EDTX excludes expert who attempted to apportion the royalty base by claim elements; allows do-over

On June 21, 2014, Judge Davis of the Eastern District of Texas issued an opinion on a Daubert motion. The case is Thinkoptics, Inc. v. Nintendo of America, Inc., Case No. 6:11-CV-455. Thinkoptics moved to exclude the testimony of Nintento's damages expert, Professor Daniel J. Slottje. The court granted the motion, but also allowed a do-over.

Professor Slottje attempted to apportion the damages base by focusing on the purported novel features of the claim. During prosecution, all claim elements were found obvious except for three steps relating to image processing. Professor Slottje took the accused products Wii consoles that operate with Wii remotes and Wii sensor bars and factored out the known Bluetooth microcontroller, which apparently existed in the prior art, and concluded that the proper royalty base was limited to the Wii remote direct pointing device ("DPD"). The theory was that Thinkoptics accused the DPD of satisfying the three novel steps, and the Bluetooth controller was covered by other claim elements that were in the prior art. He also offered an alternative base that included the DPD and the sensor bar.

The court found Professor Slottje's position "unsupported." Judge Davis recognized that apportionment is "sometimes necessary" to find the smallest salable patent practicing unit to remove the value of unclaimed elements. But the judge also observed that "Nintendo has not cited any precedent permitting the complete removal of the value of claimed elements." Slip op. at 4 (emphasis added). The court distinguished two cases cited by Nintendo Cornell v. HP and Lucent because in those cases the courts had excluded unclaimed elements from the damages base. In contrast, the court found that because Professor Slottje's theory "excludes the value of claimed elements, it does not 'carefully tie proof of damages to the claimed invention's footprint in the market place.' See LaserDynamics, 694 F.3d at 67." Slip op. at 4. To satisfy Section 284, reasoned the court, the "royalty base must include the value of all claimed elements." Id.

The court did, however, grant a do-over for Nintendo and Professor Slottje. The order allowed him to amend his report, together with all the attendant expert procedures:

If Nintendo intends to rely on Professor Slottje's reasonably royalty analysis at trial, Professor Slottje must amend his report and recalculate his reasonable royalty in light of the Court's ruling by June 27, 2014 at 12:00 p.m. If Professor Slottje amends his report, then ThinkOptics may depose Professor Slottje by June 30, 2014 at 5:00 p.m. ThinkOptics is also granted leave to file a supplemental expert report to respond to Professor Slottje's amended report by July 1, 2014 at 5:00 p.m. Nintendo may conduct a deposition relating to ThinkOptics' supplemental expert report by July 2, 2014 at 5:00 p.m.