Patent Damages

EDTX excludes evidence of party’s actual behavior at hypothetical negotiation

The Eastern District of Texas, Sherman Division, in Evicam Int’l, Inc. v. Enforcement Video, LLC d/b/a Watchguard Video, Civil Action 4:16-CV-105, Judge Mazzant ruled on a motion in limine related to the hypothetical negotiation (along with other issues).  Evicam moved to “exclude any argument, evidence, or testimony regarding how WatchGuard would have behaved at a hypothetical negotiation.”  Slip Op. at 1.  The court noted that a “reasonable royalty can be calculated from an established royalty, profit projections, or a hypothetical negotiation based on the factors in Georgia-Pacific.”  Id. (citing Wordtech Sys. V. Integrated Networks, 609 F.3d 1308, 1319 (Fed. Cir. 2010)).

The court pointed out that Evicam’s expert used the Georgia-Pacific factors to determine a reasonable royalty rate.  Id.  WatchGuard was free to file an expert report to challenge the underlying facts relied on by Evicam’s expert regarding how WatchGuard would have behaved.  Id. at 1-2.  In the absence of a rebuttal report, Evicam’s motion was granted.  “Since the Georgia–Pacific factors rely on underlying facts to make reasonable inferences about a party’s behavior during a hypothetical negotiation, evidence of how WatchGuard would have actually behaved is irrelevant.”  Id. at 1.

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