PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1201 Market Street, Suite 2500 Wilmington, Delaware 19801
February 17, 2025
MEMORANDUM
TO: Marcus Delgado, Responsible Partner, intellectual Property
FROM: Christy Bauer, Lead Associate, intellectual Property
CC: Catherine Bloom, Billing Partner; Peter Vassiliev, Working Associate
RE: Review of Expert Damages Report of Hugh Danaher, CFA (Keystone Valuation Advisors LLC) — Apex Surgical Innovations, Inc. v. Solstice Biomedical, Inc., Case No. 1:24-cv-00587-RGA (D. Del.)
Matter No.: 10294.0017
PRIVILEGE DESIGNATION: This memorandum is protected by the attorney-client privilege and constitutes attorney work product prepared in anticipation of litigation. It is intended solely for the use of the individuals to whom it is addressed and should not be disclosed, copied, or distributed to any third party without the express written authorization of Calderwood & Harkness LLP. Any inadvertent disclosure does not constitute a waiver of any applicable privilege.
I. EXECUTIVE SUMMARY
On February 14, 2025, Hugh Danaher, CFA, Senior Managing Director at Keystone Valuation Advisors LLC (1700 Market Street, Suite 3100, Philadelphia, PA 19103), served his expert damages report on behalf of plaintiff Apex Surgical Innovations, Inc. ("Apex") in the above-captioned matter. Mr. Danaher was retained by Apex's litigation counsel, Hargrove, Tate & Bennington LLP, to provide opinions regarding the reasonable royalty damages that Apex alleges it is entitled to recover for the asserted infringement by our client, Solstice Biomedical, Inc. ("Solstice").
The Danaher Report asserts total reasonable royalty damages of $31,800,000 for alleged infringement of three United States patents: U.S. Patent No. 9,814,237 (the "'237 Patent"), U.S. Patent No. 10,271,884 (the "'884 Patent"), and U.S. Patent No. 10,932,105 (the "'105 Patent") (collectively, the "Asserted Patents"). These patents are directed to various sub-components of surgical trocar assemblies, and Apex has accused Solstice's PrecisionEdge™ product lines of practicing the claims of one or more of these patents.
To arrive at his damages figure, Mr. Danaher employs a Georgia-Pacific hypothetical negotiation framework, applying a blended royalty rate of approximately 42.6% to a royalty base purportedly drawn from Solstice's combined U.S. sales of the accused PrecisionEdge™ PE-5000, PE-12000, and PE-15000 Series product lines. The royalty base used by Mr. Danaher totals $74,600,000, representing cumulative invoiced U.S. sales from calendar year 2021 through September 30, 2024.
This memorandum identifies significant methodological flaws in Mr. Danaher's analysis, challenges to both the royalty base and the royalty rate, and recommends a comprehensive rebuttal strategy for our retained damages expert, Dr. Elena Marchetti of Pinnacle Economics Group LLC. The purpose of this memo is to provide the litigation team with a roadmap for both Dr. Marchetti's rebuttal report—due March 3, 2025—and the anticipated Daubert motion to exclude Mr. Danaher's testimony, in whole or in part.
Our preliminary assessment is that the $31.8 million figure is substantially inflated and does not reflect a reasonable royalty as that term is understood under 35 U.S.C. § 284 and controlling Federal Circuit precedent. The inflation stems from three principal errors: (1) the use of an unapportioned royalty base that encompasses the entirety of accused product revenues without isolating the incremental value attributable to the patented features; (2) an effective royalty rate that is dramatically higher than anything supported by Apex's own licensing history, comparable license agreements, or a properly conducted profit-split analysis; and (3) reliance on the discredited 25% rule of thumb as a purported "cross-check," a methodology the Federal Circuit has deemed inadmissible. A defensible reasonable royalty lies in a range significantly below the $31.8 million figure, consistent with Dr. Marchetti's own damages analysis served the same date, February 14, 2025, which places reasonable royalty damages in the range of approximately $2.8 million to $5.6 million.
The balance of this memorandum addresses each of these issues in detail and sets forth specific recommendations for the rebuttal report, Daubert briefing, and the Danaher deposition.
II. OVERVIEW OF DANAHER'S REPORT STRUCTURE
A. Report Organization
Mr. Danaher's report is organized into seven substantive sections, with eleven appended exhibits (Exhibits A through K). The report spans 127 pages of text, exclusive of exhibits, and is supported by 38 footnotes and extensive citations to both documentary evidence produced in this litigation and published economic and financial literature. The principal sections of the report are as follows:
Section I: Qualifications and Assignment. Mr. Danaher sets forth his professional qualifications, including his CFA designation, his tenure as Senior Managing Director at Keystone Valuation Advisors LLC, and his prior experience as a damages expert in patent infringement actions involving medical device technology. He identifies that he was retained by Hargrove, Tate & Bennington LLP on behalf of Apex and describes the scope of his assignment: to calculate the reasonable royalty damages, if any, owed by Solstice to Apex for the alleged infringement of the Asserted Patents.
Section II: Background on the Parties, Accused Products, and Asserted Patents. This section provides an overview of the business operations of Apex and Solstice, the commercial history of the accused PrecisionEdge™ products, and a brief summary of the three Asserted Patents. Mr. Danaher describes the technology at issue, drawing primarily from the patent specifications and Apex's technical expert, Dr. Calvin Ng of Veltrano Polytechnic Institute, whose infringement report was served on February 10, 2025.
Section III: Reasonable Royalty Methodology Under 35 U.S.C. § 284. Mr. Danaher sets forth the legal framework for reasonable royalty damages, citing Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), and subsequent Federal Circuit decisions. He describes the hypothetical negotiation construct and states that he has considered all fifteen Georgia-Pacific factors in arriving at his opinions.
Section IV: Georgia-Pacific Factor Analysis. This section comprises the bulk of the report, spanning approximately 55 pages. Mr. Danaher addresses each of the fifteen Georgia-Pacific factors and reaches conclusions regarding whether each factor favors a higher or lower royalty rate. His overall conclusion is that the balance of factors supports a "substantial" royalty rate reflecting the significant value contributed by the Asserted Patents to the commercial success of the PrecisionEdge™ products.
