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Judge Andrews Grants Daubert Challenge to Comparison to Incomparable Licenses

These related patent infringement cases have resulted in several opinions by Judge Andrews, including a summary judgment opinion and a Daubert opinion in a related case against Telit. In this opinion, Judge Andrews considered a few issues not already addressed by his Telit opinion.

Considering a challenge to Defendant’s damages expert, Judge Andrews found that the expert had not shown a “basis in fact to associate the royalty rates used in [certain] prior licenses to the particular hypothetical negotiation at issue in [this] case” as required by Uniloc. The expert’s purported basis for comparability of the licenses was his discussions with the Defendant’s technical expert, yet Judge Andrews found that both experts “make almost zero reference to the specific technology involved in either the [asserted] patent or the [purportedly comparable] licenses, aside from the hazy reasoning that they all relate to product features rather than core technology.” Such “loose, vague allegations of technological comparability, without any explanation, are insufficient, and . . . invite the Court to blindly accept the unsubstantiated conclusions of [] experts . . . [which] are nothing more than ipse dixit.” M2M Solutions LLC v. Enfora, Inc., et al., C.A. No. 12-32-RGA, Memo. Op. at 14-19 (D. Del. Mar. 9, 2016).

Judge Andrews provided a further reason for excluding the expert’s testimony: the “analysis virtually ignores the fact that these two licenses resulted from litigation settlements, providing a drastically different backdrop than the hypothetical negotiation involving two willing licensors, as would be the case here.” Characterizing Federal Circuit precedent on the point as “hostile toward using litigation settlement agreements in proving a reasonable royalty, except in limited circumstances,” Judge Andrews pointed out that the “settlement licenses here were not for the patent-in-suit and are only connected to the claimed invention by vague conclusions from Defendants’ experts.” Because the expert “ignore[d] the settlement context altogether and focuse[d] on the fact that the licenses were between Enfora and a non-practicing entity, [u]nder [the expert’s] rationale, any license between Enfora and a non-practicing entity would be economically comparable to a hypothetical negotiation between Enfora and a different non-practicing entity, regardless of the specific technology or whether the licenses resulted from litigation settlements. These unsubstantiated conclusions about economic comparability, lacking in analysis, again provide nothing more than ipse dixit.” Id. at 19-20. Moreover, Judge Andrews rejected the argument that the incomparable licenses could be used only as a “sanity check” rather than as the heart of a damages analysis. Id. at 20. Accordingly, the Court excluded any use of the incomparable licenses.

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