Apportionment No Substitute for Use of Smallest Salable Unit to Determine Royalty Base

The court granted defendant's motion to exclude the testimony of plaintiff's damages expert for trying to circumvent the entire market value rule. "[Defendant] contends [the expert's] royalty base is inflated and unreliable because it is derived from the entire market value of [defendant's] end products, instead of from the smallest salable patent-practicing unit (“SSPPU”). . . . [Plaintiff] contends [the expert] did not use the EMVR because he apportioned the value of the patent invention. . . . [W]hile undoubtedly the end product derives value from the allegedly infringing technology, [defendant] buys a chip from third parties, and the chip includes the allegedly infringing technology. Although the parties dispute whether this chip is the SSPPU, [plaintiff] fails to explain why the value of the products’ other features is properly considered in conjunction with the allegedly infringing technology. The Court rejects [the expert's] attempt to circumvent the EMVR by applying an 'apportionment' to the entire market value of the allegedly infringing devices. While this approach is admittedly not the 'entire' market, the calculation is expressly based on the entire market value, and to countenance this approach would elevate form over substance."

Atlas IP, LLC v. Medtronic, Inc., et al, 1-13-cv-23309 (FLSD October 6, 2014, Order) (Altonaga, J.)