Section V: Royalty Base Calculation. Mr. Danaher calculates his royalty base as the total U.S. invoiced revenue from sales of the accused PrecisionEdge™ PE-5000, PE-12000, and PE-15000 Series products from CY 2021 through Q3 2024, totaling $74,600,000. He asserts that the use of total product revenue as the royalty base is appropriate because the patented features are integral to the accused products.
Section VI: Royalty Rate Determination. Mr. Danaher derives his blended royalty rate of approximately 42.6% through an analysis of (i) Apex's internal licensing guidelines, (ii) purported comparable license agreements, (iii) the profit margins earned by Solstice on accused products, and (iv) a "cross-check" against the 25% rule of thumb. He applies this rate to the entirety of the royalty base without disaggregation by product line or by patent.
Section VII: Damages Computation and Summary. Mr. Danaher multiplies his royalty base of $74,600,000 by his blended royalty rate of approximately 42.6% to arrive at total reasonable royalty damages of $31,800,000. He further opines that pre-judgment interest should be applied from the date of first infringement, which he places in early CY 2021. Mr. Danaher does not separately calculate pre-judgment interest but identifies the methodology (prime rate compounded quarterly) that he considers appropriate.
Exhibits A through K. The exhibits include Mr. Danaher's curriculum vitae (Exhibit A), a list of prior testimony (Exhibit B), a summary of documents and data relied upon (Exhibit C), spreadsheet calculations underlying the royalty base (Exhibit D), royalty rate analysis workpapers (Exhibit E), copies or summaries of the five purported comparable license agreements (Exhibit F), Solstice financial data (Exhibit G), Apex financial data (Exhibit H), prior art references discussed (Exhibit I), excerpts from deposition testimony of Solstice personnel (Exhibit J), and a summary chart of the Georgia-Pacific factor analysis (Exhibit K).
B. Key Opinions
Mr. Danaher offers four principal opinions in his report, which we summarize as follows:
Opinion 1: Reasonable Royalty Base. Mr. Danaher opines that the reasonable royalty base equals $74,600,000, representing the combined U.S. invoiced sales of the accused PrecisionEdge™ products from CY 2021 through September 30, 2024. This figure is broken down by fiscal year as follows:
As reflected in this table, the PrecisionEdge™ product line has experienced substantial year-over-year revenue growth since its commercial introduction in late 2020, nearly doubling from FY 2021 to FY 2023 and continuing at an elevated run rate through the first three quarters of FY 2024.
Opinion 2: Appropriate Blended Royalty Rate. Mr. Danaher opines that the appropriate blended royalty rate for the three Asserted Patents is approximately 42.6%. He characterizes this as a "composite" or "blended" rate reflecting the combined value of the '237, '884, and '105 Patents and the competitive advantage they allegedly confer upon the accused PrecisionEdge™ products.
Opinion 3: Total Reasonable Royalty Damages. Applying the blended royalty rate of 42.6% to the royalty base of $74,600,000, Mr. Danaher calculates total reasonable royalty damages of $31,800,000 (approximately $74,600,000 × 0.4264 = $31,799,440, which he rounds to $31,800,000).
Opinion 4: Pre-Judgment Interest. Mr. Danaher opines that pre-judgment interest should be applied from the date of first infringement, which he places in early CY 2021, calculated using the prime rate compounded quarterly. While he does not compute a specific dollar figure for pre-judgment interest, he identifies the methodology and states that the resulting interest figure would be "substantial" given the approximately four-year period from the date of first alleged infringement to an anticipated trial date.
III. ANALYSIS OF ROYALTY BASE
A. Danaher's Royalty Base Methodology
Mr. Danaher employs the total invoiced revenue from the accused PrecisionEdge™ PE-5000, PE-12000, and PE-15000 Series product lines as his royalty base. He includes all U.S. sales from CY 2021 through September 30, 2024, arriving at a total royalty base of $74,600,000. This approach treats the entire trocar assembly—inclusive of the cannula, the obturator, the handle, the sealing mechanisms, the blade assembly, the insufflation valve, and all associated packaging and labeling—as a single unit to which the royalty rate is applied.
Critically, Mr. Danaher does not apportion the royalty base to isolate the value attributable to the specific patented features versus the numerous unpatented features of the accused trocar assemblies. Instead, he asserts in conclusory fashion that the patented features are "integral" to the function and commercial appeal of the PrecisionEdge™ products and that, accordingly, the entire product revenue constitutes the appropriate royalty base. This assertion is unsupported by the quantitative or qualitative evidence necessary to justify the use of the entire market value of the accused products.
B. Entire Market Value Rule Challenge
Federal Circuit precedent imposes strict requirements on the use of the entire market value of a multi-component product as a royalty base. Under LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 67–68 (Fed. Cir. 2012), and Uniloc USA, Inc. v. Kestrel Partners LLC, 632 F.3d 1292, 1318–20 (Fed. Cir. 2011), the entire market value rule permits the use of total product revenue as the royalty base only where the patented feature constitutes the basis for customer demand for the entire product. This is a demanding standard. The patentee must establish that the patented feature is "the predominant basis for customer demand" or the "basis for customer demand" for the accused product as a whole.
Mr. Danaher's report fails to satisfy this standard. The three Asserted Patents are each directed to specific sub-components of the trocar assembly: the '237 Patent covers a locking-seal mechanism, the '884 Patent covers a blade-deployment mechanism, and the '105 Patent covers an insufflation valve design. While each of these components serves a functional purpose within the overall trocar assembly, Mr. Danaher does not establish—and the evidence does not support—the proposition that the locking-seal mechanism, the blade-deployment mechanism, or the insufflation valve, individually or collectively, constitute the predominant basis for customer demand for the entire PrecisionEdge™ trocar assembly.
To the contrary, the PrecisionEdge™ products incorporate numerous unpatented features that are independently significant to surgeons' purchasing decisions. These features include, among others:
• Ergonomic handle design: Solstice invested significant R&D resources in developing a proprietary handle geometry optimized for surgeon comfort during prolonged laparoscopic procedures. This feature is highlighted in Solstice's marketing materials and has been the subject of favorable commentary in peer-reviewed surgical literature.
• Proprietary optical clarity cannula: The PrecisionEdge™ cannula features a high-clarity polymer composition that provides superior visual access to the surgical site, a feature that surgeons have identified as a key differentiator relative to competing trocar products.
