Expert’s Analysis of Prior Settlement Agreement Involving Patent-in-Suit Excluded​

The court granted in part defendant's motion to exclude the testimony of plaintiff's damages expert as unreliable for relying on a prior settlement license involving the patent-in-suit. "In reaching his baseline estimate for damages, [the expert] relied on a previous license agreement involving the patent-in-suit. The previous license agreement, however, was made in the context of settling a litigation dispute, and thus did not reflect the royalty the parties would have reached 'just before infringement began.' Therefore, the damages amount arrived at in the settlement agreement had to be translated into a damages number that the same parties would have arrived at just before infringement began had they, instead, assumed that the patent was infringed and valid. This implies that the amount of the previous settlement would need to be increased to arrive at the royalties that would have been agreed to in a hypothetical negotiation. . . . [Plaintiff's expert] attempted to account for this discrepancy by estimating the discount factor the parties used when negotiating the previous license agreement. . . . The estimate did not consider the nature of the patent-in-suit, the accused products, or either party's litigation strategy. Instead, the estimate was based on a study that found that 'patent holders tend to prevail approximately 40% of the time' in the District of Delaware. The Court agrees with [defendant] that [the expert's] estimate approach is not reliable as it is not sufficiently tied to the particular facts of this case."

MAZ Encryption Technologies LLC v. Blackberry Corporation, 1-13-cv-00304 (DED August 25, 2016, Order) (Stark, USDJ)