Circuit Judge Allows Limited Path Forward For Patent Plaintiff After Its Expert’s Damages Theories Are Excluded
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  • Circuit Judge Allows Limited Path Forward For Patent Plaintiff After Its Expert’s Damages Theories Are Excluded

    On March 22, 2023, Circuit Judge Bryson, as visiting judge in the United States District Court for the District of Delaware, ruled on competing motions about the next steps in a case where the patent plaintiff’s damages theories, as set forth in expert reports, had been repeatedly rejected by Delaware District Court judge Andrews.  Judge Bryson allowed the case to proceed to trial, albeit with a very limited damages case.  Acceleration Bay LLC v. Activision Blizzard Inc., C.A. No. 16-453-WCB (D. Del. Mar. 22, 2023).

    Leading up to the motions before Judge Bryson, Plaintiff Acceleration Bay had made multiple unsuccessful proffers of expert testimony on damages.  Judge Andrews, the presiding judge at the time, struck portions of the reasonable royalty opinion from Acceleration Bay’s first damages expert, then asked the parties to brief whether Acceleration Bay had any remaining admissible damages theories.  Judge Andrews gave Acceleration Bay a “final opportunity” to present an admissible damages case; as part of that effort, Acceleration Bay sought and obtained leave to substitute a new damages expert, Mr. Parr.  Ultimately, Judge Andrews also excluded Mr. Parr’s three damages approaches, largely for lack of proper apportionment, leaving Acceleration Bay with “no intact damages theories.”  Acceleration Bay then sought to present a “fact-based damages case,” and outlined the evidence it would rely on.  While that issue was pending, Judge Andrews stayed the case pending appeal in a related case.  After the stay, the case was reassigned to Judge Bryson, who ordered further briefing on damages.  Acceleration Bay argued that it should receive additional expert discovery on certain issues and that the case should then proceed to trial, while Defendant Activision argued that the case should be dismissed because Acceleration Bay lacked an admissible damages theory and had waived the right to a reasonable royalty.

    First, the Court held that Acceleration Bay had not waived its right to a reasonable royalty.  The Court noted that, under Apple Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014), a reasonable royalty can be awarded even without expert testimony, and a court “may only award a zero royalty … if there is no genuine issue of material fact that zero is the only reasonable royalty.”  Here, there was a prior license for the asserted patents, which the Court found was “strong evidence that a reasonable royalty for infringement … is some amount greater than zero.”

    The Court acknowledged that a patentee may waive its right to a reasonable royalty in certain circumstances, but found the case distinguishable from Promega Corp. v. Life Techs. Corp., 875 F.3d 651 (Fed. Cir. 2017), where a waiver had been found.  The Court found it more appropriate to conclude that, after its multiple chances, Acceleration Bay had waived the right to present an expert opinion on the reasonable royalty.  However, Acceleration Bay would still be allowed to present certain evidence that wasn’t barred by Judge Andrews’ prior orders, including factual testimony from the prior licensee about the negotiation of its license; testimony from technical experts on the benefits of the patented technology to the accused products; and testimony from Mr. Parr (the damages expert) about the general framing of the hypothetical negotiation, the Georgia-Pacific factors, and the key terms and economic comparability of the prior license.  The Court also specifically denigrated the relevance and persuasiveness of the one allegedly comparable license agreement that Acceleration Bay indicated it would present to the jury.

    Second, the Court denied Acceleration Bay’s request for additional discovery on (1) a recent litigation settlement covering the asserted patents, and (2) Activision’s acquisition by Microsoft.  The Court found both topics of limited relevance and, thus, the likely benefit of additional discovery was outweighed by the significant burden of re-opening discovery at the late stage of the case.  The Court proceeded to set the case for trial.
    CATEGORY: Damages