• Universal compatibility with leading insufflators: The PrecisionEdge™ products are designed for compatibility with all major insufflation systems, including those manufactured by Apex itself, which eliminates a significant purchasing friction point for hospitals and surgical centers that operate diverse equipment portfolios.
• Competitive pricing: Solstice's pricing strategy positions the PrecisionEdge™ line below several premium competitors, which influences purchasing decisions at the institutional level, particularly through group purchasing organizations ("GPOs") and integrated delivery networks ("IDNs").
Market survey data produced from Solstice's files during discovery (Bates Nos. SBD-023841 through SBD-023919) provides direct evidence of the factors influencing surgeon purchasing decisions for trocar products. These survey results, which encompass responses from over 200 practicing surgeons across multiple hospital systems, consistently identify cannula clarity, overall handle ergonomics, and price as the top three factors driving trocar purchasing decisions. Notably, the specific locking-seal mechanism and blade-deployment mechanism—the very features covered by the '237 and '884 Patents—are not identified among the top purchasing drivers by the surveyed surgeons. The insufflation valve design covered by the '105 Patent is similarly absent from the list of primary purchasing considerations.
Mr. Danaher's report acknowledges the existence of this survey data (Report at 73, n.28) but dismisses it in a single sentence, stating that "survey responses may not fully capture the technical features that influence product selection at the hospital-system level." This dismissal is inadequate. The survey data constitutes probative evidence of the factors driving demand for the accused products, and Mr. Danaher's failure to engage meaningfully with this evidence undermines the foundation for his use of the entire market value rule.
In the absence of a sufficient showing that the patented features drive demand for the entire product, the controlling authority requires that the royalty base be apportioned to the smallest salable patent-practicing unit or to the incremental value contributed by the patented features. See VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326–28 (Fed. Cir. 2014); Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014).
C. Failure to Apportion Among Three Patents
A further deficiency in Mr. Danaher's royalty base analysis is his failure to apportion the relative contribution of each of the three Asserted Patents. Mr. Danaher applies a single blended royalty rate to a single, aggregated royalty base, treating all three patents as a monolithic unit of value. This approach ignores the fact that each patent covers a distinct technology (locking-seal mechanism, blade-deployment mechanism, and insufflation valve) and that these technologies make different contributions to the value of the accused products.
This failure to disaggregate is particularly problematic because not all three patents are asserted against all three product lines. The allegations of infringement, as set forth in Apex's complaint and Dr. Ng's infringement report, are as follows:
As this table illustrates, the PE-5000 Series is accused of infringing only the '237 and '884 Patents, while the PE-15000 Series is accused of infringing only the '884 and '105 Patents. Only the PE-12000 Series is accused of infringing all three Asserted Patents. Despite these differences, Mr. Danaher applies a single blended rate to the total revenue of all three product lines without accounting for the fact that only two of the three patents are at issue for the PE-5000 and PE-15000 Series.
This failure to disaggregate creates a significant potential for double-counting. If the blended rate of 42.6% is intended to reflect the combined value of all three patents, then applying that rate to revenue from products accused of infringing only two patents necessarily overcompensates Apex by attributing value from a non-accused patent. Mr. Danaher does not address this inconsistency in his report, and it constitutes a fundamental methodological error.
D. Inclusion of Pre-Suit Sales
Mr. Danaher's royalty base includes CY 2021 and CY 2022 U.S. sales of the accused PrecisionEdge™ products, notwithstanding that the complaint in this action was not filed until May 9, 2024. The inclusion of these pre-suit sales raises significant issues under 35 U.S.C. § 287, which governs the availability of damages for pre-suit infringement.
Under § 287(a), a patentee who fails to mark its products with the asserted patent numbers may not recover damages for infringement occurring prior to the date on which the infringer received actual notice of the infringement. The complaint constitutes actual notice as of its filing date. However, to recover damages for the period from CY 2021 through the filing date, Apex must establish either (a) that it satisfied the marking requirements of § 287(a) by consistently marking its own products practicing the Asserted Patents with the relevant patent numbers, or (b) that it provided actual notice to Solstice prior to the complaint.
Mr. Danaher's report does not adequately address whether Apex satisfied the marking requirements for the '237, '884, and '105 Patents. While he states in a footnote (Report at 89, n.34) that "Apex has informed me that it complied with the marking requirements of 35 U.S.C. § 287," this conclusory assertion is not supported by documentary evidence in the report or its exhibits. Our own review of documents produced by Apex in discovery suggests that Apex's marking practices were inconsistent. Specifically, certain early production runs of Apex's own trocar products practicing the '237 Patent do not appear to have been marked with the '237 Patent number, based on product packaging photographs produced at Bates Nos. APEX-009241 through APEX-009258.
Additionally, Mr. Danaher does not address or cite any evidence of actual notice to Solstice prior to the filing of the complaint on May 9, 2024. In the absence of constructive notice through marking or actual notice through a pre-suit communication, the inclusion of CY 2021 through early May 2024 sales in the royalty base is legally unsupported and should be challenged.
If pre-suit sales are excluded from the royalty base, the impact on damages is significant. Based on the revenue breakdown provided in Mr. Danaher's report, CY 2021 sales totaled $12,100,000, CY 2022 sales totaled $17,800,000, CY 2023 sales totaled $22,400,000, and CY 2024 sales through Q3 totaled $22,300,000. If damages are limited to the period following the filing of the complaint (May 9, 2024, through September 30, 2024), the qualifying revenue would be a fraction of the CY 2024 figure—approximately $10–12 million, representing roughly five months of the $22.3 million annual run rate. Even if CY 2024 sales from January 1 through September 30 are included, the reduction from the $74.6 million base would be substantial.
E. Recommended Rebuttal on Royalty Base
Based on the foregoing analysis, we recommend that Dr. Marchetti's rebuttal report address the royalty base through the following arguments:
First, Dr. Marchetti should demonstrate that the smallest salable patent-practicing unit ("SSPPU") is the patented sub-component—i.e., the seal assembly (for the '237 Patent), the blade mechanism (for the '884 Patent), or the valve assembly (for the '105 Patent)—rather than the entire trocar device. The SSPPU framework has been endorsed by the Federal Circuit as the preferred starting point for determining the royalty base in multi-component product cases. See Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc., 809 F.3d 1295, 1302–03 (Fed. Cir. 2015). Dr. Marchetti should use Solstice's cost accounting data to isolate the cost and value attributable to the patented sub-components, which represent a relatively small fraction of the total cost of goods sold for the PrecisionEdge™ products.
