Damages witnesses need to use "reliable" valuation methods

Damages witnesses justifying a reasonable royalty should bag the entire market value rule entirely and make sure any licenses submitted as evidence are, indeed, comparable. 

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 reliance on licenses that are not comparable. The federal district court (Delaware) acknowledges it is tough to come up with a reasonable royalty rate to apply to patent damages calculations, but admonishes an expert witness that the “difficulty in determining a royalty base … is not a reason to accept an unreliable method.”

Zeroing in (again) on the many-times discredited entire market value rule (EMVR), and broadening it to include an expert’s reliance on portfolio patent licenses when only a single patent is at suit, the court said. “No reasonable juror could consider … broad portfolio license agreements to be comparable in scope.”

The message to analysts in expert witness roles: If it is a single patent at suit, isolate its benefits and technological value and find comparable, single-patent license agreements. 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.