In Acantha v. DePuy, a patent case dealing with spinal implant orthopedic devices, a Wisconsin district court judge excluded what seems to be the bulk of the reasonable royalty opinions of Plaintiff’s damages expert. The court ruled that (1) the main basis for the expert’s proposed royalty rate improperly includes royalties paid to a licensee that is not a party to this litigation; (2) the expert failed to show that a litigation settlement was sufficiently comparable (beyond just technical aspects) to be a useful data point; and (3) the expert’s Georgia-Pacific analysis was not sufficiently tied to his royalty rate conclusion to demonstrate proper apportionment.
Plaintiff’s expert relied upon Acantha’s exclusive license of the patent-in-suit to Stryker (not a party to this litigation) calling for royalties of 4.25% of sales (later revised to a non-exclusive license at 3.25%) plus 40% of any sublicensing royalties. Rather than adopt the rate of 4.25%, the expert concluded that the hypothetical negotiation would include Stryker (not plaintiff) and the resulting rate would be 10.6% to 21.2% in order to remit 4.25% to Acantha. The court explains that licensees are normally included as parties to a hypothetical negotiation when they are parties to the patent infringement action. But here, Stryker is not a party to this case, so Plaintiff is entitled only to the royalties it would have earned, not those of Stryker. Hence, the expert’s methodology is unreliable since it includes Stryker’s share of the royalty.
Plaintiff’s expert then relied upon a jury verdict and subsequent settlement that Defendant entered into with Globus, related to three unrelated patents. The verdict included a royalty rate of 15%, and the subsequent settlement included a cross-license, upfront fees, and 10% royalty rate. The court finds that although the expert points to a technical expert’s opinion finding that the technologies were comparable, he failed to sufficiently analyze the other factors, specifically that the settlement included: (1) three patents (as opposed to one in the present litigation), (2) a cross-license of various patents, and (3) upfront fees. Moreover, the court notes that the Acantha-Stryker license for the patent-in-suit is the most reliable license in the record. Hence the court excludes any royalties (or even any documents) related to the Globus litigation.
Finally, Defendants assert that Plaintiff’s expert failed to properly apportion (in either the royalty base or rate) the patented features from the non-patented features in the accused products, and that his Georgia-Pacific analysis was conclusory and did not constitute apportionment. The court agrees, finding that the expert “merely stated what a reasonable royalty would be based on the Acantha/Stryker license and the Globus litigation documents without explaining how any of the factors support his conclusion.” Moreover, the “ipse dixit” nature of his conclusions will not assist the jury.
Acantha LLC v. DePuy Orthopaedics, Inc. et al, 1-15-cv-01257 (E.D. WI April 25, 2018, Order) (Griesbach)