Lost Profits Claim Dismissed Where Plaintiff Did Not Provide Sufficient Evidence to Support the Entire Market Value Rule in Opposing Summary Judgment

January 13, 2012

Defendant filed a motion for summary judgment on lost profits challenging plaintiff's use of the entire market value rule. Defendant contended that plaintiff had not presented sufficient evidence to go to the jury on the entire market value rule. Plaintiff asserted that the defendant was misapplying the entire market value rule and ignoring the evidence.

The district court began its analysis by quoting from the Federal Circuit's decision in Lucent that "[f]or the entire market value rule to apply, the patentee must prove that 'the patent-related feature is the basis for the customer demand.'" Lucent Techs, Inc. v. Gateway, Inc. 580 F.3d 1301, 1336 (Fed. Cir. 2009). The district court noted that "[p]laintiff acknowledges the language from Lucent that the entire market value rule does not apply unless the patent-related feature is the basis for the customer demand, but argues the rule is not as narrow as that language suggests."

Plaintiff asserted that the entire market value rule applies if the results of the invention drive customer demand. Plaintiff then asserted that the case was replete with evidence that its patented sensor technology contributed to the safety of an infusion pump, which drives customer demand and therefore plaintiff should be allowed to present the entire market value rule to the jury.

The district court disagreed. "Evidence that the patented sensor technology contributes to the safety of the infusion pump, however, does not warrant presentation of the entire market value rule to the jury. As stated above, the entire market value rule applies only where the patented technology is the basis for customer demand. Evidence that the patented technology contributes to the safety of the pump does not speak to that ultimate issue."

The district court rejected plaintiff's argument that it is enough, standing alone, if the patented technology contributes to an intermediary feature that drives customer demand. The district court found that although this argument had initial appeal it failed upon closer inspection. The argument failed because, as the defendant pointed out, more than one component contributed to the safety of the pump. Therefore, under plaintiff's argument, each component could serve as a basis for customer demand. The district court found that this was antithetical to the entire market value rule because the entire market value rule requires that the patented feature must be "the basis for customer demand" or the patented feature must "substantially create the value of the component parts." Here, the district court found that the plaintiff has not set forth sufficient evidence to meet either formulation of the test for using the entire market value rule.

Accordingly, the district court granted the defendant's motion for summary judgment on the entire market value rule.

Carefusion 303, Inc. v. Sigma International, Case No. 10cv0442 DMS (WMC) (S.D. Cal. Jan. 3, 2012)

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