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.”
Plaid argued to exclude Robinson’s relative value allocation estimate, characterizing it as “[a]bstract qualitative testimony . . . [un]anchored to a quantitative market valuation.” Plaid also asserted that argues that Robinson’s allocations and impermissibly rely on conversations with Yodlee employees and on marketing documents. Plaid further argued that “nothing [Robinson] cites would explain why the ‘077/’783 patents contribute 60% of the value to Plaid’s products versus, for example, 0.5% or 2%.”
In response, Yodlee argued that Robinson’s report includes reference to the “specific contributions of the patented invention to the overall functionality of the [accused] products,” analysis of customer comments and other internal documents, results from a Plaid survey, and other evidence. Yodlee also pointed out that apportionment is an inexact science subject to estimation and approximation.
The district court was not persuaded completely by the argument of either party. “The Court is not entirely persuaded by either side’s arguments. On the one hand, it is inappropriate for Robinson to rely on statements from Yodlee employees if those individuals are not subject to deposition by Plaid and cannot be called as witnesses at trial (because, for example, they were not identified in Yodlee’s Rule 26 disclosures). On the other hand, Plaid appears to know from Robinson who the employees are on whom he relied, there is sufficient time before trial for Plaid to depose these individuals, and there may be good cause to permit. Yodlee to supplement its disclosures even at this late date.”
The district court also explained that “Robinson can — and must — do more to explain how he arrived at the numbers to which he intends to testify at trial.”
As a result, the district court granted the motion to exclude with respect to apportionment, ” but without prejudice to Yodlee’s ability to serve a supplemental report to correct the deficiencies discussed herein.”
Yodlee, Inc. v. Plaid Technologies Inc., Case No. 14-1445-LPS-CJB (D. Del. Jan. 27, 2017)
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.