Attempted sales price of patent-in-suit relevant to reasonable royalties

On June 18, 2012, the District of Idaho in Hoyt A. Fleming v. Escort Inc., 109-cv-00105 (IDD) (D. Idaho June 18, 2012), the court addressed the relevance of a prior attempted sale of the patent-in-suit. The plaintiff, Fleming, had previously entered into negotiations with Mr. Coverstone to purchase the patent-in-suit Coverstone was represented by an attorney named Dowler in the deal. No money changes hands, and both sides felt duped. Fleming thought Coverstone had offered $1 million, but then breached the agreement by failing to pay. Coverstone had responded that he the right to pull out because Fleming had overstated the legal strength of his patent. Both sides filed lawsuits over the deal claiming breach. Coverstone also sued Dowler.

Fleming moved to exclude a variety of aspects concerning the failed deal and the lawsuits. Fleming did not object to the defendant raising at trial the negotiations between plaintiff and Coverstone regarding the value of the patent. The court agreed:

Certainly the negotiations between Fleming and Coverstone are relevant to value, and Dowler was part of those negotiations. Escort has not identified Dowler as a witness, and so cannot call him as one, but his role in the negotiations may, under appropriate circumstances, be discussed by others, as he has recognized in his briefing on this motion.

Furthermore, the fact that Fleming sued Coverstone for the purchase price is relevant as it is further evidence of the value Fleming placed on the patent at that time. The Court will not, however, allow a journey down the rabbit trail of details surrounding that California litigation. Its relevance lies in the fact that Fleming sued Coverstone alleging that a deal had been made to sell the patent for $1 million. Also relevant are Fleming's statements made under oath during that litigation pertaining to the value of his patent.