In the recent Arizona Supreme Court case of McAlister v. Loeb, 2025, the reliability and admissibility of a Patents Expert Witness testimony played a decisive role in the outcome of a complex patent dispute involving lost profits, licensing agreements, and allegations of professional misconduct.
Background and Parties
Roy McAlister, an inventor specializing in clean fuel technologies, held several patents through his company, McAlister Technologies, L.L.C. (MT). In 2009, MT entered into a licensing agreement with Advanced Green Technologies, L.L.C. (AGT), which subsequently retained the law firm Loeb & Loeb, L.L.P. for patent-related legal services. Disputes arose when McAlister alleged that AGT breached the licensing agreement and that Loeb & Loeb’s actions clouded MT’s patents, causing prospective licensees to withdraw and resulting in substantial lost profits.
McAlister and MT initiated litigation against Loeb & Loeb, asserting claims for lost profits, trespass to chattel, slander of title, aiding and abetting, breach of fiduciary duty, and negligent supervision.
Role and Methods of the Patents Expert Witness
Central to the plaintiffs’ case was the testimony of a Patents Expert Witness, who was retained to quantify lost profits and opine on the impact of the alleged clouding of patents on MT’s licensing prospects. The expert’s methodology involved projecting lost profits based on hypothetical licensing agreements that, according to the plaintiffs, would have materialized but for the defendants’ conduct.
The expert relied on industry data, historical licensing negotiations, and market trends to estimate damages. However, the expert’s analysis was challenged for its speculative nature and lack of concrete supporting evidence. The defense argued that the expert’s projections were not grounded in actual contracts or binding commitments, but rather on conjecture about potential future deals.
Court’s Reliability and Daubert Analysis
The Maricopa County Superior Court conducted a rigorous Daubert analysis to assess the reliability of the expert’s testimony. The court found that the expert’s opinions on lost profits were speculative and failed to meet the standard of reasonable certainty required for damages in patent cases. Specifically, the court noted that the expert did not provide sufficient factual support for the existence of prospective licensees or the likelihood of consummating the alleged agreements.
The court excluded the expert’s testimony on damages, concluding that the methodology lacked the necessary factual foundation and was not sufficiently reliable to be presented to the jury. As a result, the court granted summary judgment in favor of Loeb & Loeb on the lost profit claims.
Impact on the Outcome
The exclusion of the Patents Expert Witness testimony proved fatal to the plaintiffs’ claims for lost profits. Without admissible expert evidence to establish damages with reasonable certainty, the plaintiffs conceded that no triable damages remained and stipulated to final judgment against them on those claims.
On appeal, the Arizona Court of Appeals affirmed the exclusion of the expert testimony and the summary judgment on most lost profit claims. However, the appellate court reversed on a $5 million initial payment claim and remanded for further proceedings, indicating that not all damages theories were foreclosed by the exclusion of the expert’s opinions.
Conclusion
McAlister v. Loeb underscores the critical importance of a Patents Expert Witness in patent litigation. The case demonstrates that expert testimony must be grounded in reliable methodology and supported by concrete evidence to survive judicial scrutiny. Courts will rigorously apply Daubert standards to ensure that expert opinions are not merely speculative, and the exclusion of such testimony can be dispositive in complex patent disputes. The outcome of this case serves as a cautionary tale for litigants and experts alike: the credibility and admissibility of expert witness testimony are often determinative of success in patent litigation.