D Minn allows evidence of defense costs to support reasonable royalty

The District of Minnesota, in Ecolab USA, Inc. v. Diversey, Inc., Case No. 0-12-cv-01984 (SRN/FLN) (Judge Susan R. Nelson) (May 15, 2015), denied defendant's motion in limine to preclude plaintiffs from comparing the defendant's reasonable royalty calculation to the fees defendant incurred in the litigation. Defendant argued that its defense costs, i.e., its expert costs, costs for outside counsel to prepare noninfringement opinions, and attorneys' fees incurred in litigation, were irrelevant to the amount of damages. The defendant argued that none of these costs are covered by the Georgia-Pacific factors and should not be presented to the jury.

Plaintiffs countered that the amounts defendant was willing to pay its experts and counsel are relevant to the value attached to the patents-in-suit. Specifically, the plaintiffs urged the court that Georgia-Pacific factor 15 is related to these costs the factor pointing to "[t]he amount that a licensor ... and a licensee ... would have agreed upon ... if both had been reasonably and voluntarily trying to reach an agreement; that is, the amount which a prudent licensee who desired, as a business proposition, to obtain a license to manufacture and sell a particular article embodying the patented invention would have been willing to pay as a royalty and yet be able to make a reasonable profit and which amount would have been acceptable by a prudent patentee who was willing to grant a license." Georgia-Pacific, 318 F. Supp. at 1120.

The court ruled for the plaintiff:

The Court finds that the challenged evidence is relevant to the value the alleged infringer places on the ability "to obtain a license to manufacture and sell a particular article embodying the patented invention," as stated in Georgia-Pacific factor fifteen. Therefore, just as the Court in its Daubert Order determined as Defendant argued that post-hypothetical negotiation information such as the profitability of the accused device and the extent of the alleged infringer's sales of the accused product are relevant to the calculation of a reasonable royalty and may be presented to the jury, (see Mem. Op. and Order dated Apr. 28, 2015 [Doc. No. 278] at 25-28), the Court finds here that post hypothetical negotiation information regarding the amount of money spent to investigate and defend the ability to continue to market the accused product without obtaining a license is relevant to the calculation of a reasonable royalty and may be presented to the jury. Accordingly, this Motion is denied.