In Comcast v. Sprint, the district court allowed Comcast’s patent damages expert to employ “forward citation analyses” in two aspects of his reasonable royalty opinions, finding that the methodology was sufficiently reliable.
Comcast accused Sprint of infringing its ‘870 patent, which Comcast acquired in a purchase of 36 patents from Nokia for $600,000. Sprint’s expert concluded that a reasonable royalty would be in the range of $300,000 to $1.5 million. He relies primarily on this Nokia patent purchase, and corroborates his opinion by using forward citation analysis and other agreements. Forward citation analysis is “a method of estimating the value of a particular patent based on the number of times the patent is cited by later patents.” Using this process, the expert concluded that the ‘870 patent represents 2.5% of the total value of all patents in the sale. The resulting $15,000 value “corroborates” his overall opinion on value.
Comcast argues that this method has been “discredited,” citing Finjan v. Blue Coat (which we previously covered) and an academic paper. Yet the court concludes that Finjan “does not reject forward citation outright,” and that “a single academic paper—the Penn Paper—is not sufficient to rebut decades of literature supporting forward citation analysis.”
The court also rejects Comcast’s argument that the expert misapplied the technique, concluding that the analysis was sufficiently tied to the facts of the case.
This Sprint expert also used a forward citation analysis on a Sprint license that included three unrelated patents. The expert found that one patent shared an IPC code with the ‘870 patent, and a forward citation analysis of the three patents finds that $1 million (of the $1.5 million lump sum payment) can be attributed to that comparable patent. This “corroborates” his opinion on value of the ‘870 patent. Comcast argues that this settlement agreement is insufficiently reliable. The court disagrees, finding them sufficiently comparable since they are technologically comparable, the agreement involved a lump-sum payment (Sprint’s preference), and both are non-exclusive. Further, the expert acknowledged and accounted for the differences. The court thus declines to exclude the expert’s use of the agreement.
Sprint likewise sought to exclude Comcast’s expert, arguing that her method of step-counting is unreliable. The expert first calculated the profitability of Sprint’s accused messaging systems, then apportioned the profits based upon their technical expert’s report that broke down the processes into infringing and non-infringing steps. The court allows this method, ruling that the technical expert’s analysis was adequately supported and explained, and that the damages expert’s use of that was reliable.
Comcast Cable Communications LLC, et al. v. Sprint Communications Company LP, et al., Civ. Action No. 12-859 (E.D. PA, November 21, 2016, Memorandum) (DuBois)