Trio Process Corp. v. L. Goldstein’s Sons, Inc.

Trio Process Corporation (Trio) (plaintiff) owned a patent covering a process for removing insulation from copper wire. In 1960, Trio licensed the process for $20,000 and two furnaces necessary to practice the process for $15,000 to L. Goldstein’s Sons, Inc. (Goldstein) (defendant) . The licensing rate was equal to $2,600 per furnace year. Between 1962 and 1969, various buyers purchased licenses from Trio for between $19,500 and $25,000. In 1965, Goldstein contracted with a metal fabricator to construct a furnace modeled on the furnace purchased from Trio. Trio sued Goldstein for infringement. Goldstein contended that the patent was invalid. The court of appeals upheld the validity of the patent and concluded that Goldstein had infringed the patent. The case was remanded to the district court to compute damages. In determining the appropriate amount of damages, the court considered the $2,600-per furnace-year sum actually charged by Trio for licenses between 1960 and 1970. The court concluded that the rate did not represent an established royalty because Goldstein’s open infringement of the patent had unfairly depressed the market price of the license. On this basis, the district court increased the sum, setting damages at $7,800 per furnace year for the years prior to the validity determination by the court of appeals, and $15,000 per furnace year after the determination. Goldstein appealed. The court of appeals reversed in part, holding that the district court erred in calculating two separate royalty rates and failed to properly explain the basis for the calculation. The case was remanded for a new damages determination, which again resulted in an appeal by Goldstein.