The accused product infringed the patent, and the patentee was entitled to lost profits damages and reasonable royalties.

Versata Software, Inc. v. SAPAmerica, Inc., No. 2012-1029, -1049 (Fed. Cir. May 1, 2013).

The two patents relate to computer based pricing engines. The patentee’s commercial embodiment – software that included the claimed hierarchical computer based pricing engine – improved performance over prior art, non-hierarchical computer based pricing engines, and experienced quick commercial success. The accused infringer, a large software solutions provider, launched a competing product that incorporated the claimed hierarchal computer based pricing engine as a component. The accused infringer’s product soon consumed the market, and as a result, the patentee did not make any new sales once the accused infringer’s product took hold. The jury found infringement of one of the patents, and awarded lost profits damages and reasonable royalties to the patentee.

The Federal Circuit affirmed the jury’s finding of infringement in part because the patentee’s expert credibly testified that the accused product, by following the accused infringer’s own directions, achieved the claimed hierarchical pricing functionality.

The Federal Circuit also affirmed the jury’s lost profits damages award. The court held that there is “no qualitative requirement on the level of demand to show lost profits” and that “[the patentee] need not have actually sold [the commercial embodiment] during the damages period to show demand for the patented functionality.” Thus, the court ruled that the patentee showed that there was demand for hierarchical pricing before and after the accused infringer entered the market, and that once it did, the patentee made no sales during the relevant time period. The court also ruled that the patentee proved a quantum of lost profits with reasonable probability.

In addition, the Federal Circuit affirmed the jury’s reasonably royalty award because it was not outrageously high, and it was based on the accused infringer’s own full hypothetical negotiation analysis, royalty rate, and comparables, such that the award was supported by substantial evidence.

A copy of the opinion can be found here.