NDCA bars negative NPE terminology; allows product revenue and settlement agreements
The Northern District of California, in Finjan, Inc. v. Blue Coat Sys., Inc., Case No. 13-CV-03999-BLF (Judge Beth Labson Freeman) (July 8, 2015), ruled on a number of motions in limine. A few issues of interest were addressed in the order.
Utah court allows evidence of minimum royalty payments by third parties
The District of Utah, in Waterton Polymer Products USA, LLC v. Edizone, LLC, Case No. 2:12-CV-17 TX (Judge Ted Stewart) (Nov. 6, 2014), denied the accused infringer’s motion in limine to preclude patentee’s introduction of evidence regarding minimum royalty payments by third party licensees of the patentee.
Each of the disputed license agreements were directed to the patent-in-suit and included a percentage-based running royalty and a minimum royalty amount. The accused infringer argued that the minimum royalties were not relevant because the license agreements specifically envisioned active sales and marketing by the licensees, whereas the accused infringer alleged it endeavored not to make sales in the U.S. and made only one such sale.
CDCA denies motion to exclude third party license, citing Apple v. Motorola
On June 11, 2014, Judge Bernal of the Central District of California issued an opinion on motions in limine, including denying Texchem’s request to exclude opinions by e.PAK’s damages expert, Lawrence Simon, concerning a third partY license. The case is Texchem Advanced Products Inc. v. e.PAK Int’l Inc., Case No. EDCV 12-1341 JGB (SPx). Texchem argued that the license agreement was not comparable to the hypothetical negotiation. The court denied the motion. The court cited the Federal Circuit’s recent opinion in Apple Inc. v. Motorola, Inc., 2014 WL 1646435 (Fed. Cir. Apr. 25, 2014). We quote the court’s brief analysis in full:
NDCA denies motion to strike reports for inadequate apportionment in lost profits and reasonable royalty; allows testimony on disputed licenses and offer to license
On February 21, 2014, Judge Alsup of the Northern District of California issued an opinion in Plantronics, Inc. v. Aliph, Inc., Case No. C 09-01714 WHA, in which the court denied motions to strike defendant’s damages experts on lost profits (Matthew R. Lynde) and reasonable royalty (Brian Napper). The case was a competitor suit involving bluetooth headsets. The opinion has several interesting issues, but the most significant is the treatment of apportionment and lost profits. Judge Alsup, in effect, held that the Panduit test only requires proof of demand for the patented product, and thus the plaintiff need not prove demand for the patented feature, thus avoiding the entire market value rule.
EDTX Denies Plaintiff’s MIL Seeking to Exclude Settlement Demands Made in Other Negotiations
On October 30, Judge Payne of the Eastern District of Texas issued a pre-trial order in Personalized Media Communications, LLC v. Zynga, Inc., Case No. 2:12-CV-00068-JRG-RSP (Doc. No. 213), addressing motions in limine. PMC had filed numerous MILs, including one seeking to exclude evidence of settlement demands made in other negotiations over the same patents. The ruling is brief, and we quote it in full:
Denied. PMC provides no reason that its demands from other negotiations on
these same patents are not relevant. Contrary to Zynga’s argument, the mere fact
that such a category is not specifically identified as a factor in Georgia Pacific
does not mean that it is wholly irrelevant or otherwise inadmissible.
This is a promising ruling for defendants facing plaintiffs who have previously licensed the patents-in-suit (or have reached prior litigation settlements). Settlement demands from other litigations (or even parties who have previously settled out of the current litigation) may reflect numbers much smaller than the damages sought at trial against the current defendant. Of course, the defendant will have to introduce evidence showing the comparability of the circumstances surrounding the prior settlements and the current damages case, e.g., same products at issue, similar sales volume, effective royalty rates, and other ways to demonstrate comparability. But if this marks a trend, defendants may have a forceful weapon to inform the jury that the plaintiff’s damages figure is inflated.
DConn denies defendant’s MILs on EMVR and comparable licenses
On July 27, 2012, in Sargent Mf’g Co. v. Cal-Royal Prods., Inc. , Civil Action No. 3:08-cv-408 (VLB) (D. Conn.), the court considered defendant’s motions in limine (MILs) concerning lost profits and reasonable royalties. The lost profits issue involved the non-infringing alternatives prong of the Panduit four-part test. The reasonable royalty issues were EMVR and comparable licenses. (The court also provides a reasonably in-depth analysis of a willfulness MIL, which is worthy reading for those interested.)
EDTX Issues Pretrial Rulings on Reasonable Royalty and Lost Profits Damages
On May 5, 2011, Judge Charles Everingham IV of the Eastern District of Texas issued a two part opinion. In Part 1, the Court issued the following rulings related to damages: (1) carried in part and denied in part SAP’s (“defendant”) Motion to Exclude Expert Testimony; (2) granted Versata’s (“plaintiff”) Motion to Exclude Inadmissible Opinion of SAP’s Experts; and (3) denied Versata’s Motion to Strike Portions of the Rebuttal Expert Report. In Part 2 of the opinion, the Court ruled on Versata’s and SAP’s Motion in Limine to exclude testimony, evidence, or argument related to the addition of a new damages theory – lost profits. Versata Software Inc. v. SAP America, Inc., 2:07-CV-153-CE (E.D. Tex., May 5, 2011).
NDTX Strikes One License and Allows Another; Finds Fault in Expert’s Use of Entire Market Value Rule
On June 10, 2011, Judge Reed O’Connor of the Northern District of Texas issued an opinion granting in part and denying in part Universal Lighting Technologies’ (“defendant”) Motion to Strike, Limit, or Exclude Certain Expert Testimony. Lighting Ballast Control, LLC, v. Phillips Electronics North America Corp, Case No. 7:07-CV-29 (N.D. Tex., June 10, 2011). Defendant had moved to strike expert testimony and report on two grounds: 1) the expert proposed royalty rates for the patent-in-suit while relying on rates from two licenses most favorable to plaintiff; and 2) the expert improperly tests or “checks” the reasonableness of his selected royalty rates using the entire market value of the accused products.