Micro Chemical, Inc. v. Lextron, Inc.

Micro Chemical, Inc. (Micro) (plaintiff) patented a machine for delivering micronutrients to livestock through their feed using nutrient weight instead of volume. The machine weighed the micronutrients, mixed them with a liquid, and sprayed the mixture over feed to ensure that the animals consumed the micronutrients evenly. Micro placed its weight-based machines at farmers’ feedlots free of charge, and farmers purchased the micronutrients that they fed their animals from Micro. Lextron, Inc. (Lextron) (defendant) also manufactured a weight-based machine that Lextron called its Type 2 machine. Micro sued Lextron and obtained a ruling that Lextron’s Type 2 machine infringed Micro’s patent. After this ruling, Lextron spent several months testing design changes to its infringing Type 2 machine. Lextron had to have certain parts custom fabricated, and it then began manufacturing a new weight-based machine Lextron called Type 5. Lextron modified its remaining Type 2 machines into Type 5 machines. However, Micro sought damages for the earlier infringement by Lextron’s Type 2 machine under two theories: (1) lost profits and (2) a reasonable royalty. Lextron moved to prevent Micro from seeking any lost-profit damages. The district court granted the motion and held a bench trial on just the issue of a reasonable royalty. Ultimately, the district court awarded Micro a reasonable royalty of one percent of Lextron’s sales of microingredients. Micro appealed.