The U.S. Court of Appeals for the Federal Circuit reversed the jury’s award of lost profit damages and the district court’s grant of judgment as a matter of law (JMOL) that the defendant was personally liable for inducing patent infringement. Wechsler v. Macke Int'l Trade, Inc., Case Nos. 05-1242, -1243 (Fed. Cir., May 18, 2007) (Prost, J.).
Defendant O’Rourke is president, lone stockholder and sole employee of Macke International Trade. O’Rourke was sued by Wechsler for patent infringement. At the time of the lawsuit, Macke was selling the accused device, but subsequently took the device off the market. Approximately one year after Macke stopped selling the device, Wechsler began to manufacture and sell a similar product.
On motions for summary judgment, the district court held that Mr. O’Rourke was not an alter ego of Macke International and was not personally liable for infringement. Following trial, the jury returned a special verdict, finding Macke and O’Rourke willfully infringed and granted Wechsler lost profits and reasonable royalties for the infringement. The jury, however, found that O’Rourke was not personally liable for inducing Macke’s infringement. Nevertheless, the district court granted Wechsler’s motion for JMOL that O’Rourke was personally liable for inducing infringement. Macke appealed.
The Federal Circuit overturned a jury verdict that Wechsler was entitled to lost profits damages. Generally, there can be no lost profits if a patentee is not selling a product. The "only exception is where the patentee has the ability to manufacture and market a product, but for some legitimate reason does not." Even then, "[o]nly if it is indicative of the ability to manufacture and market the patented device during the period of infringement is it relevant." Here, the Court concluded that, "despite his later success manufacturing and marketing a product, Wechsler lacked the capability to manufacture his device during the period of infringement." Further, evidence did not show Macke’s infringing sales pre-empted subsequent sales by Wechsler or eroded the market price.
Similarly, in reversing the district court’s grant of JMOL that O’Rourke was personally liable for inducing patent infringement, the Court emphasized the distinction between a finding of willful infringement of a company and a finding of personal liability for inducing willful infringement by a corporate officer. The Court said, "personal liability for inducement must be supported by personal culpability … requires the officer to have possessed a specific intent to ‘aid and abet’ the infringement." On the other hand, willful infringement "is whether the infringer had a good faith belief that the patent was invalid and/or not infringed."
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