Recently in Damages Category

District Court Excludes Damage Expert for Failure to Apportion But Gives Expert One More Opportunity to Supplement Report

February 7, 2017

In this patent infringement action, Plaid sought to exclude the entirety of the plaintiff's damage expert's, Robinson's, reasonable royalty analysis as based on an apportionment "plucked out of thin air." Yodlee opposed the motion and asserted that its apportionment methodology was justified by the facts of the case.

The district court began its analysis by noting that "[Ii infringement is shown, the jury will need to 'apportion the defendant's profits and the patentee's damages between the patented feature and the unpatented features using reliable and tangible evidence.' Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014) (internal quotation marks omitted). 'The essential requirement is that the ultimate reasonable royalty award must be based on the incremental value that the patented invention adds to the end product.' Id."

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District Court Orders Plaintiff to Supplement Damage Information Provided in Federal Rule 26 Initial Disclosures Where Plaintiff Failed to Compute an Actual Damage Number

December 13, 2016

In this discovery dispute in a patent infringement action, Frontgate contended that Balsam Brands, Inc. ("Balsam") failed to adequately respond to an interrogatory seeking information about Balsam's damages. As explained by the district court, Balsam's response stated that it: (1) "intends to seek lost profits on the 1,662 Flip Trees that it did not sell during the 2015 Christmas season"; and (2) "intends to seek a reasonable royalty on all Inversion Trees sold by Defendants for which lost profits are not available." Balsam further responded that "historical data on Balsam's cost, sales, inventory, and pricing" was included in materials produced.

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District Court Excludes Damage Expert's Opinion Based On Faulty Royalty Calculation

September 20, 2016

In this patent infringement action between Finjan and Sophos, the district court had previously granted a motion to exclude Finjan's damage expert. The district court explained that the expert's, Layne-Farrar, "method of applying a royalty rate to an apportioned base for each patent and adding the resulting royalties was not reliable because under her apportionment method she had attributed the full value of certain features of Sophos's products to multiple patents and so had counted the value of these features multiple times."

The district court concluded that this methodology "functioned to inflate Layne-Farrar's royalty base and her final damages calculation." Nonetheless, the district court permitted the expert to submit a supplemental report. Sophos then moved to exclude the supplemental report as well.

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District Court Precludes Damage Expert from Using a Settlement Agreement to Derive a Reasonable Royalty Calculation Where Expert Employed a Likelihood of Liability Estimate Based Solely on a Study That Patent Holders Prevail Approximately 40 Percent

September 8, 2016

MAX Encryption Technologies ("MAZ") filed a patent infringement action against Blackberry for patent entitled "Method of Transparent Encryption and Decryption for an Electronic Document Management System," U.S. Patent No. 6,185,681 (the "'681 patent"). As the case progressed toward trial, Blackberry filed a motion to exclude the testimony of MAZ' damages expert, Chase Perry.

As explained by the district court, "[i]n reaching his baseline estimate for damages, Mr. Perry relied on a previous license agreement involving the patent-in-suit. The previous license agreement, however, was made in the context of settling a litigation dispute, and thus did not reflect the royalty the parties would have reached 'just before infringement began.' Therefore, the damages amount arrived at in the settlement agreement had to be translated into a damages number that the same parties would have arrived at just before infringement began had they, instead, assumed that the patent was infringed and valid. This implies that the amount of the previous settlement would need to be increased to arrive at the royalties that would have been agreed to in a hypothetical negotiation.'

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Boston University v. Everlight: District Court Grants Immediate Appeal Over Whether Lump-Sum Royalty Award Can Be Converted to Ongoing Royalty Payments Post Verdict

August 18, 2016

After a jury awarded the Trustees of Boston University ("BU") a $9.3 million dollar one-time lump-sum payment from Epistar and a $4 million dollar one-time lump-sum payment from Everlight, the district court denied the defendants' motions for judgment as a matter of law and/or a new trial, other than with respect to the issue of damages. On the damage issue, the district court granted a remittitur because the lump-sum damages awards were not supported by the evidence.

