The Pseudoscience of Patent Law: IP Watchdog Panel: Patent Damages on Trial: Rule 702 and the Daubert Conundrum

I have pointed out before that patent and copyright law have only gotten worse over time, almost never better, except by some occasional judicial interpretations of the patent and copyright statutes,¹ which is inevitable since these so-called “IP” laws grant artificial, unjust, and nonobjective IP rights.² The copyright term has increased from 14/28 years to well over 100; criminal penalties have been added; and its scope has increased to cover software, video, and so on even though the Constitution only speaks of “writings.”

The only exceptions that come to mind is that for copyright, the DMCA, and for defamation, the CDA, gave platforms/ISPs some protection from liability for infringing/defamatory acts of users (see Grok summary).

And for patent, AIA’s expansion of the prior commercial user defense in 2011, and 1997 limits on enforcement of patents on surgery procedures.³

A recent IPWatchdog podcast, Patent Damages on Trial: Rule 702 and the Daubert Conundrum (July 18, 2026) (transcript below) discusses recent changes to how damages can be proved in patent infringement litigation. It’s hosted by patent shill and buffoon Gene Quinn⁴ and includes a bunch of legal positivist, mainstream patent lawyers etc.

They are whining in part about how difficult the federal courts are making it to “scientifically” prove damages. For example, suppose you make a phone that has some chip that uses a technique that slightly speeds up computation time or slightly increases battery efficiency, and this allegedly infringes a patent on this technique or circuit. Suppose the phone sells for $700. How much of that $700 is “attributable” to the tiny component? Nobody knows, or can know; the question is ill defined and unanswerable. But you have to give an answer, since you have to “apportion” damages somehow. The panelists below discuss the “the 25% rule”—the previous rules that posited that a reasonable royalty is roughly 25% of the infringer’s expected profits—originated in a non-representative sample of mid-20th-century Swiss chemical licenses and had no scientific foundation, which was rejected by the Federal Circuit in Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011), as failing the reliability requirements of Daubert and Rule 702 (Grok elaboration).

Summary/Analysis

Patent Damages, Rule 702, and the Inherent Non-Objectivity of Intellectual Property Law: Reflections on an IP Watchdog Unleashed Episode

The recent IP Watchdog Unleashed episode “Patent Damages and Rule 702 Expert Testimony” (transcript of a panel moderated by Megan Carpenter with participants John Putnam, Glenn Forbis, and Mark Nelson, hosted by Gene Quinn) provides a revealing window into the practical absurdities of modern patent litigation. The discussion centers on the 2023 amendments to Federal Rule of Evidence 702, the Federal Circuit’s increasingly rigorous application of Daubert standards to damages experts, the long-discredited “25% rule,” problems of apportionment, and the difficulty of proving “but-for” causation in a hypothetical negotiation. In my view, the entire conversation merely illustrates a deeper truth: patent law (and intellectual property law more broadly) is fundamentally non-objective. It requires courts and experts to invent numbers that have no scientific or economic foundation.

This post integrates that episode with my longstanding critiques of IP, the historical trajectory of patent and copyright legislation, and related Austrian economic insights. It also revisits points from earlier discussions about the near-total absence of genuine legislative improvements in patent law.

I. The Historical Trajectory of Patent and Copyright Law: Mostly Worse, Rarely Better

As I have noted repeatedly, patent and copyright law have, on the whole, only gotten worse over time. Legislative changes have almost uniformly expanded scope, lengthened terms, strengthened remedies, or created new forms of liability. Genuine legislative improvements—meaning statutory changes that reduce the harm of the system—are vanishingly rare. Two modest exceptions stand out:

• The limited independent-inventor (prior-user) defense expanded in the America Invents Act of 2011 (AIA).
• The statutory limitation on remedies against physicians and related healthcare entities for infringement of pure medical-procedure patents (35 U.S.C. § 287(c)), enacted in the late 1990s in the wake of cases such as Pallin v. Singer.

Beyond these narrow carve-outs, legislative “reform” has almost always strengthened the monopoly privileges. Judicial developments have occasionally provided limited relief. The most notable example is eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), which rejected the Federal Circuit’s near-automatic injunction rule and restored traditional equitable four-factor analysis. This made permanent injunctions harder to obtain, particularly against non-practicing entities, and thereby reduced one of the most abusive features of the system. Other judicial moves—stricter enablement, written-description, and eligibility doctrines—have also constrained certain excesses, but these are judge-made and reversible.

For detailed discussion of these trends and the rare exceptions, see my posts and articles collected at C4SIF.org and stephankinsella.com, including:

• “Common Misconceptions about Plagiarism and Patents: A Call for an Independent Inventor Defense” (2009).
• “Patent Reform Is Here! O Joy!” (2011 analysis of the AIA).
• My broader treatment in The Problem with Intellectual Property (Papinian Press Occasional Paper No. 2, 2025) and the earlier monograph Against Intellectual Property.

Against this backdrop, the 2023 amendments to Federal Rule of Evidence 702 and the Federal Circuit’s recent en banc decision in EcoFactor, Inc. v. Google LLC (2025) are procedural and evidentiary developments, not substantive amendments to the Patent Act. From an abolitionist perspective they do not count as a “legislative improvement” in patent law itself. At best they modestly raise the cost of asserting certain inflated damages theories; they leave the underlying monopoly privilege intact.

II. Summary of the IP Watchdog Unleashed Discussion

The panel examined how the 2023 amendments to Rule 702 and the Federal Circuit’s stricter gatekeeping have altered patent-damages practice. Key points from the transcript include:

• Nature of the 2023 Rule 702 amendments. The amendments clarify that the proponent of expert testimony bears the burden of demonstrating, by a preponderance of the evidence, that the testimony satisfies all four Rule 702 criteria, and that the expert’s opinion must reflect a reliable application of the principles and methods to the facts of the case. The Advisory Committee notes emphasized that many courts had wrongly treated questions of sufficiency of basis and reliable application as matters of weight for the jury rather than admissibility for the judge.
• Practical effect. Panelists observed that the amendments have emboldened more Daubert motions. Courts that were already rigorous use the language to reinforce existing practice; more lenient courts sometimes treat the changes as mere clarification and continue prior habits. The net result is more pretrial fighting over expert reliability, higher costs, and greater uncertainty.
• Economist’s perspective (John Putnam). Damages analysis is inherently a counterfactual, “but-for” inquiry: what would market outcomes have been absent infringement? This requires economic tools, not mere accounting. The increased stringency favors experts trained in rigorous economic method and makes pure legal argumentation less sufficient. Ironically, when plaintiffs present scientifically defensible theories, defendants find it harder to exclude them because the fight becomes a battle of competing scientific opinions that courts often send to the jury.
• The 25% rule. Discussed as an example of previously tolerated “junk science.” The rule—positing that a reasonable royalty is roughly 25% of the infringer’s expected profits—originated in a non-representative sample of mid-20th-century Swiss chemical licenses and had no scientific foundation. The Federal Circuit correctly rejected it in Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011), as failing the reliability requirements of Daubert and Rule 702.
• Apportionment and the “left shoe” problem. Isolating the value contributed by a single patented feature within a complex product (a chip inside a phone, a minor circuit improvement, etc.) is extraordinarily difficult. Defendants often withhold the very comparative sales data (before/after, with/without the feature) that would allow a difference-in-differences analysis. Courts then criticize the expert for lacking a rigorous scientific basis—creating a catch-22. Putnam’s analogy is apt: demanding a market price for a left shoe alone is demanding the impossible.
• Early expert involvement and discovery. All panelists stressed the practical necessity of retaining damages experts at the outset of a case, conducting damages-focused discovery in waves, and integrating the damages theory thematically with the liability case. Waiting until late in discovery is described as nearly malpractice.
• Future outlook. Divergent circuit approaches to Rule 702 could eventually produce Supreme Court review, though most panelists thought this unlikely in a pure patent context. The deeper problem remains the counterfactual nature of the hypothetical negotiation itself.

