Tag: Nash Bargaining

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.

Bayer Healthcare LLC, v. Baxalta Inc., et al. (Order January 25, 2019)

It remains unclear what damages theories might remain after Judge Andrews provided his order on Daubert motions. Defendant’s expert was excluded in part and Plaintiff’s expert was excluded in part. The resulting questions: “What remains – what might damages testimony at trial look like?”

The order explains that Bayer sued Baxalta for patent infringement concerning the drug Adynovate. Dr. Rausser, Baxalta’s expert, claimed that the damages were small based upon the perspective that the patent possessed little to no value. Plaintiff’s counsel argued that Dr. Rausser failed to assume infringement, used non-comparable licenses and derived a lump sum from licenses that were, in contrast, running royalty licenses. Judge Andrews struck Dr. Rausser’s opinion based upon Plaintiff’s final complaint, noting:

Dr. Addanki, Bayer’s expert, argued that the patents are valuable and that damages would be derived from a 50/50 split of profits. Evoking the Nash Bargaining Solution (which damages experts should understand now to create Daubert exposure), Dr. Addanki claims that this outcome would be “reasonable as a matter of economics.” Judge Andrews disagreed and struck the 50/50 split analysis and “any subsequent opinions that rely on that mid-point rate.”

It would seem little remained of damages for this matter given the exclusions. We shall return later to see whether and how Baxter might advance opinions regarding damages at trial.