Background
Exmark Manufacturing Company and Briggs & Stratton Power Products Group are competitors in the commercial lawn mower market. Exmark held a patent on an improved “baffle” system — the internal channel structure that directs airflow and grass clippings inside a mower deck. Exmark sued Briggs for infringement, and the jury found that Briggs willfully infringed. The jury awarded $24,280,330 in compensatory damages, and the district court doubled that amount to approximately $48.5 million as enhanced damages based on the willfulness finding.
On appeal, Briggs challenged both the damages methodology and the willfulness enhancement. The central damages dispute involved how apportionment worked: should the royalty base (the price on which a percentage royalty is calculated) be limited to the value of the infringing baffle component, or could Exmark use the full price of the accused mowers as the royalty base? Briggs argued that using the full mower price violated apportionment principles because the patent covered only the baffle, not the entire mower.
The Court’s Holding
The Federal Circuit affirmed in part and vacated in part. On the royalty base question, the court held that apportionment does not require limiting the royalty base to the value of the smallest patented component. Because the patent claim covered the entire mower as a whole—not just the baffle in isolation—using the full mower price as the royalty base was permissible. The court explained that the entire accused product can serve as the royalty base when the claim covers the whole product. In such cases, apportionment can be accomplished by appropriately adjusting the royalty rate downward to reflect only the incremental value contributed by the patented improvement. This “two-way street” for apportionment — adjusting either the base or the rate — gave patent owners flexibility in structuring damages presentations.
However, the court vacated the damages award because Exmark’s damages expert had failed to adequately explain how she arrived at a 5% royalty rate. The expert concluded that the hypothetical negotiating parties would have agreed on 5%, but she did not tie that number to the relevant Georgia-Pacific factors or explain the analytical steps from the evidence to the rate conclusion. The Federal Circuit emphasized that expert testimony on reasonable royalties must actually apply the Georgia-Pacific framework rather than merely invoke it; bare conclusions unsupported by methodology do not satisfy the reliability standard required for damages evidence.
Key Takeaways
- Apportionment in patent damages is flexible: it can be achieved by adjusting the royalty rate, the royalty base, or both — patent owners are not required to limit the royalty base to the smallest infringing component when the patent claim covers the whole accused product.
- Using the full product price as a royalty base is permissible when the patent claim covers the entire product, provided the royalty rate is properly adjusted to reflect the patented feature’s contribution.
- Expert testimony on reasonable royalties must explain how the evidence and Georgia-Pacific factors support the proposed rate — a conclusory opinion that jumps to a number without analytical grounding will be excluded or lead to a new trial on damages.
- The case reinforced that courts will scrutinize the quality of expert methodology in patent damages cases, not just whether the expert cited the right framework.
Why It Matters
Patent damages calculations have been a battleground for years, with courts struggling to prevent juries from awarding royalties on the full value of complex products when only one small feature is patented. Exmark provided a useful clarification: the way to handle apportionment is flexible — you can use the whole product as your base if your rate accounts for the patented feature’s share of value, or you can shrink the base to the relevant component. Either path is valid, but the expert must do the analytical work.
The decision also continued the Federal Circuit’s pattern of scrutinizing damages expert opinions more rigorously. Since cases like Uniloc and LaserDynamics, courts have pushed back hard on superficial royalty analyses. Exmark reinforced that message: no matter how legitimate the damages framework in theory, the expert’s testimony must connect the evidence to the conclusion in a transparent, reviewable way. For litigants, this means investing in damages expert preparation and anticipating Daubert challenges to rate methodology as a regular feature of patent litigation.