Fair v. Fair
The primary issue in this appeal was the value of Surgical Imaging Specialists Inc. (SIS), a subchapter S corporation that the parties formed in 2002. Stephan Fair, the husband, was the sole registered shareholder of SIS. Darlene Fair, the wife, was listed on all tax returns as an equal owner. The trial court awarded all community property interest to the husband and eliminated 25% of SIS’ goodwill as personal goodwill. On appeal, the husband contended that the trial court undervalued the personal goodwill discount and failed to apply a discount for lack of marketability. The husband also appealed the separate property award of an IRA account and a reimbursement to the wife for additional salary payments made by SIS to the husband. The court of appeal affirmed the trial court value of SIS, remanded the issue of IRA gains, and affirmed the reimbursement for additional salary payments.
Appellate Court Rules on the Value of the Marital Business as to Personal Goodwill, Minority, Liquidity, and Marketability Discounts
The primary issue in this appeal was the value of Surgical Imaging Specialists Inc. (SIS), a subchapter S corporation that the parties formed in 2002. Stephan Fair, the husband, was the sole registered shareholder of SIS. Darlene Fair, the wife, was listed on all tax returns as an equal owner. The trial court awarded all community property interest to the husband and eliminated 25% of SIS’ goodwill as personal goodwill. On appeal, the husband contended that the trial court undervalued the personal goodwill discount and failed to apply a discount for lack of marketability. The husband also appealed the separate property award of an IRA account and a reimbursement to the wife for additional salary payments made by SIS to the husband. The court of appeal affirmed the trial court value of SIS, remanded the issue of IRA gains, and affirmed the reimbursement for additional salary payments.
Xodus Med. v. Prime Med. (II)
This was a patent infringement case related to technology “related to patient slippage within the context of the Trendelenburg position for surgery—when using a viscoelastic foam.” Ivan T. Hoffmann was the plaintiffs’ damages expert. The defendants sought to exclude Hoffmann’s testimony on lost profits and his opinion of the reasonable royalty. Lost profits should be excluded because “he fails to tie consumer demand for products to the patented features of those products,” and he “does not establish … that, but for the alleged infringement, Plaintiffs would have made each and every sale made by Defendants.” Hoffman’s reasonable royalty analysis should be excluded because Hofmann’s royalty rate calculation of $20.00 represents a 141.8% increase to his $8.27 per unit “starting point,” and he provided no explanation for this substantial increase. The plaintiffs argued that the defendants’ quibbles with Hoffman’s opinion was the stuff of cross-examination but not exclusion. The defendants’ motion was denied.
Court Denies Defendants’ Motion to Exclude Expert Testimony—The Subject of the Testimony Is the Subject of Cross-Examination but Not Exclusion
This was a patent infringement case related to technology “related to patient slippage within the context of the Trendelenburg position for surgery—when using a viscoelastic foam.” Ivan T. Hoffmann was the plaintiffs’ damages expert. The defendants sought to exclude Hoffmann’s testimony on lost profits and his opinion of the reasonable royalty. Lost profits should be excluded because “he fails to tie consumer demand for products to the patented features of those products,” and he “does not establish … that, but for the alleged infringement, Plaintiffs would have made each and every sale made by Defendants.” Hoffman’s reasonable royalty analysis should be excluded because Hofmann’s royalty rate calculation of $20.00 represents a 141.8% increase to his $8.27 per unit “starting point,” and he provided no explanation for this substantial increase. The plaintiffs argued that the defendants’ quibbles with Hoffman’s opinion was the stuff of cross-examination but not exclusion. The defendants’ motion was denied.
Xodus Med. v. Prime Med. (I)
This was a patent infringement case related to technology "related to patient slippage within the context of the Trendelenburg position for surgery—when using a viscoelastic foam." Justin Blok was the defendants’ damages expert. The plaintiffs sought to exclude Blok’s testimony on the reasonable royalty because they contended he used unreliable and irrelevant documents to support his opinion. The defendants argued, and the court agreed, that Blok’s opinions go to the weight and not to the admissibility of his opinions.
Court Denies Plaintiffs’ Motion to Exclude Expert Testimony—The Subject of the Testimony Goes to the Weight and Not the Admissibility
This was a patent infringement case related to technology "related to patient slippage within the context of the Trendelenburg position for surgery—when using a viscoelastic foam." Justin Blok was the defendants’ damages expert. The plaintiffs sought to exclude Blok’s testimony on the reasonable royalty because they contended he used unreliable and irrelevant documents to support his opinion. The defendants argued, and the court agreed, that Blok’s opinions go to the weight and not to the admissibility of his opinions.
Medtronic, Inc. v. Commissioner (II)
8th Circuit says Tax Court failed to do the required comparability analysis between selected uncontrolled license arrangement and contested intercompany licenses, making it impossible to say whether CUT was the best method for calculating arm’s-length royalty rates in transfer pricing case.
