## Facts

- Trio Process Corp. owned a patent covering a process for removing insulation from copper wire to salvage copper; a related entity held licensing interests.
- L. Goldstein’s Sons, Inc. (and a related entity) was found to have willfully infringed the patent; liability and willfulness had been affirmed in earlier appellate proceedings.
- The dispute returned repeatedly to the district court on remand to determine damages, with the principal question being the proper measure of a reasonable royalty rather than lost profits.
- A special master assessed Goldstein’s cost savings from using the patented process compared to an unpatented alternative, including substantial labor-cost savings per “furnace year.”
- The master derived a royalty by taking a large portion of the infringer’s savings (including halving certain savings figures) and multiplied that amount by the number of furnace-years of infringement to reach a large damages figure.
- In a prior appeal on damages, the Third Circuit vacated and remanded with instructions on how to recalculate a reasonable royalty consistent with a hypothetical negotiation framework.
- On the subsequent remand, the district court recalculated damages but did so in a manner the defendants argued did not conform to the appellate mandate.
- The present appeal concerned only whether the recalculated damages complied with the Third Circuit’s earlier directions and what royalty methodology the mandate required.

## Issues

1. Whether the district court complied with the Third Circuit’s prior mandate when recalculating damages for patent infringement.
2. What constitutes a proper reasonable royalty when the evidence emphasizes the infringer’s cost savings and the patentee has not proved lost profits.
3. Whether, and to what extent, a reasonable royalty may be based on the infringer’s cost savings or profits rather than a negotiated licensing rate.

## Decision

- The Third Circuit vacated the district court’s damages judgment and remanded again.
- The court held that the district court’s recalculation did not implement the earlier mandate and instead effectively reverted to a disapproved approach.
- The court directed recomputation using a substantially lower reasonable-royalty figure per furnace year than the master’s approach produced.
- The court confirmed that, after primary damages are set by a reasonable royalty, the district court may enhance damages for willful infringement under 35 U.S.C. § 284 and award interest.

## Legal Principles

- A district court on remand must follow both the express terms and necessary implications of the appellate court’s mandate; failure to do so warrants vacatur and further remand.
- Reasonable royalty damages must reflect what a hypothetical willing licensor and willing licensee would have agreed to at the time infringement began.
- The infringer’s cost savings and added profits may be relevant evidence for a reasonable royalty, but a royalty is not a vehicle to transfer most or all of the infringer’s gains to the patentee without grounding in the hypothetical negotiation and record support.
- Under 35 U.S.C. § 284, the court may award interest on patent damages and may increase damages up to three times the amount found or assessed, particularly where infringement is willful.

## Conclusion

The Third Circuit again vacated the patent damages award because the district court did not follow the earlier mandate governing reasonable-royalty methodology, and it required a recomputation grounded in a hypothetical negotiation—permitting enhancement and interest under § 284 after primary damages are properly determined.


Trio Process Corp. v. L. Goldstein's Sons, Inc., 612 F.2d 1353 (3d Cir. 1980)