Wednesday, November 13, 2013

Panduit Corp. v. Stahlin Bros. Fibre Works, Inc. case brief

Panduit Corp. v. Stahlin Bros. Fibre Works, Inc. case brief summary
575 F.2d 1152 (1978)

Plaintiff appealed from a judgment of the United States District Court for the Western District of Michigan, Southern Division, which adopted the report of the special master awarding plaintiff a royalty of two and one-half percent as damages for patent infringement.

Plaintiff successfully sued defendant for patent infringement; however, he was only awarded a reasonable royalty rate of two and one-half percent based on the findings of a Special Master. Plaintiff appealed, asserting that the trial court erred in denying plaintiff its lost profits due to lost sales or, alternatively, a 35 percent reasonable royalty and in denying its lost profits from plaintiff's actual sales after defendant reduced the price of the infringed goods.


  • The court found that plaintiff's lost profits due to lost sales, as well as plaintiff's right to damages caused by defendant's price reduction, were mixed matters of fact and law, and the determination of the trial court on those issues did not evince any clear error. 
  • However, the reasonable royalty rate was clearly erroneous, having been based in large part on the erroneous finding that acceptable non-infringing substitutes were available during the relevant period.

The judgment for plaintiff was reversed and remanded; the trial court was required to consider all necessary elements in the determination of a reasonable royalty rate, including those elements the trial court had failed to consider, namely plaintiff's actual profit margin, customary profit allowed licensees in specific industry, and lack of acceptable non-infringing substitutes.

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