The first Panduit factor concerning consumer demand for the patented product in order to establish a right to lost profit damages, rather than merely a reasonable royalty, cannot be satisfied by gross sales data alone when the patented invention is merely a component of the product being sold.
Background / Facts: The patents here are directed to utility lighters with child-resistant mechanisms that comport with federal safety requirements. Each patent claims a device comprised of a safety mechanism with a trigger, a locking lever, and a safety button. The claimed invention is not the utility lighter as a whole, but rather a combination of components comprising a lock mechanism that allows a user to operate a lighter in a safe, non-complicated manner. Nevertheless, the district court based its grant of lost profit damages on gross sales data of the utility lighters as a whole.
Issue(s): Whether evidence of gross sales data is sufficient under the Rite-Hite framework to establish consumer demand based on the patented safety mechanism.
Holding(s): No. “[T]he lack of demand for the patented safety mechanism is reflected in the summary judgment ruling, where the district court acknowledges that Calico made no attempt to argue that the safety mechanism drives demand for its specific product. … The patents in suit are directed to a safety mechanism with a trigger, a locking lever, and a safety button, but Calico never explored the commercial benefits of these features and elicited no testimony to distinguish between the value of the patented and unpatented features. Specifically, Calico’s Vice President of Sales and Marketing conceded that Calico had no documentation showing that consumers preferred the Calico safety mechanism to an alternative mechanism found in competitors’ products. … While the record lacks evidence that the patented feature drove customer demand, evidence was presented that the most salient driver of customer demand seemed to be the utility lighter’s price.”