## Facts

- Micro Chemical owned U.S. Patent No. 4,733,971 covering a weight-based microingredient dispensing system that mixes microingredients into a liquid carrier and applies the mixture to livestock feed.
- Micro placed its patented machines in feedlots without charge and profited from sales of microingredients used with the system.
- Lextron, a competitor, used a similar business model and sold a “Type 2” weight-based machine later determined to infringe the ’971 patent.
- After a prior appellate decision confirming infringement by the Type 2 machine, Lextron developed a purported noninfringing “Type 5” machine and converted remaining Type 2 machines to Type 5.
- On remand for damages, the district court granted summary judgment denying Micro lost profits, reasoning that the Type 5 machine was an available, acceptable noninfringing substitute.
- The district court then held a bench trial on reasonable royalty and awarded Micro a 1% royalty on Lextron’s microingredient sales.

## Issues

1. Whether summary judgment properly denied lost profits on the ground that Lextron’s Type 5 machine was an “available” noninfringing substitute during the damages period.
2. Whether the district court’s 1% reasonable royalty award could stand given the substitute-product analysis used in the damages framework.
3. Whether the case should be reassigned to a different district judge on remand.

## Decision

- The Federal Circuit reversed the summary judgment denial of lost profits, holding the Type 5 machine was not shown to be an “available” noninfringing substitute during the relevant period.
- The court vacated the 1% reasonable royalty award because the substitute-availability error affected the reasonable-royalty analysis.
- The court denied Micro’s request for reassignment to a different district judge.
- The case was reversed in part, vacated in part, and remanded for further damages proceedings.

## Legal Principles

- Lost profits may be defeated by an acceptable noninfringing substitute only if the alternative was actually “available” during the infringement period; “availability” requires more than a post hoc, hypothetical design-around.
- Under Grain Processing, a nonmarketed alternative can qualify only if it was “readily available” such that it could have been implemented without substantial design, development, effort, or delay.
- Where evidence shows months of testing, custom fabrication, and development before a design-around existed, substitute “availability” presents a fact-intensive question generally unsuitable for summary judgment.
- The analysis of noninfringing alternatives affects both lost-profits entitlement and the hypothetical-negotiation framework for a reasonable royalty; an erroneous substitute finding can require vacatur of a royalty award.
- Reassignment on remand is disfavored absent a showing that it is necessary to preserve the appearance of justice or that the judge cannot apply the appellate mandate.

## Conclusion

The Federal Circuit held that Lextron could not defeat Micro’s lost-profits claim on summary judgment by pointing to a design-around that required significant development and was not shown to be readily available during the infringement period, and it therefore vacated the reasonable-royalty award and remanded for a corrected damages determination before the same judge.


Micro Chemical, Inc. v. Lextron, Inc., 318 F.3d 1119 (Fed. Cir. 2003)