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Judge Andrews grants motion to exclude testimony of reasonable royalty expert

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In a recent memorandum order, Judge Richard G. Andrews granted defendant’s motion to exclude the testimony of plaintiff’s reasonable royalty expert. Robocast, Inc. v. Microsoft Corporation, C.A. No. 10-1055-RGA (D. Del. Jan. 29, 2014). First, plaintiff’s expert asserted in his running royalty analysis that “[t]he running royalty that would have resulted from the hypothetical negotiation would effectively result in an equal sharing of the incremental revenue and profit from the use of the patented technology.” Id. at 1. Judge Andrews explained that with respect to this argument, the parties were in agreement that the “relevant inquiry” was whether plaintiff’s proposed “50/50 split [was] sufficiently tied to the facts of the case.” Id. at 2. Judge Andrews found this inquiry to accord with the reasoning from Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011), where a 25% rule of thumb was struck down as “arbitrary [and] unrelated to the facts.” Id. Judge Andrews concluded that plaintiff’s expert failed to “discuss the relative bargaining power of [defendant] and [plaintiff],” and that without “discussing the underlying assumptions, it is impossible to tie the idealized bargaining problem to the facts of the case.” Id. at 4. Judge Andrews thus excluded the expert’s running royalty analysis. Id. at 5. Judge Andrews suggested that “if [defendant] had a history of licensing similar technology for a 50/50 split of the profits, or [plaintiff] had a history of licensing [the patent at issue] for half of the profits, those would be the sort of facts that would provide a basis for [the expert’s] calculations.” Id.

Turning to plaintiff’s expert’s lump-sum royalty analysis, defendant argued that the expert’s analysis was not based on a “reliable methodology [or] sufficiently grounded in fact,” as the expert admitted that the licenses upon which he relied “were not technologically comparable” to those at issue. Id. Judge Andrews agreed with defendant, explaining that the expert “cannot rely on licenses for unrelated technology in order to arrive at a lump sum royalty payment for the technology at issue. . . . What [defendant] paid for unrelated technology does not help the jury determine what [defendant] would have paid for this technology.” Id. at 5-6. Because the expert had “nothing else on which to base his opinion,” Judge Andrews excluded the lump-sum royalty opinion. Id. at 6.

Robocast, Inc. v. Microsoft Corporation, C.A. No. 10-1055-RGA (D. Del. Jan. 29, 2014).

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