Full transcript of the episode is available via IPWatchdog; the discussion took place at their Patent Masters event.

III. The 25% Rule and the Broader Problem of “Scientific” Damages

The panel correctly notes that the 25% rule was arbitrary. Yet the critique does not go far enough. The problem is not merely that one particular rule of thumb was unscientific; the entire enterprise of calculating a “reasonable royalty” for patent infringement is unscientific.

A patent does not confer ownership of a scarce resource. It is a state-granted negative monopoly—the right to exclude others from using certain information or techniques. When infringement is found, the statute requires at least a “reasonable royalty” (35 U.S.C. § 284). Courts construct a fictional “hypothetical negotiation” between a willing licensor and willing licensee at the time infringement began. Experts then attempt to assign a number to that fiction.

As Ludwig von Mises explained, money prices are not a measure of value:

“Although it is usual to speak of money as a measure of value and prices, the notion is entirely fallacious. So long as the subjective theory of value is accepted, this question of measurement cannot arise.”
— Ludwig von Mises, The Theory of Money and Credit (see also Kinsella, “Money Prices Not a Measure of Value” (2025), collecting Mises passages).

Value is subjective, ordinal, and non-cardinal. There is no objective quantity of “value” that can be attributed to a patented feature and then multiplied by unit sales. Hans-Hermann Hoppe has likewise emphasized that property rights protect the physical integrity of resources, not their market value:

“While a person has control over whether or not his actions will change the physical properties of another’s property, he has no control over whether or not his actions affect the value (or price) of another’s property.”
— See “Hoppe on Property Rights in Physical Integrity vs. Value” (2011) and the discussion in Hoppe’s The Economics and Ethics of Private Property.

Because there are no property rights in value, there can be no coherent “damages” for diminution of value caused by peaceful competition or independent invention. Patent damages force courts to pretend otherwise. Experts must invent a number that purports to measure the “contribution” of the patented invention to the product’s commercial success—an exercise that is, in principle, impossible. Difference-in-differences regressions, conjoint surveys, and Nash bargaining models may look scientific, but they rest on untestable counterfactuals and selective data. The panel’s own discussion of discovery battles and the impossibility of obtaining the necessary comparative sales data simply confirms the point.

Gene Quinn’s observation in the episode—that abolishing the 25% rule and starting from zero is “just as absurd”—is directionally correct but incomplete. Both starting points are arbitrary because the underlying quantity being measured does not exist as an objective magnitude. The statute’s command to award “at least a reasonable royalty” is itself an invitation to fiction.

IV. Rule 702, EcoFactor, and the Illusion of Greater Rigor

The 2023 amendments to Rule 702 and the Federal Circuit’s en banc decision in EcoFactor, Inc. v. Google LLC, 137 F.4th 1333 (Fed. Cir. 2025), tighten the gatekeeping function. Courts must now more carefully examine whether an expert’s opinion is based on sufficient facts, employs reliable methods, and reliably applies those methods to the case. In EcoFactor the court excluded testimony that relied on license agreements whose plain language contradicted the expert’s characterization of the royalty rate.

From the standpoint of reducing arbitrary awards, this is a marginal improvement in procedure. It does not, however, convert patent damages into an objective science. It merely raises the cost and complexity of the fiction. Plaintiffs must now hire more sophisticated (and expensive) economists earlier; defendants must develop competing scientific rebuttals rather than pure legal arguments; discovery fights intensify over “tangential” sales data needed for difference-in-differences designs. The net social cost of the patent system rises even as the most egregious rules of thumb are discarded.

This is consistent with the broader pattern I have described: the system evolves by becoming more elaborate, more expensive, and more dependent on specialized experts, while the fundamental injustice—the state-granted monopoly over information—remains untouched. See generally The Problem with Intellectual Property and Against Intellectual Property.

V. Conclusion: The Non-Objectivity of IP Law

The entire apparatus of patent-damages litigation—hypothetical negotiations, apportionment studies, Daubert battles, Rule 702 amendments—exists only because the law pretends that ideas can be owned and that the “value” of those ideas can be measured and transferred. Once one accepts the subjective theory of value and the distinction between physical integrity and market value, the enterprise collapses. There is no objective quantity of damages to discover; there is only a political and legal contest over how much monopoly rent the state will transfer from one party to another.

Legislative history confirms the pattern: expansion is the norm; genuine reduction of the privilege is the rare exception (the AIA prior-user defense and the medical-procedure limitation being the principal modern examples). Judicial and evidentiary developments such as eBay and the 2023 Rule 702 amendments can mitigate particular abuses, but they operate within a framework that is itself non-objective and unjust. The solution is not better expert reports or stricter gatekeeping; it is abolition of the underlying monopoly privileges.

For further reading:

• Stephan Kinsella, The Problem with Intellectual Property (Papinian Press, 2025).
• Stephan Kinsella, Against Intellectual Property (Mises Institute, 2008/2010).
• Ludwig von Mises passages collected in “Money Prices Not a Measure of Value” (2025).
• “Hoppe on Property Rights in Physical Integrity vs. Value” (2011).
• Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011).
• EcoFactor, Inc. v. Google LLC, 137 F.4th 1333 (Fed. Cir. 2025) (en banc).
• eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
• Federal Rule of Evidence 702 (as amended Dec. 1, 2023) and Advisory Committee Notes.⁵

The more rigorously courts try to make patent damages “scientific,” the more clearly they reveal that the project is impossible. That is not a bug in the system; it is a feature of any attempt to create property rights in non-scarce information.

Transcript

IP Watchdog Unleashed: Patent Damages and Rule 702 Expert Testimony (Full Corrected Transcript)

NOTE: Corrected AI-generated transcript. Spelling and transcription errors fixed (e.g., “Delbert” → “Daubert”, “butt floor” → “but for”, “Forbus” → “Forbis”, “dalbert” → “Daubert”, “Echo Factor” → consistent references, minor grammar/punctuation for clarity). No paraphrasing or content changes. Speakers identified based on context and dialogue. Grouped into natural paragraphs. Timestamps after descriptive headers.

