Delaware Court Reinforces the Basic Premise: Expert Patent Damages Testimony Should be Grounded in the Actual Facts of the Case

Two recent opinions from the District of Delaware underscore a familiar, but increasingly enforced, principle: courts will closely scrutinize the factual basis for damages opinions in patent cases. Although neither decision in The Nielsen Co. (US), LLC v. TVision Insights, Inc., No. 1:22-cv-00057 (D. Del.) expressly cites last year’s Federal Circuit decision in EcoFactor, Inc. v. Google LLC, 137 4th 1333 (Fed. Cir. May 21, 2025) (en banc), both reflect a substantive analysis of the underlying facts for a damages expert’s theory.

The message for practitioners and experts is straightforward – do not bite off more than you can chew. In particular, damages theories must be grounded in the case-specific record. Courts are unlikely to admit analyses that start with a preferred framework and work backward to justify it. Instead, the better approach is to develop the factual record first and then let the theory follow.

The First Nielsen Decision

In the first opinion, the district court excluded portions of the defendant’s damages opinion relating to a purported non-infringing alternative. The Nielsen Co. (US), LLC v. TVision Insights, Inc., No. 1:22-cv-00057, D.I. 456 (D. Del.).

For reference, a non-infringing alternative is an option the accused infringer could have used instead of the patented technology to limit damages exposure. To rely on such an alternative, the defendant must show, and carry the burden, that it was (1) non-infringing, (2) available at the relevant time, and (3) acceptable to customers. Id.  These alternatives can materially affect damages because they inform what the defendant would have done when negotiating a license for the patent.*

Here, the defendant argued, through its experts, that a third party, ARCloud, “could have modified the accused software to create a non-infringing alternative” as of May 2018. Id. The court disagreed. Specifically, the court found that the defendant had failed to overcome its burden regarding availability. And because the proposed alternative was not actually on the market, the defendant faced an elevated burden regarding availability. Id. It did not do so. Notably, the defendant never contacted ARCloud to confirm feasibility or timing. Id. And while a defendant company witness initially told the damages expert the modification would be quick and inexpensive, that same witness later admitted at deposition that he lacked knowledge of ARCloud’s development process or timeline. Id. On this record, the court found the factual support for the alternative too thin to present to a jury.

The takeaway is not new, but it is clearly enforced: a non-infringing alternative must be backed by concrete evidence, not speculation. The burden always remains with the defendant, and it becomes more demanding when the alternative is hypothetical or not commercially available.

The Second Nielsen Decision

Two weeks later, the same district court reached a similar conclusion from the opposite side of the “v.” This time, the court excluded part of the plaintiff’s damages expert report. The Nielsen Co. (US), LLC v. TVision Insights, Inc., No. 1:22-cv-00057, D.I. 498 (D. Del.).

The issue was the plaintiff damages expert’s use of the Nash Bargaining Solution to justify a 50/50 profit split during the parties’ negotiation of a hypothetical license for the patent. The expert assumed, “counterfactually” as he acknowledged, that the parties had equal bargaining power, even though Nielsen is significantly larger and arguably held the stronger position. Id.

The plaintiff defended this approach as conservative and favorable to the defendant. Id. The court was not persuaded. A theory does not become admissible simply because it is “conservative.” The key question is whether it is tied to the facts of the case.

Here, the court found that the 50/50 split was “plucked out of thin air” and untethered from the actual record evidence. In that sense, the analysis resembled the now-rejected 25/75 “Rule of Thumb,” which the Federal Circuit disapproved in Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011) for the same reason: lack of case-specific grounding.

The lesson is clear that even widely recognized economic frameworks, like the Nash Bargaining Solution, must be applied in a way that reflects the actual facts of the case. And being “conservative” or favoring the other party will not save an otherwise unsupported assumption.

Conclusion

These decisions reinforce a consistent theme from Delaware and the Federal Circuit: damages analyses must be built from the ground up. And, sometimes, preferred theories may not be available if the facts do not support them.

A few practical points stand out:

• Start with the facts. Courts are increasingly wary of opinions and enforce their gate-keeping Daubert functionality when such theories try to shoehorn facts into an ill-fitting narrative.
• Prove non-infringing alternatives with real evidence. Obtain discovery from the relevant parties (or third parties) in the record, and when a product is not on the market, expect heightened scrutiny.
• Tie every key assumption to the facts. This includes profit splits, bargaining positions, and economic inputs.
• “Conservative” is not a substitute for “supported.” Even assumptions that favor the opposing party must still be grounded in evidence.
• Be flexible in your approach. Be prepared, with your experts, to disavow or pivot from your initial damages theories when the developed factual record does not support them.

At bottom, both Nielsen decisions reflect the same core principle articulated in EcoFactor: a reliable damages opinion is one that fits the facts of the case, not one that asks the facts to fit the theory.

______________________________________________________________________________________

*Non-infringing alternatives can also affect the calculation of lost profits damages. The Nielsen case was a reasonable royalty case so that is the context of non-infringing alternatives that is discussed here.