LaserDynamics v. Quanta -- Limits to Grain Processing's Non-Infringing Alternative

In this case, LaserDynamics sued Quanta for infringing a patent for automatically determining the type os disk being used in a optical disk drive.

In the first trial, LaserDynamics received a verdict of $52 million, but could not hold on to it. Quanta filed and won a remittitur motion after which the court gave LaserDynamics a choice -- take $6.2 million or a new damages trial. LaserDynamics took the new trial.

In the new trial, Quanta's damages expert argued that the reasonable royalty would be relatively modest because Quanta had available to it an "acceptable non-infringing alternative," which would consequently have lowered the amount it would have licensed the patent for. The issue for the Court was whether the alternative was "available" to Quanta at the time of infringement under the Federal Circuit's decision in Grain Processing [which, although originally only applicable to lost profits analyses, has been used as part of a reasonable royalty analysis]

The LaserDynamics Court applied the Grain Processing test -- (1) could the defendant have readily obtained all of the material needed to implement the non-infringing alternative; (2) was the non-infringing alternative well known in the field at the time of infringement; and (3) did the defendant had all of the necessary equipment, know-how, and experience to use the non-infringing alternative.

The Court found that Quanta's expert had not shown that (1) the purported alternative was even on the market; or (2) even if it was on the Market, Quanta could have used it. The Court therefore excluded all of Quanta's damages expert's opinions to the extent they relied on an "acceptable non-infinging alternative" analysis.