Saint Lawrence Communications, LLC v. ZTE Corporation et al, 2-15-cv-00349 (TXED February 21, 2017, Order) (Gilstrap, USDJ)
Thursday, February 23, 2017
Longer License Term Does Not Support Expert’s Increase in Royalty Rate
The court granted defendant's motion to exclude the testimony of plaintiff's damages expert regarding a royalty rate as unreliable for double-counting the duration of the rate. "[The expert] adjusts the hypothetical royalty rate upward by 5 cents to account for the fact that the hypothetical license would be 2.5 years longer than [a third party] license. However, he also opines that the hypothetical license would have resulted in a running royalty, as opposed to a lump sum. A running royalty supposes that the licensee will pay a per unit royalty. Without additional facts or testimony, a running royalty necessarily accounts for any longer duration through an increased royalty base. . . . There is simply no reliable support in the record for [plaintiff's] notion that [defendant] might pay more for earlier, guaranteed access to newer technology. In fact, such notion appears to be contradicted by other statements in [the expert's] report. . . . [T]he Court’s determination here that [the expert's] royalty rate improperly double counts is not a broader statement that Georgia-Pacific Factor 7 is per se inapplicable to a running royalty as a matter of law. . . . However, Plaintiff has not marshaled sufficient facts to show that such is the case here. . . . [A]ccordingly, [the expert] may not testify that an additional 2.5 years on the hypothetical license warrants an increase of 5 cents in his calculated running royalty."