Second, Dr. Marchetti should calculate an alternative apportioned royalty base that reflects the incremental value of the patented features relative to the total product value. Based on our preliminary review of Solstice's cost data and component pricing, the patented sub-components likely represent approximately 25–40% of the total product cost and an even smaller fraction of total product value once the contributions of Solstice's proprietary cannula technology, ergonomic handle design, and brand equity are taken into account. An apportioned royalty base would therefore likely be in the range of $18.65 million to $29.84 million (25–40% of $74.6 million), representing a reduction of approximately 60–75% from Mr. Danaher's unapportioned base.
Third, Dr. Marchetti should argue for the exclusion or substantial reduction of pre-suit damages absent adequate proof of marking or actual notice under § 287. If damages are limited to the post-complaint period (May 9, 2024, through September 30, 2024), the relevant revenue base would be further reduced by a significant amount, as outlined above.
IV. ANALYSIS OF ROYALTY RATE
A. Danaher's Rate Derivation
Mr. Danaher arrives at an effective blended royalty rate of approximately 42.6%, calculated as $31,800,000 divided by $74,600,000. This rate is exceptionally high by any measure and is particularly anomalous in the context of surgical device patent licensing, where royalty rates typically range from 2% to 10% of product sales, depending on the scope and significance of the licensed technology.
Mr. Danaher derives his rate through reliance on several inputs, which we address individually below:
(i) Apex's Internal Licensing Guidelines. Mr. Danaher relies on internal Apex documents produced at Bates Nos. APEX-014280 through APEX-014295, which he characterizes as Apex's "licensing strategy" documents. These documents reference target royalty rates of 5–8% for individual patents in the Apex Trocar Patent Family. However, Mr. Danaher treats these guidelines as a floor rather than a ceiling, asserting that the competitive relationship between Apex and Solstice and the significance of the patented technology would justify rates substantially above the 5–8% range referenced in Apex's own internal guidance.
(ii) The 25% Rule of Thumb. As discussed more fully in Section IV.B below, Mr. Danaher employs the 25% rule of thumb as a "cross-check" on his royalty rate analysis, asserting that it "corroborates" his independently derived rate.
(iii) Solstice's Weighted Average Gross Margin. Mr. Danaher calculates Solstice's weighted average gross margin on the accused PrecisionEdge™ products at 61.3% and uses this figure as a key input to his royalty rate analysis. He appears to reason that because Solstice earns a substantial gross margin on the accused products, a proportionally large share of that margin should be allocated to Apex as the patentee.
(iv) Purported Comparable License Agreements. Mr. Danaher identifies five license agreements from Apex's licensing history that he characterizes as "comparable" to the hypothetical license at issue. He uses the royalty rates and financial terms of these agreements as benchmarks for his royalty rate determination. The deficiencies in his comparable license analysis are addressed in Section IV.C below.
B. The Discredited 25% Rule
One of the most significant vulnerabilities in Mr. Danaher's analysis is his reliance on the 25% rule of thumb as a "cross-check" on his royalty rate. The 25% rule posits that a licensee should pay a royalty rate of approximately 25% of its expected profits for the licensed product, and it was historically used by damages experts as a starting point or benchmark in reasonable royalty calculations.
The Federal Circuit unequivocally rejected the 25% rule in Uniloc USA, Inc. v. Kestrel Partners LLC, 632 F.3d 1292 (Fed. Cir. 2011). In Uniloc, the court held that the 25% rule is "a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation" because it is predicated on an arbitrary, general assumption that does not account for the specific facts, circumstances, and technologies at issue in a given case. Id. at 1315. The court further held that the 25% rule "is inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue." Id. at 1315.
Mr. Danaher attempts to inoculate his analysis by characterizing his use of the 25% rule as a "cross-check" rather than a starting point. This distinction is without legal significance. The Uniloc court expressly rejected the 25% rule in all forms, whether used as a starting point, a corroborating benchmark, or a "sanity check." Any reference to the 25% rule, regardless of how it is labeled, injects an impermissible analytical framework into the damages calculation and provides grounds for exclusion under Daubert.
In his rebuttal report, Dr. Marchetti should affirmatively identify and criticize Mr. Danaher's reliance on the 25% rule, and we should seek its exclusion through our Daubert motion. The fact that Mr. Danaher does not identify the 25% rule as his sole basis for the royalty rate does not cure the deficiency; the Federal Circuit has recognized that "the use of the 25% rule of thumb as a 'check' or in any form in a reasonable royalty analysis is inadmissible." Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 30 (Fed. Cir. 2012) (citing Uniloc). The question of whether Mr. Danaher's remaining methodological inputs can independently support his rate—absent the 25% rule—is a question we should force him to confront at deposition and, if necessary, at a Daubert hearing.
C. Comparable License Analysis Deficiencies
Mr. Danaher identifies five purported comparable license agreements from Apex's licensing history as the foundation for his royalty rate analysis. These licenses are summarized in Exhibit F to his report. We have reviewed the underlying agreements, which were produced during discovery, and have identified several deficiencies that undermine the comparability and reliability of Mr. Danaher's analysis.
Non-Comparable Licenses. At least two of the five agreements relied upon by Mr. Danaher (identified in the Apex production at Bates Nos. APEX-014302 and APEX-014318) involve licenses to patents in Apex's insufflation equipment portfolio. These patents cover gas delivery and pressure regulation technology used in laparoscopic insufflation systems—a distinct product category from the trocar assemblies at issue in this case. The insufflation equipment patents are not part of the Apex Trocar Patent Family and do not cover the same technology as the '237, '884, or '105 Patents. The inclusion of these licenses as "comparables" fails to satisfy the fundamental requirement that comparable licenses involve technology that is "reasonably similar" to the patents at issue. See Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009) (requiring that comparable licenses be "sufficiently comparable to the hypothetical license at issue in suit").
Litigation-Driven Licenses. The remaining three license agreements identified by Mr. Danaher were entered into under the pressure of litigation. Each involved a pending patent infringement action by Apex against the licensee, and the settlement terms reflected the parties' assessment of litigation risk, legal costs, and the desire to avoid protracted proceedings. Licenses negotiated in the shadow of litigation are inherently less reliable as indicators of arms-length royalty rates because they incorporate a significant "litigation premium" that would not be present in a purely voluntary, ex ante licensing transaction. While litigation-driven licenses are not per se inadmissible as comparables, Mr. Danaher has an obligation to account for the litigation context and to adjust the observed rates accordingly. He has not done so.
