MDFL allows "market approach" and damages expert to testify on technical comparability


The Middle District of Florida, in StoneEagle Services, Inc. v. Pay-Plus Solutions, Inc., Case No. 8:13-cv-02240 (Judge Hernandez) (June 19, 2015), allowed the plaintiff's damages expert (Weston Anson) to offer a theory based on the "market approach" and him to testify on the technical comparability of an allegedly comparable license agreement. The court reasoned that the defendants could challenge the market approach and the expert's qualifications on cross examination.

First, concerning the market approach, the court summarized the issue:

According to Defendants, Mr. Anson's "Market Approach" is not approved by the Federal Circuit. (Doc. # 144 at 7). Rather, at best, the "Market Approach" is a broad application of the first two Georgia-Pacific factors, which address "(1) [t]he royalties received by the patentee for the licensing of the patent in suit. . . ." and "(2) [t]he rates paid by the [infringer] for the use of other patents comparable to the patent in suit." (Id.)(citing Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970)).

Mr. Anson admits to not using the Georgia-Pacific factors in his analysis. (Doc. # 144 at 8). In fact, Mr. Anson referred to the factors during his deposition as "outmoded" (i.e., outdated, old-fashioned). (Id.). "Due in part to Mr. Anson's complete lack of regard for the Georgia-Pacific factors," Defendants posit that his testimony does not "carefully tie proof of damages to the claimed invention's footprint in the market place." (Id. at 9)(quoting Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 2011)). As such, Defendants contend that Mr. Anson's testimony must be excluded. (See Doc. # 144).

Slip op. at 22-23.

The court, however, found persuasive plaintiff's argument that the Federal Circuit does not specify a particular methodology for computing damages and that it does not require witnesses to use any or all of the Georgia-Pacific factors when testifying about damages. Slip op. at 24 (citing Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 31 (Fed. Cir. 2012)). The court further relied on Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1315 (Fed. Cir. 2014), in which the Federal Circuit stated: "All approaches have certain strengths and weaknesses and, depending upon the facts, one or all may produce admissible testimony in a single case. It is common for parties to choose different, reliable approaches in a single case and, when they do, the relative strengths and weaknesses may be exposed at trial or attacked during cross-examination. That one approach may better account for one aspect of a royalty estimation does not make other approaches inadmissible." Slip op. at 24-25. The court concluded that defendant's disagreement with Mr. Anson's use of the market approach was better addressed by cross-examination and by testimony of its own damages witness.

The court next considered defendants' challenge to Anson's application of the market approach. First, defendants objected to Anson's identification of 106,000 license agreements from RoyaltyStat and KtMINE databases, from which he identified seven comparable agreements. The defendants contended that Anson had failed to make an "discernible link" between the claimed invention and the licensed technology.

Plaintiff responded arguing that Anson had undertaken a rigorous analysis to select the seven licenses and that he read a group of 20-25 licenses entirely to arrive at the final seven. Plaintiff's position that the appropriate vehicle for challenge would be cross-examination and rebuttal expert testimony. The court agreed:

While Defendants provide noteworthy argument, the Court finds that Defendants have not sufficiently shown that Mr. Anson's opinions are based on unsound foundation. The Court determines that Mr. Anson's methodology is reliable to withstand Defendants' Daubert challenge. Defendants' objections directed to the reliability of Mr. Anson's opinion go to the weight of his testimony, rather than its admissibility. See Maiz, 253 F.3d at 669. As noted above, "vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence." Allison, 184 F.3d at 1311 (quoting Daubert, 509 U.S. at 596).

Slip op. at 29.