressing Nordock's request, the Federal Circuit noted that, when only a design patent is at issue, a patentee cannot recover both infringer profits under § 289 and additional damages under § 284. The Court said the owner of a design patent can recover the greater of either: 1) total profits from the infringer's sales under § 289, 2) damages for the patentee's lost profits or a reasonable royalty under § 284, or 3) $250 in statutory damages under § 289. Turning to the evidence, the Court found that even Systems' expert admitted that Systems had profited significantly from the sale of the infringing product. In fact, the Court determined that the jury's conclusion that Systems did not profit from its sale of infringing products was incorrect—Systems earned at least $600,000 from the sale of infringing products.
The Court emphasized that the jury's apparent choice to award compensatory damages under § 284, rather than total profits under § 289 was improper—juries should only determine whether § 289 damages are sought, and if so, whether recoverable damages are greater under § 289 or § 284. It is also improper, the Court said, to limit profits to a specific portion of an infringing product—total profits under § 289 are based on the entire article to which the design patent is applied.
Strategy and Conclusion
Infringers of design patents may be liable for their entire profits—not only for the portion of the infringing product subject to the design, but for the entire product. As a result, innovators should consider protecting both the ornamental and functional aspects of their products to maximize the value of their intellectual property.