"In my expert opinion, the patents are really valuable. The plaintiff told me so!"AI-Generated, displayed with permission
Exclusion of damages opinions are a frequenttopicforourblog. Daubert motions to exclude expert opinions tend to have a higher success rate than other types of Daubert motions, and it's worthwhile to have a good understanding of where the pitfalls lie, whether you are helping an expert draft a damages opinion or considering challenging one.
Yesterday, the Court granted a Daubert motion to exclude a damages opinion in a patent case. The expert relied on prior licenses to other patents from the same inventor to support his reasonable royalty opinion for the patents-in-suit. That requires showing that the prior …
If law has one guiding principle, it is that words matter. The precise choice of verb or adjective can be the difference between friend and foe, peace and war, victory and defeat.
You've read Faust, you get it.
History's most famous lawyer?AI-Generated, displayed with permission
We saw a great example of this principle this week in I-Mab Biopharma, v. Inhibrx, Inc., C.A. No. 22-276-CJB (D. Del. Oct. 17, 2024) (Mem. Order). I-Mab was prought under the DTSA which allows damages to be calculated as either (1) damages for actual loss plus unjust enrichment or (2) a reasonable royalty. 18 U.S.C. § 1836(b)(3)(B).
The defendants—who unsurprisingly preferred a lower damages figure—served an expert damages report that noted that plaintiff's "actual damages" might be "zero." The plaintiff moved to exclude the opinion under Daubert, arguing that their damages theory was based on a reasonable royalty, and thus an opinion that their "actual damages" might be zero was neither here nor there, and was unduly prejudicial.
The defendant countered that the expert had meant that "Dr. Manning is 'not offering an opinion on actual losses, but instead references ‘actual damages’ as reflective of damages I-Mab may be awarded'—in other words, according to Defendants, the zero damages opinion is an opinion that Plaintiff’s reasonable royalty damages may be zero." Id. at 8 (quoting D.I. 364 at 23).
Judge Burke, however, found the expert's choice of words dispositive, and struck the so-called "zero damages opinion"
The Court agrees with Plaintiff that Defendants are ignoring the “actual words” that Dr. Manning used, as he did not opine in the zero damages opinion that Plaintiff’s “reasonable royalty damages” are zero (nor do Defendants point to anywhere else in Dr. Manning’s report where he opined that Plaintiff’s reasonable royalty damages should be zero). Nor do Defendants explain why an opinion that Plaintiff’s “actual damages . . . are zero” should be interpreted to actually mean that Plaintiff’s “reasonable royalty damages are zero.” Moreover, the Court agrees with Plaintiff that Dr. Manning does not seem to provide any facts or analysis in support of the zero damages opinion. Thus, Defendants have not sufficiently explained how, inter alia, Dr. Manning’s zero damages opinion is relevant in light of Plaintiff’s argument to the contrary; therefore it must be excluded.
Maybe it's just me, but pre-trial evidentiary opinions are always fun to read. They often involve rules that don't come up in other written opinions, and all of the rulings tend to be highly impactful for trial (otherwise the parties wouldn't be spending their extremely limited pre-trial time and MILs on the issues).
We got an opinion from Judge Bryson last week on pre-trial evidentiary issues in Acceleration Bay LLC v. Activision Blizzard Inc., C.A. No. 16-453-WCB (D. Del. Apr. 28, 2024). There are a number of interesting rulings in it, but one in particular that is worth calling out involved whether a party can offer evidence of past licenses to prove damages. …
I have no idea what the accused product looks like, but here is a "viral whole-genome sequencing experiment."National Cancer Institute, Unsplash
Last month, Judge Williams granted a permanent injunction in Natera Inc. v. ArcherDX, Inc., C.A. No. 20-125-GBW (D. Del. Nov. 21, 2023). The Court unsealed the opinion on Friday, and I thought there were enough interesting things about it to warrant a short post.
