United States District Court, D. Delaware
before the Court are the parties' Daubert
motions. (D.I. 243, 250). I have reviewed the parties'
briefing. (D.I. 244, 251, 270, 271, 279, 283).
asserts claims 1-9 of U.S. Patent No. 9, 364, 520 ("the
'520 patent"). (D.I. 1). The '520 patent is
directed to forms of factor VIII, "a protein necessary
for normal blood clotting in response to injury." (D.I.
99 at 1). The patent claims factor VIII conjugates not found
in nature, made up of recombinant factor VIII and one or more
biocompatible polymers chemically bonded to factor VIII at
the protein region known as the "B-domain."
(Id. at 1, 3). The claimed factor VIII conjugates
are formed through a process called pegylation, which is the
conjugation of recombinant factor VIII with polyethylene
glycol ("PEG"), a biocompatible polymer.
(Id. at 5). Claims 1 and 9 are independent claims.
Claims 2-8 depend from claim 1.
accused product is Adynovate, a pegylated factor VIII used to
treat hemophilia A. (D.I. 28 ¶ 25; D.I. 247 at 1).
Hemophilia A is a congenital bleeding disorder caused by
deficient or defective factor VIII. '520 patent at
parties previously moved for summary judgment. I granted
Plaintiffs motion with respect to Defendants' invalidity
defense of lack of utility. (D.I. 319).
parties now each move to exclude expert opinions on
reasonable royalties for failure to meet Daubert
standards. Plaintiff moves to exclude the testimony of Dr.
Gordon Rausser (D.I. 243), and Defendants move to exclude the
testimony of Dr. Sumanth Addanki (D.I. 250).
702 provides that an expert witness may offer opinion
testimony if (a) the expert's scientific, technical, or
other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b)
the testimony is based on sufficient facts or data; (c) the
testimony is the product of reliable principles and methods;
and (d) the expert has reliably applied the principles and
methods to the facts of the case. Fed.R.Evid. 702.
Rules also "assign to the trial judge the task of
ensuring that an expert's testimony both rests on a
reliable foundation and is relevant to the task at
hand." Daubert v. Merrell Dow Pharms. Inc., 509
U.S. 579, 594, 597 (1993). "The relevance prong [of
Daubert] requires the proponent [of the expert
testimony] to demonstrate that the expert's
'reasoning or methodology can be properly applied to the
facts in issue.'" Johnson v. Arkema, Inc.,
685 F.3d 452, 459 (5th Cir. 2012) (quoting Curtis v. M
& SPetroleum, Inc., 174 F.3d 661, 668 (5th Cir.
1999)). "The reliability prong [of Daubert]
mandates that expert opinion 'be grounded in the methods
and procedures of science and ... be more than unsupported
speculation or subjective belief" Johnson, 685
F.3d at 459 (quoting Curtis, 174 F.3d at 668).
assessing the "reliability" of an expert's
opinion, the trial court may consider a list of factors
including: "whether a theory or technique . .. can be
(and has been) tested," "whether the theory or
technique has been subjected to peer review and
publication," "the known or potential rate of
error," "the existence and maintenance of
standards," and "general acceptance" of a
theory in the "relevant scientific community."
Daubert, 509 U.S. at 593-94; see also Kumho Tire
Co., Ltd. v. Carmichael, 526 U.S. 137, 150 (1999)
("Daubert makes clear that the factors it
mentions do not constitute a 'definitive
checklist or test.'"); U.S. v. Valencia,
600 F.3d 389, 424 (5th Cir. 2010). "The proponent need
not prove to the judge that the expert's testimony is
correct, but she must prove by a preponderance of the
evidence that the testimony is reliable."
Johnson, 685 F.3d at 459 (quoting Moore v.
Ashland Chem., Inc., 151 F.3d 269, 276 (5th Cir. 1998)
(en banc)). At base, "the question of whether the expert
is credible or the opinion is correct is generally a question
for the fact finder, not the court." Summit 6, LLC
v. Samsung Elecs. Co., Ltd., 802 F.3d 1283, 1296 (Fed.
Cir. 2015). Indeed, "[v]igorous cross-examination,
presentation of contrary evidence, and careful instruction on
the burden of proof are the traditional and appropriate means
of attacking shaky but admissible evidence."
Daubert, 509 U.S. at 596.
Dr. Rausser's Reasonable Royalty Testimony
argues that Dr. Rausser's reasonable royalty opinion
should be excluded for three reasons.
Plaintiff argues that Dr. Rausser's analysis is
inconsistent with the assumption that the '520 patent is
valid and infringed. Plaintiff asserts that Dr. Rausser
improperly relies on the anticipation, non-utility, and
noninfringement analyses of Defendants' technical experts
to apportion minimal value to the '520 patent in the
hypothetical negotiation. (D.I. 244 at 4-11). Plaintiff
further argues that, in doing so, Dr. Rausser opines on
technical issues beyond his expertise. (Id. at
not find Dr. Rausser's testimony inconsistent with the
assumption that the '520 patent is valid. Dr. Rausser
opines that the '520 patent adds little to
Adynovate's value because, among other reasons,
Adynovate's extended half-life is largely derived from
the prior art. (D.I. 245, Ex. B ¶ 104). Relying on Dr.
