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Mentor Graphics Corporation v. EVE-USA, Inc.

United States Court of Appeals, Federal Circuit

September 1, 2017

MENTOR GRAPHICS CORPORATION, AN OREGON CORPORATION, Plaintiff-Cross-Appellant
v.
EVE-USA, INC., A DELAWARE CORPORATION, SYNOPSYS EMULATION AND VERIFICATION S.A.S., FORMED UNDER THE LAWS OF FRANCE, SYNOPSYS, INC., A DELAWARE CORPORATION, Defendants-Appellants

         Appeals from the United States District Court for the District of Oregon in Nos. 3:10-cv-00954-MO, 3:12-cv-01500-MO, 3:13-cv-00579-MO, Judge Michael W. Mosman.

         ON PETITION FOR REHEARING EN BANC

          MaekE. Miller, O'Melveny & Myers LLP, San Francisco, CA, filed a response to the petition for plaintiff-cross-appellant. Also represented by Anne E. Huefsmith, LUANN LORAINE SIMMONS.

          E. JOSHUA Rosenkranz, Orrick, Herrington & Sutcliffe LLP, New York, NY, filed a petition for rehearing en banc for defendants-appellants. Also represented by Daniel A. Rubens, Andrew D. Silverman; Robert M. Loeb, Eric Shumsky, Washington, DC; Vicki L. Feeman, Travis Jensen, Scott T. Lonardo, Menlo Park, CA; William H. Wright, Los Angeles, CA; Indra Neel Chatterjee, Goodwin Procter LLP, Menlo Park, CA.

          ERIC E. Bensen, Garden City, NY, as amicus curiae.

          Phillip R. Malone, Stanford Law School, Stanford, CA, for amici curiae Public Knowledge and Jeremy W. Bock, et al. Also represented by JEFFREY THEODORE Pearlman.

          Before Prost, Chief Judge, NEWMAN, LOURIE, Dyk, Moore, O'Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll, Circuit Judges.

          ORDER

          PER CURIAM.

         Appellants EVE-USA, Inc., Synopsys Emulation and Verification S.A.S., and Synopsys, Inc. filed a petition for rehearing en banc. A response to the petition was invited by the court and filed by the cross-appellant Mentor Graphics Corporation. Two motions for leave to file amici curiae briefs were also filed and granted by the court.

         The petition, response, and briefs of amici curiae were referred to the panel that heard the appeal, and thereafter were referred to the circuit judges who are in regular active service. A poll was requested, taken, and failed.

         Upon consideration thereof, It Is Ordered That:

         The petition for panel rehearing is denied.

         The petition for rehearing en banc is denied. The mandate of the court will be issued on September 8, 2017.

          Stoll, Circuit Judge, with whom NEWMAN, MOORE, O'MALLEY, Reyna, and WALLACH, Circuit Judges, join, concurring in the denial of rehearing en banc.

         Because the panel's decision is consistent with longstanding patent law damages principles, [1] I concur in the denial of rehearing en banc.

         We have consistently held that where an infringing product is a multi-component product with patented and unpatented components, apportionment is required. See VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326 (Fed. Cir. 2014) ("No matter what the form of the royalty, a patentee must take care to seek only those damages attributable to the infringing features."); Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc., 809 F.3d 1295, 1301 (Fed. Cir. 2015) ("[D]amages awarded for patent infringement 'must reflect the value attributable to the infringing features of the product, and no more.'") (quoting Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014)); Ericsson, 773 F.3d at 1226 ("[Apportionment is required even for non-royalty forms of damages."). The apportionment requirement dates back to Garretson v. Clark, 111 U.S. 120 (1884), where the Supreme Court held that "[t]he patentee . . . must in every case give evidence tending to separate or apportion the defendant's profits and the patentee's damages between the patented feature and the unpatented features." Garretson, 111 U.S. at 121.

         Garretson, however, also holds that damages for patent infringement may be based on the value of the entire infringing product if the patentee can show that "the entire value of the whole machine ... is properly and legally attributable to the patented feature." Id. In other words, "[i]f it can be shown that the patented feature drives the demand for an entire multi-component product, a patentee may be awarded damages as a percentage of revenues or profits attributable to the entire product." LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 67 (Fed. Cir. 2012).

         In this case, on the question of lost profits, the jury was instructed to consider the Panduit factors, including "demand for the patented product" (factor one) and an "absence of acceptable noninfringing substitutes" (factor two). See Panduit Corp. v. Stahlin Bros. Fibre Works, Inc.,575 F.2d 1152, 1156 (6th Cir. 1978). As the panel recognized, these two factors together "consider[] demand for the patented product as a whole" and "consider[] demand for particular limitations or features of the claimed invention." Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275, 1285 (Fed. Cir. 2017) (citing DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc.,567 F.3d 1314, 1330-31 (Fed. Cir. 2009)). As the panel noted, the jury found that "Intel would not have purchased the [infringing] Synopsys emulator system without the two patented features and that there were no other alternatives available." Id. at 1287. This undisputed fact finding established that Mentor proved that the patented features were what imbued the combined features that made up the emulator with marketable value. Under these circumstances, further apportionment is unnecessary. See Ericsson, 773 F.3d at 1227 ("[W]here the entire value of a machine as a marketable article is 'properly and legally attributable to the patented feature, ' the damages owed to the patentee may be calculated by reference to [the entire value of ...


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