Episode Introduction (00:00:10)

00:00:10 Renee (co-host): Hello everyone. Welcome to IP Watchdog Unleashed, where each week we journey into the world of intellectual property to discuss the laws, news, policy, and politics of innovation, technology, and creativity. With analysis and commentary from industry thought leaders and newsmakers from around the world, IP Watchdog Unleashed is hosted by world-renowned patent attorney and the founder of IPWatchdog.com, Gene Quinn, who has twice been named one of the most influential people in the intellectual property community and recognized numerous times as one of the top IP strategists in the world. Take it away, Gene.

00:00:46 Gene Quinn: Thanks, Renee. And welcome, everyone, to this week’s edition of IP Watchdog Unleashed.

Overview of Patent Damages and Rule 702 Changes (00:00:49)

00:00:49 Gene Quinn: Today we’re going to talk about patent damages. Recent changes to Rule 702 of the Federal Rules of Evidence and the Federal Circuit’s rigorous application of scientific standards to expert testimony are reshaping how patent damages must be proved in court. As judges apply more demanding scrutiny to the reliability of economic opinions, the traditional divide between legal argument and expert analysis is narrowing. It is no longer sufficient to challenge or defend expert testimony using purely legal arguments. Courts are increasingly focused on whether damages opinions are grounded in sound economic reasoning that meets accepted scientific standards. These developments also highlight a longstanding but often overlooked distinction between economics and accounting. While accounting records what was, patent damages analysis requires answering a fundamentally different question, what would have been, but for infringement. Addressing these different questions requires economic tools such as comparative analysis of market outcomes that are central to economic science but often underutilized in patent litigation. Our conversation this week took place during our annual Patent Masters event last month at IP Watchdog Studios. With me chiming in from time to time, the conversation was moderated by Megan Carpenter, an IP expert, strategist, and author, who most recently served as dean at the Franklin Pierce School of Law at the University of New Hampshire. Participating in the conversation are John Putnam, who is the founder and principal economist at Competition Dynamics, Glenn Forbis, a patent litigator and principal at Harness IP, and Mark Nelson, a patent litigator and partner at Barnes & Thornburg. The conversation between Megan, John, Glenn, and Mark examines how evolving Rule 702 standards are changing the role of economics experts in patent litigation. We discuss the practical implications for litigators, including how to evaluate damages theories, how to prepare experts for Daubert screening, how courts are approaching issues such as causation, apportionment, license comparability, and but for pricing. We pick up the discussion after the introductions and with Megan asking Mark the first question.

2023 Rule 702 Amendments: Clarification or More? (00:02:59)

00:02:59 Megan Carpenter: Courts say that the 2023 amendments didn’t actually change anything. It really just clarified the law. Do you find that this is, in your opinion, is this a true clarification or is it in some way more significant than that?

00:03:15 Mark Nelson: Well, thank you. I guess before I start, I just want to say that the opinions expressed are my own. They’re not of my firm or of my clients. So with that disclaimer, I think the, I mean, if you look at the actual amendment to the rule, there were two changes. One was it inserted that the proponent of the expert report has to prove by preponderance of the evidence that it should be let in per the court’s gatekeeping function. And then the second part that was amended was that the expert basically reiterated the expert can’t go beyond sort of what the methodology that presumably he followed that would make it admissible, he can’t extrapolate beyond that to a conclusion that otherwise would not be supported. And the actual language that was changed is very little. If you read the comments to the rule, the intent was to stress to the district courts that they really need to focus on their gatekeeping function. Depending on what circuit you were in and what court you were in, some of the courts almost operated like under a presumption that, well, the report’s admissible unless there’s really something crazy wrong with it. Or some other courts were really tight on the gatekeeping function. And so the first portion of it, I think the intent was to emphasize that this is the proponent’s burden to prove that this report is admissible for all the purposes that the rule is there for.

00:05:00 Gene Quinn: I don’t know if it actually changed that much, although the intent, I think, was to make changes. At least from what I’ve looked at in preparation for this conference, a lot of the circuits that were already sort of tighter with their gatekeeping function used this rule to sort of reinforce what they were already doing. And likewise, other courts that were maybe a little bit looser with their gatekeeping function looked at the rule, looked at the amendments. Well, it really didn’t. It didn’t change that much. There were other there’s other commentary that said it wasn’t really intended to be a substantive change. And then and they sort of doubled down on what they were doing as well. So I think the jury is still out, so to say, as to whether five years from now that’ll be the same thing. But at least at present. I’ll summarize by saying I think the intent was there to have the rule make somewhat of a change. But in practice, I don’t think it’s really changed that much. Everybody just doubled down on what they were already doing.

00:06:07 Megan Carpenter: Glenn, does that reflect your experience as well?

00:06:10 Glenn Forbis: It does. I think academically, the change in the rule is academically is very significant, right? Because I think the second part of the amendment effectively gives the courts, in a way it didn’t before, an opportunity to kind of pressure test, I’ll say, ultimately the conclusion almost, right, based upon is the application of the methodology to the particular set of facts in that case essentially reasonable. They don’t use the word reasonable, but that’s the way I think it could be read effectively. I think that that’s an academic change because I agree with Mark that we’re at such a level, it depends on the courts you’re in as to how they actually implement that. Where is the dividing line between the so-called old way of effectively, was there an issue just with the methodology, or the new way, which is, is there a problem with the application of the methodology to the particular facts, and is it supported? So I think that my experience is that it really is court dependent still because you’re at such a level of analysis that it’s difficult to determine where that dividing line is. Now, what I will say is, is emboldened a lot more, I think, Daubert motions than what were there before. Like when we look at things before, we may not file a Daubert motion because we’re like, it’s going to be an issue of fact. It’s going to go to the jury. It’s not a clear problem with the methodology. But now I think you can look at areas where maybe the application of the methodology doesn’t fit the facts as well as it could. And maybe you’ve got a basis for a Daubert motion. So I think there’s more Daubert motion fighting going on. And certainly from my experience, that’s true.

Economist’s View on Daubert Practice (00:07:58)

00:07:58 Megan Carpenter: John, as someone, an economist who actually has to produce these reports, has this substantively changed the way that you do your work or does it feel more like a fine tuning?

00:08:10 Jon Putnam: Well, I think that the answer is, in the last 15 years, we’ve gone from a Daubert motion, just the filing of a Daubert motion being a black mark on your career, like, what did they do? You know, what did I do wrong? To now, you just have to expect it. Like, it’s like a Markman hearing. You know, you’re going to get Dauberted in a big case. It’s going to happen. And so, since you know that’s going to happen, you have to anticipate that in advance. Even sometimes if you’re working for a plaintiff, even before the case is filed, you have to have as part of pitching the case, you’ve got to explain how you’re going to survive the Daubert motion. So in that sense, nothing has really changed. I think what’s changed is it’s emboldened defendants because they now have helpful language which reinforces. They’re threatening really the judge rather than me and saying, you judge have to take a look at this. You can’t just punt it to the jury. Because if you do, you’ll get reversed for failing to be a good gatekeeper. And so you see Daubert motions couched in language that is implicitly threatening the court as opposed to threatening the, in addition to threatening the expert. And then taking that apart and saying, you know, is it reliable methodology? Is it reliably applied to the facts? Do you have sufficient facts? You know, breaking it down and sort of uh, in the way that rule 702 does and trying to identify weaknesses in each one of these elements and trying to explain to the judge why you have failed to meet one of the three elements. So I think it’s emboldened defendants. That’s why I would, it hasn’t changed my work that much. Yeah.

