Question of When Foreign Patent Owner May be Entitled to Lost Profits Certified for Interlocutory Appeal

The court certified for interlocutory appeal its order granting defendants' motion for summary judgment that a Japanese plaintiff could not recover lost profits damages because plaintiff did not have any U.S. sales. "The court finds that [questions of whether foreign patent owners may seek lost profits based on sales of subsidiaries or payments via “transfer pricing mechanism designed to comply with the Internal Revenue Code, 26 U.S.C. § 482”] are controlling questions of law that are pivotal to the ultimate termination of this litigation. The court further finds that there is substantial ground for difference of opinion as to the application of Federal Circuit precedent to the specific, yet common, facts of this case. On the discrete issue of lost profits damages, there is a need for additional precedent for purposes of offering guidance to foreign patent owners — and district courts — regarding the circumstances, if any, under which a foreign patent owner that does not sell any products in the U.S. market can nevertheless collect as damages the lost profits of its wholly-owned U.S. subsidiary, specifically when the foreign patent owner sells component parts of the patented device to its wholly-owned U.S. subsidiary for sale of the patented device in the U.S. market."

Fujitsu Network Communications Inc., et. al. v. Tellabs, Inc., et. al., 1-09-cv-04530 (ILND May 23, 2013, Order) (Holderman, J.).