Is a Damages Expert Required?

Damages experts are a routine part of litigation, as the issue of financial losses is often complicated. A variety of subject matter experts and financial experts are a standard feature in litigation to sort out the issues and help judges and juries understand the numbers. But what if there is no damages expert? Can a proper award of damages be made?

In an opinion issued this spring, a judge in federal court in the District of New Jersey granted defendant’s motion for summary judgment on plaintiff’s claim for damages.

Unicom Monitoring, LLC was granted summary judgment its patent infringement claims against Cencom, Inc.  The plaintiff alleged that it could prove the revenue and profits earned by Cencom related to the infringement, and the reasonable royalty that Unicom was entitled to because of the infringement.

However, Unicom did not identify a damages expert or submit a damages report during the case. While the company claimed it was entitled to a 30% royalty on the revenue earned by Cencom via the infringement,  it did not support that claim with expert testimony or any other credible evidence. Cencom argued that since Unicom did not present any evidence that the award it was seeking was reasonable, the court should award no damages.

The court pointed out in its decision that the prevailing claimant should receive damages which are adequate to compensate for the infringement.  The decision also indicated that establishment of a reasonable royalty rate does not necessarily require expert testimony.

However, in this particular case, the court determined that Unicom presented no evidence whatsoever to support its claim for damages. The judge was presented no evidence on which a reasonable royalty calculation could be done, so no damages were awarded.

It is interesting to note that the case had been ongoing since 2006. Yet during seven years of litigation, Unicom took no affirmative steps toward proving its damages.

Ultimately, the plaintiffs claimed the reasonable royalties were $36,000 to $37,000. One might imagine that with that level of damages, it may not have seemed cost effective to retain a damages expert. Yet when faced with the alternative – – an award of $0 – – an expert witness may have been a good investment.

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