Federal Circuit Clarifies Recovery for Lost Profits, Non-Exclusive Licensees: Parent Company Denied Recovery for Lost Profits of Subsidiary
By Jeff Gritton — Edited by Joshua Gruenspecht
Mars, Inc. v. Coin Acceptors, Inc.
Federal Circuit, June 2, 2008, No. 2007-1409
The Federal Circuit affirmed in part and vacated in part the District Court of New Jersey and remanded for recalculation of damages in a patent infringement suit.
The court affirmed the district court’s holding precluding Mars Inc. (“Mars”) from recovering damages on a lost profits theory, holding that Mars could not recover for its wholly owned subsidiary’s lost profits. The court stopped short of answering the question of whether a parent company could ever recover for its subsidiary’s lost profits, limiting its holding to the facts of the case at issue.
The court also affirmed the district court’s judgment denying Mars’s motion to amend its complaint to add its subsidiary Mars Electronics International (“MEI”) as a co-plaintiff in its action against Coin Acceptors, Inc. (“CoinCo”) for infringements occurring before 1996, agreeing with the lower court that MEI lacked constitutional standing as a non-exclusive licensee.
The Federal Circuit vacated the lower court’s conclusion that Mars had standing to recover damages for the period between 1996 and 2003. Because Mars had assign its title to the patent to MEI in 1996, it lacked standing for that period of time.
Finally, the court affirmed the district court’s assessment of a reasonable royalty rate for the calculation of damages related to the infringement. Because Mars’s lack of standing for the period from 1996 to 2003 changed the royalty base, the court remanded for recalculation of damages for the period prior to 1996.
The Patent Hawk provides a “sassy” take.