Expert’s Royalty Rate Testimony Excluded for Failing to Calculate Starting Point for Georgia Pacific Analysis​

The court granted defendant's motion to exclude the testimony of defendant's damages expert concerning a reasonable royalty rate as unreliable. "[Defendant] contends [the expert's] opinion is inadmissible because it considers the Georgia-Pacific factors without regard to a starting point—that is, a starting royalty rate which varies up or down based on the expert’s application of the Georgia-Pacific factors. . . . Rather than identifying a starting royalty rate, [the expert] contends there are no comparable licenses in the record on which to base his Georgia-Pacific analysis. Instead, he opines that [plaintiff] would not accept less than a 27.6% royalty, which is derived from his lost profits estimate, and [defendant] would not accept a royalty rate higher than 36.5%, the average of its gross profit margins on the [accused] Cooler. . . . He concludes with his 'conservative' estimate of a 29% royalty. The fundamental flaw in this analysis becomes clear when one tries to identify exactly what [the expert] was pushing up or down based on each Georgia-Pacific factor. Without some identifiable and relevant rate to which these factors are applied, the factfinder is unable to evaluate how the expert reaches his final number. This ipse dixit justification is the hallmark of an unreliable methodology."

Baltimore Aircoil Company, Inc. v. SPX Cooling Technologies, Inc., 1-13-cv-02053 (MDD August 22, 2016, Order) (Blake, USDJ)