In Mentor Graphics Corp. v. EVE-USA, Inc., the Federal Circuit determined that the “but for” compensatory damages test applies to the calculation of lost profits damages in patent infringement cases involving multicomponent products. The court rejected defendant Synopsys’s argument that because multicomponent products necessarily have many important features beyond the one or two that are infringing, the plaintiff should only be awarded the portion of the compensatory damages apportionable to the infringing features. Although some scholars have supported the decision, many believe that the Mentor Graphics rule will overcompensate patentees, and that an apportionment rule is preferable.
This Note offers a comprehensive economic framework for implementing the Mentor Graphics “but for” compensatory damages scheme in scenarios that were not before the court in Mentor Graphics but which will arise in the future. By exploring the implications of this framework, this Note provides needed clarity to the Mentor Graphics debate. First, it shows that a properly constructed compensatory damages rule and the apportionment rule advocated for by Synopsys and many scholars operate far more similarly than commentators currently believe.
Second, this Note shows that if the proposed framework is adopted, then each of the concerns expressed by scholars over the Mentor Graphics rule would either be alleviated, overstated, or in need of some revision. It concludes by clarifying exactly what might still remain concerning about the Mentor Graphics rule.
* J.D., Stanford Law School, 2018. I would like to thank Eric Bensen, Bernard Chao, Thomas Cotter, Erik Hovenkamp, Dmitry Karshtedt, Mark Lemley, Jonathan Masur, Lisa Larrimore Ouellette, A. Mitchell Polinsky, Brendyn Reinecke, and Ted Sichelman for their assistance and for providing comments on earlier drafts of this Note. Thanks also to participants in the Bay Area Works-in-Progress Seminar and the 2019 Works-in- Progress Intellectual Property Colloquium for helpful comments. Finally, many thanks to the Stanford Law Review editing team, including Raquel Dominguez, Lori Ding, Patrick Kennedy, Reid Whitaker, Yoni Marshall, and Annie Shi.
I am currently an associate at Covington & Burling LLP. This Note was written and submitted to the Stanford Law Review before I began my employment at the firm. All views expressed are my own.