Face the inMusic: A Corporate Patent Owner Cannot (Yet?) Recover the Lost Profits of a Subsidiary

The Federal Circuit has long held that “the general rule” of patent infringement damages law is “a patentee may not claim, as its own damages, the lost profits of a related company.” More than 15 years ago, one patent owner argued that an exception to this general rule should be when a subsidiary’s profits “flow inexorably” to the parent patent owner. In that case, the Federal Circuit avoided deciding the legal question, concluding that the patent owner had failed to prove that its wholly owner subsidiary’s profits flowed inexorably to it. The same legal question came before the Federal Circuit again in Roland Corp. v. inMusic Brands, Inc. and the result was, well, the same: no dice.

Lost Profits for Unpatented Products Dry Up in Wash World

By Steven Auvil on April 3, 2025 Posted in Intellectual Property, IP Litigation, Patent Litigation, Patents, US

Wash World Inc. v. Belanger Inc. raises the question whether lost profit damages for patent infringement can extend to profits related to unpatented products sold with a patented product. As with many legal issues, including the lost profits issue I addressed in my recent post, the answer to the question is “sometimes.”

In Wash World, the Federal Circuit confronted this question in reviewing a damages judgment based on a jury verdict awarding the patent owner, Belanger, lost profits on its (1) patented car wash system due to sales by the infringer, Wash World, and (2) unpatented dryers sold with its patented car wash system. The jury awarded $9.6M, one of the damages figures advanced by Belanger’s damages expert. On appeal, Wash World challenged $2.6M of the award tied to Belanger’s lost profits associated with its unpatented dryers. Wash World argued that this portion of the award was improper because Belanger failed to prove any functional relationship between the patented car wash system and unpatented dryers.

No Infringement of Nonfiction Work by Makers of Tetris Film – Court Uses Wrong Analysis to Reach the Right Result

By Joe Meckes on March 10, 2025 Posted in Copyright, IP Litigation, Judiciary, US

Ackerman v. Pink asks how much of a written history can be claimed as proprietary by the author of that history. The answer: Not much. It is black letter that the author of a non-fiction work cannot prevent others from using historical facts in some other work – even if those historical facts are known only because of the author’s independent research. Copyright covers only the author’s expression of the research, not the research itself.

Ackerman is interesting because the analysis the court uses to separate the historical fact from the author’s expression is misplaced – even though the Court appears to have reached the right conclusion.

Loper Bright Dealt a Blow to the FTC’s Noncompete Rule — Will the New FTC Chairman Deliver the Knockout?

By Victoria Smith and Chris Lewis on February 24, 2025 Posted in Consumer Law, Intellectual Property, IP Litigation, Judiciary, Supreme Court, Trade Secrets, US

The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo has and will continue to alter the legality and enforceability of federal agency rules and regulations related to ambiguous federal statutes. As a reminder, Loper Bright abolished the Chevron doctrine, which instructed courts to give deference to federal agency interpretations of ambiguous statutes. In Loper Bright, the Supreme Court held that the Administrative Procedure Act (“APA”) requires courts to “exercise independent judgment” when evaluating the constitutionality of a federal agency’s rulemaking or interpretation of an ambiguous statute. For a more detailed discussion of the Loper Bright decision and its overruling effect on the Chevron doctrine, please refer to our earlier blog post, which discusses Loper Bright’s impact on the International Trade Commission. This blog post focuses on another agency that has already felt the impact of Loper Bright, the Federal Trade Commission (“FTC”).

Commercial Agents Regulations: Here to Stay

By Paul Jinks on February 21, 2025 Posted in Advertising, Artificial Intelligence, Consumer Law, Copyright, Data Protection, Europe, Intellectual Property, IP Litigation, Judiciary, Technology, UK, Uncategorized

In October 2024 we reported on the case of Kompakwerk GmbH v Liveperson Netherlands B.V. [CL-2018-000802] which concerned the question of whether an agent selling access to end users in Great Britain to a third-party software as a service (SaaS) product should be considered an agent for the purposes of the Commercial Agents (Council Directive) Regulations 1993 (the Regulations), post available here. For the reasons set out in our post on that case, the Court decided that the agent did not.

As further detailed in that earlier report, in Great Britain the Regulations protect both individual self-employed agents and companies who act as agents and sell goods (but not services) on the behalf of another (their Principal). The Regulations are generally favourable towards agents providing many protections, most of which cannot be contracted out of (even by agreement) whilst an agency arrangement remains in place. A key protection for agents is the right to claim a potentially significant compensation payment from their Principal in most termination scenarios.

