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Court Allows Use of a Settlement Agreement from a Prior Patent-Infringement Litigation as a Basis for Determining a Reasonable Royalty Rate

April 23, 2012
John C. Paul, D. Brian Kacedon, and Andrew J. Ra
LES Insights

Stephen Heath’s expert testimony was referenced in an LES Insights article analyzing the U.S. District Court for the Central District of California’s decision in Raymond Caluori v. One World Technologies, Inc., et al. This action concerns complaints filed by the plaintiff, Raymond Caluori, alleging infringement of U.S. Patent 6,915,727, entitled “Angled Light Beam Rotary Saw Cut Alignment Device” (“the ‘727 patent”).

Mr. Heath was retained by the plaintiff to provide an opinion on damages. He applied the market approach, which focuses on examining agreements related to the patent-in-suit. Mr. Heath concluded that a lump-sum settlement agreement relating to the patent-in-suit from a previous patent-infringement litigation (the Bosch Agreement) represented a reasonable benchmark to consider in determining a reasonable royalty rate in the Calouri matter. Mr. Heath reached this conclusion based on an analysis of the facts and circumstances surrounding the Bosch Agreement relative to the facts and circumstances of the hypothetical negotiation at issue. Mr. Heath corroborated his finding under the market approach by applying the income and cost approaches.

The court rejected the defendant’s argument to exclude Mr. Heath’s opinion and allowed for the use of the Bosch Agreement as a comparable agreement based on his analysis. The court’s decision is consistent with Mr. Heath’s publication, “Applying the Market Approach to Valuation for Patent Damages in Light of Recent Case Law.”

View the U.S. District Court, Central District of California civil minutes.

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