00:09:48 Gene Quinn: And picking up on what you said, John, when I first started doing this and was interviewing experts in the damages context, you would always ask, have you been Dauberted, has been successful, et cetera. And a lot of times the answer was no. And if it was yes, it was, oh, my goodness, I’m not sure I can move forward with this person. Now, it’s like you haven’t been Dauberted. You must have never testified in anything big.

Winners, Losers, and Truth-Seeking in Damages (00:10:09)

00:10:09 Megan Carpenter: Let’s dig in a little bit now to kind of winners and losers, piggybacking on what you’re saying. John, I feel like I have to ask you about something that’s been really striking during our prep call when we were having the conversation. Most people would assume, or I would assume in this scenario, that the tighter the expert rules that it’s going to hurt the plaintiff because they have to prove they’re the ones that have to prove the damages. But you’ve argued that the picture is a little is more complicated than that. And I was wondering if you could explain that and talk more about that here today.

00:10:46 Jon Putnam: Yeah. I went to graduate school because I actually liked trying to figure out the truth. And I think if you view damages as being a truth-seeking exercise, which is how I view the increased stringency of Rule 702, the court saying you’re actually trying to figure out the truth, then that plays to my strength because that’s how I was trained. So increasing the stringency of Rule 702 is harder for plaintiff experts in the first instance if that’s not how they’re trained. So you see this, for example, in the EchoStar versus Google case. From my perspective, that case was badly litigated in the following sense. The damages expert was relying on a royalty rate that was put in a license, but otherwise unjustified. And when asked the basis for that royalty rate, he cited the CEO of a company who was actually unfamiliar with how the rate was calculated. And it was a lump sum. The license gave a lump sum payment without any reference to the number of units that were being licensed. So you couldn’t figure out a rate. And so there was a chain of reasoning that allowed you to cite witness testimony, but there was not a chain of logic that generated the number that the expert was relying on. And so the Federal Circuit en banc threw that out and said there wasn’t sufficient facts to base the damages theory on. And I think if your goal is truth-seeking, then you would applaud that decision and say there probably wasn’t sufficient facts. The problem is that when you get to cases that are methodologically more difficult, where there clearly are sufficient facts, it becomes more difficult for defendants because they have to argue that on scientific grounds, not just legal argument, but they’ve got to present scientific evidence that the plaintiff’s method is inadequate. And if the plaintiff has done their job, they should have had this vetted long before they filed the case, whereas the defendant actually has a very short window of time in which and usually when they’ve already retained an expert to develop a counter theory and explain why the method is scientifically deficient. And that turns out to be hard to do. And it’s especially hard to do because if you submit an expert declaration as a defendant, then you’ve got one expert saying that the method is scientifically valid and another one saying it’s not scientifically valid. And this is a classic case where courts are like to say it’s a battle of the experts. And if it’s a battle of the experts, then it’s going to go to the jury. And if your goal is to preclude the plaintiff’s expert from testifying, then you have lost if you only fought the plaintiff’s expert to a draw. So for defendants, it’s actually increasing the stringency of the testimony is actually works long-term to their disadvantage if the plaintiffs are taking Rule 702 amendments seriously and doing their job to present scientifically valid testimony in the first instance.

00:13:46 Gene Quinn: Yeah, but on that point, if the plaintiff’s expert does their job, right, then you have two apparently sufficiently supported competing theories, and that’s the definition of something to go to the jury.

00:13:59 Jon Putnam: True. And that’s my point, is that if your goal was to get the expert thrown out, if your goal as a defendant was to get the plaintiff’s expert thrown out, then you will have failed in that goal. Sure. And so it actually makes it harder for you if you are, whereas before, you could often use legal argument to get a plaintiff’s expert thrown out. But the ironic, by raising the standard and by making this a truth-seeking exercise and emphasizing to courts that you are trying to weigh the validity of scientific testimony both for the plaintiff and for the defendant. The defendant can’t merely make legal arguments anymore. They have to have scientifically supported arguments. That turns out to be harder for defendants, and it makes it harder to actually establish that the plaintiff’s testimony is scientifically deficient because it becomes a battle of disagreement between scientists.

Audience Question on 25% Rule and Scientific Rigor (00:14:51)

00:14:51 Gene Quinn (narrating): Let me break in here and set the stage a bit for what you’re about to hear next. At this point in the panel, we had our first question from the audience led to an interesting conversation about the 25% rule. The question boils down to this. What can parties realistically believe is scientifically appropriate enough given the mercurial nature of the Federal Circuit? After all, the 25% rule existed and was relied upon right up until the Federal Circuit said it was arbitrary and decided to chart a new path. So how can parties know what they should do relative to economic evidence and scientific rigor when we have a federal circuit that is increasingly difficult to predict and seems quite willing to change direction without warning? We pick up the conversation with John Putnam taking a stab at answering that particular question.

00:15:37 Jon Putnam: I’ll give you my 30-second version. The 25% rule was developed based on a sample of Swiss chemical licenses from the 1950s and 60s and had no scientific basis. The Nash bargaining solution was part of the reason why John Nash won the Nobel Prize. So they are complete opposite ends of the scientific spectrum. And the idea that they would be conflated by the federal circuit as being both rules of thumb is scientifically ridiculous. Although I agree with you. So all I’m saying is that as a person who strongly believes you should be relying on science is I cite the science in my expert reports, including the Nash bargaining solution, when it’s appropriate to use that, and why it is that you can actually do that, why you can apply it, why it’s not just a rule of thumb, but there’s actual data and facts of the case that are employed in doing it properly. So you can’t just exclude it offhand. So my point simply is that defendants have a lot of weapons, and I agree that they’ve succeeded in throwing out damages experts, but it’s getting harder if the plaintiff’s experts are not relying on rules of thumb and junk science and that sort of thing, but actually going to the economic literature on, for example, the distribution of patent values and presenting a theory that is not only difficult for the defendant to refute, but the defendant has hired an expert who’s unfamiliar with that literature and so is not in a position to offer a scientific rebuttal.

