The court in Eastern District of Virginia denied Defendant’s motion for a new trial on damages based on the court’s exclusion of testimony regarding the book of wisdom in Centripetal Networks, LLC v. Palo Alto Networks, Inc., 2:21-cv-00137 (EDVA, Oct. 30, 2024).
Defendant argued that the court erred in not permitting cross-examination of Plaintiff’s witness about: 1) the fact that several patents included in a certain patent license entered into between Plaintiff and a third party were subsequently invalidated; and 2) the fact that the third party-licensee was found not to have infringed one of the licensed patents in ITC proceedings. Slip. Op. at 37. Noting that Defendant’s argument relates to the propriety of considering facts occurred post-hypothetical negotiation, the court addressed whether these facts should have been considered under the Book of Wisdom. Id. at 38.
The court explained, “[w]hile there is no bright-line rule regarding what post-infringement evidence may be considered, evidence admitted under the ‘book of wisdom’ generally provides facts or data to supplement ‘information that the parties would frequently have estimated during the negotiation.’” Id. (internal citation omitted). One example of such evidence would be “post-infringement data regarding how often consumers used an infringing feature of an accused product” because “it shed[s] light on a fact frequently estimated during a license negotiation.” Id.
By contrast, the court found that the evidence that other tribunals have subsequently invalidated Plaintiff’s patents or found that the third-party licensee did not infringe “would not establish facts that the hypothetical negotiator would routinely estimate at the time of the hypothetical negotiation” because the hypothetical negotiation assumes infringement and validity. Id. at 39. The court also noted that Defendant essentially argues that such evidence is relevant to show that “subsequent events fundamentally changed the circumstances that drove the [third party] License,” however, there is no case where the Book of Wisdom was applied in this context. Consequently, the court held that Defendant’s attempt to introduce such evidence stretches the Book of Wisdom too far and that it did not err in excluding testimony regarding these facts. Id.