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Expert’s Lump-sum Damage Calculation is Not Inadmissible Because it Accounts for Future Sales of Potentially Non-accused Products

recent order from the District of Delaware in Evolved Wireless, LLC v. Apple Inc., No. 15-00542 (“Evolved Wireless”) provides interesting guidance regarding the use of future sales in calculating lump-sum damages.  This order suggests that a damages expert’s lump sum payment structure is not unreliable simply because it takes into account future sales of potentially non-accused products.  The court concluded that any alleged flaws in the expert’s methodology go to credibility—issues typically left for the jury to weigh—and not admissibility.

In Evolved Wireless, Evolved filed a patent infringement suit asserting its patents directed to Long-Term Evolution (“LTE”) wireless communications systems.  These patents are essential to the 3GPP 36 series technical specifications, which include the LTE wireless communication standard.  Apple moved to preclude testimony of Evolved’s damages expert, Dr. Putnam, for his lump sum damages methodology.  (Dkt. 275.)  While the briefing is sealed, it appears that Dr. Putnam’s lump sum payment methodology utilized Apple’s past sales of the accused products to forecast future sales. 

Apple criticized this methodology because it appeared to capture future sales on non-accused products since the calculation assumed that the accused product will continue to be sold through 2026.  This did not take into account Apple’s routine business practice of phasing out older products every few years as new versions of the product line are released.  As a result, Apple argued that Evolved would be capturing future sales of non-accused products.  This argument assumed, of course, that the future products would not infringe the asserted patents.

Evolved countered that Apple’s argument conflated the running royalty calculations with lump sum damage calculations.  According to Evolved, lump-sum payments may consider sales of future products, whereas running royalty calculations cannot.  Therefore, “Dr. Putnam was justified in looking to forecasts of Apple’s future LTE sales to support his lump sum calculation.”  (Order at 8).  Additionally, Evolved argued that any alleged flaws in Dr. Putnam’s calculation is a credibility question that should be left for the jury to weigh.

The court agreed with Evolved and concluded that any potential flaws in the expert’s damages theory goes to its credibility before the jury, not admissibility.  The court noted that the parties may cross-examine experts, present contrary evidence, and seek cautionary jury instructions to prevent any risk that the jury might be misled. 

This order illustrates that an expert’s damages calculation method that includes future sales of potentially non-accused products is not per se unreliable as Apple argued.  Nor is it subject to a Daubert motion on this ground alone.  The jury must assess the credibility of each damages expert, which may entail weighing evidence of product forecasts and potential sales years into the future.  While Apple argued in its motion papers that the accused products likely will not infringe the asserted patents in twenty years, this is a question for the jury to decide.  This case is also a good example of a court trusting the jury to assess the credibility and strength of the parties’ experts and their competing theories.  However, we can likely expect Apple to test this ruling on appeal.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume IX, Number 88

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About this Author

 Andrew H. DeVoogd Member Boston Mintz Patent Litigation Licensing & Technology Transactions International Trade Commission Strategic IP Monetization & Licensing Federal District Court IP Due Diligence
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Drew is an experienced patent litigator and trial attorney whose work encompasses a broad range of technologies. He regularly represents clients in high stakes International Trade Commission investigations involving some of the world's largest technology companies. He also litigates patent matters and other business disputes in federal district courts around the country, and advises clients in complex IP licensing and related transactions. Drew excels at helping clients make sense of nuanced legal issues while developing effective strategies to protect and leverage their intellectual...

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Daniel B. Weinger Patent Litigation Attorney Mintz Law Firm
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Daniel's practice in intellectual property focuses on patent litigation, both at the International Trade Commission and the Federal District Courts. Daniel has participated in all phases of patent litigation, including active engagement in multiple evidentiary hearings at the International Trade Commission. He has done work in a variety of technology areas, including computer software, software architecture, GPS, network devices, semiconductors, converged devices, and LED lighting.

Prior to joining Mintz Levin, Daniel worked as a database programmer with InterSystems, Corp., where he specialized in programming solutions for database development with a focus primarily on integration engines.

While on leave from Mintz Levin, from 2014 - 2015, Daniel practiced as a Special Assistant District Attorney in the Middlesex County (MA) District Attorney's Office, based in the Framingham, MA, district court.  During that time, Daniel prosecuted and tried numerous drug, larceny, breaking and entering, and motor vehicle cases in bench and jury sessions.  He also argued bail hearings, motions to suppress, and motions to dismiss.

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