A California district court excluded opinions of a damages expert that attempted to apportion the reasonable royalty based on forward citations; i.e. the number of times each patent-in-suit has been cited as prior art by future patents.
First, the Court finds that Plaintiff’s expert, Dr. Anne Layne-Farrar, “offers no explanation as to why the forward citation methodology is an appropriate measure of the value of the patents at issue in this case.” Since the analysis was not tied to the facts of this case, the methodology “has little more probative value than the ‘25 percent rule of thumb’ and Nash Bargaining Solution analyses that the Federal Circuit rejected in Uniloc and VirnetX.”
Second, the Court explains that the expert only analyzed the six patents-in-suit, and hence “this methodology does not account for the value of the accused features as a portion of the accused products, but rather demonstrates only the value of each patent-in-suit relative to each other.” The Court finds that the expert “compares the forward citations of the patents-in-suit to one another as a method of apportioning a royalty base that quizzically does not take into account the infringing and non-infringing features in the accused products.” If this explanation is accurate – that the expert apportioned the royalty base between patented and non-patented features without actually analyzing the non-patented features – then indeed the methodology seems peculiar.
The Court also considers the expert’s second method of apportionment wherein she relies upon an internal document identifying all 24 functions of the relevant products. The expert concludes that the patents-in-suit drive 9 of the 24 functions, and then apportions product revenues assuming that each function is worth 1/24th of the revenues. The Court allows the analysis but will allow Defendant to further object to the expert’s conclusion that each function has an equal value of 1/24th of revenues.
Finjan, Inc. v. Blue Coat Systems, Inc., 5-13-cv-03999 (N.D. CA, July 14, 2015, Order) (Freeman)