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Panduit Corp. v. Stahlin Bros. Fibre Works

United States Court of Appeals for the Sixth Circuit

November 29, 1977, Argued ; April 25, 1978, Decided and Filed

No. 75-2417

Opinion

 [***728]  [*1154]   MARKEY, Chief Judge.

Appeal from a judgment of the district court, Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., C.A. Nos. 4935 and G293-71 (W.D.Mich. Sept. 15, 1975), adopting, with an unpublished opinion, the report of the special master awarding plaintiff, as  [*1155]  damages for patent infringement, a reasonable royalty of 2 1/2%. We reverse and remand.

Litigation Background

In 1964 plaintiff Panduit Corp. (Panduit) sued defendant Stahlin Bros. Fibre Works, Inc. (Stahlin) for infringement of Panduit's Walch patent No. 3,024,301, covering duct for wiring of electrical control systems.  [**2]  In 1969, the district court found claim 5 valid and infringed by the "Lok-Slot" and "Web-Slot" ducts made and sold by Stahlin, enjoined Stahlin from further infringement, and ordered an accounting. 298 F. Supp. 435, 162 USPQ 114 (W.D.Mich. 1969). That judgment was affirmed on appeal. 430 F.2d 221, 166 USPQ 524 (6th Cir. 1970), cert. denied, 401 U.S. 939, 168 USPQ 673, 28 L. Ed. 2d 218, 91 S. Ct. 932 (1971).

Thereafter, the district court adjudged Stahlin in contempt of the court's injunction, because of Stahlin's making and selling the "Tear Drop" duct, a colorable imitation of the infringing "Lok-Slot," 338 F. Supp. 1240, 172 USPQ 650 (W.D.Mich. 1972). [***729]  That judgment was also affirmed on appeal. 476 F.2d 1286, 178 USPQ 12 (6th Cir. 1973).

In 1971, the district court appointed a master to determine Panduit's damages pursuant to 35 U.S.C. § 284, 2 to take evidence, and render a report on the issues of treble damages, interest, costs, and attorney fees. The district court, in adopting in toto the master's report, considered the master's findings of fact not clearly erroneous, and [**3]  stated that "the Master had correctly applied the law to the circumstances of this case." The report recommended $ 44,709.60 in damages, based on a royalty of 2 1/2% of gross sales price, the percentage being calculated on Stahlin's testimony that its normal profit on all of its products was 4.04% and the concept that a "reasonable royalty" entailed some level of profit to the "licensee." Horvath v. McCord Radiator and Mfg. Co., 100 F.2d 326 at 335, 40 USPQ 394 at 403 (6th Cir. 1938), cert. denied, 308 U.S. 581, 43 USPQ 520, 84 L. Ed. 486, 60 S. Ct. 101 (1939).

 [**4]  Fact Background

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575 F.2d 1152 *; 1978 U.S. App. LEXIS 11500 **; 197 U.S.P.Q. (BNA) 726 ***

PANDUIT CORP., Plaintiff-Appellant, v. STAHLIN BROS. FIBRE WORKS, INC., Defendant-Appellee

Prior History:  [**1]   Appeal from the United States District Court for the Western District of Michigan, Southern Division.

CORE TERMS

infringement, patent, royalty, duct, wires, district court, noninfringing, customers, damages, substitutes, sales, license, clearly erroneous, lost profits, manufacture, Electric, licensee, profits, negotiated, price cut, advantages, selling, injunction, royalty rate, lost sales, competitor, elected, costs, price reduction, issue a patent

Patent Law, Damages, Patentholder Losses, Reasonable Royalties, Remedies, General Overview, Business & Corporate Compliance, Ownership, Conveyances, Licenses, Patentholder Losses, Infringement Actions, Burdens of Proof, Infringer's Profits, Measure of Damages, Civil Procedure, Trials, Bench Trials, Judicial Officers, Masters, Appeals, Standards of Review, Clearly Erroneous Review, Exclusive Rights, Manufacture, Sale & Use, Infringing Acts, Patents as Property, Real Property Law, Torts, Trespass to Real Property, Offers to Sell & Sales, Invention Date & Priority, Use, Defenses, Bad Faith Enforcement, Equitable Relief, Injunctions, Copyright Law, Types of Damages, Infringement Profits, Antitrust & Trade Law, Regulated Practices, Intellectual Property, Ownership & Transfer of Rights, Bad Faith, Fraud & Nonuse, Inequitable Conduct, Intent & Knowledge, Insurance Law, Policy Interpretation, Reasonable Expectations, Utility Patents, Product Patents, Machines