Bayer v. Baxalta, Part II (Federal Circuit opinion, March 1, 2021)

A lot has happened in this matter since we last discussed it on A2C. To recap, Bayer’s expert, Dr. Addanki, had been excluded from offering his specific damages opinion, derived by employing the Nash Bargaining Theorem. In the absence of his damages value, we questioned how and with what the case might continue to trial. It turns out that the surprise is on us, because a lot remained: in fact, so much so that in November 2018, a Delaware jury awarded Bayer damages of $155,190,264 based on a reasonable royalty rate of 17.78%.

How did Bayer secure this damages sum in the absence of Dr. Addanki’s opinion?

In fact, while Dr. Addanki was not allowed to testify to a discrete damages value, he was permitted to testify to a damages-rate range, which he opined fell between 5.1% and 42.4%. As a result, the jury returned a damages figure within Dr. Addanki’s range. In turn, the Federal Circuit affirmed the damages award.

This conclusion to the Bayer v. Baxalta matter teaches us two things. First, damages experts need not opine to a specific number. Ranges on damages are just fine. In fact, very wide ranges on damages are just fine. Secondly, Daubert motions involving opinions with ranges must strategically address the essential roots of analysis, and not just a specific tainted “fruit” offered by the expert.

Nox Medical EHF v. Natus Neurology Inc. (Order on Motion to Strike Issued March 26, 2018)

Delaware District Court Judge Andrews issued an order and an opinion regarding patent infringement damages analyses by Richard Bero and Scott W. Cragun. Judge Andrews granted in part the motion to exclude Mr. Cragun, while denying the motion to exclude Mr. Bero.

The alleged infringing product is a sleep belt that was used together with a non-accused sleep monitor. Plaintiff’s expert Mr. Cragun was excluded from issuing some, but not all of his lost profit opinions regarding accused belt sales. Mr. Cragun advanced the view that, but for the alleged infringement, 75 percent of accused belts would have been sold by plaintiff Nox. The basis for his 75 percent figure was grounded in three different categories of belt consumers: 1) those Nox monitor consumers who purchased the accused belt, 2) those Natus monitor consumers who, but-for infringement, would have purchased both Nox’s monitor and Nox’s belt, and 3) those consumers of defendant’s monitor or other third-party monitors, for which consumers would purchase an accused belt.

Judge Andrews allowed Mr. Cragun’s lost profit calculations on #1 (i.e., the installed base of Nox monitor users), but found that his categories #2 and #3 above were speculative.

With regard to category #2, Judge Andrews notes that Mr. Cragun failed to “identify a single customer who would have but did not purchase Plaintiff’s device due to Defendant’s alleged infringement.” With regard to category #3, Judge Andrews explains that Nox only had adapters which connected its patented belt to its own monitor base. To substantiate his third category, Mr. Cragun would have had to prove that “an adapter would have been available in the United States to use Plaintiff’s patented belt with Defendant’s or third-parties’ sleep-monitoring devices.” Mr. Cragun failed to prove any such adapter was available.

Judge Andrews did find Mr. Bero’s reasonable royalty calculation to be based on an acceptable methodology and chose not to exclude those opinions, despite what appears to be a strong motion by the plaintiffs. Mr. Bero appears to have used a novel method as the starting point for his royalty rate considerations: namely, he multiplied the estimate of plaintiff’s lost sales (i.e., 15%) times defendant’s profit margin on accused products to establish his starting point:

We will await to see whether the jury is convinced.

Arctic Cat v. Bombardier Rec. (December 7, 2017)

The CAFC issued this opinion regarding marking, ongoing royalties, willfulness and damages. The court reviewed the Daubert motion and found that the court did NOT err in NOT excluding the expert analysis which involved comparing an infringing product to a non-infringing product. Citing Apple v. Motorola the CAFC opined that, “factually attacking the accuracy of a benchmark goes to evidentiary weight, not admissibility.”

The initial rulings on the Daubert Motions and Motions for Summary Judgment are good reads as well.