Per Facebook User Damages Theory Excluded as Fatally Flawed

Following an order excluding the report of plaintiff's damages expert, the court denied plaintiff's motion to allow its damages expert to present a "per-user" theory of damages because the theory was fatally flawed. "Where, as here, the accused technologies represent a small improvement to an existing technology, [plaintiff] is only entitled to a royalty based on the incremental value provided by that improvement. . . . Instead, the 'per-user' damages theory (1) calculates the number of people using [defendant's product], (2) multiplies the number of users by the equivalent of one [Dutch] Guilder, and (3) reduces that amount by 80% to account for the fact that the original licenses were for products and not patents. At no point does the 'per-user' damages theory discuss the value of the . . . features that allegedly cause [defendant] to infringe the patents at issue. Thus, the 'per-user' theory is fatally flawed [and] claims damages 'far in excess of the contribution of the claimed invention to the market' and thus claims 'more than the damages adequate to compensate for the infringement.'. . . [Plaintiff's expert's] 'per-user' theory does not take into account the value of the asserted claims by focusing on the asserted features."

Rembrandt Social Media, LP v. Facebook, Inc., et al, 1-13-cv-00158 (VAED May 6, 2014, Order) (Ellis, J.)