Patent Damages

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.


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).


Judge Posner precludes royalty rate testimony based on disparate licenses for unknown different inventions

On May 28, 2013, Judge Posner, sitting by designation in the Northern District of Illinois, issued an opinion in Promega Corp. v. Applied Biosystems, LLC, et al., Case No. 13-cv-2333 (Doc. No. 378), addressing Daubert motions to exclude opinions by plaintiff’s and defendant’s experts, including damages experts for both sides.  The patentee in the case was Life Technologies, and the accused infringer was Promega.  Promega’s motion to exclude royalty rate testimony by Life Tech’s expert (Jed Greene) will be addressed here.  Judge Posner granted the motion to exclude Greene’s testimony because “[u]sing the midpoint of a range of royalty rates in disparate licenses for unknown different inventions as the estimate of a reasonable royalty for a license for Promega products outside the field of use of the 2006 patent is arbitrary.”  Slip op. at 3 (citing Federal Circuit’s opinions in Wordtech and Lucent).  Judge Posner observed that “Greene testified simply that he considered the totality of the circumstances. But generalized impressions are no substitute for a method of computing, and evidence justifying, a reasonable royalty rate.”  Id.


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.


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.


DDEL approves case-by-case approach to discovery of license negotiation documents

The District of Delaware in Sciele Pharma, Inc. v. Lupin, LTD, Civil No. 09-37 (RBK/JS) (Redacted Version) (D. Del. January 31, 2013), ruled on plaintiff’s motion seeking production of certain license agreements and related negotiation documents.  The portion of the opinion concerning production of negotiation documents is most interesting.  The court granted the motion as to negotiation documents, but indicated that production in such cases should be based on a case-by-case approach.

Having determined that the defendant was required to produce some license agreements, it was compelled to address plaintiff’s request for the underlying documents, including “negotiations, forecasts and analysis.”  The court noted that there are cases going both ways on settlement negotiation documents, citing:  Tyco Healthcare Group LP v. E-Z-EM, Inc., No. 2:07-cv-262 (tjw), 2010 wl 774878, at *2 (E.D. Tex. March 2, 2010) (ordering production); High Point SARL v. Sprint Nextel Corp., C.A. No. 09-2269-CM-DJW, 2012 WL 1533213 (D. Kan. April 30, 2012) (denying production even though license agreements ordered to be produced).  The court recognized the split was not surprising given the broad discretion afforded courts in deciding discovery issues.

The court declined to adopt a blanket rule on the discoverability of negotiation documents, instead opting for a “case-by-case approach … to determine whether the requested documents were discoverable.”  The court cited Charles E. Hill & Assoc., Inc. v. ABT Elecs., Inc., 854 F. Supp. 2d 427, 429 (E.D. Tex. 2012), in support of this approach.  However, the Delaware court also agreed with Charles E. Hill that “as a general rule license negotiations are less probative and more prejudicial than the licenses themselves,” and that “negotiation documents ‘primarily add heat and not light to an already difficult judicial chore.’”  Slip op. at 10 (quoting Charles E. Hill).


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).