Abstract :
The Federal Circuit - the federal appellate court that handles all patent appeals - has increasingly awarded patent owners damages based on profits that they might have made on products that their patents do not cover. Initially, the idea was that sometimes a patent "convoys" sales of related products. The recent Micro Chemical case- Micro Chemical, Inc. v. Lextron, Inc.-involved the application of this principle to a machine for dispensing microingredients (such as vitamins, antibiotics, and hormones) into livestock feed. The patentee and the infringer both gave their machines away. Apparently grateful users then bought the microingredients-at greatly elevated prices-from whichever company provided the machine. Obviously, the profits on the machines as such, were zero or negative. The profit was on the microingredients, and that is what the Federal Circuit used, at least in principle, as the basis for calculating damages.
