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 ... Read More
So begins a district court ruling in Good Technology v. MobileIron. The Court’s EMVR lesson in this July 10, 2015, order is as follows: when Dauberting an opposing damages expert for failing to fully apportion the patented product in his reasonable royalty opinion, you had better identify the unpatented features and show how the product should be apportioned.
Here, MobileIron’s expert, Richard Eichmann, identified one of Good’s products (the standalone AppCentral product, which is sold in larger product bundles) as having a close relation to the claimed functionality of the patent in suit. He then opines that the reasonable royalty would amount to the incremental profits from that product.
Good first argues that Eichmann should have further apportioned AppCentral, which the Court rejects because (1) “Good fails to offer any evidence or counter-opinion that AppCentral can be further apportioned,” and (2) “Good merely points fingers” instead of providing support about non-patented features. As support, the Court cites VirnetX: “a patentee must take care to seek only those damages attributable to the infringing features,” and the “law requires patentees to apportion the royalty down to a reasonable estimate of the value of its claimed technology, or else that its patented technology drove demand ... Read More
In this case where Microsoft’s Xbox and Kinect sensors are accused of infringing a facial recognition patent, the Virginia court excludes some opinions regarding the use of comparable agreements, the Entire Market Value Rule, and the basis for a lump-sum royalty. Plaintiff’s expert, Walter Bratic, opined that royalty damages should be a running royalty of 3x the court-ordered royalty rate from a prior case (Immersion/Sony) involving handheld controllers. Meanwhile, Defendant’s expert, Julie Davis, opined that Kinect-related settlement agreements (for lump sums) were the relevant data points.
• Comparable licenses: The Court ruled that Mr. Bratic erred in finding the Immersion/Sony verdict and court-ordered royalty rate to be comparable. First, plaintiffs tried to “dodge” the fact that the technologies were different by merely pointing to the similarities in the patents instead of the specific implementations. Additionally, Mr. Bratic’s assertion that the patented technology was more valuable than the comparable license “is considerable evidence of the non-comparability.” This therefore leaves the Kinect-related settlements as the most useful data points and thus relevant under ResQNet.
• Comparable licenses: The Court ruled it is improper for Mr. Bratic to rely upon 13 non-comparable Microsoft licenses to support his contention that a running royalty is the appropriate form. The ... Read More
As a follow up to our 2013 post regarding a Daubert ruling in this case, the Federal Circuit this week upheld the district court’s rejection of a $70 million jury verdict, finding that the lower court correctly found a lack of evidence that Cisco defrauded XpertUniverse during a partnership between the firms. As we noted previously, the $70 million claim related to lost business value that Plaintiff’s expert computed.
The district court had also ruled that Plaintiffs failed to show that Cisco’s concealing their news of denial from XpertUniverse destroyed Plaintiff’s partnership opportunities that led to the lost business value. In short, Plaintiffs failed to prove causation, which the judge had warned them about in the March 2013 Daubert ruling that permitted presentation of the $70 million in claimed damages.
XpertUniverse Inc. v. Cisco Systems Inc., 09-157-RGA (D. DE, November 20, 2013, Order) (Andrews)
After precluding certain testimony by Plaintiff’s damages expert in January, the court now rules against the remainder of his damages opinion of $150 to $300 million “or more.” The court found that the expert’s reasonable royalty opinion was unreliable, being based upon a single litigation settlement that (a) occurred 5 years after the hypothetical negotiation, (b) pertained to a different patent, and (c) accompanied no analysis of comparability.
The court notes that "AVM does not cite to a single case where any court permitted a damages claim to be based on a single settlement agreement for a comparable technology.”
The court also suggests some pertinent questions that Plaintiff’s expert could have addressed in an analysis of comparability:
• What was the amount of damages ultimately sought in the litigation?
• Would the issue of willfulness have been tried, with the possibility of treble damages?
• Had sanctions been imposed, as in LaserDynamics v. Quanta?
• Did the agreement have provisions that would differ from the present case? (Here, the later settlement included a provision requiring dispute resolution before filing further patent suits.)
The court concludes: “Even assuming that a single settlement agreement on a comparable technology could be the basis for a reliable conclusion, which the Court doubts, Evans' analysis falls ... Read More