In a patent case regarding infant play yard arches, an Illinois district court this week excluded the royalty opinion of plaintiff’s damages expert because his royalty rate “might have been picked out of a hat.” In Kolcraft v. Chicco, plaintiff’s expert first estimated a baseline royalty of 7.7% of sales, then adjusted it upward to 8% based on the Georgia-Pacific factors, resulting in total damages of $3.73 million. The starting point of 7.7% was based on the expert’s decision to apportion one-third of the incremental profit from the accused devices to their patented features.
The court rejects the expert’s analysis, explaining:
“There is no justification for the one-third figure anywhere in the report or attached exhibits. Although [the expert] discusses the value added by the patented features in abstract terms, … he does not explain how those advantages translate to the one-third apportionment number. Nor is there any other evidence that would support the apportionment figure … As far as the record shows, the one-third number might have been picked out of a hat.”
Just as the 25% rule-of-thumb apportionment methodology was rejected for good in Uniloc v. Microsoft (Fed. Cir. 2011), the judge explains:
“[Expert’s] number was 33%, not 25%, but the principle is the same: because no evidence or analysis ties the number to the particular facts of the case, any damages calculation based on that number must be rejected.”
Based upon the court’s characterization of the expert’s opinion, this ruling does not appear particularly surprising. Here at VLF, we have been noting for several years that the courts have been increasingly demanding more rigorous analyses of the value of patented technologies. This case serves as yet another reminder.
Kolcraft Enterprises, Inc. v. Chicco USA, Inc., 1-09-cv-03339 (N.D. IL, July 16, 2018, Order) (Chang)