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District Court Excludes Evidence of Lost Profits Where Inventor Did Not Make Products That Practiced the Patent Even Though a Related Corporation Did

In this patent infringement action, the defendants filed a motion in limine to exclude evidence of any claimed lost profits damages alleged by the plaintiff, the inventor of the patent-in-suit.
The defendants asserted that the plaintiff could not recover lost profits damages because he did not make or sell products covered by the patent-in-suit.

In support of their position, the defendants cited cases stating that only a plaintiff who sells the patented device may claim lost profits damages. See Poly-America, L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004). The defendants also cited cases showing that a plaintiff cannot claim as patent infringement damages the lost profits of a related corporation, arguing that the plaintiff could not recover the lost profits of Death Door Marine, Inc. (“DDM”) because DDM’s profits “flow inexorably” to the plaintiff.

The plaintiff disagreed and asserted that the cases cited by Defendants are distinguishable from the facts of the case at hand and that DDM’s profits do flow inexorably to him. See Fujitsu Ltd. v. Tellabs, Inc., 2013 WL 2285794, at *3 (N.D. Ill. May 23, 2013). Alternatively, the inventor sought to amend the complaint to add DDM as a plaintiff in the case.

The district court agreed with the defendants that the inventor was was unable to recover lost profits damages. “Unlike the patentees discussed in Carver v. Velodyne Acoustics, Inc., 202 F. Supp. 2d 1147, 1149 (W.D. Wash. 2002), and Kalman v. Berlyn, Corp., 914 F.2d 1473 (Fed. Cir. 1990), Plaintiff does not have an exclusive license with DDM for the ‘554 Patent.

As Plaintiff stated in his deposition, he is free to license out the ‘554 Patent to other parties:
Q: Do you license the patent to anyone?
A: No.
Q: Nothing prevents you from licensing it, does it?
A: It does not.
Q: In other words, if you wanted to license it to my client as part of a settlement agreement, you’d be able to do that; is that correct?
A: That is correct.

The district court also concluded that “because DDM is a non-exclusive licensee, it has no standing to sue for damages. See Carver v. Velodyne Acoustics, Inc., 202 F. Supp. 2d 1147, 1148 (W.D. Wash. 2002). As such, I also find that it would be inappropriate to grant Plaintiff’s alternative request to amend and add DDM as a party.”

Accordingly, the district court granted the motion to exclude evidence of lost profits.

Kahr v. Cole
, Case No. 13-C-1005 (E.D. Wisc. July 28, 2016)

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

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