District Court Orders Submission of Expert Reports on Damages to Determine Proper Usage of Entire Market Value Rule

May 18, 2015

Invista North America S.A. R.L. ("Invistia") filed a patent infringement action against M&G USA Corporation ("M&G"). As the case progressed toward trial, both parties exchanged expert reports on damages, which implicated the entire market value rule.

As explained by the Federal Circuit, the entire market value rule is derived from Supreme Court precedent requiring that the patentee 'must in every case give evidence tending to separate or apportion the defendant's profits and the patentee's damages between the patented feature and unpatented features, and such evidence must be reliable and tangible, and not conjectural or speculative.' Astrazeneca AB v. Apotex Corp., --- F.3d. ---, 2015 WL 1529181 at *11 (Fed. Cir. April 7, 2015).

In analyzing the entire market value rule, the district court explained that "[e]ven where a patent covers the infringing product as a whole (not a single component of a multi-component product) and the claims recite both conventional and unconventional elements, 'the court must determine how to account for the relative value of the patentee's invention in comparison to the value of the conventional elements recited in the claim.'"

The district court stated that "[r]egardless of how one characterizes the above exercise, it is clear that 'the ultimate reasonable royalty award must be based on the incremental value that the patented invention adds to the end product.' Ericsson, Inv. v. D-Link Sys., Inc., 773 F.3d at 1226."

The plaintiffs argued that "the 'conventional' elements of the [patent-in-suit] (namely the PET, MXD6 and cobalt) become more valuable by their use in the patented invention." More specifically, "the synergistic reduction in yellowness was an unexpected and surprising result of the entire composition."

Defendants disagreed and contended that "the [patent-in-suit] teaches the combination of three elements: a copolyester comprising a metal sulfonate salt, a partially aromatic polyamide, and a cobalt salt, not a composition that provides a claimed reduction in yellowness and haze. Claim 1 makes no reference to a reduction in yellowness or haze in the claim itself."

As a result, the district court found that the experts disagreed about the value added by the inventive concept described in the patent-in-suit. Recognizing that "[t]he disagreement between the experts as to whether the claimed invention is coextensive with the entirety of the accused product . . . or an incremental improvement in the technology" should be an issue of fact for the jury, the district court ordered a review of the expert reports. "However, as articulated by defendants in the pretrial order,' I have a concern that the manner in which they attempt to minimize the value of the '216 patent may be inconsistent with the validity verdict rendered in the liability phase of the trial and affirmed on appeal. For that reason, I will review defendants' expert reports and confirm that they are directed to valuation and not (even obliquely) to invalidity."


Invista North America S.A. R.L. v. M&G USA Corporation, Case No. 11-1007-SLR (D. Del. May 2015)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.