The U.S. District Court for the Eastern District of Louisiana handed down two summary judgment decisions, denying summary judgment for defendants and allowing plaintiff to seek provisional rights damages, and granting summary judgment for defendants that plaintiff was not entitled to lost profits damages. Innovention Toys, LLC v. MGA Entertainment, Inc., Case No. 07-6510 (ED. La., Feb. 3, 2011) (Feldman, J.).
Innovention has a patent that generally covers a board game which makes use of laser beams. In an earlier summary judgment decision, the district court held that Innovention’s patent was valid and was infringed by MGA’s Laser Battle Game (defendants Wal-Mart and Toys “R” Us sell MGA’s products and are collectively referred to herein as MGA). The court then granted a permanent injunction; all of these decisions were appealed to the U.S. Court of Appeals for the Federal Circuit. Although an appeal is still pending, the district court invited motions on the pending damages issues.
Provisional rights damages are available where the issued patent claims are “substantially identical” to those claimed in a published patent application. MGA argued that because of Innovention’s narrowing of claims during prosecution, the issued claims were not substantially similar to the broader claims in the published application. Innovention argued, and the district court agreed, that the changes during prosecution were made simply for clarity and to recite explicitly what was already implicitly claimed. The district court reasoned that no substantive change occurs if the claims are amended to simply make them more definite. Because the scope of the claims of the issued patent were substantially identical to the scope of the claims of the published application, MGA’s motion as to provisional rights was denied.
The minimum amount of damages provided by law for patent infringement is a royalty payment for infringing sales. Lost-profits damages may be recovered if the patent holder can show a reasonable probability that, but for the infringement, it would have made the infringer’s sales. The burden then shifts to the infringer to show that the patent holder’s “but for” causation showing is unreasonable as to some or all of the lost sales. Innovention argued that this was only a two-supplier market and that Innovention had the manufacturing and marketing capability to make the sales diverted to MGA; it provided documentation to support this argument. MGA objected that the only evidence Innovention offered to support this claim was inadmissible hearsay, not subject to any exceptions, and thus could not be relied on by the court for purposes of summary judgment. The district court agreed and granted MGA’s motion that Innovention could not seek lost-profits damages.