In this patent infringement action, the defendant, Faro Technologies ("Faro"), moved to exclude the plaintiff's expert with respect to the expert's opinion regarding the absence of acceptable non-infringing alternatives as a basis for lost profits. Faro moved to exclude on the basis that the plaintiff's expert economist lacks the expertise to opine on Faro's likely redesign to avoid infringing the patent-in-suit. The plaintiff's expert relied on the expert report of another expert of plaintiff', who specialized in computer science and electronics.
As the district court analyzed the motion, it explained that "'[a]n expert may express and opinion that is based on facts that the expert assumes, but does not know, to be true. It is then up to the party who calls the expert to introduce other evidence establishing the facts assumed by the expert.' Williams v. Illinois, No. 10-8505, 2012 WL 2202981, at *2 (U.S. June 18, 2012). To be sure, Faro challenges Hager's technical analysis of the external box option. However, when 'experts rely on conflicting sets of facts, it is not the role of the trial court to evaluate the correctness of facts, it is not the role of the trial court to evaluate the correctness of facts underlying one expert's testimony.' Micro Chem., Inc. v. Lextron, Inc., 317 F. 3d 1387, 1392 (Fed. Cir. 2003)."
Faro also moved to exclude the plaintiff's expert on the ground that his revealed preference theory was not reliable for calculating lost profits. Faro asserted that the theory was not appropriate in the case because the expert had conducted no market surveys to support his view that customers who use arm-mounted scanners do not consider non-arm-mounted scanners as a close substitute.
The district court denied this part of the motion as well, noting that the revealed preference theory has been used by experts in other contexts: "The revealed preference: theory has been applied by experts in other contexts. See In re Pharm. Average Wholesale Price Litig., 582 F. 3d 156, 183 (1st Cir. 2009); see also Partial Testimony of Raymond S. Hartman, Ph.D., at 2, Commonwealth of Massachusetts v. Mylan Labs., No. 03-CV-11865-PBS, 2008 WL 8782579 (D. Mass. March 19, 2008). While the record is not well-developed, the 'revealed preference' theory appears to be an economic principle cited in the literature. See, e.g., Hal R. Varian, Revealed Preference, Samuelsonian Economics and the Twenty-first Century 99-115 (2006). Faro has not demonstrated that revealed preference is an unreliable methodology in the patent context that should be excluded under Fed. R. Evid. 702."
Accordingly, the district court denied the motion to exclude the experts.
Metris U.S.A., Inc. v. Faro Technologies, Inc., Case No. 08-CV-11187-PBS (D. Mass. July 10, 2012)