Thursday, June 16, 2011

Expert's Use of Entire Market Value Rule is Economically Justified Even Without Proof as to "the Basis for Customer Demand" if Related

Licenses Use Entire Value of Products
The court denied in part defendants' motion to exclude expert testimony concerning the entire market value rule. "The defendants argue that [plaintiff's damages expert] cannot apply the 'entire market value rule' in this case because the patented feature of the accused product has not been shown to provide the basis for the customer demand. Indeed, the fact that the patented feature does not provide the basis for the customer demand is largely undisputed. . . . If this rule were absolute, then it would put Plaintiff in a tough position because on one hand, the patented feature does not provide the basis for the customer demand, but on the other hand, the most reliable licenses are based on the entire value of the licensed products. . . . Plaintiff bases its analysis on approximately 13 comparable licenses of the patents-in-suit that also use the entire base of the licensed product, and Defendants do the same. Therefore, [plaintiff's expert's] use of the entire value of the accused products is 'economically justified'. . . . Under the facts in this case, Plaintiff may base its reasonable royalty analysis on the entire value of the accused products, despite not showing the accused features provide the basis of the customer demand. In this Court's view, Federal Circuit jurisprudence regarding the 'entire market value rule' allows for this result, and further, Federal Circuit damages jurisprudence encourages this result by placing a large emphasis on comparable licenses of the patents-in-suit."

Mondis Technology Ltd. v. LG Electronics, Inc., et. al., 2-07-cv-00565 (TXED June 14, 2011, Order) (Everingham, M.J.)

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