The NDCA, in Digital Reg of Texas v. Adobe, Civil Action No. 12-1971 CW (Judge Claudia Wilken) (August 19, 2014), granted a motion to exclude testimony from Digital Reg’s damages expert Robert Parr on a number of grounds.
The patents-in-suit related to digital rights management. Mr. Parr, in deriving his royalty rate, looked at software piracy rates across the software industry and from Symantec (who had settled out), but not Adobe itself. Moreover, Mr. Parr did not seek to adjust the industry data or Symantec data to account for differences that might be applicable to Adobe. Digital Reg stated that the information it desired was not produced by Adobe, and Adobe responded that it did not track that specific statistic. The Court analyzed all of the various things Mr. Parr could have done, but did not do, and held “the inputs of Mr. Parr’s damages calculation are inherently unreliable.”
Separately, the Court also found that Mr. Parr’s use of a 50-50 share of saved profits was improper, and just as arbitrary as the 25% rule.
Beyond that, the Court found that Mr. Parr’s analysis violated the entire market value rule. Digital Reg relied on the Mondis case to argue that its use of EMVR was appropriate because previous licenses had been based on the licensed product’s total value. But unlike Mondis, Digital Reg did not have the same history of multiple licenses based on total value, so the Court distinguished Mondis and cited to Uniloc for the proposition that there is no exception to EMVR if the royalty rate is “low enough.”
Mr. Parr had an alternative analysis that apportioned the royalty base, but that analysis increased the rate, so the Court cited to Lucent for the proposition that this is not acceptable.
To sum up, the Court stated “[d]ue to the multiple flaws in Mr. Parr’s inputs and analysis, his damages testimony must be excluded in full.”