DDE denies request to strike lost profits opinion re non-patented items; addresses test data admissibility
The District of Delaware, in Masimo Corp. v. Philips Elec. North Am. Corp., (Judge Leonard P. Stark) (October 31, 2016), addressed motions to strike opinions of several experts related to damages. The experts in question were Michael Keeley (Finance), Joseph Dyro (Technical), Nitin Shah (Technical), Vijai Madisetti (Finance), and Michael Wagner (Finance). The court granted in part and denied in part the motions. The key motions are addressed below.
The Eastern District of Texas, in ZiiLabs, Inc. v. Samsung Electronics Co., (Judge Roy S. Payne) (December 4, 2015), granted in part and denied in part defendant’s motion to exclude various opinions from plaintiff’s damages expert, Robert Mills.
The District of Arizona, in GoDaddy.com LLC v. RPost Communications Limited, Case No. CV-14-00126-PHX-JAT (Judge James A. Teilborg) (May 10, 2016), excluded the entire report of Defendant’s damages expert, Gregory Smith, but allowed a do-over.
Plaintiff GoDaddy moved to exclude Smith’s testimony under FRE 702, asserting two grounds: (1) Smith inappropriately accounted for non-infringing features in his royalty rate analysis rather than apportioning the royalty base, and (2) because Smith used the entire revenue of the accused product as the royalty base, he necessarily applied the entire market value rule (“EMVR”) but failed to demonstrate that the patented features form the basis of consumer demand. Defendant RPost denied that Smith applied the EMVR, arguing that the accused products were the smallest saleable unit (“SSU”), and the Federal Circuit has never defined a particular formula for apportioning damages for SSUs. Smith used the operating margin of the accused products and apportioned the royalty rate instead of the royalty base.
DDE excludes settlement agreements; allows licenses as a “check”; addresses apportionment of accused products & services
The District of Delaware, in ART+Com Innovation GMBH v. Google Inc., Case No. 14-217-RGA (Judge Richard G. Andrews) (April 28, 2016), considered several motions related to royalty calculations. In a previous blog post, we addressed the motion for reconsideration of the 13% apportionment issue addressed below. This post covers the earlier order addressing that issue plus others.
Plaintiff ART+Com Innovation (“ACI”) challenged the reliance of Google’s expert Reed on seven licenses as a "check" on his reasonable royalty analysis. Five of these licenses were settlement agreements. The court excluded these (except as to their lump-sum nature) because they were products of litigation and not economically comparable. The other two licenses were the product of licensing negotiations. ACI disputed that these licenses were technologically comparable. The court allowed these licenses because Reed acknowledged the differences, and his analysis was consonant with using the licenses as a "check" against his reasonable royalty calculations. The jury could then weigh the evidence for itself.
The Northern District of California, in Nortek Air Solutions, LLC v. Energy Lab Corp., No. 14-cv-02919-BLE (July 15, 2016) (Judge Beth Labson Freeman), granted Energy Labs’ Daubert motion to exclude testimony of Nortek’s damages expert, Dr. Stephen Prowse, regarding reasonable royalty damages. The motion included three reasons; we address the first one here: “Dr. Prowse’s royalty analysis fails to apportion the value of the allegedly patented features from the unpatented features in the accused products ….” Slip op. at 8. The accused products were air handling systems.
In response to the motion, Nortek argued that Dr. Prowse had properly relied on the value of the accused air handling system as a whole rather than a smaller component for several reasons: (1) “because the asserted claims are directed to the entire air handling unit rather than any individual features,” and (2) because “the air handling unit is the smallest saleable unit and thus an appropriate royalty base.” Id.
The District of Delaware, in ART+COM InnovationPool GMBH v. Google Inc., (Judge Dyk) (May 16, 2016), denied Defendant’s motion for reconsideration, allowing Plaintiff’s apportionment theory to proceed to the jury.
Plaintiff’s expert, James Nawrocki, calculated per-session damages. Defendant argued that Mr. Nawrocki’s theory included improper categories of revenue in the royalty base and an unsupportable 13% apportionment. (slip op. at 5). With regard to the categories of revenue, Defendant argued that Mr. Nawrocki should not have started with the revenue from the entire Geo Product group. The Court said:
EDTX denies Daubert motions involving apportionment, entire market value rule, license agreements, and patent valuations
The Eastern District of Texas, in Core Wireless Licensing SARL v. LG Electronics, Inc. et al, Case No. 2-14-cv-00911 (Judge Payne) (March 19, 2016), addressed motions filed by both parties seeking to exclude the other party’s damages expert’s opinions and testimony. LG, the alleged infringer, filed a motion to exclude the opinions of Core’s damages expert, Dr. Stephen Magee, on Daubert and untimeliness grounds. Similarly, Core, the patent owner, sought to exclude the opinions of LG’s damages expert, Dr. Thomas Vander Veen, on the same grounds. The court concluded that both experts’ opinions were reliable under FRE 702, and thus denied both parties’ Daubert motions. The court also concluded that the parties’ late disclosures were harmless and denied the parties’ motions to exclude the adverse party’s supplemental report for untimeliness.
The Eastern District of Texas, in Metaswitch Networks Ltd. v. Genband US LLC, Case No. 2:14-cv-00744 (Judge Payne) (March 5, 2016), addressed defendant Genband's Daubert motion seeking to strike plaintiff's expert Mr. Sims’ opinions relating to apportionment, royalty base calculation, and the application of the "analytical approach." The court concluded that Mr. Sims' opinions were reliable under FRE 702 and thus, denied Genband's Daubert motion.
The Eastern District of Texas, in Metaswitch Networks Ltd. V. Genband US LLC, Case No. 2:14-cv-00744 (Judge Payne) (March 7, 2015), addressed a number of issues in a FRAND case involving an IETF standard. Specifically, defendant moved under Daubert to exclude certain opinions of plaintiff’s damages expert Matthew R. Lynde. The court granted in part and denied in part the motion.
C.D. Cal. excludes do-over damages opinions for failure to apportion and allows second do-over if case proceeds to damages phase
The Central District of California, in Enovsys LLC v. AT&T Mobility LLC, et al., Case No. 11-5210 SS (Judge Suzanne H. Segal) (August 10, 2015), granted Defendant AT&T’s motion to exclude the supplemental opinions of Plaintiff Enovsys’ damages expert. The Court also bifurcated the trial into liability and damages phases, and allowed for a second supplemental damages opinion in the event the case proceeded to the damages phase.
In June 2015, the Court granted AT&T’s Motion in Limine to Exclude Enovsys’ damages expert, Russell Parr because Mr. Parr’s “did not sufficiently tie damages to the ‘limited features’ of the patented invention.” (slip op. at 3). The Court allowed Enovsys a do-over. AT&T took the position that the do-over report suffered from the same defect as the original report – the damages calculations were not tied to the value of the patented invention.