High Court Denies Review of Standards On Patent Infringement Damages, Lost Profits

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June 30 — The Supreme Court denied on June 30 a petition for writ of certiorari in Rudolph Techs., Inc. v. Integrated Tech. Corp. (U.S., No. 13-1062, review denied 6/230/14), which appealed a Nov. 4 decision by the U.S. Court of Appeals for the Federal Circuit.

Integrated Technology Corp. owns a patent (U.S. Patent No. 6,118,894) on equipment that inspects probes that test chips on a semiconductor for misalignment. Rudolph Technologies Inc. is a competitor. The district court granted summary judgment of literal infringement by Rudolph's pre-2007 products, and a jury found infringement by subsequent products under the doctrine of equivalents. The jury awarded $7.7 million and $7.8 million in lost profits for the two product versions, respectively.

The appeals court overturned the jury's decision as to the later products but affirmed the lost profits award as to the pre-2007 products, reviewing under a substantial evidence standard.

It held that the jury could have determined the award under a “two-supplier theory,” per State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1578, 12 U.S.P.Q.2d 1026 (Fed. Cir. 1989) (“In the two-supplier market, it is reasonable to assume, provided the patent owner has the manufacturing and marketing capabilities, that it would have made the infringer's sales.”).

In the courts and in its cert petition, Rudolph argued that versions of the noninfringing products were available to it pre-2007, negating application of a lost-profits option for damages.

It thus presented two questions:

1. Whether issues of law impacting patent damages should be reviewed de novo—like all other issues of law—or whether they should be reviewed under the deferential substantial evidence standard.

2. Whether a patentee may obtain “lost profits” damages under a “two-supplier market” theory even when there are non-infringing alternatives.

 

Daniel W. McDonald of Merchant & Gould PC, Minneapolis, and Carter G. Phillips of Sidley Austin LLP, Washington, D.C., represented Rudolph. Harry D. Cornett Jr. of Tucker Ellis LLP, Cleveland, represented Integrated.