Philippi-Hagenbuch, Inc. v. Western Technology Services, Int’l, Inc., No. 12-cv-1099, 2013 WL 2419934 (C.D. Ill. June 3, 2013)
In Philippi, the court concluded that, while pre-issuance sales and marketing data was relevant to royalty damages and was thus discoverable, it was not relevant to a price erosion theory because the pre-issuance competition was lawful.
Plaintiff served broad requests for production regarding technical, sales, and marketing information relating to the accused products without any limits on time. Defendant limited its responses to the earliest date one of the patents issued for one group of patents and the six-year statute of limitations for another group because damages would be limited to the date. Id. at *1. Plaintiff moved to compel seeking documents back to the first application date. Id.
The court granted the motion in part, agreeing that technical, sales and marketing information from prior to the date of issuance was relevant to the reasonable royalty method of calculating damages. Id. at *3. Defendant’s history and experience with the patented technology prior to issuance would be relevant to the value of the inventions when the patents issued and therefore relevant to the damages calculation. Id.
Plaintiff also argued the requested information was relevant to its request for lost profits damages resulting from price erosion. Id. The court rejected the argument, saying use of the inventions prior to issuance was legal and not infringement. The impact of that legal activity on market prices would not have injured Plaintiff. Id. Thus, the requested information was not relevant to lost profits. Id.
Evidence of infringement during periods when damages are not recoverable could, nonetheless, be relevant to price erosion and would, therefore, be discoverable. Id. at *3, n. 1.