Federal Circuit “Cuts” at Lost Profits Award for Saw Blade Patent
January 08, 2001
Last Month at the Federal Circuit - February 2001
Judges: Clevenger (author), Schall, and Dyk
In Chiuminatta Concrete Concepts, Inc. v. Cardinal Industries, Inc., No. 00-1172 (Jan. 8, 2001) (nonprecedential decision), the Federal Circuit held that Defendant Green Machine Corp. (“GMC”), which had been found liable as inducing infringement, had raised material issues of fact as to whether each sale of a GMC accused product induced the purchaser to directly infringe, rendering inappropriate a SJ of lost profits for each such sale.
This decision is the fourth in a series of decisions during which Cardinal Industries, Inc. (“Cardinal”) and GMC had been found liable for inducement to infringe Chiuminatta’s U.S. Patent No. 4,889,675 (“the ‘675 patent”). The ‘675 patent teaches a method for cutting concrete when the concrete is within a specific hardness range. Specifically, the ‘675 patent teaches cutting concrete while it is still soft, or “green.”
Cardinal and GMC manufactured a concrete-cutting saw dubbed the “Green Machine” and advertised the Green Machine’s ability to cut concrete in various hardness ranges—including the range claimed in the ‘675 patent. Although the Green Machine saw alone does not infringe the claimed method in the ‘675 patent, a purchaser can infringe the patent when using the saw to cut concrete within the claimed range. Uses outside the claimed range of hardness, however, do not directly infringe.
After the Federal Circuit affirmed the Defendant’s liability of inducing infringement, the case went back to the district court for a determination of damages. The Federal Circuit noted that in instances where “not every sale lends to an instance of infringement, it logically follows that not every lost sale profit should be
compensated by the party inducing infringement.” Chiuminatta, slip op. at 6. Therefore, the Court continued, “in cases in which there is a question whether every sale leads to an instance of direct infringement, a patentee must, in addition to establishing that the four factors of the [Panduit Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152 (6th Cir. 1978)] test are satisfied, establish the connection between sales and direct infringement. Chiuminatta, slip op. at 6.
Since the lost profits damages were assessed against Cardinal and GMC on a SJ motion, the Federal Circuit looked to see whether Cardinal and GMC had raised any genuine issues of material fact. Cardinal and GMC had submitted evidence that they had sold blades of varying hardness for the Green Machine saw–the hardest being most appropriate for “green” concrete. Their evidence also showed that most of the blades sold for the Green Machine saw were of the soft or medium hardness typically used to cut concrete outside the hardness range claimed in the ‘675 patent. This evidence raised genuine issues as to whether each sale of a Green Machine saw induced the purchaser to directly infringe the patent, the Court concluded.
The Federal Circuit was careful to state that Chiuminatta was not “required to demonstrate a one-to-one direct correspondence between units sold and directly infringing customers.” Id. This record, however was insufficient to support SJ even by circumstantial evidence. Based on this, the Federal Circuit reversed the lower court’s lost profits damage award and remanded the case for further consideration consistent with its ruling.