Tuesday, March 15, 2011

"Downstream Sales Information" Not Relevant to Reasonable Royalty or Lost Profits

Where plaintiff accused manufacturers of flame retardant fabric and customers who incorporated the fabric into garments of infringing, the court denied plaintiffs’ motion to compel the production of "data regarding the customers’ sales figures, costs, and profits stemming from their sale or rental of garments incorporating the allegedly infringing fabric." "The plaintiffs assert that because they ‘intend to seek lost profits from [fabric manufacturers] . . . for a portion of their sales’ to the customers, the detailed financial data regarding the customers’ infringing sales are therefore ‘relevant to damages issues.’. . . But here, the plaintiffs -- who make and produce fabrics, not garments -- do not suggest that they would have made sales of garments, rather than fabrics, absent the alleged infringement. Nor have they explained in what way the downstream sales information regarding finished garments would influence their calculation of lost sales of fabrics when the manufacturer defendants have already provided them with fabric sales information." Moreover "plaintiffs have not articulated any specific potential theory under which they could factor the sales of finished garments, rather than fabrics, into the reasonable royalty base of a hypothetical negotiation with the manufacturers."

Itex, Inc., et. al. v. Westex, Inc., 1-05-cv-06110 (ILND March 9, 2011, Order) (Kim, M.J.)

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