Bait-and-Switch Leads to Patent Damages Award for Non-Infringing Sales

Thanks to Professor Crouch at Patently-O for concisely explaining the decision in American Seating v. USSC Group (January 29, 2008) where the Federal Circuit held that

USSC's VPRo-I wheelchair tiedowns for mass transit [infringed] a patent held by American Seating. At some point, USSC stopped selling the VPRo-I and switched to a non-infringing design (presumably to avoid infringement). For pending VPRo-I orders, USSC simply notified customers that the new design would serve as a substitute.

After finding the patent valid and infringed by the offer to sell, the Michigan jury awarded American Seating lost profit damages based on the USSC’s non-infringing sales “because in those cases USSC first made infringing offers to sell the VPRo I, but ultimately delivered the [non-infringing] VPRo II.”

On appeal, the CAFC affirmed that a damage award for the non-infringing sales was appropriate because USSC had essentially pulled a bait-and-switch on its customers. Although courts have “significant latitude” in types of harms that can lead to an award of lost profits. However, plaintiffs must at least prove that the infringement was a “but for” cause of the lost profits.