After the district court denied a motion for reconsideration, BU notified the district court that it elected to have a new trial on damages or, in the alternative, to permit an interlocutory appeal.

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District Court Excludes Evidence of Lost Profits Where Inventor Did Not Make Products That Practiced the Patent Even Though a Related Corporation Did

August 8, 2016

In this patent infringement action, the defendants filed a motion in limine to exclude evidence of any claimed lost profits damages alleged by the plaintiff, the inventor of the patent-in-suit.
The defendants asserted that the plaintiff could not recover lost profits damages because he did not make or sell products covered by the patent-in-suit.

In support of their position, the defendants cited cases stating that only a plaintiff who sells the patented device may claim lost profits damages. See Poly-America, L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004). The defendants also cited cases showing that a plaintiff cannot claim as patent infringement damages the lost profits of a related corporation, arguing that the plaintiff could not recover the lost profits of Death Door Marine, Inc. ("DDM") because DDM's profits "flow inexorably" to the plaintiff.

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District Court Permits Survey Evidence to Support Lost Profits Damage Theory

July 7, 2016

The defendants', Roland DGA Corporation and Roland DG Corporation (collectively "Roland"), filed a motion for summary judgment against plaintiff, Gerber Scientific International, Inc. ("Gerber") regarding Gerber's claims for lost profits and enhanced damages. Gerber's claim for lost profits was based, in part, on survey evidence.

The district court explained that "[t]o recover lost profits a patentee must show that „but for' infringement it reasonably would have made the additional profits enjoyed by the infringer." Micro Chemical, Inc. v. Lextron, Inc., 316 F.3d 1119, 1122 (Fed. Cir. 2003). "A patentee may resort to any method showing, with reasonable probability, entitlement to lost profits „but for' the infringement." Id.

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District Court Denies Request for Order Compelling Production of Damage Expert Report from a Different Pending Case

June 6, 2016

In this patent infringement action between Chrimar Systems, Inc. ("Chrimar") and Alcatel-Lucent USA, Inc. ("Lucent"). Lucent sought production of the damages expert report of Plaintiffs' damages expert, Robert Mills, that was created for a litigation currently pending in the Northern District of California.

Chrimar opposed the request on the ground that the expert report was covered by a protective order issued by another Federal court. The district court in Texas agreed.

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District Court Precludes Plaintiff from Presenting Damage Theories That Were Not Disclosed in Rule 26(a) Disclosures

March 21, 2016

The plaintiff, Radware, planned to present damages theories in its closing argument seeking more than twice the damages that its retained expert on damages computed. The district court noted that "[w]hile expert testimony is not always required to prove damages, any damages theory must have evidentiary support. Radware had a duty to disclose its damages theories and evidence under Federal Rule of Civil Procedure 26(a)(1)(A)(iii) and in response to F5's discovery requests and this court's orders. Radware attempted to do that by pointing to the calculations of its expert Mr. Malackowski. The permissible scope of Radware's damages contentions at trial is thus limited by Radware's pretrial disclosures--including Mr. Malackowski's expert report--and, to the extent that the court allowed it, Mr. Malackowski's revised report served on February 27, 2016."

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Partial Summary Judgment Granted on Failure to Mark Where Defendant Stipulated That Plaintiff Practiced the Patent-In-Suit

March 14, 2016

Metaswitch Networks Ltd. ("Metaswitch") filed a motion for partial summary judgment to limit Genband US LLC's ("Genband") damages based on a failure to mark. In support of its motion, Metaswitch argued that partial summary judgment should be granted because: (1) Genband makes and sells products that practice the patents-in-suit, (2) Genband has not marked those products with the patent numbers, (3) these unmarked products have been sold throughout the damages period; and (4) Genband has no evidence that Metaswitch had pre-suit notice of the patents-in-suit.

Genband's opposition did not contest any of these facts. Instead, Genband argued that Metaswitch cannot meet its summary judgment burden because Metaswitch contended that Genband does not practice the patents-in-suit. In support of this position, Genband cited to the report of Metaswitch's expert that Metaswitch hotly contests Genband's assertion that it practices the patents-in-suit. As a result, Genband argued there is a genuine fact dispute because a reasonable jury could credit Metaswitch's evidence and conclude that Genband does not practice the patents-in-suit.

