Legal Definitions - lost-sales-of-unpatented-items theory

The lost-sales-of-unpatented-items theory is a legal principle applied in patent infringement lawsuits to determine the full scope of financial damages suffered by a patent holder.

When a party infringes on a patent, they directly cause the patent holder to lose sales of the patented product. This theory expands the concept of lost profits by recognizing that many patented products are typically sold in conjunction with other, related items that are *not* patented. These unpatented items might be accessories, consumables, replacement parts, or complementary services that customers usually purchase alongside the patented product. If the infringement leads to a loss of sales for the patented item, it often simultaneously results in a loss of sales for these associated, unpatented items.

Under this theory, a patent holder can seek compensation not only for the profits lost on their patented product but also for the profits lost on these unpatented, complementary items. To succeed, the patent holder must demonstrate that, "but for" the infringer's illegal actions, customers would have purchased these unpatented items from them.

• Example 1: Advanced Water Filtration System

  Imagine "AquaPure," a company that holds a patent for a unique, highly efficient water purification device designed for homes. While the device itself is patented, AquaPure also sells specific, unpatented filter cartridges and a proprietary, unpatented water quality monitoring app subscription that are essential for the device's optimal performance and are typically purchased together. A competitor, "HydroCopy," infringes AquaPure's patent by manufacturing and selling an identical water purification device. As a result, AquaPure not only loses sales of its patented purification device but also loses sales of its unpatented filter cartridges and app subscriptions, which customers would have purchased to use with the original device. Under the lost-sales-of-unpatented-items theory, AquaPure could seek damages for the lost profits on both the patented device and the unpatented consumables and service.

• Example 2: Specialized Camera Lens System

  Consider "OptiFocus," a company that patents a groundbreaking optical stabilization mechanism integrated into a professional camera lens. OptiFocus sells this patented lens as a premium product and also offers a range of unpatented lens filters, cleaning kits, and extended warranty packages specifically designed for this lens, which photographers often buy at the same time. "LensClone," a rival company, begins selling camera lenses that illegally incorporate OptiFocus's patented stabilization mechanism. OptiFocus can claim lost profits not only for the patented lenses it would have sold but also for the lost sales of its unpatented filters, cleaning kits, and warranty packages, as customers who bought LensClone's infringing lenses would have otherwise purchased OptiFocus's full lens system and accessories.

• Example 3: Patented Industrial Robot Arm

  A company named "RoboTech" patents a unique articulation joint that allows its industrial robot arms to perform highly complex and precise movements. While the joint itself is patented, RoboTech sells complete, unpatented robot arm systems that incorporate this joint, along with unpatented specialized grippers, programming software licenses, and installation services that are all sold as a package. When "MechMimic Corp." infringes RoboTech's patent by selling unauthorized robot arms that use the patented joint, RoboTech loses sales of its patented joints. Crucially, it also loses the sales of the unpatented complete robot arm systems, grippers, software, and services that customers would have purchased to implement the legitimate RoboTech solution. The lost-sales-of-unpatented-items theory allows RoboTech to recover damages for these associated lost sales.