On June 21, 2014, the Eastern District of Texas granted plaintiff’s motion to exclude the testimony of defendant’s damages expert because the expert used an improper royalty base. The asserted patents are directed to systems and methods for displaying and moving a cursor on a screen with a handheld device. During prosecution of the patents, all elements of the invention were found obvious except for three image-processing steps. Thus, defendant’s damages expert deemed the three image-processing steps to be the “inventive aspect” of the patents. The accused product—the Nintendo Wii Remote pointing device—allegedly infringed the patents by practicing the three image-processing steps in combination with a Bluetooth controller. Since the Bluetooth controller existed in the prior art and was not an “inventive aspect,” defendant’s damages expert excluded the Bluetooth controller and determined the proper royalty base was the Wii Remote alone.

The court rejected defendant’s arguments. While the court noted that the proper royalty base is often the smallest salable infringing unit to “remove the value of unclaimed elements,” defendant “has not cited any precedent permitting the complete removal of the value of claimed elements.” The court held that the royalty base must include the value of all claimed elements and excluded the testimony of defendant’s damages expert for his failure to use the proper royalty base.

ThinkOptics, Inc. v. Nintendo of America, Inc., 6:11-cv-00455 (E.D. Tex. June 21, 2014) [Davis, J].