Patent Damages
9Mar/12Off

EMVR and “Artful Drafting”

In a case involving medical devices, the District Court for the Western District of Pennsylvania was faced with the question of what the “patented product” means for purposes of the entire market value rule.  The Defendant moved for summary judgment on the issue of whether linear accelerators could be included in the royalty base.  The Defendant believed that only RPM Respiratory Gating Systems (“RPM Systems”) were appropriately part of the base, and that linear accelerators were an unpatented article that should not be included under the Entire Market Value Rule (“EMVR”).  The Plaintiff believed that the linear accelerators were properly part of the damages base because multiple claims referred to linear accelerators.

The District Court’s opinion began with citations to Lucent and Uniloc for the basic propositions for EMVR, and then Judge Rader’s opinion in Cornell for the specific test to be applied.  The crux of the dispute, as the Court saw it, was what it meant for something to be part of the invention – as that term was used in Lucent, Uniloc, and Cornell.  The Plaintiff pointed to the fact that linear accelerators were mentioned in several of the claims and therefore part of the invention, while the Defendant argued that linear accelerators were in fact in the prior art, and that adding prior art components to an apparatus claim through “artful drafting” should not expand what the invention was for damages purposes.  The Court sided with the Plaintiff, finding that:

[T]he linear accelerators were a critical component of the infringing apparatus for Claims 22 and 38 and not just an accessory that is used in conjunction with the RPM System. Id. It is important to note that many components of the RPM System are not patented by Pitt but Varian does not argue that those components should be excluded from the royalty base. For example, the processor that is being used to process the signals coming from the camera has not been patented by Pitt. Thus, the Court surmises that the primary reason that Varian is arguing that the linear accelerators are not a part of the patented apparatus is because of the impact that including the linear accelerators will have on damages. However, because the Court has concluded the linear accelerators are a part of the patented apparatus and not just a mere accessory, the added value of the linear accelerators may be used in determining the royalty base.

Varian argued that the Court’s analysis would be akin to including the price of a TV in the royalty base for a patented DVR that mentions a TV in the claims.  The Court refuted this argument by holding that in the present case, the better analogy would be for a TV that had a built in DVR, and that the TV was a critical component of the whole patented apparatus.

The Court’s opinion arguably runs counter to the first Lucent case decided by Judge Brewster in the Southern District of California, involving methods for encoding and decoding MP3 files.  There, the plaintiff argued that the entire computer was the appropriate base, because the computer was mentioned in the claims and was central to the encoding and decoding process, and the defendant argued a similar “artful drafting” argument.  Judge Brewster sided with the Defendant, noting that what mattered was the truly novel feature of the invention – the advancement over the prior art – and that the other elements of the claim should not affect the damages base, since the patent’s value and the royalty base should not change depending on what additional prior art elements get added to a claim.

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