Eastern District of Texas Court Denies Defendants’ Motion to Exclude Plaintiff’s Damages Expert

Red Rock Analytics, LLC v. Samsung Electronics Co., Ltd., et. al., Case No. 2:17-CV-00101-RWS-RSP (E.D. Tex. Feb. 6, 2019)

U.S. Magistrate Judge Roy Pain rejected all four of the arguments brought by Samsung Electronics Co., Ltd., et. al, in its motion to exclude Red Rock’s damages expert.  Samsung had argued that Red Rock’s damages expert’s 1) calculations through the date of patent expiration were speculative, 2) apportionment analysis was unreliable, 3) reliance on Red Rock’s technical expert’s analysis was flawed due to improper apportionment, and 4) the Georgia-Pacific analysis improperly converted lump-sum license arrangements into a running royalty.  Overall, the court disagreed with Samsung’s arguments noting that these issues would better be addressed through cross examination and decided by the jury.

In this matter, originally filed in February 2017, Red Rock alleged Samsung infringed Red Rock’s U.S. Patent No. 7,346,313 (“‘313 Patent”).   (1) Accused products include mobile hotspots, cellular phones, tablets, and notebooks. (2) Red Rock’s damages expert opined that Red Rock was owed a minimum of $75.9 million in reasonable royalty damages. (3)

In seeking to exclude portions of Red Rock’s damages testimony, Samsung presented four primary arguments.s.

First, Samsung argued that Red Rock’s damages expert’s calculation of damages through the date of patent expiration was “based on guesswork, not evidence.” (4) To this point, Samsung disagreed with the expert’s use of a constant sales amount from 2017 through the patent expiration date without sufficient evidence.

The court found Samsung’s arguments unpersuasive citing prior case law that states a “lump sum may be based on developments that have occurred after the date of the hypothetical negotiations, including realistic projections of future sales.”  (5) The court also maintained that Red Rock’s expert attempted to project sales using available sales data and that Samsung failed to demonstrate why the analysis was “purely speculative.” (6)

Second, Samsung argued that Red Rock’s expert’s apportionment analysis was “unreliable because he relied on a licensing program that was rejected by the Federal Circuit as being impacted by standardization.” (7)

The judge rejected Samsung’s argument noting that at most this argument went more to the issue of comparability and less to the issue of apportionment.  “Apportionment concerns what part of the infringing features are incorporated into the accused products, whereas comparability concerns whether the … Licenses are a good measure of the value of the patented invention.” (8) The judge further noted that the issue regarding comparability is better left to cross-examination the expert as opposed to any exclusion by the court.

In its third argument, Samsung contended that Red Rock’s damages expert’s reliance on the technical expert’s analysis was flawed because that technical expert’s analysis failed to properly apportion the alleged value of the ‘313 patent.

On this point, the judge found that Red Rock’s technical expert did appropriately account for “the claimed invention’s footprint in the market place,” and its damages expert “explicitly” accounted for non-infringing aspects of the technology at issue. (9) The court further noted that Samsung’s arguments on this point were with the damages expert’s conclusions, not the methodologies employed.  Accordingly, the court found the methodology reasonable and rejected Samsung’s arguments denying the motion for exclusion on this basis.

Finally, Samsung argued that Red Rock’s expert’s analysis under Georgia-Pacific converted lump-sum license arrangements into a running royalty rate thereby ignoring evidence that prior patent license agreements entered into by Samsung did not include running-royalty type arrangements.

The court responded that while the analysis performed by Red Rock’s damages expert was not consistent with the specific license Samsung used in its argument, this fact alone did not invalidate the analysis.  In denying Samsung’s argument, the court further noted, “Whether his specific methodology and the reasoning are persuasive is a question for the jury.” (10)

Overall, the motion to exclude certain opinions offered by Red Rock’s damages expert was denied as the court disagreed with Samsung’s arguments on each of the four issues.

 

Author(s): Krista L. Santino   

Editor(s):  Barry L. Bell   

Case Referenced:

Red Rock Analytics, LLC v. Samsung Elecs. Co.,

Case No. 2:17-CV-101-RWS-RSP (E.D. Tex. Feb. 6, 2019

1 Red Rock Analytics, LLC’s Complaint for Patent Infringement, Red Rock Analytics, LLC v. Samsung Electronics Co., Ltd., et. al., Case No. 2:17-CV-00101-RWS-RSP (E.D. Tex.), Feb. 1, 2017, at 4–5.

2 Id. at 4–5.

3 Memorandum Order, Red Rock Analytics, LLC v. Samsung Electronics Co., Ltd., et. al., Case No. 2:17-CV00101-RWS-RSP (E.D. Tex.), Feb. 6, 2019, at 1.

4 Id. at 4.

5 Id. at 5, citing Ericson Inc. v. TCL Commc’n Tech. Holdings, Ltd., 2018 WL 3089701, at *7 (E.D. Tex.) Mar. 7, 2018.

6 Id. at 5.

7 Id. at 4.

8 Id. at 6.

9 Id. at 8, 10.

10 Id. at 11.

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