00:17:09 Mark Nelson: Yeah, I mean, I see this as sort of an evolution going back to the 25% rule. From a plaintiff’s side, damages experts. The 25% rule was often applied just very lazily. It was just, okay, it’s 25%, no other basis, good enough, and it would get through. But beginning with patent reform back in the 2000s, the federal circuit has taken many, many steps, including abolishing the 25% rule and lots of other steps, smallest saleable unit, to tighten the gatekeeping function on damages. And this now 702 amendment, as it’s being used, I think, in the patent context and damages context, is just a further evolution of that. And again, requiring that the plaintiff’s expert do what they should have been doing to begin with. And that’s, as John said, providing reports with a scientific basis. I think on the defense side, it creates a little bit of a catch-22 in that as a defendant, I represent both. And as a defendant, you should be planning your damages case once you get sued. You shouldn’t be waiting till you see the plaintiff’s case. But as John said, I mean, if you buy into sort of a competing rationale that rebuts plaintiff’s expert but uses essentially the same methodology, well, then you’ve just undercut your Daubert motion because you’re basically saying, well, the methodology is correct. We just come out to a different outcome. Well, that’s going to go to the jury, in which case if you’re a defendant trying to kick the other side’s expert out of the case, you’ve lost and that expert’s going to get in. And so as a defendant, I think you need to take the rule seriously, too, is if you’re going to offer a counter damage proposal, it can’t just be. While plaintiff is wrong for X, Y, or Z reasons, you have to have your own science and your own number and your own rationale supporting that number. I’ll stop there.

Critique of the 25% Rule Abolition (00:19:11)

00:19:11 Gene Quinn: Can I jump in for a minute? Because this is a real pet peeve of mine, the 25% rule. Because I’m not going to say that there wasn’t some laziness with its application, because I think that there probably was, right? And one of my friends, who is a former judge, is the one who wrote the decision that erased the 25% rule. And I disagree. That’s probably the only decision he’s ever written that I disagree with. The reason is because it seemed to me that what we did is we said, it can’t be 25%. It’s artificial. It can’t start there. So what we’re going to do is we’re going to start at zero, which is just as absurd as starting at 25%. Because it could be, actually, it’s more absurd, because it could be 25%. It can’t be zero, right? It has to be worth something. It seems to me that what we’ve done in a large respect, and I’m sorry, this is like fingers on the chalkboard for me because I feel like all throughout patent law so much, we rearrange chairs on the Titanic and think that we’ve accomplished something. It’s like, no, you just started with different uncertainty from a different point of view. And if what we wanted to do is say, what I think we’re trying to get at now with the evidence is. Prove it. Then start wherever you want. But I would pick a number higher than zero because if there’s been infringement, then there has been no arm’s length negotiating and it should be worth something to the patent owner. And I’ll get off my high horse, but this great panel so far. So continue, please.

Admissibility vs. Weight in Expert Challenges (00:20:42)

00:20:42 Megan Carpenter: Are you ready to talk about admissibility and weight? Do that. All right. Mark, you put it really well in our discussion. And so I’ll throw out a question about wondering when does a challenge to an expert’s analysis kind of cross over from being a weight question for a jury to a reliability problem that the judge has to decide? And then in practice, how do you make that call?

00:21:12 Mark Nelson: Yeah, I mean, it’s a tough call. I mean, the reality is it crosses over when the judge says so on either granting or denying your Daubert motion. So I want to pull out something here real quick. I took a look at some other non-patent decisions, and this happens to be a mass tort one that I just wanted to quote. So this is a mass tort case from the Sixth Circuit. Won’t name the name of the case, but the expert got excluded. And the Sixth Circuit is a circuit that really has always been tight on the gatekeeping function of the court. And so the experts excluded, and here’s the rationale and sort of a thumbnail of what the judge said. Expert relied on only one study and excluded four other studies that contradicted the study relied upon. Relied on animal studies, but had no explicit experience interpreting animal studies and did not include linkage between the animal studies and what he was trying to do. The issue in question was trying to find a link between the use of a diabetes drug and potential heart failure. And then the third one was cherry picked some data, relied on, and ignored other data. Well, depending on which side of the docket you were on, that sounds pretty darn factual to me in some contexts. And in other contexts, it doesn’t. And so that’s a really it’s a really hard decision. And like EchoStar is another one, for example. Judge Stark’s dissent or concurrence in part dissent in part looked at EchoStar and there. The expert took the lump sum royalties that the parties agreed to pay and basically extrapolated based on sales. Well, this equates to a per unit royalty. And then from that, the mistake in my view that he made was he said, and the parties agreed to that per unit royalty. And there was some language in the contracts that says defendant licensees said, no, we don’t agree it’s a per unit royalty. But the math was right. They just, there’s a line in the contract that said they didn’t agree that’s what it was. And the majority of the EchoStar court jumped on that and said, well, wait a minute here. We have a factual basis for this report. That’s just wrong. It’s wrong on its face based on the contract language. Despite the fact that the contract language and that whole issue was never even briefed. It wasn’t even part of any of it. And the court went off that direction and said, well, too bad. That’s a factual issue. It was wrong. Doesn’t go to credibility. Doesn’t go to weight. We’re going to reverse it. Judge Stark pointed out in his dissent, well, boy, that’s really dangerous of opening a door. And I’m paraphrasing, but this holding should be really narrow to this set of facts where the judge or the expert explicitly relied on a fact that was not undisputedly wrong. So to try to answer your question is, again, I’ll go back to where I started. It really depends on how the judge rules on your Daubert motion. If I’m a defendant, I’m certainly going to take my shot at trying to disqualify another side’s expert if I think I can get even a fairly good colorable argument that the expert’s opinion is exceeding what the facts would support. And likewise, if I’m a plaintiff, I’m going to take the other direction and I’m going to back it with as much science as I can back it. Try to backstop that science with some more science so that I can point to, you know, my methodology is sound. It’s been accepted in other cases. And so therefore, I’m good.

00:25:10 Gene Quinn: Yeah, I agree generally. I think that the EchoStar case was decided on a set of essentially egregious facts, if you will, right? Because the conclusion that the damage expert came to was absolutely inconsistent with the exact, with the words, the explicit words, right, on the, in the license agreement. So consequently, it was a relatively easy case to say, you know, we really disagree with, you know, what the expert concluded on a factual basis. But it did open up the door. And that’s why I think that, you know, the results of that decision in combination with the change in 702 is going to result in a lot of case-by-case jurisdiction-dependent results. And one thing that is clear about the dividing line between weight and admissibility versus exclusion is if just like in the EchoStar case, if you have a conclusion in your expert report that is directly contradictory to a documentary piece of evidence, right, that can’t be disputed, then you’ve got a problem. I think the question then becomes, you know, well, what if it’s contradictory to other evidence that’s not necessarily so clear? That, in my view, should go to the weight and weight as opposed to admissibility. But you never know what the district courts are going to do with it because they’re so close to the line. And I think that’s what creates the danger.

