Judge Grewal of the Northern District of California granted defendant’s motion to exclude opinions and testimony of plaintiff’s damages expert. The court found that the expert’s methodology in calculating both the royalty base and the royalty rate violated the standards of Fed. R. Evid. 702 and 703 and Daubert v. Merrell Dow Pharms. Inc. The expert used the entire handset unit as the royalty base, namely the iPhone 4, 4S, and 5 and iPad 2nd generation. The handset was used as the royalty base even though the accused feature was just one feature of the baseband processor of the accused products. The court concluded that the expert ignored the entire market value rule by failing to link the demand for the accused product to the patented feature and by failing to apportion the value of the patented feature against the vast number of non-patented features in the accused products to arrive at an apportioned royalty base. The court rejected plaintiff’s argument that the iPhone and iPad are the smallest saleable unit because throughout the litigation, plaintiff took the position that the infringing functionality lies in the baseband processor, not the accused product as a whole. The smallest saleable unit must be closely tied to the patent, and the expert failed to take that into account. In calculating the royalty rate, the expert relied on licenses secured in settlement of plaintiff’s various patent infringement cases without making a comparable link to the patent-in-suit. The court determined the experts approach was also flawed because he relied on a maximum, cumulative royalty rate without a showing that anyone had committed to such a notion. Lastly, the court concluded that because the damages expert failed to allocate a value to the invention claimed in the asserted patent, his opinions would not be admitted, but provided plaintiff the opportunity to submit a new damages expert report in line with the guidance provided in the court’s order.
Golden Bridge Technology v. Apple Inc., No. 5:12-cv-4882 (N.D. Cal. May 18, 2014) [Grewal, J.]