Hughes Tool Co. v. Dresser Industries, Inc.

816 F.2d 1549 (1987)

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Hughes Tool Co. v. Dresser Industries, Inc.

United States Court of Appeals for the Federal Circuit
816 F.2d 1549 (1987)

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Facts

Hughes Tool Co. (Hughes) (plaintiff) held patents for rock bits, which are drills that make holes in hard rock. Dresser Industries, Inc. (defendant) was a competitor in the rock-bit space and created and sold a rock bit that directly competed against Hughes. Hughes asserted that Dresser’s product violated one of Hughes’s patents and sued in federal court. The district court found that Hughes had a valid patent and that Dresser had infringed on that patent, awarding Hughes monetary damages. The district court calculated its damages award by attempting to identify the amount of a reasonable royalty Dresser would have paid Hughes for use of its patented invention had Hughes been willing to license its product to Dresser. The district court concluded that a 25 percent royalty was appropriate, based on its understanding of Dresser’s estimated projected profits for its rock bits and how significantly Hughes’s patented invention contributed to those expected profits. Dresser appealed, asserting that the district court used incorrect numbers to calculate the damages amount, confusing Dresser’s estimated total profits with its estimated return on incremental investments needed to make the rock bits. Hughes also appealed, seeking increased damages.

Rule of Law

Issue

Holding and Reasoning (Rich, J.)

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