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How Should the Total Damages be Calculated if the Infringed-upon Products Comprise Both Infringing and Non-infringing Components?
Nowadays, most industrial products are assembled or manufactured with a plurality of components. Since different components might be protected by different patents, how should damages be calculated if only a certain component of a product infringes on a certain patent? The detailed approaches are illustrated in the 2015 Min-Zhuan-Su-Zi No. 62 judgment made by the Intellectual Property Court (hereinafter “IPC”) on June 21, 2016.
The plaintiff of this case claimed itself to be the patentee of the Taiwan design patent D141942 (hereinafter “the Patent”), and that the infringement was found to have occurred by comparing two drawings, which showed that the handles of the trolley cases sold by the defendant (hereinafter “the accused device”) were largely identical or similar, in the perception of common consumers, to the visual design of the Patent, and the novel features of the Patent were included. Therefore, the plaintiff requested the profit earned by the defendant as the amount of damages for the Patent infringement.
The IPC held that the patent was used, as the trolley case handles in the patent were the same as those of the accused device. Moreover, the accused device was thought to be similar to the patent based on the likelihood that common consumers may mistake the accused device and the patented unit to be the same style based on overall comparison and judgement of their appearance, and would likely cause confusion. The IPC thus concluded that the accused device fell within the scope of the Patent.
Regarding the calculation of the damages, the plaintiff claimed that damages should be calculated based on the total profit from sale of trolley cases that had been sold by the defendant, because the accused device was sold with trolley cases rather than being sold alone. However, the IPC opined that when an infringing product is a combination of infringing components and non-infringing components, damages for such patent infringement would be the total profit of the product only if (1) infringing components are generally sold together with non-infringing components; and (2) only the combination of both components can achieve the function and effect of the patent; (3) the patentee has proved, with supporting evidence, that the patented unit became the driving force of the trading counterparts’ purchase of fully-assembled products. In this case, although preconditions (1) and (2) were met, while the size, body design, material of the body case, interiors, wheels, colors/patterns and safety measures are usually considered key factors by a trading counterpart when purchasing trolley cases, and since the handles were not the highlight of the design when the plaintiff sold the trolley cases, the court concluded that the resulting damages shall be solely calculated based on the profit of “the accused device” (i.e., the handles) rather than the total profit from “trolley cases that had been sold by the defendant.”
Similar approaches to calculation of damages can be seen in the 2014 Min-Zhuan-Shang-Zi No. 9 judgment made by the IPC on April 7, 2016, which declares that damages suffered by patentees shall be calculated based on the total value of products, rather than the individual value of patented units, only if the value of the patented units becomes the driving force in consumers’ purchases of the products; while the patented and non-patented components generally have to be combined and sold together, and only the combination can achieve the function and effect of the patent. It is well worth following up on, if this is the conclusion the IPC tends to support.