In this patent infringement action, the plaintiff, Personalized Media Communications, LLC (“PMC”), moved to exclude the testimony of Apple’s damages expert, Mr. Thomas. In rebuttal, Mr. Thomas estimated that PMC would be entitled to a lump-sum payment of $1 million per allegedly infringing patent.

PMC asserted that Mr. Thomas’ damages calculation was improper because his calculation of the value added by the patents-in-suit to the functionality of Apple’s FairPlay was flawed. As explained by the district court, PMC pointed to Mr. Thomas’ calculation when he “divided the profitability of FairPlay by 53 (50 Apple DRM patents plus the three patents-in-suit).” They state Mr. Thomas’ calculation “necessarily assumes that each of Apple’s patents has in fact contributed separate and noncumulative benefit[s] to FairPlay.” PMC further states “[t]he Thomas Report contains no analysis of whether each (or even any) of Apple’s DRM patents were in fact used by Apple in its FairPlay technology at the time the patents-in-suit were issued, the priority date of the Apple patents, or whether the Apple patents are valid.”

To counter this argument, Apple argued that Mr. Thomas was merely correcting and rebutting PMC’s damages expert’s erroneous damages calculation. Apple argued the “Thomas alternative calculation merely points out that PMC has not sufficiently tied its damages theory to the facts of this case.”

The district court agreed with PMC. “Mr. Thomas made an unreliable calculation of the value attributable to the patents-in-suit that was carried into his later calculations. Mr. Thomas disagreed with Mr. Dansky’s assessment that the FairPlay functionality derives 100% of its value from the patents-in-suit. Mr. Thomas rebuts Mr. Dansky’s calculation by re-calculating the percentage of value added by the patents-in-suit by “[a]ssuming equal value of the Apple DRM patents and the patents-in-suit . . . divid[ing] the three patents-in-suit by 53 (50 Apple DRM patents plus the three patents-in-suit.)” (emphasis added). Mr. Thomas’ calculation is reminiscent of a royalty stacking calculation. However, Mr. Thomas’ calculation diverges from royalty stacking significantly. Mr. Thomas is not sure if any of the fifty patents were being practiced by Apple at the time of the infringement. Furthermore, there [has] been no evidence cited in the report (nor has Apple referred to any in the briefing) that any of the fifty patents were being practiced by Apple at the time of infringement. Simply owning a patent does not mean that it is being practiced in a particular product. It cannot be assumed any one patent is being practiced without a more thorough investigation/analysis—much less fifty patents. Mr. Thomas’ calculation is fatally flawed solely on that ground.”

The district court explained further that even “assuming arguendo that each patent of the fifty Apple DRM patents were practiced in the FairPlay functionality at the time of infringement, Mr. Thomas cannot assume that each patent has equal value. The exercise of performing an apportionment analysis is to separate the specific value of the patents-in-suit using reliable known methods. VirnetX, Inc., 767 F.3d at 1327. It would be unscientific to make a conclusory assumption that each patent has equal value. Indeed, not all patents are created equal. An expert may conclude—by using evidentiary support— that the patents-in-suit holds the same value as Apple’s other DRM patents, but Mr. Thomas cannot simply make this assumption. The expert must tie his or her analysis to the facts of the case. Id. at 1331–34. Mr. Thomas’ assumptions cannot be made without any support. Merely stating a conclusory assumption not predicated on evidence is inadmissible.”

Accordingly, the district court concluded that “Mr. Thomas’ method of determining the value attributable to the patents-in-suit is unreliable.”

Personalized Media Communications, LLC v. Apple, Inc., Case No. 2:15-cv-01366-JRG-RSP (Feb. 19, 2021)