00:26:39 Jon Putnam: The only thing I would add to that is I think that the game, one of the things that was true in EchoStar was, you know, the assertion that there was an adequate factual basis or it contradicted, you know, the contract language. And I feel like one of the things that I’ve seen as working, particularly for plaintiffs, but on both sides, is the game is to increase the bar for what constitutes valid scientific testimony past the point where anybody could prove the fact in question. So, for example, I’ll just take a simple illustration. Suppose apportionment comes up in almost every case. So suppose you had to apportion the value of a pair of shoes, okay, based on market evidence. And so you observe in the marketplace that a pair of shoes trades for $100. What would you say the value of the left shoe is? How does an economist establish that? Well, there’s no market evidence. Left shoes are not traded by themselves. You have no facts. But if you’ve got a patent that concerns the left shoe but not the right shoe, that’s the focus of the inquiry, and you’ve got to do some kind of apportionment. And if you say, well, it’s reasonable to divide the value 50-50 between the left shoe and the right shoe, that might be reasonable, but that’s just your opinion. Can you point to a scientific study that says that the value of shoes are divided 50-50? No, you can’t. And so this is an absurd example, but in slightly more complicated situations, you’re doing something that is reasonable, but there is no quote-unquote scientific basis for it. And so a good lawyer can say this opinion should be excluded because it’s not consistent with the scientific literature. And the bar has become something that no one can meet because left shoes are never traded. You don’t find a fair market value of a left shoe in the marketplace. So you’ve asked the expert to do something that is impossible. So from my perspective, the solution to this is to go back to what would be reasonable if parties were negotiating over it. Would it be reasonable for negotiators to assume that the value of the shoes is split 50-50? Because people solve these problems in the real world when there aren’t scientific studies all the time. But that currently is not the law.

00:28:57 Gene Quinn: Yeah, no, I totally agree with that. I think that, you know, what you’ve seen over the last 15 years is a raising of the bar to such a degree, and it goes, it couples with what Gene said about the 25% rule and why are we starting at 0%, right? It is, it’s so difficult for a plaintiff to apportion, and by the way, I practice on both sides, about 50-50 defense and plaintiff. So I don’t have a particular bent here. I’m not advocating a plaintiff’s position, but it is so difficult in my view for a plaintiff to win on the apportionment side, to point to scientific studies or analyses sufficient to get over Daubert. And then you’re starting at zero. You don’t have a place to start, but yet the statute says you get at least a reasonable royalty. How do you reconcile that, right? You know, there’s cases that I’ve run into where the ability to prove through an expert what, you know, at that level that you need to damage this is almost impossible. But yet you have a statute that says you should get at least a reasonable royalty. So how do you reconcile those two things?

00:30:00 Megan Carpenter: No, I’ll reiterate that. I think John’s example was a great teaching example, but let’s say you’re suing on a computer or a cell phone, and something within one of the chips gives you a little bit of a speed advantage. It’s some little nuance to a circuit that you need to figure out, okay, what is the value of that to the overall product or the smallest saleable unit if you’re using the chip as an example? Well, it’s probably likely that the defendant doesn’t keep that information. How one little nuance changed to some aspect of a chip basically increases the sales of the computer or the sales of the chip. And so as a plaintiff, it’s your burden to prove damages. And again, I’m probably 50-50, 60-40 defendant plaintiff, and so I don’t have an axe to grind either way. But Rule 702 really becomes, and particularly if it’s continuing to be tightened, it’s a real challenge to figure out an economically sound method supported by actual facts that will give you a value for that and to get it through Daubert. And the topic we’ll get to here in a second, you’re also maybe not going to be able to get the discovery for that, because if you’re seeking stuff from defendants, they’re going to say you’re on a fishing expedition and not want to produce a whole lot of things that you might find valuable for that analysis. Go ahead, there’s a question.

Apportionment Surveys and Additional Experts (00:31:37)

00:31:37 Gene Quinn (narrating): I’ll break in here again one more time to summarize this question that we received from the audience. It dealt with apportionment surveys and asked whether or not the panelists had ever used an apportionment survey. This led to a conversation about the complexity of adding an additional witness to the mix, the scientific evidence that’s required, and then ultimately the cost that is associated with yet another expert.

00:31:57 Glenn Forbis: Then there’s a whole body of law as to what all can be wrong with your survey. And you have another set of, another expert that you’ve got to get through Daubert if you’re on the plaintiff’s side.

00:32:11 Jon Putnam: For sure. Do you feel, I mean, along those lines to build on your great question, are you seeing costs go up post amendments or do you think costs are going down or about staying the same?

00:32:23 Mark Nelson: That’s one of the biggest challenges that I have is explaining the costs of the damages case. And I’m a big advocate of engaging your expert before the case, right at the beginning of the case, if you’re a defendant, all the way through discovery, because I think there’s no better value you can get on the damages side than to have them engaged, guiding along the way and developing that case along the way with the liability, because I think the damages case is more complex than the liability side.

00:32:50 Gene Quinn: Yeah, I think that the experts needed in certain cases for that analysis have multiplied as well. Because, I mean, a lot of times you used to have it that the economist expert could deal with the damages stuff. And a lot of times they still can. But sometimes you need a scientific engineer to give you a quantitative value of the little nuance in your chip or the, you know, the economic value, scientific value that, well, this makes your video conference X percent clearer and somehow that then translates into this percent more market share than you otherwise would have had, which is really hard sometimes for the economist to do. Sometimes there might be documents that lets that occur. And one of the cases that up until six months ago was seeming to be pretty decently sound was you used to be able to count features. And there’s an old Finjan case, Finjan versus Bluecoat, that you could find a marketing document. And if it had 25 features and you could have somebody say, well, 12 of these relate to this particular patented technology. So I’m going to count those 12 and then I’m going to weight them and then I’m going to apportion. Well, recently Finjan versus, I think it’s Sonicare came out. And, well, there they had, they didn’t have, they had main categories, but they had subcategories. And the expert didn’t account for the value of the subcategories. So expert report gets tossed. So it’s, you know, it’s a moving target and it’s a hard target. And I think, I call them bridge reports, which are the, I call them the name that I give the reports. That is the science report that takes the value of the invention, quantifies it such that then the economists can rely on it for the numbers game. And so now with 702, you also have to have, in many cases, not all of them, but many, a report that withstands 702 scrutiny in that context to even get to your damages economics. There increases the cost.

Discovery Challenges and Early Expert Involvement (00:35:00)

00:35:00 Megan Carpenter: I think we’re kind of touching on the discovery issues now. And Glenn, you mentioned your approach is to involve experts early. Are you finding that under 702 now that engaging experts from the discovery space is becoming standard practice or are you still seeing people kind of parachute in at the last minute?

00:35:24 Glenn Forbis: You know, I’ve seen, I don’t really see a difference in my practice. I don’t do anything differently because I always wanted to get a damaged expert involved early. I also usually dedicate at least kind of a mid-level partner person at least to be the specialist on the damages case in, you know, just specialize on the damage side by 100% because it’s so complicated, you know, with my oversight and my involvement as well. But you need somebody that just focuses on that, in my opinion, and you need to have your damages expert involved early. People do it differently. I see people not getting their damage expert involved early. I see them not focused on the damage case until middle of the case or later on. And I think that’s a big mistake. It’s too complicated. It takes too long to develop, to let it go. And the discovery is important. That’s the other aspect, right? Which is, I think you need to do discovery on damages in waves because you learn stuff along the way of the case. And it’s a big challenge because the defendants are fighting that, particularly that damage portion of the discovery tooth and nail early on. And so you have to really go to the mat on getting that early discovery on damages. And so I think that’s important as well, because otherwise you’re going to find yourself the last three months of discovery, trying to pick up your damages discovery, and it’s just not enough time.