Moreover, each of the three litigation-driven licenses includes a lump-sum component in addition to (or in lieu of) running royalty payments. Mr. Danaher has not adequately disaggregated the lump-sum payments from the running royalty components, making it impossible to derive reliable per-unit or percentage-based royalty rates from these agreements. Without proper disaggregation, the effective rates cited by Mr. Danaher are unreliable and potentially inflated.
Failure to Account for Scope Differences. Mr. Danaher does not account for material differences in the scope of the license grants, field-of-use restrictions, or volume of licensed sales across the five purported comparable agreements. For example, at least one of the agreements includes a broad, worldwide, non-exclusive license with no field-of-use restrictions, while another is limited to a specific product category and geographic market. These differences in scope directly affect the royalty rates negotiated in each agreement and must be accounted for when using the agreements as benchmarks for the hypothetical license in this case. Mr. Danaher's failure to adjust for these differences further undermines the reliability of his rate analysis.
D. Gross Margin as Profit Split — Overstatement
A particularly striking feature of Mr. Danaher's analysis is the implied profit split between Apex and Solstice. At his proposed rate of 42.6% applied to total product revenue, Mr. Danaher effectively proposes that Apex capture approximately 69.5% of Solstice's gross profit on the accused products. This calculation is straightforward:
• Solstice's weighted average gross margin on PrecisionEdge™ products: 61.3%
• Solstice's total gross profit: $74,600,000 × 61.3% = $45,729,800
• Royalty payment to Apex: $31,800,000
• Apex's share of Solstice's gross profit: $31,800,000 ÷ $45,729,800 = ~69.5%
This profit split is economically unreasonable and inconsistent with the principles governing hypothetical negotiations. Under a properly conducted hypothetical negotiation, both the licensor and the licensee must retain a sufficient share of the economic surplus to provide an adequate incentive for the licensee to continue manufacturing and selling the licensed product and for the licensor to grant the license. A royalty that captures nearly 70% of the licensee's gross profit—before accounting for operating expenses, selling costs, and a reasonable return on investment—would leave the licensee with insufficient economic incentive to participate in the hypothetical transaction. No rational licensee would agree to such terms.
Furthermore, the named inventor of the Asserted Patents, Dr. Raymond Szabo, is the Vice President of Engineering at Apex. Dr. Szabo is a corporate employee, not an independent inventor or licensor with unique market power that would justify an outsized share of the incremental profit. The inventions reflected in the Asserted Patents were developed in the ordinary course of Apex's business operations using Apex's resources and facilities, and the patent rights belong to Apex as a corporate entity. The absence of unique licensor market power further undermines the basis for a profit split as heavily skewed as the one implied by Mr. Danaher's analysis.
E. Georgia-Pacific Factor-by-Factor Critique
Mr. Danaher's report devotes approximately 55 pages to his Georgia-Pacific factor analysis. While we will prepare a comprehensive factor-by-factor rebuttal as part of Dr. Marchetti's rebuttal report, we summarize below the most significant areas of disagreement, organized by the factors that favor a lower royalty rate (which Danaher underweights or ignores) and the factors that Danaher overweights.
Factors Favoring a Lower Rate (Danaher Underweights or Ignores)
Factor 1 — Royalties Received by the Patentee for Licensing the Patent in Suit. Apex's existing license agreements involving the Asserted Patents (and other patents in the Trocar Patent Family) reflect running royalty rates of 3–6% for individual patents. Mr. Danaher acknowledges these rates but dismisses them as reflecting "different circumstances" and "less competitive relationships" than the Apex-Solstice dynamic. However, his effective blended rate of 42.6%—equivalent to approximately 14.2% per patent if divided equally among the three Asserted Patents—is wildly inconsistent with Apex's own established licensing rates. This inconsistency is difficult to explain and will be a focal point at deposition.
Factor 2 — Rates Paid by the Licensee for the Use of Other Patents Comparable to the Patent in Suit. Solstice's own licensing history, as reflected in documents produced at Bates Nos. SBD-031400 through SBD-031425, shows that Solstice has not paid royalty rates above 5% in any of its other intellectual property licenses, including licenses covering medical device technology that is at least as significant to Solstice's products as the technology claimed in the Asserted Patents. Mr. Danaher's report does not meaningfully address this evidence.
Factor 4 — The Licensor's Established Policy and Marketing Program to Maintain Its Patent Monopoly by Not Licensing Others to Use the Invention or by Granting Licenses Under Special Conditions Designed to Preserve That Monopoly. Apex's established practice is to license its surgical access patents on a non-exclusive basis. The internal licensing strategy documents (APEX-014280 through APEX-014295) expressly contemplate non-exclusive licensing as the default mode for the Trocar Patent Family. A licensor that routinely licenses its patents non-exclusively does not enjoy the exclusivity premium that a patentee with a strict no-license policy could command, and this factor should weigh in favor of a lower rate.
Factor 8 — The Established Profitability of the Product Made Under the Patent, Its Commercial Success, and Its Current Popularity. Mr. Danaher attributes the commercial success of the PrecisionEdge™ products entirely to the patented features, without accounting for the substantial independent contributions of Solstice's R&D investment (including the proprietary cannula technology and ergonomic handle design), Solstice's brand reputation in the medical device market, and Solstice's investment in its sales force and distribution network. The commercial success of the PrecisionEdge™ line is the product of many factors, only some of which relate to the patented technology.
Factor 9 — The Utility and Advantages of the Patent Property Over the Old Modes or Devices, if Any, That Had Been Used for Working Out Similar Results. The Claim Construction Order entered by Judge Andrews on December 6, 2024, construed five of nine disputed claim terms favorably to Solstice. These claim constructions narrow the scope of the asserted claims and limit the incremental advantage of the patented technology relative to the prior art. For example, the court's construction of "rotationally locking" in the '237 Patent requires a specific mechanical interlock that significantly limits the breadth of the claim and reduces the competitive advantage over prior art seal mechanisms that achieve rotational stability through friction-based or adhesive-based approaches. Mr. Danaher does not account for the narrowing effect of the court's claim constructions on the value of the Asserted Patents.
