Delaware court rules on date of hypothetical negotiation and Daubert motion re damages expert's reasonable royalty methodology

On April 13, 2011, Judge Robinson of the District of Delaware issued a six part opinion. Three of the six are directly relevant to damages. Boston Scientific Corp. v. Cordis Corp., Civ. No. 10-315-SLR (D. Del. April 13, 2011).

First, the court denied the defendant Cordis' argument that the date of the hypothetical negotiation for the case involving 2.25 mm Cypher stent should be in 1999 because Cordis manufactured other Cypher stents in the United States in 1999. The court held that infringement caused by the 2.25 mm Cypher stent was separate and distinct from infringement caused by the other Cypher stent because the evidence overwhelmingly indicated that the 2.25 mm Cypher stent was distinct from the Cypher stents previously marketed by Cordis. The court reasoned that two separate hypothetical negotiation dates were required because the sales of two different products caused two infringements beginning at different times. See Applied Medical Resources Corp. v. U.S. Surgical Corp., 435 F.3d 1356, 1363-64 (Fed. Cir. 2006). Because the court held that the 2.25 mm Cypher was separate and distinct from the other Cypher stents and because both the parties did not dispute that the 2.25 mm Cypher stent was first sold in the United States in September 2009, the court held that "the date of first infringement must be September 2009 as a matter of law."

Second, the court denied the defendant's Daubert motion to exclude plaintiff BSC's damages expert from calculating reasonable royalty based on the outcome of a prior case between the same parties involving the same patent. The court held that BSC's damages expert's methodology meets the requirements of Fed. R. Evid. 702. The court reasoned that "BSC's expert looked to factor 13 of the Georgia-Pacific factors to determine the impact of the judgment in the [previous case between the parties involving the same patent], concluding that the judgment strengthened [plaintiffs'] bargaining position in the hypothetical negotiation and demonstrated the business need and market niche for the [accused product]. These considerations are relevant to the reasonable royalty analysis separate and apart from the willfulness analysis, even though overlapping evidence may be used to support both."

Third, the court denied the defendant's final argument that the plaintiff's damages expert relied on an incorrect hypothetical negotiation date of September 2009. Because the court already affirmed that "the date of first infringement must be September 2009 as a matter of law," the court rejected the defendant's final motion.