For as long as I have been with The BERO Group, we have talked about the importance of attorneys hiring their damages expert early. In fact, hiring a damages expert early is the first step in my brother Rick Bero’s book “The Litigator’s Damages Blueprint – The Pragmatic Solution.” While this may sound self-serving coming from a damages expert, just like hiring an architect before you build your new home, hiring a damages expert before you build your case makes sense. It may just provide you and your clients with damages related insights early on that can help guide portions of your case. A recent ruling by the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) may also highlight the importance of doing so.
In MLC Intellectual Property, LLC. v. Micron Technology, Inc.2, the Federal Circuit upheld a district court’s order that excluded MLC Intellectual Property LLC’s (“MLC”) damages expert from characterizing two lump-sum, third party license agreements as reflecting a 0.25% royalty rate that served as the basis for MLC’s claimed reasonable royalty rate. This was after MLC had not produced key documents and information about MLC’s damages theory when requested prior to expert discovery. 3
Early in the case, Micron Technology, Inc. (“Micron”) had asked MLC about its damage theories, along with any facts, evidence, and testimony regarding any applicable royalty rate in two separate interrogatories. MLC never responded to these interrogatories. Micron did not learn about MLC’s damages theory until MLC produced its damages report. Micron argued that MLC’s failure to timely disclose its damages theory and basis was prejudicial to them. The district court agreed with Micron. It excluded MLC’s damages expert from testifying.4
In its decision, the Federal Circuit pointed out:
“MLC’s argument that it need not disclose factual underpinnings and evidence underlying its damages theory prior to expert discovery undermines a district court’s discretion to encourage early discovery. District courts had the discretion to encourage parties to provide discovery of damages theories prior to expert discovery. Doing so promotes judicial efficiency, informs settlement discussions, and helps parties determine the resources that will be devoted to a case based on its potential value.” [emphasis added]
This highlights the importance of hiring your damages expert early. It also raises interesting damages related questions. For example, how could MLC have benefited by providing a more thorough outline of its damages theories in interrogatory responses? Similarly, if MLC had been more forthcoming in its interrogatory responses, and Micron had raised objections to them, could MLC have taken a different damages approach the district court and Federal Court might have accepted?
At The BERO Group, we are frequently hired early in cases. Sometimes we are not. We certainly recognize various constraints and considerations that may not allow for hiring a damages expert early. Is it worth waiting? MLC’s experience may suggest it is not. Certainly, in complex cases, there is little downside in contacting your damages expert early, even if it is only to have initial high-level conversations. As for us, we are just a bunch of accountants….and we are always thrilled to answer your call.
NOTE: The opinions and thoughts expressed herein are the opinions of Ronald A.Bero, Jr. They are not necessarily the opinions of The BERO Group.
1 As with all articles written by The BERO Group, we are not attorneys and we do not provide any legal opinion and may characterize things inaccurately from a legal perspective.
2 MLC Intellectual Property LLC v. Micron Technology, Inc. 2020-1413 (August 26, 2021).
3 Order Granting in Part and Denying in Part Micron's Damages Motion, Case No. 3:14-cv-03657-SI (July 2, 2019), p.2. MLC’s expert was not allowed to testify for additional reasons, which I do not address herein.
4 Micron raised other issues with the district court, which I do not address herein.
5 MLC Intellectual Property LLC v. Micron Technology, Inc. 2020-1413 (August 26, 2021), p.22.