Thursday, November 21, 2013

Patentee May Not Recover Lost Profits of Subsidiary Based on Reduction of Hypothetical Sales Price of Subsidiary

The court granted defendants' motion for summary judgment that plaintiff was not entitled to price erosion damages incurred by its subsidiary because plaintiff did not establish a direct injury. "While [plaintiff's expert] has offered hypotheticals about the potential impact of Defendants' infringement, however, such as the possibility that [plaintiff] would have received a lower price if it had attempted to sell one of its subsidiaries, she has provided no factual basis to support these hypotheticals. . . . [W]ere the Court to find that such hypotheticals are sufficient to establish an independent basis for a parent to recover the lost profits of its subsidiaries it would be creating an exception that would essentially swallow the rule . . . . Every parent of a wholly owned subsidiary . . . could obtain the lost profits of the subsidiary simply by claiming it fully controlled the subsidiary and that dividends could have passed the lost profits upstream had the parent decided dividends should be declared by the subsidiary or that a hypothetical buyer might have paid less for a subsidiary had the parent chosen to sell it. Further, such a holding would also fly in the face of the well-established rule that damages may not be awarded on the basis of harm that is entirely speculative."

Volterra Semiconductor Corporation v. Primarion, Inc., et. al., 3-08-cv-05129 (CAND November 18, 2013, Order) (Spero, M.J.)

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