Use of Experts in a Licensing Dispute

In Ceats, Inc. v Ticketnetwork. Inc., et. al., 2:15 –cv-1470, (E.D. Tex. Jan 17, 2018) the court in the Eastern District of Texas was required to address the limits of permissible expert testimony in a licensing dispute over royalties. The parties to that dispute had settled a prior patent infringement litigation by entering into a license agreement. However a dispute arose over the amount owed pursuant to the running royalty provisions which led to further litigation between the parties. The licensee retained an expert to testify on the meaning of a phrase, “Subject Functionality,” in the license agreement that would essentially define the scope of what was covered by the license. Since this was a contract dispute, the court acting in its gatekeeper role ruled that the expert would not be allowed to testify what that phrase meant (or the parties intent) as that was for the fact-finder to determine. However, the court indicated the expert could testify on phrases that had a particular meaning in the underlying industry. Opinions like this are helpful reminders for attorneys to consider when marshaling the evidence in preparation of trial.