Global Traffic Technologies, LLC v. Emtrac Systems, Inc , No. 1—4110 ADM/JJG, 2013 WL 2297054 (D. Minn. May 24, 2013).
Global Traffic Technologies teaches us that courts lean toward vigorous cross-examination rather than exclusion when damages experts are subject to a Daubert challenge. As long as the expert applies methodology from well-established case law, the likelihood is low for a successful Daubert challenge. Of course, when an expert departs from this norm, problems can quickly arise.
Plaintiff sued alleging patent infringement. Id. at *2. Defendant filed a Daubert motion seeking to exclude the testimony of Plaintiff’s damages expert, Donald Gorowsky, regarding lost profits and reasonable royalty damages. Id. at *3, 21.
Defendants first argued against Gorowsky’s opinions on lost profits and price erosion, saying he (1) ignored the law of price elasticity of consumer demand, and (2) the analytical gap between the facts and the analysis was too great to allow Gorowsky to testify. Id. at *22.
Denying the motion, the court concluded the lost profits and price erosion opinions were proper and would be best tested through cross-examination. Id. Gorowsky followed the appropriate methodology by: (1) defining the relevant market; (2) determining the parties were the only competitors in the market based on an analysis of competition, testimony by witnesses from both parties, and customer interviews; then (3) used a two-supplier market methodology found in well-recognized case law to determine lost profits. Id. at *22-*23. He also used a method approved by case law to analyze price erosion. Id. at *23.
Second, Defendants challenged Gorowsky’s opinions on a reasonable royalty rate, arguing he ignored fundamental licensing terms when calculating a reasonable royalty, including foreign patent protection, know-how, exclusivity, and rights to improvements. Denying the motion as it related to reasonable royalty damages, the court found Gorowsky properly considered all 15 Georgia-Pacific factors and correctly conducted a hypothetical negotiation. Id. The court encouraged Defendants to challenge Gorowsky through cross-examination and the presentation of their own expert. Id.