Texas Round-Up: June 2025

Co-Authored by: Summer Associate Twinkle Tharwala  

The Texas Round-Up for June 2025 covers decisions addressing the Georgia-Pacific factors, the entire market value rule, and laches for damages and equitable relief claims. 

R2 Solutions, LLC v. Databricks, Inc., 4:23-cv-01147 (E.D. Tex. Jun. 12, 2025) (Mazzant, J.) 

Databricks moved to compel R2 Solutions to produce financial statements, arguing that the statements were relevant to R2 Solutions’ damages claims for reasonable royalties with respect to Georgia-Pacific factors 5 and 12. After evaluating factor 5 (the commercial relationship between parties) and factor 12 (the customary profit or selling price), the court denied Databricks’ motion to compel.  

Factor 5: Databricks argued that R2 Solutions’ revenue, cost, and profits are important to understanding the broader economic relationship between the parties and how R2 Solutions would have approached a negotiation. R2 Solutions countered that factor 5 addresses competitive market dynamics rather than internal financial health and that Databricks was already aware of the parties’ commercial relationship because R2 Solutions does not sell any products or services. The court held that the general financial health of a non-practicing entity is not relevant to factor 5 unless a substantive commercial relationship exists between the parties. The court explained that factor 5 concerns the structural nature of the commercial relationship rather than a party’s negotiating position. 

Factor 12: Databricks argued that financial statements beyond a licensing agreement are relevant to customary royalty arrangements in negotiations (e.g., financial data providing insight into R2 Solutions’ value for a patent and negotiation position). In contrast, R2 Solutions argued that factor 12 is based on industry-wide royalty norms rather than a particular party’s internal finances. The court held that financial statements are irrelevant to factor 12 because they are tailored to a single entity and do not shed light on market norms as a whole. 

Key takeaway: For non-practicing entities, general financial statements typically are irrelevant to Georgia-Pacific factors 5 and 12 absent a substantive commercial relationship with the accused infringer. 

Headwater Research, LLC v. Verizon Communications, Inc. et al., 2:23-cv-00352 (E.D. Tex. Jun. 15, 2025) (Payne, J.) 

Entire market value rule and cost-avoidance damages models 

Verizon moved to exclude testimony of Headwater’s damages expert for violating the entire market value rule (“EMVR”). EMVR allows for the recovery of damages based on the entire value of an accused product when the patented feature is the basis for customer demand. Verizon argued that the damages expert began with the entirety of Verizon’s spectrum holdings rather than the smallest saleable patent practicing unit and that presenting such large dollar numbers to the jury would cause “skewing of the damages horizon.”  

In response, Headwater argued that the damages expert’s reference to the value of Verizon’s spectrum portfolio was for applying capacity savings, which does not violate the EMVR. Further, Headwater claimed that the damages expert’s model was not based on total revenues per se but rather the incremental cost savings due to Verizon’s sales of devices that included the infringed features. Headwater also contended that the large dollar numbers were not direct inputs for calculating reasonable royalty, so Headwater would agree to not present figures relating to the “aggregate auction returns or carrier spending in general” to the jury. 

The court distinguished between using spectrum values as a royalty base (which would violate EMVR) versus using them to calculate capacity savings. The expert’s model calculated incremental cost savings from avoided spectrum purchases due to the patented technology’s data efficiency features — not damages based on total spectrum value. 

Key takeaway: Cost-avoidance damages models that calculate savings from deferred infrastructure investments do not trigger EMVR concerns, even when referencing large asset values like spectrum portfolios. 

Daubert challenge to spectrum valuation methodology 

Judge Payne denied Verizon’s Daubert motion challenging the spectrum valuation methodology of the plaintiff’s expert, finding the expert’s use of auction prices and reliance on technical inputs sufficiently reliable. Verizon argued that auction prices were inappropriate proxies for spectrum value due to timing constraints and market externalities. The court found auction prices sufficiently reliable as arm’s-length transactions, leaving Verizon’s criticisms about specific auction selection (allegedly “cherry-picked”) for cross-examination. 

Key takeaway: Damages experts may use spectrum auction prices to value spectrum holdings, and challenges to specific auction selection or market conditions go to weight, not admissibility. 

Headwater Research, LLC v. Verizon Communications, Inc. et al., 2:23-cv-00352 (E.D. Tex. Jun. 19, 2025) (Payne, J.) 

Judge Payne held that laches is no longer available as a defense to any patent infringement claim — whether seeking legal or equitable remedies — following the Supreme Court's SCA Hygiene decision. 

Verizon argued that while SCA Hygiene barred laches for damages claims within the six-year limitations period, it remained available for equitable relief claims. The court rejected this distinction, reasoning that the Supreme Court’s concern was with timing and Congressional intent. Allowing laches for injunctions but not damages would create an illogical split where delay could bar equitable relief but not monetary relief for the same conduct. The court relied on the Supreme Court’s guidance in SCA Hygiene that laches is a “gap-filling doctrine,” and where Congress has enacted a statute of limitations, “there is no gap to fill.” 

Key takeaway: Laches is completely unavailable as a defense to patent infringement claims filed within the statutory limitations period, regardless of the type of relief sought.