The Intellectual Property Enterprise Court

By Carlton Daniel and Paul Jinks on February 19, 2025 Posted in Artificial Intelligence, Consumer Law, Copyright, IP Litigation, Judiciary, Patent Litigation, Patents, Technology, Trade Secrets, Trademark Infringement, Trademarks, UK, Uncategorized

In the UK, intellectual property (IP) infringement claims and other disputes in which IP is a major concern can be brought in either the High Court or in many cases the specialist Intellectual Property Enterprise Court (IPEC). Based at the Rolls Building in central London, the IPEC has a more streamlined procedure than the High Court and employs a full-time specialist IP judge (currently Judge Hacon) and a number of specialist deputy judges, which aids the development of a consistent approach to cases that can often cost less than in the High Court.

Is IPEC Suitable for a Claim?

The IPEC can hear all types of IP disputes, including IP infringement claims along with other disputes in which IP is a major concern. Importantly, the court has the power to award all of the same remedies available in the High Court (interim injunctions, damages, delivery up etc.). Examples of the types of cases which have previously been heard in the IPEC include: IP infringement claims, amendments of patents, compensation for employees in respect of patented inventions created by them and claims relating to a breach of confidentiality including misuse of trade secrets.

Eyes Wide Open: Lost Profits Are Available in the Absence of Acceptable Non-Infringing Substitutes

By Steven Auvil on February 18, 2025 Posted in Intellectual Property, IP Litigation, Judiciary, Life Sciences, Patent Litigation, Patents, Uncategorized, US

Lost profit damages are notoriously difficult to recover in patent infringement cases. Lost profits damages are recovered in only a small percentage of cases that go to trial. Among the challenges in recovering lost profits under the Panduit test are that the patent owner must prove the absence of acceptable non-infringing alternatives (Panduit factor 2) and proving a negative in life is never easy. But the law is sometimes more flexible than meets the naked eye.

In Bausch & Lomb vs. SBH Holdings LLC, over which U.S. District Judge Burke of Delaware presides, the accused infringer, SBH, learned this principle the hard way. SBH was accused of infringing B&L patents covering nutritional supplements for treating age-related macular degeneration, or AMD. B&L sought lost profits damages caused by SBH’s sale of the accused product that competed with B&L’s supplement. In pre-trial disclosures, B&L supported its claim for lost profits damages by relying on expert opinions of a damages expert and a technical expert. In his report, the damages expert relied in part on the technical expert in opining that there was an absence of acceptable non-infringing substitutes in the marketplace. In addition, the damages expert relied on an alternative theory of lost profits, namely that B&L should recover its share of the “eye vitamin” market.

Clock is Ticking for Responses to UK Government Consultation on Copyright and Artificial Intelligence

By Carlton Daniel, Mike Llewellyn, Paul Jinks and Richard Armitage on February 14, 2025 Posted in Artificial Intelligence, Copyright, Data Protection, Europe, Intellectual Property, Internet, Judiciary, Technology, UK, Uncategorized, US

The authors wish to thank Sumaiyah Razzaq for her contributions to this post.

Ever since the emergence of generative AI, a major concern for all participants has been the extent to which copyright works can and should be used in training AI models.

The application of UK copyright law for this purpose is disputed, leading to inevitable high-profile tension between, on one hand, rights holders keen to control and be paid for use of their work and, on the other, developers who argue that this legal uncertainty is undermining investment in, and the development of, AI in the UK.

Whilst cases are making their way through the courts in the UK and further afield (such as in Germany[1] and the US[2]) on this issue, there have been frequent calls for specific legislation (including by the UK government itself, which has publicly stated that the status quo cannot continue).

Court: Training AI Model Based on Copyrighted Data Is Not Fair Use as a Matter of Law

By Joe Meckes and Joseph Grasser on February 11, 2025 Posted in Artificial Intelligence, Copyright, Cybersecurity, Data Protection, Intellectual Property, IP Litigation, Judiciary, US

In what may turn out to be an influential decision, Judge Stephanos Bibas ruled as a matter of law in Thomson Reuters v. Ross Intelligence that creating short summaries of law to train Ross Intelligence’s artificial intelligence legal research application not only infringes Thomson Reuters’ copyrights as a matter of law but that the copying is not fair use. Judge Bibas had previously ruled that infringement and fair use were issues for the jury but changed his mind: “A smart man knows when he is right; a wise man knows when he is wrong.”

At issue in the case was whether Ross Intelligence directly infringed Thomson Reuters’ copyrights in its case law headnotes that are organized by Westlaw’s proprietary Key Number system. Thomson Reuters contended that Ross Intelligence’s contractor copied those headnotes to create “Bulk Memos.” Ross Intelligence used the Bulk Memos to train its competitive AI-powered legal research tool. Judge Bibas ruled that (i) the West headnotes were sufficiently original and creative to be copyrightable, and (ii) some of the Bulk Memos used by Ross were so similar that they infringed as a matter of law.