The District of Delaware ruled in Evolved Wireless, LLC v. Apple Inc., No. 15-00542 (“Evolved Wireless”) on the use of future sales in calculating lump-sum damages. In an order denying a motion to exclude a damages expert, the court wrote that the damages model in question, which used a lump sum payment structure, was not inadmissable simply because it accounted for future sales of potentially non-accused products. The court determined that any flaws in the expert’s methodology go to the weight and credibility of the witness’ testimony—not admissibility.
In Evolved Wireless, the Evolved Wireless, LLC (“Evolved”) filed a patent infringement suit regarding patents covering Long-Term Evolution (“LTE”) wireless communications systems. These patents are essential to LTE wireless communication standard. Apple filed a motion to exclude the testimony of Evolved’s damages expert, and particularly for his lump sum damages methodology. Although the briefing is sealed, it appears that the methodology in question utilized Apple’s past sales of the accused products to forecast future sales.
Apple argued that the lump sum reasonable royalty captured future sales on non-accused products as the calculation assumed continued sales of the accused product through 2026. Apple also argued that the analysis did not take into account Apple’s normal business practice of phasing out older products as new versions of the product are released.
Evolved argued in reply that Apple was wrong in its position that a lump sum royalty should not include consideration of future sales, even beyond the data of trial. In contrast, for a running royalty, this would be improper, according to Evolved. As Evolved described it, “[the expert] was justified in looking to forecasts of Apple’s future LTE sales to support his lump sum calculation.” (Order at 8).
Evolved was successful on the motion, with the court concluding that any flaws in the expert’s damages theory go to the weight. The court elaborated, referencing the ability to cross-examine experts and present contrary evidence, as well as seeking jury instructions to prevent any risk of misleading the jury.
The opinion on the motion highlights that use of future sales in the estimation of a lump-sum reasonable royalty is not necessarily unreliable. In this court’s opinion, this did not provide grounds for exclusion. Rather, Apple will be able to attack the expert’s credibility with cross-examination, with the jury left to decide the issue.