Judge Posner rejects another expert’s testimony in late May Daubert hearing

7th Circuit Judge Richard Posner, this time sitting by designation in the Northern District of IL, again rejected an expert’s opinion in a Daubert hearing, Promega Corp. v. Applied Biosystems, LLC, et al.

Jed Greene was patent holder Life Technologies’ expert. He claimed a reasonable royalty rate would be 10%, offering as evidence 20 IP licenses entered into by either Life Technologies or Promega and having royalty rates ranging from 3 to 15 percent.

Greene narrowed the range to between 7.5 and 15 percent based on six licenses that he claimed were the ones most relevant to the patent in suit, then further narrowed it to between 8 and 12 percent without explanation (emphasis added) before finally settling on 10 percent, the midpoint of that range, as his argument for a reasonable royalty for sales of infringing products outside the field of use. (A cross-license agreement between Promega and a Life Technologies subsidiary specified 2% as the royalty rate in the field of use, “genetic identity.”)

Posner’s brief description of the 6 licenses relied upon by expert witness Greene foretells the outcome of the Daubert hearing:

[Greene’s] report does not identify the six licenses he relied on or explain why they were the most relevant, and he could not identify them at the Daubert hearing.

Posner reasoned:

  1. Some of the license agreements used by Greene license a predecessor to the patenet in suit, but license it or them for applications that may not relate the patent claims at issue in this case;
  2. Each of the license agreements used by Greene covers multiple patents, not just the patent in suit and its predecessor, and Greene has not attempted to attribute a percentage of the royalty rates in those licenses to the patent in suit;
Wordtech Systems, Inc. v. Integrated Networks Solutions, Inc. and Lucent Technologies, Inc., v. Gateway, Inc. each held that licenses held up as comparable to the hypothetical license at issue must take into account economic and technological differences. “Generalized impressions are no substitute for a method of computing, and evidence justifying, a reasonable royalty rate.”

Posner went one step further, suggesting expert Greene offered no help in estimating or quantifying market changes from 2006 (the year of the 2% cross license between the parties for field of use sales). Nor did Greene offer an estimate of the profits that Promega would have lost had it not obtained a lawful license and had ceased selling the products in question outside the field of use.

Posner granted Promega’s Daubert motion to exclude Greene’s testimony.