Patent Damages After Rule 702: Will Your Expert Survive Daubert? | IPWatchdog Unleashed

Liability and damages are separate legal questions, but too often only lip service is paid to that distinction, which leads to a sequencing error that can be difficult—even impossible—to recover from. Patent litigation teams put copious amounts of time into infringement and validity only then turning to damages when expert deadlines begin to loom. In today’s new Rule 702 environment, that approach is no longer merely inefficient. It can be outcome-determinative and catastrophic.

Recent amendments to Federal Rule of Evidence 702 did not invent the trial judge’s gatekeeping obligation, nor did they transform economic analysis. They did, however, sharpen the focus on the burden of establishing admissibility and whether an expert has reliably applied a valid methodology to the facts. Combined with the Federal Circuit’s increasingly demanding review of patent damages opinions, the practical message is unmistakable: the economic case must be engineered from the beginning, or you will surely suffer the consequences only after it is too late.

That was the central takeaway of our recent IPWatchdog Patent Masters™ conversation on patent damages, experts and the new reality of Rule 702 as it is unfolding. Moderated by Megan Carpenter and featuring economist Jon Putnam of Competition Dynamics, Glenn Forbis of Harness IP, and Mark Nelson of Barnes & Thornburg, the conversation was published as our latest episode of IPWatchdog Unleashed.

A Clarification With Real Leverage

Nelson began with the language of the 2023 amendment. The textual changes may appear modest, and Nelson observed that, so far, “Everybody just doubled down on what they were already doing.” Courts that already took gatekeeping seriously found reinforcement; courts with a more permissive tradition have often treated the amendment as a clarification. Nevertheless, litigation behavior is changing even where outcomes have not changed uniformly.

Forbis explained that new Rule 702 has emboldened parties to challenge not only an expert’s methodology but also the fit between that methodology and the facts. Daubert motions are becoming less exceptional and more routine. Putnam made the point even more bluntly: in a significant patent case, an expert should expect the challenge and design the analysis accordingly—sometimes before the complaint is even filed.

That is a material shift in operating posture. A damages expert can no longer assume that any particular, plausible methodology will reach the jury, while counsel cannot rely on purely legal attacks to dispose of an opposing expert opinion. Both sides must be ready to defend the economic logic, the factual inputs, and the path connecting the two.

The Surprise: Greater Scrutiny Can Hurt Defendants Too

The conventional assumption is that stricter expert rules primarily burden patent owners because they bear the obligation to prove damages. Putnam challenged that premise. He described the inquiry as “damages as being a truth-seeking exercise.” If a plaintiff’s expert presents a scientifically grounded method supported by adequate facts, the defendant cannot necessarily win with legal criticism alone. Defendants will need a scientific rebuttal, or the expert testimony will be allowed.

That creates a strategic trap. A defense expert who uses substantially the same methodology but reaches a lower number may help validate the plaintiff’s method. The dispute then looks like a classic battle of experts—precisely the kind of disagreement courts commonly leave to the jury. This means a defendant can prevail on valuation and still lose the Daubert objective of excluding the plaintiff’s case altogether.

This does not mean defendants have lost their weapons. EcoFactor illustrates the vulnerability of an opinion built on a royalty rate that cannot be logically tied to the underlying licenses and record evidence. But the broader implication cuts both ways. Once a plaintiff develops a coherent economic foundation, the defense needs its own science, its own number, and its own rationale. As Nelson noted, the Federal Circuit remains open to “different methodologies of proof, as long as they’re scientifically sound.”

Zero Can’t Be a Reasonable Royalty

Our discussion of the old 25-percent rule exposed a deeper problem. The rule was often applied mechanically and sometimes substituted a rule of thumb for proof. But eliminating an arbitrary starting point does not justify pretending that the correct starting point is zero when, in fact, zero is simply a different low end starting point. And whatever you think about the old 25-percent rule, it had the virtue of being possibly correct, while zero simply cannot be the correct reasonable royalty ever.

As I pointed out during the panel, “It has to be worth something.” If infringement has been established, 35 U.S.C. § 284 guarantees no less than a reasonable royalty. The valuation exercise may be difficult, but difficulty does not erase value. I also explained my frustration that, throughout patent law, “we rearrange chairs on the Titanic and think that we’ve accomplished something.” Replacing one unsupported assumption with an equally unrealistic baseline is not progress—it is maddening, like fingers on a chalkboard.

The same tension appears in apportionment. Putnam used the example of a patent covering the left shoe in a pair. The pair sells for $100, but left shoes are not sold independently. A 50-50 division may be reasonable, yet there may be no market transaction or scientific paper proving it. Courts can demand disciplined reasoning but should not demand evidence that cannot exist. The hypothetical negotiation itself is an effort to reconstruct how rational parties would have dealt with imperfect information, not a laboratory experiment capable of producing a single indisputable answer.

Discovery Must Be Designed for Causation

The scientific standard also changes what should count as relevant discovery. Economists often measure causation by comparing outcomes before and after a feature is introduced and by comparing products with and without that feature. That can require sales information for earlier products or non-accused products—materials a defendant may characterize as irrelevant or a fishing expedition.

There is an obvious institutional conflict. Courts cannot demand scientifically rigorous measurement while denying access to the data needed to perform it. Putnam put the principle squarely: “you have to give them the data so that they can perform the science that you’re ultimately requiring of them.” At minimum, counsel should create a clear record showing what was requested, why it mattered to the proposed method, and what the court denied.

The evidentiary burden may also require multiple experts. An economist can quantify market effects, but a technical expert may first need to translate a patented improvement into measurable performance value. Nelson described these as bridge reports: technical analysis that connects the invention to an economic input. Each additional bridge increases cost and introduces another potential Rule 702 challenge.

Forbis cautioned that “the damages case is more complex than the liability side.” Delaying that work does not save money; it concentrates risk when there is least time to correct deficiencies.

Build Damages and Liability as One Case

The panel’s practical advice was unusually consistent. Forbus called for “preparation, preparation, preparation” and said, “you need to do discovery on damages and waves.” Experts should help shape requests, test alternative theories, identify factual gaps, and prepare counsel to obtain useful admissions in depositions. That process must run in parallel with liability, not behind it.

Defendants also need a credible damages story. A jury presented with $100 million from the patent owner and zero from the accused infringer has not been given a serious valuation choice. A defendant can maintain noninfringement and invalidity defenses while also explaining what fair market value would be if liability is found. That is analytically sound and thematically stronger than simple denial.
Finally, counsel must determine what kind of case they actually have. Is the available evidence capable of measuring value directly, or must the expert reconstruct the world without infringement? Putnam captured the distinction: economists “ask counterfactual questions about what would have happened, not actual questions about what did happen.” That choice affects the expert, the methodology, the discovery plan, and the trial narrative.

Rule 702 has not supplied a mechanical formula for patent damages. It has made the cost of late thinking much higher. The winning strategy is not to search for perfect expert report at the end of discovery. It is to build a coherent damages case from day one—grounded in economics, supported by technical evidence, integrated with liability arguments, and developed with enough time to survive serious scrutiny.

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