Uniloc expert fails to analyze sufficiently comparable licenses

To calculate reasonable royalty damages for patent infringement, financial experts must now comply with the tighter Uniloc v. Microsoft standard, which only permits reliance on comparable licenses with a “discernible link to the claimed technology”. Importantly, this link must account for both the technological and economic differences between the prior licenses and the patents-in-suit.

Ironically, the same expert whose analysis failed in the Uniloc case appeared in a new case out of the federal district court in California. To calculate reasonable royalty damages for infringement of mobile phone technology, he relied on two comparable licenses that were technologically but not economically similar. In fact, the expert apparently provided “no analysis at all of the economic differences between the significant patent agreements,” the court held, and excluded his testimony under Daubert. The expert “bears the burden of proving comparability,” the court added, noting that simply picking a low royalty rate will not cure “a faulty damages analysis.” However, the court approved the expert’s application of the entire market value rule, and permitted him to “prepare and prepare” a Uniloc-compliant analysis prior to trial. Look for the complete digest of Dataquill Ltd. v. High Tech Computer Corp. 2011 U.S. Dist. LEXIS 138565 (Dec. 1, 2011) in the Feb. 2012 Business Valuation Update; the court’s opinion will be available soon at BVLaw.

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