In the 1941 case of Mishawaka Rubber & Woolen Manufacturing Co. v. S.S. Kresge Co., the U.S Supreme Court addressed a dispute over patent infringement and damages calculation methods used in such cases. The plaintiff, Mishawaka Rubber & Woolen Manufacturing Company, had patented an insole for shoes that was being infringed upon by S.S Kresge Company's product line. The court ruled in favor of Mishawaka, stating that when calculating damages for patent infringement, it is appropriate to consider not only lost profits but also potential gains made by the infringer from using the patented invention without permission - often referred to as "reasonable royalty". This ruling established important precedent regarding how courts should calculate damages in patent infringement lawsuits.

In the dissenting opinion for Mishawaka Rubber & Woolen Manufacturing Co. v. S.S. Kresge Co., Justice Frank Murphy argued that the majority's decision to award profits from patent infringement based on a reasonable royalty rate was incorrect and unfair, as it failed to consider the actual harm suffered by the plaintiff due to defendant's actions. He believed that this approach would not deter future infringers since they could potentially profit more than what they might have to pay in damages if caught. Instead, he proposed an alternative method of calculating damages which involved determining how much of defendant’s total sales were attributable solely to its use of plaintiff’s patented design and then subtracting any additional costs incurred by defendant in making those sales.