EDTX Excludes Evidence of Party's Actual Behavior at Hypothetical Negotiation

The Eastern District of Texas, Sherman Division, in Evicam Int'l, Inc. v. Enforcement Video, LLC d/b/a Watchguard Video, Civil Action 4:16-CV-105, Judge Mazzant ruled on a motion in limine related to the hypothetical negotiation (along with other issues). Evicam moved to "exclude any argument, evidence, or testimony regarding how WatchGuard would have behaved at a hypothetical negotiation." Slip Op. at 1. The court noted that a "reasonable royalty can be calculated from an established royalty, profit projections, or a hypothetical negotiation based on the factors in Georgia-Pacific." Id. (citing Wordtech Sys. V. Integrated Networks, 609 F.3d 1308, 1319 (Fed. Cir. 2010)).

The court pointed out that Evicam's expert used the Georgia-Pacific factors to determine a reasonable royalty rate. Id. WatchGuard was free to file an expert report to challenge the underlying facts relied on by Evicam's expert regarding how WatchGuard would have behaved. Id. at 1-2.  In the absence of a rebuttal report, Evicam's motion was granted. "Since the Georgia—€“Pacific factors rely on underlying facts to make reasonable inferences about a party's behavior during a hypothetical negotiation, evidence of how WatchGuard would have actually behaved is irrelevant." Id. at 1.