Under today’s tighter evidentiary standards for proving reasonable royalty damages, IP experts can expect challenges to any use of the entire market value of the accused product as well as any reliance on prior licenses. For instance, a new decision from the federal district court (Delaware) considers $300 million in damages claims against the Intel Corp. and a Daubert challenge against the plaintiff’s expert for violating the entire market value rule (EMVR) as well as his reliance on portfolio (rather than single patent) licenses. In response, the plaintiff argued that Intel processors were the “smallest practicable unit” that contained the patented circuitry and “at least one” of the prior licenses concerned a single patent.
But “difficulty in determining a royalty base … is not a reason to accept an unreliable method,” the court held. Even if the patented circuits were the single most important feature, the expert’s report provided “little, if any, basis” for concluding they drove demand for the entire Intel processor. Further, “this is a single patent case,” the court said. “No reasonable juror could consider … broad portfolio license agreements to be comparable in scope.” The one single-patent license resulted from litigation, and the expert’s report failed to analyze its comparable benefits and technological value. Although the court leaned toward excluding his entire opinion, it granted the expert a last chance to give “live” testimony at a hearing. Read the complete digest of AVM Technologies LLC. v. Intel Corp., 2013 U.S. Dist. LEXIS 1165 (Jan. 4, 2013) in the March 2013 Business Valuation Update; the district court’s decision will be posted soon at BVLaw.
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