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."

Saint Lawrence Communications, LLC v. ZTE Corporation et al, 2-15-cv-00349 (TXED February 21, 2017, Order) (Gilstrap, USDJ)

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