Monday, March 31, 2014

Expert’s Reasonable Royalty Analysis May Not Include “Price Effect”

The court granted defendant's motion to exclude the opinions of plaintiff's compensatory damages expert regarding the "price effect" on a reasonable royalty. "[Plaintiff's expert] attributes more than half of his reasonable royalty rate, $71, to what he calls the 'price effect.' As [he] describes it, 'the pricing effect is based on [plaintiff's] initial and subsequent pricing being lower than its intended pricing. In the event [plaintiff] could have sold its valves at the intended higher prices, and [it] expected higher prices without [defendant] in the market, these otherwise higher prices are additional profits [plaintiff] would have been licensing out and are attributable to the Accused Products.'. . . [Plaintiff's expert] does not have the proper foundation to conclude that [plaintiff] would have made every sale that [defendant] did at its intended higher price. . . . [T]he 'price effect' is twice as large as the value that [he] attributes to the patented product. [Plaintiff's expert] is attempting to use the label 'price effect' to cover what appears to be lost profits. . . . For these reasons, [the expert] cannot include the 'price effect' in his reasonable royalty analysis."

Sloan Valve Company v. Zurn Industries, Inc., et al, 1-10-cv-00204 (ILND March 26, 2014, Order) (St. Eve, J.)

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