Lack Of Standing Is Fatal To Lost Profits Claim
Jun.04.2008
In Mars, Inc. v. Coin Acceptors, Inc., (No. 07-1409, -1436, June 2, 2008), the Federal Circuit affirms a district court's summary judgment excluding Mars' lost profits claim prior to 1996 based upon manufacture and sale by its former subsidiary which was non-exclusively licensed to use Mars' patented technology. However, the determination that Mars had standing to recover damages from 1996 to 2003 is reversed. The Federal Circuit affirms the district court's assessment of a 7% reasonable royalty rate and remands to the district court for recalculation of damages for the period prior to 1996. The panel relies on the Federal Circuit's 2004 Poly-America L.P. v. GSE Licensing Technology, Inc. decision which held that a patent holder is not entitled to recover under a lost profits theory as a result of sales lost by a sister corporation, absent a showing that the patent holder itself or its exclusive licensee had lost profits. Therefore, a non-exclusive licensee such as Mars' subsidiary did not have constitutional standing. Regarding the 1996-2003 period, Mars' lack of standing is found not to have been cured by a Confirmation Agreement transferring back to Mars the rights to the '137 and '719 patents before final judgment.
For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.