The U.S. Court of Appeals for the Federal Circuit held that a district court erred in failing to consider additional damages based on a reasonable royalty after it reduced a jury’s lost profits damage award due to a lack of proof of actual sales of products corresponding to some of the infringing products. Separately, the Federal Circuit held that a patent holder must prove infringement under the doctrine of equivalents by a preponderance of the evidence, even when the alleged products are themselves subject to patent protection. Siemens Medical Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., Case No. 10-1145; -1177 (Fed. Cir., Feb. 24, 2011) (Lourie, J.).

Siemens Medical Solutions sued Saint-Gobain Ceramics & Plastics for infringement of a patent that relates to crystals used in medical PET scanners to detect gamma rays emanating from a patient. Saint-Gobain’s crystals were covered by the claims of another patent, to which it held a license. Saint-Gobain sold its crystals to Philips Medical Systems, which manufactures and sells crystal-using PET scanners that compete with Siemens scanners.

The judge instructed the jury that Siemens must prove infringement under the doctrine of equivalents (DoE) by a preponderance of the evidence. Also, based on evidence that Saint-Gobain had sold Philips enough crystals for 79 scanners and that Philips and Siemens were direct competitors in a two-competitor market, the jury awarded Siemens $52.3 million in lost-profit damages for all 79 PET scanners. The district court judge, however, reduced the damage award to $44.9 million because the evidence suggested that Philips did not actually sell 18 of those 79 scanners. Saint-Gobain appealed the district court’s jury instruction regarding the burden of proof for DoE infringement, and Siemens appealed the judge’s modification of the jury’s damage award.

DoE Burden of Proof

The Federal Circuit affirmed that a patent holder must prove infringement under doctrine of equivalents by a preponderance of the evidence even when the accused products are themselves covered by a different patent. Saint-Gobain had argued that under Festo (seeIP Update, Vol. 10, No. 7) that a heightened burden of proof on the issue of equivalents should apply based on the Court’s statement in Festo that an infringement determination in those circumstances “is at least considerably more difficult to make out.” The Federal Circuit rebutted that argument, reiterating that “patent infringement, whether literal or by equivalence, is an issue of fact, which the patentee must prove by a preponderance of the evidence.” The Court remarked that its statement in Festo simply meant that when the accused products are covered by a separate patent, it is more difficult to prove DoE infringement by a preponderance of the evidence.

Reasonable Royalty

The Federal Circuit concluded that the district court erred in not considering at least reasonable royalty damages for the 18 scanners for which lost profit were not available as a measure of damages, citing §284 and explaining that the statute mandates that the damage award for making an infringing product should be no less than a reasonable royalty. The Federal Circuit explained that a court may split a damage award “between lost profits as actual damages to the extent they are proven and a reasonable royalty for the remainder.”