Pioneering Patent Case: Lack of Non-Infringing Alternatives in Two-Player Market Proves Essential for Lost Profits Award, Delaware District Court Rules

Wilmington, Delaware – In a recent ruling, the District of Delaware clarified the evidence required to establish a lack of non-infringing alternatives in a two-player market. The case involved two competitors in the outdoor decking products industry, both selling bamboo decking products. The defendants had been found guilty of patent infringement, and they challenged the damages award of $1.5 million, claiming that the plaintiffs had failed to prove lost profits.

The defendants argued that the plaintiffs had not provided customer-specific evidence to establish the absence of non-infringing alternatives. However, the district court rejected this argument, stating that it is not necessary for a patentee to present evidence for each individual customer. Instead, evidence addressing the market as a whole may be sufficient in certain cases.

The court reviewed the evidence presented at trial, which demonstrated that both parties were the only manufacturers in the market to receive certifications for their bamboo decking products. One witness testified that the products of the plaintiffs and defendants were the only ones considered to be genuine bamboo. Additionally, a customer of both parties testified that he had no other options for outdoor bamboo decking. Based on this evidence, the plaintiffs’ expert concluded that there were no acceptable non-infringing alternatives in the market, as there were no other companies making comparable products.

In addition to upholding the damages award, the court granted the plaintiffs’ motion for enhanced damages. The court considered the “Read factors” to evaluate the egregiousness of the circumstances. While most factors were either neutral or weighed against enhancement, two factors strongly supported enhancing the damages. The court found strong evidence of copying, as the accused products were produced in the same factory and were virtually identical to the plaintiffs’ products. Furthermore, the court found evidence of the defendants’ motivation for harm, as one of their employees harbored animosity towards the plaintiffs.

As a practice tip, plaintiffs seeking a damages award of lost profits should consider defining the relevant market in a way that includes only their own product and the accused product. This narrow market definition may strengthen the argument for the absence of non-infringing alternatives.

The ruling in “Dasso Intl., Inc. v. Moso N.A., Inc.”, issued by the District of Delaware, provides guidance on establishing the absence of non-infringing alternatives in a two-player market. By clarifying the evidentiary requirements, the court ensures fairness in determining damages for patent infringement cases.