DDE excludes revenues & profits due to failed apportionment, allows do-over


The District of Delaware, in Comcast IP Holding I LLC v. Sprint Comms. Co. LP, Civil Action No. 12-205-RGA (Judge Richard G. Andrews) (Sept. 29, 2014), granted Sprint's motion in limine to exclude Comcast from introducing at trial profits and/or revenues related to the accused products. Sprint argued that this evidence was not allowed due to the entire market value rule (EMVR). Comcast contended that its expert did use EMVR but instead had apportioned. After obtaining a proffer of the Comcast expert's testimony, Judge Andrews ruled for Sprint. He did note, however, that this exclusion still left Comcast with a basis to seek damages, which he believed would be in the same amount requested without the exclusion.

Judge Andrews concluded that Comcast's expert had not properly apportioned the revenues, and if that had been done he "would [have been] inclined to allow the revenues and/or profits numbers for the accused products ... [because] an expert needs a logical starting place for analysis." Slip op. at 1-2 (citing D.I. 302-1 at 6 (citing cases that support this proposition)). The expert had identified three functionalities in the accused products, only one of which was substantially implicated by the asserted patents, but did not account for other "non-technology factors [that] contribute to the value of the products." Slip op. at 2. Judge Andrews identified "use patterns" as a value indicator that had not been considered, and cited the expert's failure to "do a 'numerical calculation' to arrive at a percentage to apply to the profits. Apportionment does not seem possible without a numerical calculation." Id. (citation omitted). "There is no evident apportionment in the proffer, and I do not see any apportionment in the lengthy sections of the expert's report that are attached to the proffer." Id.

I asked for the proffer in response to the concern that Comcast was going to violate the entire market value rule. I was most interested in the use of the numbers associated with the accused products. It is possible that had I, at the pretrial conference, focused on apportionment, I would have gotten a different proffer. Thus, if Comcast wants to pursue its "income approach," I will give it to COB September 30, 2014, to submit a proffer with some detail as to how much of the revenues and/or profits it apportioned to the patented technology, and what the basis for that apportionment is. Otherwise, the "income approach" and the corresponding revenues and/or profits for the accused products will be excluded.

Slip op. at 2-3.