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Rite-Hite Corp. v. Kelley Co. - 56 F.3d 1538 (Fed. Cir. 1995)

Rule:

A showing of damages under Panduit permits a court to reasonably infer that the lost profits claimed were in fact caused by the infringing sales, thus establishing a patentee's prima facie case with respect to "but for" causation. A patentee need not negate every possibility that the purchaser might not have purchased a product other than its own, absent the infringement. The patentee need only show that there was a reasonable probability that the sales would have been made "but for" the infringement. When the patentee establishes the reasonableness of this inference, e.g., by satisfying the Panduit test, it has sustained the burden of proving entitlement to lost profits due to the infringing sales. The burden then shifts to the infringer to show that the inference is unreasonable for some or all of the lost sales.

Facts:

Kelley Company (Kelley) was a company that produced vehicle restraints similar to those produced by Rite-Hite Corporation (Rite-Hite). Rite-Hite brought a suit for patent infringement. Rite-Hite distributed its product through wholly-owned sales organizations and through independent distributors. The independent distributors intervened as exclusive licensees entitled to lost retail profits. The trial court found in favor of Rite-Hite and the independent distributors, entitling them to damages. Kelley appealed, claiming that the trial court incorrectly determined damages. Rite-Hite appealed the trial court's award of simple interest and refusal to award lost retail profits. 

Issue:

Was Kelley liable for damages?

Answer:

No

Conclusion:

The court affirmed in part, vacated in part, and remanded, holding that lost sales were compensable where foreseeable. However, Kelley was not liable for damages associated with a non-patented device sold with the patented product where the two did not function together to create one result and could be used independently. Judgment interest was properly calculated and lost profits denied where distributors' license lacked the right to exclude others under the patent.

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