Yodlee Inc. v. Plaid Technologies Inc., 1-14-cv-01445 (DED February 1, 2017, Order) (Stark, USDJ)
Friday, February 3, 2017
Expert’s Failure to Explain Basis For Hypothetical Negotiation “Compromise” Renders Opinion Unreliable
The court granted defendant's motion to exclude the testimony of plaintiff's damages expert regarding a reasonable royalty as unreliable for relying on a rule of thumb profit split. "In calculating a reasonable royalty resulting from a hypothetical negotiation, [the expert] determines [the parties'] respective maximum and minimum 'economic positions.' His analysis results in no overlap (i.e., the maximum amount [defendant] is willing to pay for a license is less than the minimum amount [plaintiff] is willing to accept). As [the expert] notes, 'both parties would need to compromise in order to arrive at a reasonable royalty.' He then proceeds to choose a rate between [defendant's] maximum and [plaintiff's] minimum. . . . [T]he Court agrees with [defendant] that [the expert's] failure to expressly account for varying pricing structures and the lack of a sufficiently detailed explanation for how he reached the 'compromises' set out in Table 15 renders [his] reasonable royalty analysis, as presently articulated, insufficiently reliable."