Damage Expert Opinion Allowed Where Expert Properly Apportioned the Value Between the Patented Feature and the Unpatented Features of the Accused Products

May 25, 2012

Plaintiff retained an expert to opine on damages arising from the defendants' alleged infringement of the asserted patents. The defendants moved to exclude the expert report on two grounds: (1) the expert failed to properly apportion the value of the patented features; and (2) the expert misapplied the market value rule. The expert had attributed 30% of the value of the accused products to the asserted bus interface department.

The district court began its analysis by stating the applicable law: "An expert witness may provide opinion testimony if '(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issues; (b) the testimony is based on sufficient fact or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case." Fed. R. Evid. 702. A trial court is "charged with a 'gatekeeping role,' the objective of which is to ensure that expert testimony admitted into evidence is both reliable and relevant.' Sundance, Inc. v. DeMonte Fabricating Ltd., 550 f.3D 1356, 1360 (Fed. Cir. 2008)."

The district court summarized the defendants' position as follows: "Defendants argue that this opinion should be excluded because Mr. Nawrocki merely adopts the opinion of PACT's technical expert, Dr. Tredennick, that "robust system I/O" accounts for 30% of the value of the accused products, without verifying the value of tying it more closely to the value of the patented features. Dkt. No. 185 at 10-11. Defendants also criticize Mr. Nawrocki's interpretation of the evidence as being arbitrary and unreliable. Id. In response, PACT describes the analysis and evidence supporting Mr. Nawrocki's opinion. PACT contends that the 30% figure is derived from Xilinx's customer surveys and internal reports, referred to as the 'SLE' and 'Boardwalk' reports."

The district court found that the defendants' criticisms went more to the weight the jury should accord the opinion and not to the admissibility. "Although Defendants largely disagree with Mr. Nawrocki's interpretation of the evidence, Defendants have not shown that Mr. Nawrocki's apportionment methodology is unreliable or that there are no facts to support his opinion. Accordingly, the Court overrules Defendants' objection to Mr. Nawrocki's apportionment opinion."

With respect to the entire market value rule, the district court stated: "Defendants argue that Mr. Nawrocki improperly invokes the entire market value rule by using the average sales price of the accused products in his calculation of a per-unit running royalty rate for the asserted patents. Dkt. No. 185 at 11-12. PACT admits that Mr. Nawrocki's analysis starts with the average sales price of the accused products, but argues that the entire market value is not being invoked because Mr. Nawrocki apportioned the average sales price using the 30% apportionment factor, and made other adjustments to account for the profitability of the accused products. Dkt. No. 220 at 4-6 and 12; Nawrocki Rep., Dkt No. 220-2 ΒΆΒΆ 153-154. The Court agrees with PACT that Mr. Nawrocki apportioned the average sales prices of the accused products to account for the contribution of the unpatented features to the accused products' value, and therefore did not invoke the entire market value rule. Defendants' entire market value rule objection is overruled."


Pact XPP Technologies, AG v. Xilinx, Inc., et al., Case No. 2:07-CV-563-RSP (E.D. Tex. May 11, 2012)

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