Mondis v. LG: EDTX Resolves Battle Between Comparable Licenses and EMVR in Favor of Licenses

Judge Everingham in EDTX was faced with a motion noting the tension between two (potentially) conflicting issues of damages law. Specifically, he was asked to grant a Daubert motion for Plaintiff's expert based on that expert's use of the Entire Market Value Rule, but where the royalty base was chosen because it was the royalty base from numerous comparable license agreements. Judge Everingham noted that there was tension between the EMVR and use of comparable agreements based on the EMVR, noting that if the EMVR "were absolute, then it would put Plaintiff in a tough position because on one hand, the patented feature does not provide the basis for the customer demand, but on the other hand, the most reliable licenses are based on the entire value of the licensed products."

Judge Everingham held that the lesser of two evils, as it were, would be to allow the use of the entire royalty base, as it was less speculative to adjust the rate from previous licenses (to the hypothetical negotiation) than to adjust the base and apportion the value of the patented features as it related to the previous licenses, or simply not use the previous licenses at all. In so doing, he cited ResQNet for the proposition that licenses to the patents-in-suit are potentially the most reliable evidence in computing a reasonable royalty.

Additionally, he allowed the Plaintiff to argue a "multiplier" effect on the royalty, essentially that the Plaintiff would be allowed to argue that the royalty rate for the hypothetical negotiation should be higher than the rates negotiated for the comparable licenses, because the comparable licenses have a certain degree of uncertainty to them that a license resulting from the hypothetical negotiation would not. The Court held that "a contrary holding would discourage patentees from licensing their patents at a lower, pre-litigation rate (to account for uncertainty) because they would run the risk that they would be capped by that licensing rate in future cases."

Link to case here.