Factor 10 — The Nature of the Patented Invention, the Character of the Commercial Embodiment of It as Owned and Produced by the Licensor, and the Benefits to Those Who Have Used the Invention. The patented features at issue—a locking-seal mechanism, a blade-deployment mechanism, and an insufflation valve—represent incremental improvements to existing trocar technology, not breakthrough innovations that fundamentally altered the field. Trocar assemblies with functional seals, blades, and valves existed long before the Asserted Patents, and the patented features refine rather than revolutionize these elements. Mr. Danaher's analysis treats the patented features as if they were transformative innovations conferring unique competitive advantages, which overstates their significance.
Factor 13 — The Portion of the Realizable Profit That Should Be Credited to the Invention as Distinguished from Non-Patented Elements, the Manufacturing Process, Business Risks, or Significant Features or Improvements Added by the Infringer. Mr. Danaher fails to conduct an adequate apportionment analysis under this factor. He does not identify the specific portion of Solstice's profit on the accused products that is attributable to the patented features as distinct from the numerous unpatented features, the manufacturing processes employed by Solstice, the business risks borne by Solstice, and the significant improvements and design choices contributed by Solstice's own engineering team. This failure of apportionment is one of the most significant deficiencies in the report and provides independent grounds for challenging the reliability of Mr. Danaher's rate under Daubert.
Factors Danaher Overweights
Factor 5 — The Commercial Relationship Between the Licensor and the Licensee, Such as Whether They Are Competitors in the Same Territory in the Same Line of Business, or Whether They Are Inventor and Promoter. Mr. Danaher treats Apex and Solstice as direct, head-to-head competitors and inflates the royalty rate accordingly, asserting that Apex would demand a premium for licensing to a direct competitor. While Apex and Solstice do compete in the surgical trocar market, Mr. Danaher ignores the fact that the parties also operate in complementary product segments. Apex is a leading manufacturer of insufflation equipment, while Solstice has a strong presence in hand instruments and surgical accessories. In a hypothetical negotiation, a license between Apex and Solstice could facilitate cross-selling opportunities and strengthen both parties' positions in the surgical suite, making a license mutually beneficial rather than purely competitive. The existence of complementary business interests would moderate the competitive premium in a hypothetical negotiation and support a lower royalty rate.
Factor 6 — The Effect of Selling the Patented Specialty in Promoting Sales of Other Products of the Licensee, the Existing Value of the Invention to the Licensor as a Generator of Sales of His Non-Patented Items, and the Extent of Such Derivative or Convoyed Sales. Mr. Danaher asserts that Solstice's sales of the accused PrecisionEdge™ products generate significant "convoyed sales" of related accessories, disposables, and service contracts, and that these convoyed sales should increase the royalty rate. However, Mr. Danaher provides no quantitative data to support this assertion. He does not identify the specific convoyed products, estimate the volume or value of convoyed sales, or establish a causal link between the patented features and any such convoyed sales. In the absence of supporting data, Mr. Danaher's assertion amounts to speculation and should be given no weight.
Factor 11 — The Extent to Which the Infringer Has Made Use of the Invention, and Any Evidence Probative of the Value of That Use. Mr. Danaher assumes that all sales of the accused products depend on the patented features and that Solstice could not have achieved comparable sales without the patented technology. This assumption is unsupported by the evidence. Solstice has presented evidence through its technical expert, Dr. Ostrowski, that non-infringing alternative designs were available for each of the patented features, and that Solstice could have implemented these alternatives without significant cost or delay. If non-infringing alternatives were readily available, the extent to which Solstice's use of the patented features drives the value of its products is substantially limited, and this factor should not weigh heavily in favor of a higher rate.
F. Recommended Rebuttal on Royalty Rate
We recommend that Dr. Marchetti's rebuttal report address the royalty rate through the following approaches:
First, Dr. Marchetti should anchor her royalty rate analysis in Apex's actual licensing history. The most probative evidence of a reasonable royalty rate is the rate that the patentee has actually charged for comparable licenses. Apex's own internal guidelines and existing license agreements reflect rates of 3–6% per individual patent. Dr. Marchetti should present these rates as the appropriate starting point for the hypothetical negotiation and explain that the specific circumstances of this case—including the narrow claim scope following the Claim Construction Order, the availability of non-infringing alternatives, and Apex's non-exclusive licensing policy—support rates at the lower end of this range.
Second, Dr. Marchetti should argue that a reasonable per-patent royalty rate falls in the range of 1.5–3.0%, yielding a cumulative rate for three patents of approximately 4.5–7.0% on a properly apportioned royalty base. This rate range is consistent with Apex's licensing history, Solstice's own licensing history, and industry norms for surgical device patent licensing.
Third, Dr. Marchetti should prepare a detailed profit-split analysis demonstrating that even a royalty rate at the lower end of the recommended range would adequately compensate Apex for the value of the patented technology while preserving Solstice's incentive to continue manufacturing and selling the accused products. The analysis should show that a rate of 4.5–7.0% on an apportioned base would result in Apex capturing a reasonable share (approximately 15–25%) of the incremental profit attributable to the patented features—a far more defensible profit split than the ~69.5% gross profit capture implied by Mr. Danaher's analysis.
Fourth, we should move to exclude Mr. Danaher's reliance on the 25% rule and on the non-comparable insufflation equipment licenses under Daubert and the Federal Rules of Evidence. The exclusion of these inputs would significantly undermine the foundation for Mr. Danaher's royalty rate, potentially leaving his opinion without adequate support.
V. PRE-JUDGMENT INTEREST AND OTHER REMEDIES
A. Danaher's Pre-Judgment Interest Calculation
Mr. Danaher opines that pre-judgment interest should be applied from the date of alleged first infringement, which he places in early CY 2021, using the prime rate compounded quarterly. While Mr. Danaher does not calculate a specific dollar figure for pre-judgment interest in his report, the amount would be substantial given the approximately four-year period between the asserted first infringement date and an anticipated trial date in late 2025 or early 2026.
