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Tactical Decision to Exclude Royalty Rate from Expert Report Causes Court to Preclude Defendant from Arguing Royalty Rate to the Jury

In this patent infringement action, the defendant, Varian Medical Systems, provided an expert report on damages that did not state a royalty rate for the accused products. The district court termed this a tactical decision. “By the way of background, Defendant Varian made the tactical decision to have its expert not state any royalty rate for the sales …”

Varian subsequently filed objections to the district court’s final jury instructions with respect to damages and sought to clarify the jury instructions so that it could argue to the jury reasonable royalties may consist of the sale of one component but there should be no royalty on the sale revenue of the combination of various components. “Alternatively, Varian seeks to argue to the jury that ‘if the jury is to award any royalty on the revenue from the Clinac or Trilogy that royalty should be small given, that Varian contributed to the combination.'”

The district court noted that because it had already determined on summary judgment that the accused products infringe the patent-in-suit as a matter of law and therefore the damages portion of the trial will include reasonably royalty on the sales of the accused products, Varian had over time filed several motions or objections seeking “clarification” that were really “an attempt to compensate for, or correct, this tactical decision.”

The district court found that Varian’s request was contrary to the tactical decision it had made to have its expert not provide a royalty rate. “In other words, since Defendant Varian made the tactical decision in its expert report not to place a specific royalty rate or percentage before the jury on the combination products, Varian now wishes to argue that the reasonable royalty should be zero or at least ‘small’. Obviously such argument is inconsistent with the tactical decision previously made by Varian not to come forth with any royalty rate or percentage, and is inconsistent with prior rulings of the Court barring Varian from arguing, or presenting specific or alternative royalty rate on the combination products. . . . To argue that the reasonable royalty should be ‘small’ would permit Varian to reverse or at least attempt to minimize its tactical decision to come forward with an expert report containing no royalty rate or percentage for the combined Clinac/Trilogy products.”

Accordingly, the district court denied the motion for clarification and the related objections.

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Preparing expert reports on damages involve many tactical decisions, some of which are made in advance of summary judgments ruling that may directly impact the issue of damages. Determining whether to present a number for a reasonably royalty rate is one of these tactical decisions and it may have consequences as the case progresses. Indeed, as this decision makes clear, a defendant may be stuck with that tactical decision and unable to offer its own damage number.

University of Pittsburgh of the Commonwealth System of Higher Education v. Varian Medical Systems, Inc., Case No. 08-cv-1307 (W.D. Pa. Feb. 21, 2012)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or