Patent Damages

MDPA approves smallest salable unit as base; allows lump sum agreements as evidence of running royalty

On May 27, 2014, Judge Caldwell of the Middle District of Pennsylvania issued an opinion on a motion for reconsideration of an earlier Daubert opinion.  The case is Kimberly-Clark Worldwide, Inc. v. First Quality Baby Products, LLC, Civil No. 1:09-CV-1685.  The court addressed defendants’ motion to exclude opinions by plaintiff’s damages expert, Julie L. Davis, on two issues:  (1) whether Ms. Davis’ use of the smallest salable patent-practicing unit (“SSU”) as the royalty base violated the entire market value rule (“EMVR”); and (2) whether Ms. Davis’ use of lump sum agreements as evidence of a running royalty rate should be allowed.  The court ruled in plaintiff’s favor on both issues.


CDCA denies motion to compel production of settlement agreements

On May 29, 2014, Magistrate Judge Mumm of the Central District of California issued a discovery order in In re Katz Interactive Call Processing Litigation, Case No. 07-ML-1816 RGK (FFMx), addressing defendant Echostar’s motion to compel production of settlement agreements by plaintiff.  The issue is a narrow one, but points out the importance of crafting damages-related discovery requests sufficiently broad to capture all kinds of agreements.  The court reviewed the document requests at issue and concluded they were intended to cover license agreements.  The court reasoned that the requests only addressed settlement agreements to the extent they included a license.  The settlement agreements at issue were related to expired patents, and the court concluded they “are not sufficiently related to license agreements to be fairly within the contemplation of the discovery requests.”  Slip op. at 2. The court thus denied Echostar’s motion.



EDTX excludes opinions on non-comparable licenses

On May 9, 2014, Judge Davis of the Eastern District of Texas issued a Daubertopinion in Tracbeam, L.L.C. v. Google, Inc., Case No. 6:13-cv-00093-LED, addressing numerous motions to exclude from both parties.  The Court denied the vast majority of the motions, but granted-in-part motions brought by both sides as to reliance on “comparable” license agreements.


CDCA excludes opinions on non-comparable license agreements

On April 21, 2014, Judge Guilford of the Central District of California issued aDaubertopinion in Universal Electronics, Inc. v. Universal Remote Control, Inc., Case No. SACV 12-00329 AG (JPRx), addressing numerous motions to exclude.  The issue of primary interest concerns plaintiff’s expert’s setting of a 3% “baseline royalty rate” based on four license agreements the court found not sufficiently comparable.  The expert is Frank Bernatowicz.


NDCA denies summary judgment and Daubert motions on lost profits and reasonable royalty; allows patentee’s entire market value and comparable license theories

On July 18, 2013, Judge Seeborg of the Northern District of California issued an opinion in Interwoven, Inc. v. Vertical Computer Sys., Case No. CV 10-04645 RS (Doc. 191), in which the court denied Interwoven’s motion for summary judgment concerning lost profits and reasonable royalties, and denied Interwoven’s motion to exclude Vertical’s damages expert, Joseph Gemini.


NDCA denies motion to strike reports for inadequate apportionment in lost profits and reasonable royalty; allows testimony on disputed licenses and offer to license

On February 21, 2014, Judge Alsup of the Northern District of California issued an opinion in Plantronics, Inc. v. Aliph, Inc., Case No. C 09-01714 WHA, in which the court denied motions to strike defendant’s damages experts on lost profits (Matthew R. Lynde) and reasonable royalty (Brian Napper).  The case was a competitor suit involving bluetooth headsets.  The opinion has several interesting issues, but the most significant is the treatment of apportionment and lost profits.  Judge Alsup, in effect, held that the Panduit test only requires proof of demand for the patented product, and thus the plaintiff need not prove demand for the patented feature, thus avoiding the entire market value rule.


NDCA addresses lump sum/EMVR and comparable licenses

On September 6, 2013, Magistrate Judge Grewal of the Northern District of California issued an opinion in HTC Corp. v. Technology Properties Ltd., Case No. 5:08-cv-00882 PSG (Doc. No. 563), addressing a Daubert motion filed on the eve of trial to strike the patentee’s expert’s damages testimony.  (Note the parties are reversed from the standard order:  HTC was accused of infringement, and TPL was the patentee.)  HTC argued that TPL’s damages expert (Dr. Stephen Prowse) had made two errors:  (1) he used a lump sum royalty to avoid the EMVR; and (2) the license agreements on which he relied were not comparable.  The court denied the motion.


DDEL rejects reasonable royalty theory based on single settlement agreement

On February 21, 2013, Judge Andrews of the District of Delaware issued an opinion in AVM Tech, LLC v. Intel Corp.-d8cf79052b12, Case No. 1:10-cv-00610-RGA (Doc. No. 283), addressing various Intel pretrial motions concerning damages.  (See February 22, 2013 post on this blog concerning a different opinion from this same case.)  Judge Andrews concluded that AVM could not present a damages theory that was based on a single Intel settlement agreement (from a previous litigation involving a different plaintiff), even though the technology at issue in the agreement was allegedly comparable, in part because AVM failed to analyze the underlying litigation that lead to the settlement or to explain why other Intel licenses were not comparable.  See slip op. at 8 (“An analysis that relies on a single license agreement but does not take into account why other licenses are not comparable cannot be a reliable analysis.”) (footnote omitted).


DDE excludes lump sum opinion where allegedly comparable licenses used running royalties

On March 11, 2013, Judge Andrews of the District of Delaware issued an opinion in XpertUniverse, Inc. v. Cisco Systems, Inc., Civil Action No. 09-157-RGA (Doc. No. 647), granting Cisco’s Daubert motion to exclude opinions by plaintiff’s damages expert (Walter Bratic) concerning a lump sum reasonable royalty award for alleged patent infringement.  (The case also involved other claims for fraud and breach of contract.)

Bratic based his opinion on a Georgia Pacific hypothetical negotiation and concluded that Cisco would have paid a $32.5M lump sum for a license to the two patents-in-suit.  He opined that Cisco would have paid 50% of $65M he stated was invested to develop a computer system that could stand as a proxy for the plaintiff’s technology.  He used two license agreements he considered comparable and found they established a running royalty range of 3-5%.


DDEL addresses EMVR vs. smallest salable unit and comparability of portfolio licenses

The District of Delaware in AVM Tech., LLC v. Intel Corp., Civil Action No. 10-610-RGA (D. Del. January 4, 2013), ruled on Intel’s Daubert motion to exclude the testimony of AVM’s damages expert, Larry Evans.  Judge Andrews considered two issues:  1) the intersection of the entire market value rule (EMVR) and smallest salable unit, and 2) comparability of portfolio license agreements.