Rite-Hite Corp. v. Kelley Co.
56 F.3d 1538 (Fed. Cir. 1995)

  • Rite-Hite made a popular device to help trucks back up into loading docks called the ADL-100.
    • Rite-Hite had also invented and got a patent on a different kind of device to help trucks back up into loading docks called the MDL-55. It was a lot less popular than the ADL-100.
    • Rite-Hite also made a number of other unpatented accessories (e.g. 'dock levelers') that were designed to be installed along with ADL-100 and MDL-55.
  • Kelly was a competitor that made a device designed to compete with the ADL-100. Rite Hite sued for infringement.
    • Rite Hite argued that Kelly's device infringed on their patent on the MDL-55. (Despite the fact that Kelly was selling their device as a competitor to the ADL-100).
  • The Trial Court found for Rite Hite. Kelly appealed.
    • The Trial Court found that damages should be calculated by determining how many more sales Rite Hite would have made "but for" Kelly's infringement.
      • See 35 U.S.C. 284.
    • The Court found that Rite Hite would have sold 80 more MDL-55s, 3,200 more ADL-100s, and a bunch of 'dock levelers' if it wasn't for Kelly's infringement.
    • Kelly argued that since they didn't infringe any patents on the ADL-100 and the 'dock levelers' were unpatented, they shouldn't have to pay for those lost sales. The damage award should be limited to only the MDL-55 sales, since that was the patent they infringed.
  • The Appellate Court partially affirmed and partially reversed.
    • The Appellate Court found that damages from 284 should be limited to things that are reasonably, objectively foreseeable.
      • The Court found that it was reasonably, objectively foreseeable that Kelly was infringing sales of the ADL-100, so those lost sales should be included in the damage award even though Kelly didn't infringe any patent associated with the ADL-100.
      • There needs to be 'but for' causation in order to include the claim in the damage award.
    • With regard to the 'dock levelers', the Court reversed. The Court found that under the entire market value rule, when there was an infringement of a patent that represented a small component in a larger machine, the value of lost sales of the larger machine would only be awarded if it could be shown that the entire value of the whole machine was properly and legally attributable to the patented component.
      • See Paper Converting Machine Co. v. Magna-Graphics Corp. (745 F.2d 11 (1984)).
      • The Court found that the entire market rule didn't cover accessories or other things that were sold as a matter of convenience or business advantage.
        • In addition, they aren't covered because the 'dock levelers' weren't part of the same physical unit as the patented product. They were a separate thing.
  • In a dissent it was argued that Rite-Hite had a patent on the ADL-100 and Kelly hadn't been accused of infringing it, so how could Rite-Hite get damages?
  • What if a third-party company could show that they lost sales on their product also? Would they be able to claim damages even though they didn't own the MDL-55 patent?
  • Basically, under the entire market value rule you can only get the value of a larger product if you show that the small, patented component is what drives sales.
    • So for example if you had a patent on automatic locks for a car, you probable can't get damages for the entire cost of the car since no one buys a car because they like the automatic locks.