June 25th, 2013 by Keith Hock
In my first GBQ blog post last summer, I wrote about two orders issued by Judge Richard Posner in Apple, Inc., et al. v. Motorola, Inc., et al. In general, the first order excluded testimony from both sides’ damages experts. Because all of the damages experts were excluded, neither side could present proof of damages. As a result, Judge Posner’s second order dismissed (with prejudice) the competing infringement claims. In 2013, Judge Posner has continued his effort to change how damages in patent infringement cases are calculated by issuing two additional orders excluding, at least in part, damages experts in the following cases.
Brandeis University, et al. v. Keebler Co., et al. – Judge Posner stated that “Keebler would not have paid a royalty higher than the cost to it of switching to a non-infringing substitute…or otherwise reworking its manufacturing process…” After identifying this measure of damages, Judge Posner concluded that the plaintiffs’ expert’s damage calculations were not based on acceptable methodologies. He did allow testimony regarding damages based on one license agreement that Judge Posner described as “a possible basis for estimating a reasonable royalty for a license to Keebler.” However, the plaintiff’s expert had previously described that same license agreement as providing “the minimum royalty” that the plaintiffs would accept. While Judge Posner’s decision allowed the plaintiff’s expert to testify based on this one agreement, the parties apparently have since settled the case.
Promega Corporation v. Applied Biosystems, LLC, et al. – Like in the Apple v. Motorola case, Judge Posner excluded portions of the proposed damage testimony from both sides’ expert witnesses. The plaintiff’s reasonable royalty rate was the mid-point of a range of royalty rates from a population of license agreements entered into by one of the parties to the litigation. Judge Posner determined that, “[u]sing the midpoint of a range of royalty rates in disparate licenses for unknown different inventions as the estimate of a reasonable royalty for a license for Promega products outside the field of use of the 2006 patent is arbitrary” and that “generalized impressions are no substitute for a method of computing, and evidence justifying, a reasonable royalty rate.” Since the defendants’ expert conceded that a prior cross-license (between the same parties) would suggest a royalty rate of 2%, Judge Posner determined that there may not be a need for expert testimony on the royalty rate and asked the parties to submit additional briefing on this issue.
In general, I find these decisions by Judge Posner to be similar to his (and other court’s) recent rulings that have suggested some damage experts should perform a more thorough analysis and pay more attention to detail than they are currently. Damages experts – and the lawyers that retain them – would be well-served to review these recent decisions and consider the implications, if any, on the damages claims that they are planning to make in currently pending cases.
Have Judge Posner’s (or other judge’s) decisions impacted how you work with damages experts and assess their patent infringement damage claims? Please share your thoughts in the comments section below.