This California district court set some limits on the plaintiff’s damages expert testimony, ruling that plaintiff had not shown that the patented feature was the basis of demand for a pricier group of patented remote controls, and thus the expert could not use a higher royalty for those units.
Interestingly, the Court first noted that the EMVR did not apply because (1) Claim 1 of the patent-in-suit described a “remote control device,” not merely the patented feature (a thumb switch), and (2) the thumb switch is a prominent feature, so “a reasonable juror could conclude that the thumb-switch is the primary driver of consumer demand for the device.” Thus, the Court allows the use of the remote control as the royalty base.
Yet then the Court rules that the plaintiff failed to meet its burden that the thumb-switch drove customer demand for the higher-priced remotes, citing Lucent. The Court notes that the higher prices seem to be driven by other added features, and as a result, plaintiff’s expert could not testify that the royalty per unit could exceed that of the lowest priced unit.
At first blush, it seems a bit confusing that the Court rules that the EMVR does not apply, then immediately cites the EMVR requirements in order to reduce damages. But the EMVR affects the royalty base, and the Court here is placing limits on the royalty rate. So it is not really using the EMVR at all, but rather trying to tie the royalty rate more closely to the economics (a current trend in the courts). Couching this argument within EMVR language seems a bit confusing and, on its face, possibly unnecessary.
The Court also precludes plaintiff’s expert, Dr. Barbara Luna, on Daubert grounds from presenting her proposed royalty rates (1.5% and 5%) because the rates were based on third-party licenses that were not shown to be comparable to the technology at issue (citing ResQNet). The Court notes: “the royalty rates Luna computes are unreliable because they are based on mere ‘summaries’ of license agreements that are easily distinguishable from any hypothetical licensing agreement that MMIT and VIZIO may have entered.” Assuming that this data was the typical publicly-available licensing information, then this ruling should be no surprise.
Man Machine Interface Technologies, LLC v. Vizio, Inc., et al., 8-10-cv-00634 (C.D. CA February 27, 2012, Order) (Guilford, J.)