00:36:43 Megan Carpenter: Mark, does that mirror your experience as well, or do you have a different perspective?

00:36:46 Mark Nelson: No, I mean, that mirrors mine as well. Again, I think regardless of whether you’re representing the patent holder or the defendant. It really behooves you and I’ve always tried to get the damages experts involved early because, I mean, if you’re a plaintiff and you’re trying to prove damages, there’s a lot of different ways you can do it. I mean, the good part is the Federal Circuit is very open to different methodologies of proof as long as they’re scientifically sound. And so by getting your expert involved early and helping to shape the discovery. I think you get the best thinking from the expert to help craft the damages case or multiple theories that give you the best chance of success. And on the flip side, from a defendant’s perspective, I mean, it’s always, I mean, most defendants, we don’t infringe, we shouldn’t talk about damages, we don’t want to spend money on damages. Well, that’s, you know, for a big case, that’s the naive viewpoint, and most of the big companies don’t feel that way. But you need, you don’t want to be in a situation where plaintiff has a damages expert $100 million. Your damages expert says zero. Both of them go through. The jury’s given no choice between $100 million and zero, and if they happen to like the plaintiff, they’re going to pick the $100 million, as opposed to an analysis and a number that’s somewhere rational from a defendant’s perspective, but not zero.

Counterfactual Thinking and Discovery Strategy (00:38:22)

00:38:22 Megan Carpenter: John, I think that now that the importance of bringing you in early has been teed up, do you want to talk a little bit? Not only a best practice, it’s practically malpractice not to do that. Do you want to talk a little bit about how that changes by bringing in an expert early, you know, sort of changes the way that discovery is approached from day one?

00:38:45 Jon Putnam: Well, so, I mean, it’s actually interesting for me as an economist because when I think about, well, how are you going to prove the value of a feature, for example? And if you think about this from first principles, apportionment and incremental profit, these are really causation questions. And so how do you measure these things and how do you establish causation? So one of the ways you do that is kind of with a statistical version of the experiments that we all did in third grade. So if you want to know what causes a plant to grow, you take two plants. And you put one of them in the closet and you put one of them on the windowsill and you see what happens to them. You know, the one in the closet dies and your teacher said, hmm, what was the difference? And you learn that light causes plant growth. And that’s really philosophically what is how you prove the value of an input into a device. What’s the value of light or what’s the value of some particular feature? So the way you do that statistically is you collect information, not only about the product that is accused of using the device but about products that don’t use, or the patent, that don’t use the patent. So you want, ideally, you want sales evidence, not only from the date of infringement on when the feature was added, but sales to the date of infringement before the feature was added. And you also want sales of related products that don’t contain the feature. So if you have before and after and with without, then you have an experimental design that economists call difference in differences. And then you can measure the effect of the feature controlling for other things that are going on in the environment simultaneously or before and after. The problem with that from a discovery perspective is that if you ask the judge to give you access to sales of products other than the accused product, you’ll often be denied. And so and defendants naturally argue that this is a fishing expedition. These other products are not related and that sort of thing because they don’t see how you’re going to use the experiment. And maybe you’re maybe you can do it and maybe you can’t. But so the point of it is that if you’re going to hold an expert to a scientific standard, then you have to give them the data in order so that they can perform the science that you’re ultimately requiring of them. If you deny them the data, then you can’t say, well, you you can’t then argue the expert’s method was scientifically deficient if the expert couldn’t conduct the experiment that he would have conducted otherwise. So I think you’re setting up a conflict going forward where it’s both a strategic conflict and a legal conflict. Do you grant the expert access to the additional data and then argue that their method is deficient, or do you try to deny them access to the additional data but then lose the ability to argue later on that the expert’s method was deficient because you denied them the ability to do the scientifically valid thing. That’s going to be interesting dilemma that defendants will face, I think, down the road.

00:41:36 Glenn Forbis: Yeah. And that problem is real because we’ve run into that recently as well, which is, you know, on the plaintiff’s side, seeking sales information for non-accused products, but parallel, you know, to the accused products and trying to get the judge to understand against the argument that, hey, it’s efficient expedition. They’re going after products that aren’t accused. They don’t have anything to do with this case and trying to explain why those apparently tangential products are relevant to a damages calculation for the accused products is a truly uphill battle. Because most of the time, it’s a magistrate judge you’re dealing with and not anything against magistrate judges, but you typically don’t get the time of day on some of those complicated arguments, in my experience, in a discovery motion. They don’t want to be in a discovery motion anyways. But on something like that, that on its face looks like it’s tangential to what you should be getting in discovery, that’s a tough battle.

00:42:41 Jon Putnam: Yeah, 100% agree. And also, at least if you’ve sought all of that information and been denied, when the expert gets Dauberted, you can point to the court, look, I mean, we tried this, we tried this, we tried this, we tried this. You denied it all. This is what we had left. This is the science behind what we had left. It’s as good as it can be, given the rulings that you made. May get you somewhere, may not, but at least you have those arguments.

Future Outlook and Supreme Court Possibility (00:43:08)

00:43:08 Megan Carpenter: In our remaining 10 minutes, I want to talk a little bit about the future and then we’ll focus on some practical advice and takeaways. Mark, you had mentioned that the possibility of Supreme Court intervention in given sort of continued divergence and approaches. Do you think this is, is this inevitable? Is it likely? What does it look like? And I love kind of both your and Glenn’s perspectives on that.

00:43:36 Mark Nelson: Yes, I would say it’s not inevitable, certainly. Is it likely? Possibly, depending on how the circuits continue to treat this. And I don’t know if it’ll come up in a Supreme Court in the patent context, but it very well could in other contexts dealing with Rule 702 because that’s applicable in all cases where there’s, all federal cases where there are experts involved. And so certain venues and certain circuits are, and again, I’m generalizing, but at least at the circuit level, they’re taking their gatekeeping function real seriously, and those experts are really being put through the filter before their opinions are let in. And other circuits are much more lax is probably the wrong word, but not as stringent, I’ll just say. And if those bodies of law continue to develop and continue to diverge, I can certainly see that it’s possible that the Supreme Court would step in and try to set a more uniform sort of definition of what meets scientific rigor and how far you can extrapolate from that before you have extrapolated too far and your method is no longer supported by the facts. But again, this is such a fact-specific inquiry case by case, that it’s unclear, but possible, so I’ll leave it.

00:45:04 Megan Carpenter: Glenn, what about you?

00:45:05 Glenn Forbis: Yeah, I don’t see this as going to the Supreme Court. I think the rule is fairly clear. It’s just a different application of it. And I think that what we’re seeing is effectively a case-by-case assessment on kind of where that line is between admissibility and weight. And I think that those are the types of things that in my view, the Supreme Court and the Federal Circuit, they moved towards that direction as opposed to the bright line rules. And so consequently, I just don’t see that. I personally don’t see it going to the Supreme Court to reconcile kind of the nuanced application of the rule.