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District Court Declines to Exclude Damage Expert Even Though Expert Relied Upon Information Not Disclosed During Discovery

March 7, 2016

Plaintiffs Equistar Chemicals, LP and MSI Technology, LLC accused Westlake Chemical Corporation ("Westlake") of infringing U.S. Patent No. 7,064,163. The asserted patent relates to a method of making polyolefin-based adhesive resins used for bonding to or bonding together polyolefins and polar materials. Westlake retained Christopher Bakewell as a damages expert, and Plaintiffs asserted that Bakewell relies on information that was not produced during discovery in his expert report, particularly on pound estimates for PE processing. Plaintiffs contended that Bakewell's report improperly relie upon private conversations concerning non-infringing alternative costs.

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District Court Denies Plaintiffs' Motion to Exclude Damage Expert Report Where Expert Relied Upon Comparable Licenses

February 25, 2016

In this patent infringement action, Plaintiffs filed a motion to exclude the defendant's damage expert. The motion sought to exclude portion of the defendant's expert report on damages, in particular the "market share reasonable royalty analysis" which was based on licenses for the patents-in-suit.

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District Court Grants Motion to Strike Damage Expert Where Damage Expert Did Not Serve Report Prior to Court Deadline

February 18, 2016

In this patent infringement suit, Defendants and Counterclaimants James Stephens and Spectrum Laboratories, LLC ("Spectrum") moved to strike the report of Plaintiff's damages expert, Robert Taylor. Spectrum argued that the Plaintiff did not designate Mr. Taylor as an expert before the expert designation deadlines set by the district court expired. Spectrum also contended that the plaintiff violated a protective order by providing Taylor with information designated "Attorneys' Eyes Only" under the protective order.

The Plaintiff conceded that it failed to identify Taylor prior to the district court's deadline, but contended that the oversight was inadvertent. The Plaintiff also argued that Taylor's report was timely filed before the expert report cutoff date and that Taylor was required to execute the Acknowledgment accompanying the protective order prior to receipt of any information marked confidential or attorney's eyes only.

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District Court Denies Accounting and Ongoing Royalty Where Jury Instructions Told Jury to Award Damages That Would Put Patent Holder in Same Financial Position Had Infringement Not Occurred

December 31, 2015

Prism brought suit against Sprint alleging patent infringement of U.S. Patent Nos. 8,127,345 and 8,387,155 (the "Asserted Patents"). After the jury returned a $30 million award in favor of Prism, Prism filed a motion for an accounting and ongoing royalties. Prism requested an accounting for Sprint's infringement after 2014 through the entry of judgment and to have a royalty set for ongoing infringement through the life of the Asserted Patents.

Sprint opposed the motion by asserting that both an accounting and ongoing royalties were improper because the jury instructions provided Prism compensation for past, present, and ongoing infringement. Prism responded that an accounting and ongoing royalties would grant Prism complete relief from Sprint's infringement of the Asserted Patents.

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District Court Strikes Portion of Damage Expert Report Where the Expert Relied Upon Surveys But Did Not Explain How They Related to Specific Facts of Case

November 4, 2015

The defendants moved to exclude the expert report of Mr. Ratliff, asserting that he made critical errors in his expert report on damages. The defendants specifically alleged that Mr. Ratliff committed basic math and reasoning errors in adjusting the royalty rate in an exclusive license from 1% to 4% for the non-exclusive hypothetical license.

The defendants first asserted that Mr. Ratliff made three math errors in adjusting a license agreement to derive the reasonable royalty rate for the hypothetical license. After reviewing the expert report, the district court found the approach sufficiently reliable to be admissible under the Federal Rules of Evidence and Daubert. "Why Cree and BU lowered the original 2% running royalty to 1% in the amended agreement, and whether additional payments from Cree and the sublicensees make the licensing scheme the economic equivalent of a 3% running royalty, are factual questions that go to the weight of his testimony."

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