The starting date for pre-judgment interest accrual is directly linked to the availability of pre-suit damages under 35 U.S.C. § 287. As discussed in Section III.D above, Apex must establish that it complied with the marking requirements of § 287(a) or that it provided actual notice to Solstice prior to the complaint in order to recover pre-filing damages. If damages are limited to the post-complaint period (beginning May 9, 2024), the accrual of pre-judgment interest should commence no earlier than that date, which would substantially reduce the pre-judgment interest component of any award.
Even assuming that some pre-suit damages are recoverable, the selection of the prime rate compounded quarterly warrants scrutiny. While the prime rate is a commonly used benchmark for pre-judgment interest in patent cases, the decision to compound interest quarterly rather than annually increases the total interest figure. In a case where the underlying damages figure is disputed, the compounding methodology can have a material impact on the total award. Dr. Marchetti should evaluate whether the prime rate compounded quarterly is the most appropriate methodology given the facts of this case and should be prepared to offer an alternative calculation if warranted.
B. Enhanced Damages and Willfulness
Mr. Danaher references Apex's willfulness allegations in his report (Report at 118–19) but does not independently opine on whether the alleged infringement was willful. He states only that "if the Court determines that the infringement was willful, enhanced damages of up to three times the reasonable royalty may be appropriate under 35 U.S.C. § 284 and Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016)."
We note that the willfulness analysis is a separate inquiry from the damages calculation and that Mr. Danaher's reference to enhanced damages in his report is gratuitous and potentially prejudicial. More importantly, Solstice obtained a freedom-to-operate opinion from Dr. Jonathan Kendrick of Kendrick & Lau LLP prior to the launch of the PrecisionEdge™ products. Dr. Kendrick's opinion concluded that the PE-5000, PE-12000, and PE-15000 Series products did not infringe the Asserted Patents, and Solstice relied in good faith on this opinion in proceeding with its product launch. If properly relied upon, the Kendrick & Lau opinion supports a good-faith defense that weighs heavily against a finding of willfulness and, consequently, against the imposition of enhanced damages. This defense should be developed more fully in our opposition to Apex's willfulness arguments, but it is relevant here insofar as it further limits Solstice's overall damages exposure.
VI. DAUBERT CHALLENGES
A. Potential Grounds for Exclusion
Based on our review of Mr. Danaher's report, we have identified four principal grounds for a Daubert challenge to his damages testimony:
1. Exclusion of the 25% Rule of Thumb Methodology. As discussed in Section IV.B, Mr. Danaher's use of the 25% rule as a "cross-check" on his royalty rate is inadmissible under Uniloc USA, Inc. v. Kestrel Partners LLC, 632 F.3d 1292 (Fed. Cir. 2011). The Federal Circuit has held that the 25% rule is fundamentally flawed and inadmissible in any form, whether used as a starting point, a corroborating benchmark, or a "sanity check." Mr. Danaher's reliance on this methodology taints his royalty rate analysis and provides grounds for exclusion of his rate opinion in its entirety or, at minimum, for exclusion of the specific portion of his analysis that relies on the 25% rule.
2. Exclusion of Non-Comparable License Agreements. At least two of the five license agreements relied upon by Mr. Danaher as "comparables" involve Apex's insufflation equipment patents, which are technologically distinct from the trocar patents at issue. The inclusion of non-comparable licenses as a basis for the royalty rate violates the requirement of Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009), that comparable licenses involve "sufficiently comparable" technology. Mr. Danaher's failure to establish the technological comparability of these licenses renders them unreliable inputs that should be excluded.
3. Challenge to Failure to Apportion the Royalty Base. Mr. Danaher's use of the entire revenue from the accused products as his royalty base, without apportionment to the patented features, fails to satisfy the requirements of LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (Fed. Cir. 2012), and VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308 (Fed. Cir. 2014). The absence of apportionment renders the royalty base unreliable and results in an inflated damages figure that does not reflect the incremental value of the patented technology.
4. Challenge to the Entire Market Value Theory. Related to the apportionment issue, Mr. Danaher's invocation of the entire market value rule is unsupported by evidence that the patented features drive demand for the entire PrecisionEdge™ product. The market survey data (SBD-023841 through SBD-023919) affirmatively contradicts Mr. Danaher's assumption, and his failure to address this evidence undermines the reliability of his methodology.
B. Timing and Strategic Considerations
Under the Scheduling Order entered in this case, the deadline for filing Daubert motions is tied to the close of expert discovery. We anticipate that expert depositions will be completed in March or early April 2025, with Daubert motions due approximately 30 days thereafter. This timing aligns with our plan to file summary judgment motions in early April 2025.
We recommend filing a Daubert motion to exclude Mr. Danaher's damages opinions in their entirety, arguing that his methodology is fundamentally unreliable and that the cumulative effect of his errors—use of the 25% rule, reliance on non-comparable licenses, failure to apportion, and unsupported invocation of the entire market value rule—renders his opinions inadmissible under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). In the alternative, we should seek exclusion of the specific opinions identified above: the 25% rule cross-check, the non-comparable license analysis, and the unapportioned royalty base.
From a strategic perspective, even if the Daubert motion does not result in complete exclusion of Mr. Danaher's testimony, the motion serves several important purposes. First, it puts the Court on notice of the methodological deficiencies in Mr. Danaher's report and frames the issues for cross-examination at trial. Second, it may result in partial exclusion that forces Mr. Danaher to revise his opinions and reduce his damages figure. Third, and perhaps most importantly for settlement purposes, a pending Daubert motion creates significant litigation risk for Apex, which may incentivize Apex to engage in more realistic settlement discussions. If the matter proceeds to settlement rather than trial, the Daubert arguments serve as powerful leverage in negotiations regarding the damages exposure that Apex can credibly claim.
VII. COMPARISON TO DR. MARCHETTI'S DAMAGES ANALYSIS
Dr. Elena Marchetti of Pinnacle Economics Group LLC served her own expert damages report on behalf of Solstice on February 14, 2025—the same date as Mr. Danaher's report. Dr. Marchetti's report sets forth her independent assessment of the reasonable royalty damages, if any, owed by Solstice for the alleged infringement of the Asserted Patents.
In contrast to Mr. Danaher's approach, Dr. Marchetti used an apportioned royalty base that focuses on the incremental value of the patented sub-assemblies rather than the entire revenue from the accused products. Dr. Marchetti arrived at a reasonable royalty range of approximately $2.8 million to $5.6 million, depending on assumptions regarding the degree of apportionment and the applicable royalty rate.