00:45:43 Mark Nelson: Well, we all know how much the Supreme Court likes patent cases. So I think if you were betting on that one, you’d have to bet against. I actually think that, you know, I mean, Daubert was a Supreme Court case, so you could imagine this happening. The thing that makes patent cases different, and I don’t think it’ll go to the Supreme Court, but it’s important to note that it’s not just science. In the following sense, if you think that a hypothetical negotiation is the right way to think about measuring damages, and I think it’s often not the right way, but it’s useful to think of people bargaining on the eve of infringement. The question is, how would they think about this problem? And based on what information that they had at the time, what sort of solution would they reach? That’s not science. That’s kind of forming expectations. And there’s right and wrong ways to do that, but reasonable minds can differ, which is why you guys all negotiate complicated license agreements. The ability of an expert to say, here’s how expectations would have been formed based on the information that is available to me now and that was available to those parties on that date, that’s an extremely difficult problem because it’s not just science. It’s basically an opinion about imperfect information. You can’t always measure that. And you might wish you had more information, but the fact is you don’t. And so are you going to exclude the expert? How do you think about that bargaining process when both sides don’t have perfect information? That’s not really, I don’t think, a Supreme Court worthy case. But it’s an extremely difficult case. And at some point, the federal circuit is going to have to come to grips with it.

Lightning Round: Practical Advice (00:47:19)

00:47:19 Megan Carpenter: OK, in our remaining five minutes, I love a good lightning round and I love a practical takeaway. So if each of you had one piece of advice for the people either listening in this room or listening online, watching it later, one thing to perhaps do differently, what would you suggest that should be? And I’ll throw it up to anyone who wants to go first.

00:47:45 Glenn Forbis: I’ll go first. Preparation, preparation, preparation, and focus on the damage case in parallel with the liability case from the very beginning with waves of discovery. I just see it way too often that people wait too long on the discovery side to think about getting what they need and thinking through the damages case. And if you do that, you don’t have enough time.

00:48:08 Mark Nelson: I guess I’ll add to that more preparation. When you’re picking venue, if you’re a plaintiff, use the tools that are out there to look at how the judges in that venue you might draw are going to rule on Daubert motions. That information’s out there. If you’re trying to decide between two competing venues that otherwise both are likely good venues, that could be an interesting data point. Completely agree on both, and this is from both plaintiff and defendant’s side, focus on the damages case early. If you’re a defendant, push plaintiff to get its damages case out there so that you know what it is, you know what you’re shooting for. If you’re a plaintiff, don’t be wedded to one theory. Get your expert involved very early. Look at all kinds of different alternatives that you can use to prove damages. Start seeking documents so that when you’re taking depositions, you’re taking them, you know, after having already really thought through a lot of this stuff. So you’re taking them to get admissions that you actually can use as opposed to just learning information. I guess I’ll stop there.

00:49:16 Jon Putnam: I once met the first chair partner in a case that I was testifying in on the way up to the witness stand. And I shook his hand. We were at a break. I shook his hand and he said, hi, nice to meet you. I’m really sorry. I have to give you 20 minutes of my time because I’d rather would have spent it on invalidity. So needless to say, I rushed through the testimony and it didn’t go well. And so I tell that story to say it’s actually really important to integrate the damages theory early on thematically with the rest of the case. So if you’re a defendant, you don’t want to be perceived as simply in denial mode. You want to be somebody who’s willing to pay the fair market value of the invention. That converts you from being a black hat to a white hat. But you just disagree on the value of the invention, without giving up your non-infringement position or invalidity position, you’re willing to pay it. You just don’t think that the plaintiff has measured that value accurately. And that thematic involvement is something that occurs very early on in the case. So I also think that it’s good to get a damages expert involved early. The other piece of advice I would give as an economist is ask yourself whether you’ve got a counterfactual case or a measurement case. And what I mean by that is, are you able, given the data that you have, to measure the value of the invention? Or is the primary point of the damage expert’s testimony to imagine the world in which there is no infringement? If you’ve got a measurement case, sometimes you can get by with an accountant, and sometimes you need an accountant because you’re measuring things that are, from an accounting perspective, actually complicated, and you need a technical expert to help the accounting. If you’ve got a counterfactual case, which is really much more naturally the way the damages question is formed, posed, what would have happened in the absence of infringement, then you should think seriously about hiring an economist because that’s the way economists think. They ask counterfactual questions about what would have happened, not actual questions about what did happen. And that’s an important conceptual distinction that you should satisfy yourself with early on.

Episode Closing (00:51:23)

00:51:23 Gene Quinn (or host): Thank you for listening to IP Watchdog Unleashed. We will be back next week and we hope you will join us again. In the meantime, please be sure to visit IPWatchdog.com to read all the latest news and information about what is happening in the intellectual property world. And also be sure to subscribe to our free daily email newsletter.

End of Transcript This covers the complete attached transcript with all content preserved in corrected form.

1. See Grok elaboration; Kinsella, “Radical Patent Reform Is Not on the Way,” Mises Daily (Oct. 1, 2009); The Mainstream Patent Pendulum Swings Back; “Patent Reform is Here! O Joy!” (Mar. 23, 2011); “How to Improve Patent, Copyright, and Trademark Law.” [↩]
2.  Intellectual Property versus Intellectual Property Rights. [↩]
3. See Grok summary; Kinsella, “The America Invents Act and Patent Reform: The Good, the Meh, and the Ugly,” C4SIF.org (2011); “Prior User Rights and Patent Reform”; Kinsella, “Obama’s Patent Reform: Improvement or Continuing Calamity?,” Mises Daily (2011); Kinsella, “Common Misconceptions about Plagiarism and Patents: A Call for an Independent Inventor Defense,” stephankinsella.com (November 21, 2009); 1964 Hippocratic Oath and Patents; Kinsella & Rosenthal, “How to Operate Within the Law: Patents on Medical Procedures” (Duane Morris website version), The Legal Intelligencer [Philadelphia] (Feb. 5, 1998); Industry Opposition to Patent Challenges; Trump’s Plan to Raise Patent Office Fees: Thumbs Up; “The America Invents Act and Patent Reform: The Good, the Meh, and the Ugly,” Mises Daily (Nov. 14, 2011). [↩]
4. See posts at c4sif.org, stephankinsella.com, e.g. Desperate Patent Troll’s Plan to get Trump to Unblock his old patent applications to replace tariff games; A “Patent Stimulus” to End the Recession? (arguing for a “patent stimulus plan”: “If we really want to get out of this economic downturn we need a Patent Stimulus Plan. … What we need to do is have President Obama issue an Executive Order directing the Patent Office to start allowing patents.”). This genius doesn’t even know his degree is an LL.M. not a L.L.M. See here and here; Kinsella, How the History of Patents Can Teach Us What a World Without Them Might Be Like. [↩]
5. U.S. Courts – Federal Rules of Evidence 2023 (the full set of rules as amended); H. Doc. 118-33 – Transmission of Amendments from the Supreme Court (GovInfo) (Includes the transmittal letter and full text of the amendments; PDF available.); U.S. Courts – PDF Pamphlet (includes rules and notes) (Comprehensive version with historical notes and committee notes.) [↩]