In This Issue:
May Expert Use Valuation with Unknown Discounts for Royalty Analysis?
The plaintiff’s Daubert challenge in this intellectual property case is noteworthy because the plaintiff sought to enlarge the concept of comparability when arguing that Microsoft’s damages expert produced an unreliable calculation. It also attacked the expert for using the plaintiff’s own valuation of the patent in suit even though he did not know the embedded discounts accounting for uncertainty.
Nash Bargaining Solution a ‘Non-Starter’ for Royalty Analysis
After rejecting the plaintiff’s Daubert challenge in an earlier ruling, the federal district court next turned to defendant Microsoft’s attack on the plaintiff’s damages expert, specifically its claim that his reasonable royalty calculation was the result of the Nash bargaining solution (NBS)—an impermissible rule of thumb that did not tie the royalty rate to the particulars of a case.
‘Stand-Alone’ Lost Profits Claim Sinks, as Does Expert Opinion
A short Daubert decision regarding a contract dispute subject to New York law and involving the licensing of patents stands out because it discusses not only problematic expert testimony, but also the use of future lost profits as a measure of damages and the relevance of the hypothetical negotiation framework to the case.
Don’t Forget About Your Expert Valuation, Delaware Chancery Warns
Even when a case ostensibly is not about valuation, valuation issues often play a pivotal role, and failure to provide a valuation may undermine a party’s claim. This is one of the lessons gleaned from a Delaware shareholder suit that moved from the Delaware Court of Chancery to the state’s Supreme Court on a novel legal issue.
Court Balks When Expert Veers from Classic Analysis
When it comes to methodology, stick to the tried and true. This is the key takeaway from a recent intellectual property case involving a patent related to a dual-flush valve mechanism in toilets. An experienced appraiser adjusted the royalty base and royalty rate formulas—and saw his damages calculation go down the drain.
Katz, Sapper & Miller’s Litigation Services Bulletin is a quarterly newsletter that focuses on the latest developments in litigation services and financial damages expert consulting, brought to you by KSM's Litigation Services Group.