Expert’s Reliance on “Nash Bargaining Solution” In Addition to Other Considerations to Calculate Royalty Rate Did Not Render Opinion Unreliable

The court denied defendant's motion to preclude the royalty estimates testimony of plaintiff's damages expert. "[Defendant] alleges that . . . [the expert's] royalty rate analyses are improperly premised on 'arbitrary profit splits,' such as the '25-percent rule' . . . [Plaintiff] counters that his calculations were influenced, appropriately, by the facts of the case, including the competitive environment and [its] policy of exploiting its own patents. . . . [Plaintiff's expert] explained his methodology as based on a combination of real world observation and the Nash bargaining solution. The Nash bargaining solution is a mathematical proof. Although it has been criticized as impenetrable, at least one court has permitted its use 'in addition to, rather than in lieu of' other considerations. . . . The Court agrees with [plaintiff] that [its expert's] analysis is tied to the facts of the case. It will not exclude his testimony on this ground."

Gen-Probe Incorporated v. Becton Dickinson and Company, 3-09-cv-02319 (CASD November 26, 2012, Order) (Benitez, J.).