WILLIS ELECTRIC CO., LTD. v. POLYGROUP LTD.

Authored by: Jeremy J. Gustrowsky

The Federal Circuit affirmed a $42.5 million jury verdict in a patent dispute over pre-lit artificial Christmas trees, providing important guidance on when expert testimony on damages should be excluded versus when challenges should simply go to the jury. The case involved U.S. Patent No. 8,454,186, which covers artificial trees with modular trunk sections that establish both mechanical and electrical connections simultaneously—allowing consumers to simply stack tree sections together and have the lights turn on automatically, regardless of how the sections are rotated.

The dispute centered on whether claim 15 of the patent, which specifies the use of “coaxial trunk connectors” for this simultaneous connection feature, was obvious and whether the damages expert’s testimony should have been excluded. Polygroup argued that a skilled artisan would have been motivated to modify an existing prior art tree (the “Loomis GKI Tree”) to use well-known coaxial barrel connectors. The court disagreed, finding substantial evidence supported the jury’s conclusion that such a modification would have required removing the prior art’s alignment features, redesigning connector housings, and fundamentally departing from the prior art’s teachings—all factors that would have discouraged a skilled artisan from attempting the combination.

On damages, the court provided a detailed discussion of Rule 702’s gatekeeping requirements following its 2023 amendments. The court emphasized a critical distinction: while district courts must ensure expert methodology is reliable by a preponderance of evidence, questions about whether an expert’s testimony is credible or correct are for the jury. This is particularly important in patent cases because calculating a reasonable royalty “necessarily involves an element of approximation and uncertainty.” The hypothetical negotiation framework used to determine royalties is inherently counterfactual, requiring assumptions about market conditions and bargaining positions that cannot be proven with mathematical certainty.

Willis’s damages expert employed multiple approaches: an income-based analysis comparing profit margins on trees with and without the patented feature, a market-based analysis examining comparable licenses, and a Georgia-Pacific factor analysis. Polygroup challenged each approach, arguing the expert failed to properly isolate the value of the coaxial connectors, used imperfect data, and relied on licenses that were not sufficiently comparable. The court found these criticisms went to the weight of the testimony rather than its admissibility. Where an expert’s methodology is reasonable and tied to case facts, disagreements over assumptions and modeling choices are properly addressed through cross-examination and competing evidence, not exclusion.

The court also rejected Polygroup’s argument that the expert’s “purely qualitative” Georgia-Pacific analysis was inadequate. Multiple Georgia-Pacific factors—such as the parties’ commercial relationship and advantages of the invention—simply do not lend themselves to mathematical precision. An expert may explain how qualitative factors influence where a royalty should fall within an established range without assigning a specific numerical value to each factor. The case reinforces that reasonable royalty calculations remain “an inexact art” and that competing experts reaching different conclusions does not establish that either analysis is unreliable.