Judge Noreika Excludes Expert Damages Testimony for Failure to Apportion Value in License

November 11, 2022

Publication| Intellectual Property

In Rex Medical L.P. v. Intuitive Surgical, Inc., No. 19-0005-MN (Oct. 13, 2022), Judge Noreika excluded under Daubert the reasonable royalty testimony of the plaintiff’s damages expert. 

To determine the starting point for the hypothetical negotiation, the expert relied on a lump-sum royalty license that the plaintiff had entered into with third-party Covidien as part of a settlement.  The license granted rights to many patents, including the two asserted in the earlier litigation against Covidien and again against the defendants in this litigation.  The expert attributed most of the value of the license to these two patents. 

The defendants argued that the expert’s opinion based on this license should be excluded because the expert failed to apportion the value either between the two originally asserted patents (the plaintiff had ceased asserting one of these two patents by this point in the case) or among the other patents covered by the license, as in Apple Inc. v. Wi-LAN Inc., 25 F.4th 960 (Fed. Cir. 2022).  The plaintiff argued that its expert had apportioned the value between these two patents, but Judge Noreika noted that the plaintiff cited no such allocation in the opinions, and the expert himself had stated that he did not do so.  And while the expert further opined that the remaining patents covered by the license were of little value to Covidien, Judge Noreika pointed out that the expert never analyzed whether the foreign patents in the license covered the same subject matter as the two asserted patents or any products of Covidien.  Finding the expert’s methods unreliable, the court excluded the opinion. (At trial, the plaintiff secured a verdict of $10 million without the benefit of damages expert testimony.)       

The decision is available here.      

Key PointAlthough the expert opined that the royalty payment was primarily attributable to two patents in the license, the absence of any explanation apportioning the value between these two patents—when only one remained asserted in the litigation—led Judge Noreika to exclude the reasonable royalty opinion.

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