The gap between Mr. Danaher's $31.8 million figure and Dr. Marchetti's $2.8–$5.6 million range represents the damages battleground at trial. This is a substantial gap—Mr. Danaher's figure is approximately 5.7 to 11.4 times greater than Dr. Marchetti's—and the disparity will be a central issue in the damages phase of the trial.
The key differences between the two experts' methodologies are as follows:
The consistency of Dr. Marchetti's approach with Federal Circuit precedent and the transparency of her methodology should give our position credibility with the Court and, ultimately, with a jury. Conversely, the vulnerabilities in Mr. Danaher's approach—particularly his reliance on the discredited 25% rule and his failure to apportion—create significant risk that his opinions will be excluded or significantly discounted.
VIII. RECOMMENDED REBUTTAL STRATEGY
A. Dr. Marchetti Rebuttal Report
The deadline for service of rebuttal expert reports is March 3, 2025, which is 14 calendar days from the date of this memorandum. Dr. Marchetti should prepare a comprehensive, point-by-point rebuttal of Mr. Danaher's report, addressing each of the following topics:
1. The Royalty Base. Dr. Marchetti should demonstrate that the smallest salable patent-practicing unit for each of the Asserted Patents is the relevant patented sub-component—the seal assembly, the blade mechanism, or the valve assembly—rather than the entire trocar device. Her rebuttal should present the SSPPU analysis in detail, using Solstice's cost accounting data to isolate the cost and value attributable to each patented sub-component, and should explain why the entire market value rule does not apply in this case. Dr. Marchetti should also present her alternative apportioned royalty base and show how it differs from Mr. Danaher's unapportioned base.
2. The Royalty Rate. Dr. Marchetti should anchor her rebuttal rate analysis in Apex's actual licensing history, demonstrating that Apex has consistently licensed individual patents in the Trocar Patent Family at rates of 3–6%. She should disaggregate the lump-sum and running royalty components of the litigation-driven licenses cited by Mr. Danaher, showing that the effective running royalty rates in those agreements are consistent with (or lower than) the 3–6% range reflected in Apex's internal guidelines. Dr. Marchetti should also affirmatively reject the 25% rule as a methodology and explain why its use is inconsistent with Uniloc and Daubert.
3. Georgia-Pacific Factors. Dr. Marchetti should provide a balanced factor-by-factor analysis demonstrating that the majority of the Georgia-Pacific factors favor a significantly lower royalty rate than the 42.6% proposed by Mr. Danaher. Her analysis should give particular attention to the factors identified in Section IV.E above—Factors 1, 2, 4, 8, 9, 10, and 13—where the evidence most clearly supports a lower rate.
4. Pre-Suit Damages. Dr. Marchetti should challenge the inclusion of CY 2021, CY 2022, and CY 2023 sales in the royalty base, absent proof that Apex satisfied the marking requirements of 35 U.S.C. § 287(a) or that Apex provided actual notice to Solstice prior to the filing of the complaint on May 9, 2024. Dr. Marchetti should present an alternative damages calculation that limits the relevant revenue period to the post-complaint timeframe and should quantify the impact of this limitation on the total damages figure.
5. Pre-Judgment Interest. Dr. Marchetti should argue for a later accrual start date for pre-judgment interest, consistent with the § 287 analysis above. If damages are limited to the post-complaint period, pre-judgment interest should accrue from May 9, 2024, at the earliest. Dr. Marchetti should also evaluate whether the prime rate compounded quarterly is the most appropriate methodology or whether an alternative interest rate or compounding period is more consistent with the facts of this case.
B. Coordination with Dr. Ostrowski's Rebuttal
Dr. Miriam Ostrowski of Halford University, whom we have retained as our technical expert on invalidity and claim construction issues, is also preparing a rebuttal report in response to Dr. Calvin Ng's infringement report (Veltrano Polytechnic Institute), which was served on February 10, 2025. Dr. Ostrowski's rebuttal report is also due on March 3, 2025.
It is essential that Dr. Marchetti's damages rebuttal and Dr. Ostrowski's technical rebuttal be coordinated to ensure consistency and mutual reinforcement. In particular, Dr. Ostrowski's non-infringement arguments, if credited by the Court, would directly impact the damages analysis by eliminating the damages inquiry for certain product lines and further reducing the royalty base.
The most significant area of overlap involves the PE-5000 Series. Dr. Ostrowski's rebuttal is expected to present detailed non-infringement arguments for the PE-5000 Series, contending that the PE-5000 design does not practice the asserted claims of the '237 and '884 Patents. These arguments will form the basis for our summary judgment motion on non-infringement, which we plan to file on April 1, 2025. If the PE-5000 Series is found non-infringing, the royalty base in Mr. Danaher's analysis must be reduced by the PE-5000 sales revenue, which totals $12,100,000 in FY 2021 alone and represents a significant portion of subsequent years' revenue as well, given that the PE-5000 is the original product in the PrecisionEdge™ lineup and continued to generate substantial sales throughout the damages period.
Dr. Marchetti should account for this contingency in her rebuttal by presenting an alternative damages calculation that excludes PE-5000 revenue from the royalty base. This alternative calculation will provide the Court with a ready framework for adjusting damages in the event that the PE-5000 Series is found non-infringing on summary judgment or at trial.
Peter Vassiliev should schedule a coordination call with Dr. Ostrowski and Dr. Marchetti no later than February 20, 2025, to discuss overlapping issues and ensure that the experts' reports are consistent and complementary.
C. Deposition Preparation
Following the service of rebuttal reports, we plan to depose Hugh Danaher to probe the factual and analytical bases for his opinions. Mr. Danaher's deposition will be a critical opportunity to develop the record for our Daubert motion and for cross-examination at trial. Key deposition topics should include the following:
• Reliance on the 25% rule: Mr. Danaher should be questioned in detail about the role of the 25% rule in his analysis, including whether he used it as a starting point, a cross-check, or an independent corroboration of his rate. He should be pressed on his awareness of Uniloc and the Federal Circuit's categorical rejection of the 25% rule, and he should be asked to explain how his analysis would change if the 25% rule were excluded.
• Basis for selecting comparable licenses: Mr. Danaher should be questioned about the specific criteria he used to identify the five purported comparable licenses, with particular focus on the two insufflation equipment licenses. He should be asked to explain the technological rel