Although courts and commentators have turned up the heat on the entire market value rule (EMVR) in recent years, it can be a useful tool for a patentee to obtain significant damages where the evidence shows that the patented feature is the basis of consumer demand for the accused product. Thus, defendants often try to exclude such evidence and related damages analyses based upon arguments that the evidence is insufficient or the analyses are flawed.
In one such District of Massachusetts case, plaintiff Exergen sought damages from defendant Kaz under the EMVR, claiming that the patent-related feature of obtaining a body temperature from the forehead drives consumers to purchase the accused Kaz products. Exergen relied on analysis from its damages expert who used Kaz’s own documents to support his application of the EMVR. Those documents suggested that location of the temperature-measurement site is the first decision a customer makes when deciding on a thermometer—and this location is the primary reason a consumer would buy a temporal thermometer.
Kaz then filed a motion in limine to strike Exergen’s damages theory based upon the EMVR as improper. Kaz claimed that the feature of taking a temperature from the forehead is simply a law of nature and, as such, Exergen cannot claim this law of nature as its own invention for the purposes of an EMVR analysis. In support of its position, Kaz pointed to three recent rulings by Judge Stearns—one in this case and two in related infringement cases against competitors Brooklands and Thermomedics—where certain of Exergen’s patent claims were deemed invalid under 35 U.S.C. § 101 as being directed to an unpatentable law of nature.
The Court denied Kaz’s motion. In his order, Judge Stearns concluded that Kaz’s reliance on § 101 in the damages context “falls short even at face value.” Although Exergen’s claims use a law of nature, it is the application of this law of nature that renders them patent-eligible. Therefore, Judge Stearns stated that “there is no reason why that application cannot also be the primary driving factor in the sales of products embodying the claims” for the purpose of a damages analysis. If it were otherwise, Judge Stearns continued, important inventions like the solar panel would suffer a similar fate “because the driving factor in its success is that it relies on a law of nature – that is, the sun’s energy.”
Judge Stearns’ reasoning highlights the important distinction between an unpatentable law of nature and a patent-eligible application of the same, both generally and in the context of patent damages. Litigants hoping to exclude evidence and expert opinion on this basis should scan such arguments closely before introducing them. Otherwise, a court may find that the arguments do not have any skin in the game.
The case is Exergen Corp. v. Kaz USA, Inc., Civil Action No. 13-cv-10628 (D. Mass. Jan. 7, 2015), before Hon. Richard G. Stearns. A copy of the order can be found here.