When Is An Economic Expert Witness Needed? Part 1

In Getting the full value of economic experts in IP litigation: A qualified expert is key, attorney Devon Zastrow Newman writes that “Expert witnesses can make or break your intellectual property litigation.”

A plaintiff’s claims in intellectual property litigation may take several forms, including assertion of claims of infringement of the IP right or loss of the plaintiff’s right to the IP through unlawful misappropriation (e.g., trade secret theft). To prevail, the plaintiff must establish three elements: the defendant’s breach of the IP right belonging to the plaintiff; the defendant’s breach damaged the plaintiff; and the measure of damages the plaintiff accrued as a direct cause of the defendant’s breach. An economic expert may be the key to establishing the third element.

When is an economic expert needed?

Expert witness testimony is necessary when a party must present evidence outside a juror’s common knowledge, which applies to nearly all (IP) cases. A technical expert explains the technology and whether it is infringed by the defendant. The plaintiff may use an economic expert to explain how economic damages occurred. The defendant’s economic expert, if any, will present an alternative view of the damages.

Most IP cases are litigated in federal court; thus, the expert’s testimony must be admissible under Federal Rules of Evidence 702 and 703. These rules require that the expert be qualified to testify about the subject matter and perform the analysis using qualified information he or she has personally reviewed. The expert must base his or her opinion on facts or data that are the type of information experts in the field would rely on to form an opinion. A party may challenge an expert’s testimony through a pre-trial motion if it fails to abide by FRE Rules 702 or 703. Challenges typically come in pre-trial motions to limit or preclude the testimony. Finally, the expert’s opinions must be relevant to the issues and help the jurors understand them.

Expert testimony regarding the plaintiff’s economic damages is relevant provided the plaintiff has standing to assert a claim for economic damages. The plaintiff’s damages must also be so complex that the average juror could not tally the numbers. Most IP claims are sufficiently complex to warrant an economic expert, because IP rights can affect what products can be marketed, can affect consumer preferences, and typically have a life of many years. Thus, calculation of the plaintiff’s damages often requires testimony on the impact of such factors on the plaintiff’s financial performance over a multi-year period and in different geographic and economic markets. For IP rights without fixed-term duration, the calculation may involve estimating damage to the right itself. It is more advantageous for a jury to hear testimony about economic issues from an expert with credibility in evaluating economic issues — not argument from the party’s lawyer.

Case law also makes an economic expert necessary in most IP cases. The next article in this series will address how case law requires proof of the specific elements of damages in patent, trademark, copyright and trade secret cases, using expert testimony.

Devon Zastrow Newman is a shareholder in the Portland office of Schwabe, Williamson & Wyatt, P.C., where she leads the Intellectual Property Litigation Group. She focuses her practice on intellectual property and complex litigation, and has extensive experience representing patent and trademark owners in infringement actions. Ms. Newman is also a registered U.S. patent attorney and assists clients in obtaining patent, trademark, and copyright protection for their innovations. She earned her J.D. from Cornell Law School.

About Karen Olson

Information Professional with twenty years experience in legal, public record, and business research. Fifteen years law firm experience.

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