Damages Expert’s Reliance on “25% Rule” Supports Preclusion of Testimony

The court granted defendant's motion to strike plaintiff's damages expert's reports and rejected plaintiff's argument that its expert relied on the 25% rule of thumb as an alternative method to calculate reasonable royalty damages. "Plaintiff claims that [the expert's] opinions do not rely on the discredited 25 percent rule, contending instead that [the expert's] report shows that the 25 percent rule is 'an alternative method' for determining reasonable royalty damages. However, in the view of the Federal Circuit, the 25 percent rule is not 'an alternative method' at all; it is a 'fundamentally flawed,' forbidden method, which the Court as gatekeeper cannot allow to taint the jury’s consideration of damages. Even where the 25 percent rule is offered merely as a starting point to which the relevant factors for a reasonable royalty calculation found in Georgia-Pacific are then applied to adjust the rate, the taint of the 25 percent rule remains. . . . Plaintiff has not shown [the expert] to possess sufficient 'scientific, technical, or other specialized knowledge [that] will help the trier of fact to understand the evidence or to determine a fact in issue.' Fed. R. Evid. 702(a). Accordingly, the Court strikes [the expert's] reports and precludes him from testifying at trial."

Info-Hold, Inc. v. Muzak Holdings LLC, et. al., 1-11-cv-00283 (OHSD August 20, 2013, Order) (Black, J.).