Nordock Inc. v. Systems Inc., No. 11-C-118, 2013 WL 989864 (E.D. Wis. March 13, 2013).
In Nordock, a damages expert’s attempt to testify to a “reasonable” royalty rate of 100% of patentee’s lost sales was summarily rejected and the opinion was excluded. The lesson here is that a “reasonable royalty” must actually be “reasonable.”
Plaintiff sued defendant for infringement of a design patent and unfair competition. Id. at *1. Defendant filed a motion in limine to exclude the opinion of Plaintiff’s damages expert, Prof. Stan V. Smith. Id. at *5, arguing is was based on “faulty factual and legal analysis that rendered it ‘fatally’ unreliable.” Id.
Relying on Rule 702, Fed. R. Evid., the court first evaluated Prof. Smith’s qualifications and methodology and found them acceptable. Id. at *6.
The court then considered Defendant’s challenges to Prof. Smith’s lost profits analysis. Specifically, Defendant argued Prof. Smith had: (1) failed to conduct the requisite “but for” analysis for lost profit damages under Panduit; (2) failed to address the impact of non-infringing substitutes, and (3) improperly testified to damages resulting from convoyed sales. Id. at *7. Concluding Defendant’s objections either went to the weight of the testimony rather than its admissibility, or were premature, the court denied the motion in limine insofar as it related to lost profits. Id. at *7, *8.
Next, the court considered Defendant’s challenges to Prof. Smith’s reasonable royalty opinions. Id. at *8. Prof. Smith testified the reasonable royalty on the sales of infringing products would be 100% of Plaintiff’s lost sales. Id. The court granted the motion to exclude this opinion, concluding that a 100% royalty figure does not reflect a willing party or a balancing of the parties’ interest. Id. at *8.