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.)