Judge Otero Approves Cost-Savings-Based Apportionment for Process Patent

Judge Otero denied Kaneka's motion in limine to preclude portions of Defendants' rebuttal damages report.  Defendants' damages expert calculated a base for each defendant by comparing their cost of manufacturing under the patented method with their cost of manufacturing using an earlier unpatented method.  Their expert further opined that a reasonable royalty rate should be no more than 3% for each defendant.

Plaintiff Kaneka argued that Defendants' report improperly apportioned the royalty base using a cost-savings methodology.  Kaneka further argued that apportionment was improper in this case because the patented features create the basis for customer demand.

Judge Otero ruled that Defendants' apportionment methodology was sufficiently reliable to pass muster under Rule 702.  The order cites a similar ruling in a companion litigation.

Judge Otero further ruled that apportionment was not improper in this case.  Judge Otero explained that Kaneka did not meet its burden to prove the EMVR applies.  He further explained that apportionment applies in any case because "apportionment is a fundamental concept in patent damages[.]"  The order cites AstraZeneca AB v. Apotex Corp., 782 F. 3d 1324, 1338 (Fed. Cir. 2015), which states that when the EMVR does not apply and "a patent covers the infringing product as a whole, and the claims recite both conventional elements and unconventional elements, the court must determine how to account for the relative value of the patentee's invention in comparison to the value of the conventional elements recited in the claim, standing alone."

-- Kaneka Corporation v. Zhejiang Medicine Co., Ltd. et al, 2-11-cv-02389 (CACD), Doc 696.




Source: Docket Navigator

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