Case cite

Xpertuniverse v. Cisco Sys., Inc., No. 09-157-RGA, 2013 WL 936449 (D. Del. March 11, 2013).

IPDQ Commentary

Courts are tossing damages opinions not scrupulously linked to case facts and not the result of rigorous economic analysis. See LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F. 3d 51, 67 (Fed. Cir. 2012) (damages must be based on “sound economic and factual predicates”). Xpertuniverse provides a practical lesson in what not to do when preparing and presenting a damages opinion.

Case Summary

Defendant filed a Daubert motion to exclude, inter alia, testimony of Plaintiff’s damages expert, Walter Bratic. Id. at *1. Mr. Bratic testified the parties would have agreed to a $32.5 million lump sum royalty in a hypothetical negotiation.

Defendant argued Mr. Bratic had a faulty basis for recommending a lump sum. Id. at *3. After a hearing at which Mr. Bratic testified, the court decided the:

  • Accused product sales totaled about $937,000. Id.
  • The two comparable license agreements Mr. Bratic considered established a royalty rate of 3% to 5%. Id.
  • Applying a royalty rate of 3% to 5% to the accused sales resulted in damages of about $39,000 to $65,000. Id.
  • Mr. Bratic provided no basis for comparison between the damages suggested by the rate-driven running royalty and his $32.5 million amount. Id.
  • Mr. Bratic’s testimony that the parties would have realized that a lump sum was the appropriate royalty structure was not based on sufficient data or information. Id.
  • Mr. Bratic explained the lump sum based on Defendant’s “vision selling strategy” and significant convoyed sales in Latin America generated by the accused products. Id.
  • Mr. Bratic did not provide a logical link between the foregoing grounds and his conclusion that the lump sum would be 50% of development costs of another project. In any event, the costs on that project totaled $22 million. Id. at *3.

The court granted the motion and ordered Plaintiff’s damages expert could not opine that a hypothetical negotiation between the parties would have concluded in a lump sum of $32.5 million for infringement damages. Id. at *5.