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Expert’s royalty methodology properly apportioned the value of nonpatented features and of standardization

Expert’s royalty methodology properly apportioned the value of nonpatented features and of standardization

Chrimar Holding v. ALE USA is a nonprecedential case decided on May 8, 2018 on appeal from the Eastern District of Texas. All four asserted patents were standard essential. Before trial the district court denied ALE’s motion to exclude the testimony of Chrimar’s damages expert regarding a reasonable royalty. A jury found infringement by defendant ALE and awarded damages to plaintiff Chrimar. The district court then denied Chrimar’s motion for attorney fees. Both parties appealed.

The Federal Circuit vacated one claim construction adopted by the district court, affirmed the damages award, and affirmed the denial of fees.

The district court did not abuse its discretion in admitting Chrimar’s damages expert’s (Mr. Mills) testimony. ALE argued that certain “licenses were not sufficiently comparable to be reliable indicators of what would have occurred in a hypothetical negotiation.” But “ALE failed to make that challenge when seeking to exclude Mr. Mills’s testimony or when that testimony was presented at trial.”

There was no reversible error regarding Mr. Mills’s testimony as to apportionment. Mr. Mills explained at trial that he accounted for the products’ “nonpatented functionality outside the [relevant] standard,” for “two nonpatented features of the [relevant] standard,” and for “the value of standardization (generally requiring practice of a standard-essential patent rather than noninfringing alternatives).” (parenthesis in original). Mr. Mills compared ALE’s products that differ only in the addition of the patented functionality, thus calculating the “profit premium” of the relevant standard’s functionality. Mr. Mills also testified that, “although there was some value attributable to the nonpatented features of the [relevant] standard and to standardization, he adopted a conservative estimate of the profit premium attributable to the patented features…, which did not include those values.” Mr. Mills’s methodology was sufficiently reliable and reasonable. Moreover, the “assumptions underlying his damages theory were the subject of cross-examination;” ALE “provided contrary testimony from its own expert;” and the jury “was given instructions regarding apportionment.”

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The district court did not err in denying Chrimar’s motion for attorney fees. Although, “ALE pressed a large number of defenses and counterclaims for years, only to drop most of them … late in the litigation,” the district court “denied summary judgment as to a number of the claims ALE later dropped,” and later “determined that ALE’s litigation decisions fell within the range of ordinary practices involving the narrowing of claims for trial.”

 

Chrimar Holding Co., LLC v. ALE USA Inc., 732 F. App’x 876 (Fed. Cir. 2018)