High Court Dissent Rebukes Chancery’s Analysis in Option Valuation Case
In medical company valuation case, high court affirms award to option holders based on deference owed to trial court’s findings of historical fact; dissent says Chancery’s dismissal ...
In Transfer Pricing Case, Tax Court Fails to Perform Adequate CUT Analysis
In transfer pricing case centering on taxpayer’s intercompany licensing agreements, Tax Court finds CUT method is the best way to calculate arm’s-length royalty rates; court accepts taxpayer-proposed uncontrolled comparable but makes adjustments to account for differences in transactions.
Medtronic, Inc. v. Commissioner (I)
In transfer pricing case centering on taxpayer’s intercompany licensing agreements, Tax Court finds CUT method is the best way to calculate arm’s-length royalty rates; court accepts taxpayer-proposed uncontrolled comparable but makes adjustments to account for differences in transactions.
Cdx Holdings, Inc. v. Fox (Fox II)
In medical company valuation case, high court affirms award to option holders based on deference owed to trial court’s findings of historical fact; dissent says Chancery’s dismissal of board members’ valuation testimony evinces Chancery’s hindsight bias.
High Court Dissent Rebukes Chancery’s Analysis in Option Valuation Case
In medical company valuation case, high court affirms award to option holders based on deference owed to trial court’s findings of historical fact; dissent says Chancery’s dismissal ...
Federal Circuit Sweeps Aside Lost Profits Theories and Award
Federal Circuit strikes down lost profits where patentee does not practice patents and fails to qualify for convoyed sales because of missing functional relationship between nonpatented parts it sells to related company and latter’s patented products.
Warsaw Orthopedic, Inc. v. NuVasive, Inc.
Federal Circuit strikes down lost profits where patentee does not practice patents and fails to qualify for convoyed sales because of missing functional relationship between nonpatented parts it sells to related company and latter’s patented products.
Expert Trips Over Fundamental Damage Concepts
Court strikes rebuttal testimony under Daubert, where expert admitted he lacked an understanding of the damages concepts central to the opposing expert’s calculation, failed to identify a specific method for his conclusions, and included his clients’ tria ...
Orthoflex, Inc. v. Thermotek, Inc.
Court strikes rebuttal testimony under Daubert, where expert admitted he lacked an understanding of the damages concepts central to the opposing expert’s calculation, failed to identify a specific method for his conclusions, and included his clients’ tria ...
Flawed Market Reconstruction Ends Lost Profits Claim
District court finds damages expert’s model for reconstructing market and allocating share to plaintiffs based on a “but for” world, is too speculative to establish causation under the Panduit test and disallows lost profits; however, the court awards rea ...
Tyco Healthcare Group LP v. Ethicon Endo-Surgery, Inc.
District court finds damages expert’s model for reconstructing market and allocating share to plaintiffs based on a “but for” world, is too speculative to establish causation under the Panduit test and disallows lost profits; however, the court awards rea ...
Judicial Buyout at Fair Value Trumps Buy-Sell at Book Value
Texas court of appeals affirms equitable award of fair value for oppression of 10% minority shareholder at “enterprise value” rather than at book value of buy-sell agreement, and upholds $300,000 award based on expert’s enterprise valuation.
‘Modified’ Georgia-Pacific Analysis Applies to Post-Verdict Royalties
Court applies modified Georgia-Pacific analysis—including changed economic circumstances between the parties as well as changes in patent law—to determine post-verdict, ongoing reasonable royalty rate.
Cardiac Perfusion Services, Inc. v. Joubran
Texas court of appeals affirms equitable award of fair value for oppression of 10% minority shareholder at “enterprise value” rather than at book value of buy-sell agreement, and upholds $300,000 award based on expert’s enterprise valuation.
Court ‘Surprised’ by Lack of Expert to Prove Losses to Employee Benefit Plan
Federal district court finds that ESOP trustees breached their fiduciary duties by failing to determine whether permitting the company to repurchase plan stock at book value was “adequate consideration,” but dismissed the plaintiffs’ claims for lack of an ...
Patent Damages for ‘Lost Opportunity Value’ Pass Daubert
Court admits expert’s “lost opportunity value analysis” for calculating damages, finding that Georgia-Pacific reasonably royalty damages and lost profits are not exclusive remedies in patent infringement cases.
Defendant Tries Every Pretrial Tactic to Avoid Trial on Patent Damages
District court finds that entire market value rule applies only when unpatented features are combined with patented invention, denying this and numerous other objections by defendant to plaintiff’s reasonable royalty calculations.
DeFazio v. Hollister, Inc.
Federal district court finds that ESOP trustees breached their fiduciary duties by failing to determine whether permitting the company to repurchase plan stock at book value was “adequate consideration,” but dismissed the plaintiffs’ claims for lack of an ...