In a recent Memorandum Order, Chief Judge Leonard P. Stark granted in part defendant’s motion to exclude the testimony of plaintiff’s damages expert. MAZ Encryption Technologies LLC v. Blackberry Corporation, C.A. No. 13-304-LPS (D. Del. Aug. 25, 2016). As Judge Stark explained, to calculate “his baseline estimate for damages,” the expert relied on a “previous license agreement involving the patent-in-suit.” Id. at 2. 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.’” Id. at 2-3. As Judge Stark explained, “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.” Id. at 3. The expert attempted to do so by “estimating the discount factor the parties used when negotiating the previous license agreement.” Id. The expert used the equation “Expected Damages= Settlement Value/Likelihood of Liability,” and arrived at his estimate of expected damages “by estimating the likelihood of liability at 40%.” Id. Judge Stark found that the expert’s “likelihood of liability” factor was unreliable:
[The expert’s] estimate for the likelihood of liability was not based on any facts relating to the merits of Plaintiff’s case. The estimate did not consider the nature of the patent-in-suit, the accused products, or either party’s litigation strategy. Instead, the estimate was based on a study that found that “patent holders tend to prevail approximately 40% of the time” in the District of Delaware. The Court agrees with [defendant] that [the expert’s] estimate approach is not reliable as it is not sufficiently tied to the particular facts of this case.
Id. at 3-4.