Westinghouse Electric & Manufacturing Co. v. Wagner Electric & Manufacturing Co.
Headline: Patent ruling reverses lower decision and orders a new accounting, saying an infringer who mixes noninfringing improvements may lose all profits if apportionment is impossible, shifting loss to the wrongdoer.
Holding: In cases where a patentee proves infringement and the infringer’s conduct makes it impossible to separate profits between the patented feature and other improvements, equity permits awarding the entire profit to the patentee.
- Allows patent owners to recover all profits when infringer makes apportionment impossible.
- Shifts financial loss onto infringers who mix non-infringing improvements with patented features.
- Orders new accounting and a fresh hearing to determine profits and apportionment.
Summary
Background
The dispute was between the Westinghouse Company, which owned a patent claim for a transformer feature, and a defendant manufacturer who made and sold Type M transformers. A Master (a court-appointed factfinder) found the defendant made $132,000 in net profits from the sales. A lower court limited Westinghouse to only nominal damages because the company did not separate profits attributable to the patent from profits tied to the defendant’s added improvements.
Reasoning
The central question was who must prove how much of the profit came from the patented feature when the patent and noninfringing improvements are mixed together. The Court explained that statutory law lets a patent owner recover the defendant’s profits, but practical rules about burden of proof must be applied sensibly. The Court held that once the patentee proves infringement and establishes the existence of profits, and the defendant’s conduct has made accurate apportionment impossible, equity requires that the wrongdoer bear the loss. The Court reversed the decree that awarded only nominal damages and emphasized that the loss should fall on the party who created the confusion.
Real world impact
The ruling sends the case back for a new hearing and accounting, and it directs courts to consider awarding full profits to a patentee where an infringer has inextricably commingled improvements so apportionment cannot be made. Patent owners, manufacturers, and courts will be affected because an infringer who hides or mixes improvements risks losing all profits rather than forcing the patentee to prove exact shares.
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