Patent Damages

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%.


NDCA finds evidence of related company's potential lost profits relevant to hypo negotiation

On April 2, 2013, the NDCA issued an opinion in Accessories Marketing, Inc. v. TEK Corporation, Case No. C 11-4773 PSG (Doc. No. 183), addressing TEK’s MIL concerning damages.  One of the issues concerned the impact of lost sales by a related company on the hypothetical negotiation.


EDTX accepts Nash Bargaining; finds plaintiff’s expert failed to account for smallest salable unit

On March 1, 2013, the EDTX issued an opinion in VirnetX Inc. v. Cisco Systems, Inc., Case No. 6:10-cv-00417-LED (Doc. No. 745), granting in part and denying in part Cisco’s motion to exclude certain opinions by VirnetX’s damages expert, Roy Weinstein.  The court addressed two issues:  (1) whether Mr. Weinstein had accounted for the smallest salable patent practicing unit (SSU) in determining the royalty base the accused products; and (2) the acceptability of Mr. Weinstein’s reliance on the Nash Bargaining Solution (NBS) profit splitting model.  The court ruled for Cisco on issue #1 and for VirnetX on issue #2.


Federal Circuit addresses damages issues and worldwide sales

On March 26, the Federal Circuit issued its opinion in Power Integrations v. Fairchild Semiconductor Int’l, Inc., No. 11-1218, addressing damages issues and worldwide sales.  The case is linked here.


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.


NDTX continues trial to allow plaintiff's damages expert to address issues in damages theory

The Northern District of Texas in Axcess Int’l, Inc. v. Savi Tech., Inc., Case No. 3:10-cv-1033-F (N.D. Tex. January 25, 2013), ruled on defendant’s motion to exclude plaintiff’s damages expert, Dr. Scott D. Hakala, from testifying on damages.  The court held a pretrial hearing and afterward considered issues related to Dr. Hakala’s expert report.  Axcess submitted a supplemental document in an attempt address the court’s concern that Dr. Hakala had inadequately apportioned the royalty base to account for the smallest salable patent practicing unit and failed to give a reliable assessment of the royalty rate.  The court continued the trial to permit Axcess an opportunity to address the court’s concerns and in the opinion outlined the additional requirements for Dr. Hakala’s new expert report.


EDVA grants motion in limine precluding pre-notice data to be used for determining post-notice price erosion

In Morpho Detection, Inc. v. Smiths Detection, Inc. (E.D. Va. December 3, 2012), Judge Mark S. Davis granted the Defendant’s motion in limine to prevent the Plaintiff from using pre-notice data for calculating post-notice price erosion damages.  The Court noted that this issue is disputed by scholars, and that he sided with those in favor of excluding pre-notice data, but that the particular facts in dispute rendered that determination unnecessary.  Specifically, the Court found that Morpho’s expert was making an assumption about sales that was barred due to section 287’s marking provisions:

There is an obvious and important difference between considering historical pricing and market information to determine the amount the patentee could have charged later, to account for damages caused by infringement occurring during the damages period (which is proper), and calculating damages for defendant’s infringing conduct that occurred before the patentee complied with the marking statute (which is improper).  Here Morpho seeks to do the latter, which is expressly prohibited by the marking statute.


WDPA allows “novel” damages theory for per-unit royalty on units sold outside US because of “but for” usage inside US

Judge Fischer in the Middle District of Pennsylvania, in Carnegie Mellon University v Marvell Technology Group, Ltd. (M.D. Pa. November 29, 2012), denied an “emergency” motion to strike CMU’s damages theory on the eve of trial.  The Court denied the motion on multiple grounds, both procedurally (finding that it was in essence a motion for reconsideration of a previous order), and substantively (applying the same logic from the previous summary judgment motion that was denied).


SDCA broadly construes comparable licenses and allows profit split/Nash bargaining

The SDCA in Gen-Probe Inc. v. Becton Dickinson & Co., Case No. 09-CV-2319 BEN NLS and 10-CV-0602 BEN NLS (S.D. Cal. November 26, 2012), ruled on Daubert motions by plaintiff Gen-Probe and defendant Becton Dickinson (“BD”) regarding damages issues.  The court denied both motions.


MDFL takes an expansive view of comparable licenses

The MDFL in Harris Corp. v. Ruckus Wireless, Inc., Case No. 6:11-CV-618-Orl-36KRS (M.D. Fla. January 16, 2013), ruled on plaintiff Harris’s motion to strike the expert report and exclude testimony (i.e., a Daubert motion) of defendant’s damages expert Richard Ostiller.  Harris made several arguments challenging the reliability of Ostiller’s opinions, the most interesting of which involved Ostiller’s reliance on two license agreements that he concluded were comparable and the methodology he used to locate those licenses (which did not involve either of the parties to the lawsuit).  The court denied the motion.