EVE-USA, Inc., et al. v. Mentor Graphics Corporation

The Federal Circuit has carved out an exception in the Patent Act with a judge-made rule known as “assignor estoppel.” Assignor estoppel precludes an inventor who has assigned her patent, and those in privity with her, from contesting the patent’s validity in an infringement suit. The Patent Act has no such bar. And, this Court in Lear, Inc. v. Adkins, 395 U.S. 653 (1969), abolished the analogous doctrine of “licensee estoppel,” which barred licensees from challenging the validity of patents they licensed, as contrary to the important public interest of eliminating invalid patents. The question is whether, and under what circumstances, assignors and their privies are free to contest a patent’s validity.

This Court has long adhered to a rule requiring apportionment of damages: “When a patent is … not for an entire[] … machine or contrivance, the patentee must … separate or apportion … the patentee’s damages between the patented feature and the unpatented features.” Garretson v. Clark, 111 U.S. 120, 121 (1884). In Garretson and multiple other cases, this Court applied that rule to damages in the form of lost profits. The Federal Circuit, however, permits patentees to recover lost profits damages for an entire multicomponent product, without apportioning the value between patented and unpatented features, simply by showing that the patentee would have made the sale “but for” the infringement. Pet. App. 22a. Did the Federal Circuit err in holding that proof of but-for causation, without more, satisfies the requirement that damages be apportioned between patented and unpatented features?