Zalipsky's anticipation testimony, Dr. Rausser concludes
that the patent "makes at most a small
'improvement' to the prior art," and thus the
parties to the hypothetical negotiation "would have
accorded little or no value to the '520 patent compared
to the prior art." (Id., Ex. B ¶¶
126-28).Plaintiff argues that Dr. Rausser wrongly
imports a risk of anticipation into his hypothetical
negotiation. (D.I. 244 at 5-7). I disagree. Validity does not
define a patent's economic value-a patent can be valid
yet offer little economic value over existing inventions.
Thus, like anticipation, damages may require technical
comparisons between the claimed invention and the prior art,
albeit for different purposes. To make those comparisons, Dr.
Rausser properly relies on Dr. Zalipksy's technical
analyses of the claimed invention and the prior art. I do not
think Dr. Rausser's testimony is tainted by Dr.
Zalipsky's ultimate conclusion that the '520 patent
I find that Dr. Rausser properly relies on Dr. Thakker's
invalidity testimony. (D.I. 244 at 7-9). Plaintiff argues
that Dr. Rausser improperly relies on Dr. Thakker's
finding that the '520 patent fails to demonstrate
extended factor VIII half-life. (D.I. 245, Ex. B ¶ 127).
As discussed in my summary judgment opinion, utility can be
met without showing extended half-life. (D.I. 319 at 20).
Therefore, although the parties to the hypothetical
negotiation would assume that the '520 patent meets
§ 101 utility, they would not necessarily assume that
the claimed invention extends half-life. Plaintiffs remaining
arguments relate to whether Dr. Thakker is factually
incorrect and should be addressed during
contrast, I do find portions of Dr. Rausser's testimony
inconsistent with the assumption of infringement. (D.I. 244
at 9-11). Dr. Rausser opines that the parties to the
hypothetical negotiation would assign little value to the
'520 patent in part because the patent disparaged random
pegylation, a characteristic of Adynovate. (D.I. 245, Ex. B
¶¶ 130-31). I construed the "isolated
polypeptide conjugate" limitation in claim 1 of the
'520 patent as "a polypeptide conjugate where
conjugation was not random." Therefore, if Adynovate is
assumed to have infringed claim 1, it cannot have been the
product of random pegylation.' Dr. Rausser's opinions
based on the erroneous assumption that Adynovate is the
product of random pegylation are excluded.
Plaintiff argues that Dr. Rausser's apportionment
calculation lacks economic foundation. (D.I. 244 at 12-14).
Dr. Rausser initially finds that a maximum of 20% of
Adynovate's value may be attributed to the '520
patent. Plaintiff asserts that Dr. Rausser then
arbitrarily reduces the apportionment from 20% to 2-4%.
discussed, Dr. Rausser relies on Dr. Zalipsky and Dr.
Thakker's technical opinions to opine that much of
Adynovate's value can be attributed to the prior art as
opposed to the '520 patent. (D.I. 245, Ex. B ¶¶
126-28, 133; D.I. 271 at 13-14). Dr. Rausser also finds,
based on Dr. Zalipsky's testimony, that less than 10% of
Adynovate factor VIII conjugates could infringe any of the
'520 patent claims. (D.I. 245, Ex. B ¶ 132 (finding
less than 10% of factor VIII in Adynovate meets the SEQ ID
NO. 4 claim limitation)). Dr. Rausser explained during
deposition that he reached the 2% apportionment floor by
multiplying his 20% starting point by the 10% of Adynovate
conjugates that infringe. (D.I. 271 at 14; D.I. 272-1, Ex. 2
at 289:21-290:12). Defendants assert that Dr. Rausser
ultimately reached a conservative estimate of 2-4%
based on the totality of the evidence. (D.I. 271 at 14).
Rausser provides an alternative apportionment rate for claim
9. Plaintiff argues that Dr. Rausser improperly relies on his
claim 9 analysis to support the 2-4% range for
claims 1-8. (D.I. 244 at 13). Claim 9 is the only '520
patent claim that requires the conjugates to be
"monopegylated." Dr. Rausser opines that the
reasonable royalty rate would be "very low" based
on claim 9 alone, because only about 0.2% of Adynovate is
monopegylated. (D.I. 245, Ex. B ¶¶ 132, 135).
Defendants argue that, applying the same analysis as for
claims 1-8, a 0.2% monopegylation frequency would result in
an apportionment rate of 0.04% (20% starting point x 0.2% of
Adynovate conjugates that infringe claim 9). (D.I. 271 at
14-15). It appears that Dr. Rausser made a calculation error
during deposition to reach a result of 4% rather than 0.04%.
(D.I. 272-1, Ex. 2 at 253:12-20). Plaintiff argues that the
deposition testimony shows that Dr. Rausser inappropriately
conflates the apportionment analyses for claims 1-8 and claim
9. (D.I. 244 at 13-14). Dr. Rausser has since corrected
himself. (D.I. 272-1, Ex. 4 (Rausser deposition errata)).
that Dr. Rausser has provided sufficient evidence to show
that he applies reliable methods to the facts of this case to
support his apportionment opinion. Plaintiffs arguments go to
the weight and credibility of Dr. Rausser's testimony,
which should be addressed in cross-examination.
Plaintiff argues that Dr. Rausser fails to show the licenses
he relied on are technologically or economically comparable
to the ...