The Court granted the injunction only in part, and permitted the defendant to continue using the personalized cancer monitoring product, referred to as "PCM," for "ongoing clinical trials, for updating old studies undergoing peer review, and for limited quality control." The parties also agreed that the injunction should exclude use …
Many years ago, before Andrew made me put a picture in EVERY TURTLE-CURSED POST, I wrote a post about the very easiest Daubert motion to win. As a brief refresher, it turned out to be a motion to exclude a damages experts reliance on a jury verdict point as the starting point for a hypothetical negotiation. Both Judge Andrews and Judge Burke were particularly firm on the issue, coming just short of setting a bright-line rule:
A jury verdict does not represent evidence from which a hypothetical negotiation can be reliably determined. A jury verdict represents the considered judgment of twelve (or maybe fewer) random non-experts as to what a hypothetical negotiation would have resulted in for the patent(s) …
Judge Connolly issued a post-trial opinion in a false advertising case this week that contained another interesting bit of damages arcana under the Lanham Act.
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The trial in CareDx, Inc. v. Natera, Inc., C.A. No. 19-662 (D. Del. July 17, 2023), seemed to go great for the plaintiff with the jury finding 9/10 of the defendant's advertisements were false and awarding $21.2 Million in compensatory damages and $23.7 Million in punitive damages. As we say in Delaware, "that's a lotta crabs"*
It all went tails up in post-trial briefing however, when the defendant moved for JMOL of no damages. The court began by summarizing the elements of a Lanham Act claim in the Third Circuit
1) that the defendant has made false or misleading statements as to his own product [or another's]; 2) that there is actual deception or at least a tendency to deceive a substantial portion of the intended audience; 3) that the deception is material in that it is likely to influence 3 purchasing decisions; 4) that the advertised goods traveled in interstate commerce; and 5) that there is a likelihood of injury to the plaintiff in terms of declining sales, loss of good will, etc.
CareDX, at 3-4 (emphasis added) (quoting Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241,248 (3d Cir. 2011))
The highlighted factor is the interesting one. You see, actual deception is ...
The defendant moved to stay the second trial because nearly all of the patents at issue had been found invalid—or were in danger of being found invalid—during a pending re-exam proceeding. The parties finished briefing, but the Court has not yet ruled or heard oral argument on the motion to stay. …
We try to keep it light here at IP/DE, but sometimes I actually learn something and I feel sort of obliged to pass it on. You know, some real dark arts stuff that I wouldn't have known if I didn't have to read absolutely everything written in the district for this blog.
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Today's bit of lore today is about damages, and a split amongst district courts that visiting Judge Bryson has taken a stand on. Can a corporate parent can claim lost profits that would have initially accrued to its subsidiary?
The trite answer to this is "no." The Federal Circuit has squarely held that "a patentee may not claim, as its own damages, the lost profits of a related company." Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1375 (Fed. Cir. 2015). However, as Judge Bryson pointed out in his opinion in Kaneka Corp v. Designs For Health, Inc., C.A. No. 21-209 (D. Del. Mar. 3, 2023) (Mem. Op. & Order), several courts have held that lost profits of a subsidiary can still be claimed if they flow "inexorably" from the subsidiary to the parent.
Judge Bryson agreed, stating
To be sure, the Federal Circuit has not expressly recognized that lost profits can be awarded when those profits flow inexorably from a subsidiary to the patentee . . . I find the weight of district court authority on that point to be ...
Photograph of a damages expert report involving the Georgia-Pacific factors, the Panduit test, apportionment, convoyed sales, non-infringing alternatives, marking . . .Luca J, Unsplash
It seems like people arealwaysmessingup with patent damages experts. There are just a lot of ways to get tripped up on damages, and—obviously—big incentives to take risks to drive damages numbers up or down.
We had another example of that on Monday, when visiting Judge McCalla granted a Daubert motion and excluded testimony from an expert who applied a later date for the start of infringing sales for the royalty calculation, and an earlier date for the hypothetical negotiation. The expert apparently used a December 2014 date for his royalty calculation:
Wonderland argues that neither Evenflo nor Mr. Peterson presented evidence of any manufacture or testing that occurred at the dates that Mr. Peterson suggested. . . . Wonderland supports its assertion by pointing to sections of Mr. Peterson’s report and deposition in which Mr. Peterson . . . uses December 2014 and not an earlier date as the starting point for calculating royalty damages based on his hypothetical rate. . . .
But the expert used an earlier date for the reasonably royalty calculation, arguing that the earlier date is when the infringement actually began:
When using a hypothetical negotiation to assess damages, “the date of the hypothetical negotiation is the date that the infringement began.” . . . Mr. Peterson asserts that a date falling between December 2013 and April 2, 2014 “more naturally aligns with the actual date of first infringement.” . . .
But the Court found that the party had failed to put forth evidence of the earlier date, and ...
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