Licenses dated after hypo negotiation not excluded

On June 15, 2012, the District of Idaho in Hoyt A. Fleming v. Escort Inc., 109-cv-00105 (IDD) (D. Idaho June 15, 2021), the court addressed two reasonable royalty issues: 1) whether license agreements dated after the alleged infringement began (and thus after the hypothetical negotiation date) were admissible, and 2) whether the ex post ante licensing deals would be relevant. The alleged infringement began in 2007, and the deals were made in 2010 and 2012.

Escort sought to exclude the licenses on the ground that "[t]he law forbids evidence of licensing deals that post-date the date of first infringement, which is the date established for the hypothetical negotiation that is the key to royalty calculation." Escort also argued that the plaintiff's expert failed to explain in his expert reports why these licensing deals would be relevant.

On the first issue, the court held that the law does not set up an automatic bar to post-hypothetical negotiation licenses: "[T]he case law sets up no automatic bar, and in fact allows such evidence if appropriate. See, e.g., Lucent Tech., Inc. v. Gateway, Inc., 580 F.3d 1301, 1333-34 (Fed. Cir. 2009) (stating that "[c]onsideration of evidence of usage after infringement started can, under appropriate circumstances, be helpful to the jury and the court in assessing whether a royalty is reasonable")."

On the second issue, the court found that the expert had explained the relevance of the licenses to the hypothetical negotiation. According to the court, the expert explained how the 2010 and 2012 deals show what the parties would have negotiated in 2007, and that they would have entered into a running royalty arrangement, and not lump sum, because of the uncertainty of sales volume in 2007.