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Parallel Networks Licensing LLC v. International Business Machines Corporation

United States District Court, D. Delaware

April 17, 2017

PARALLEL NETWORKS LICENSING, LLC, Plaintiff,
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendants.

          Adam W. Poff, Esq., Pilar G. Kraman, Esq., Young Conaway Stargatt & Taylor, Counsel for Plaintiffs Of Counsel: Douglas A. Cawley, Esq., Christopher T. Bovenkamp, Esq., Eric S. Hansen, Esq., Avery R. Williams, Esq., Justin W. Allen, Esq., McKool Smith, PC, Angela M. Vorpahl, Esq., McKool Smith, John B. Campbell, Esq., Leah Bhimani Buratti, Esq., Kevin P. Hess, Esq., McKool Smith, PC.

          Jack B. Blumenfeld, Esq., Rodger D. Smith, II., Esq., Jeremy A. Tigan, Esq., Morris, Nichols, Arsht &Tunnell, LLP, Counsel for Defendants Of Counsel: John M. Desmarais, Esq., Jon T. Hohenthaner, Esq., Andrew G. Heinz, Esq., JeffreyS. Seddon, II, Esq., William D. Findlay, Esq., Desmarais LLP.

          MEMORANDUM OPINION

          Jordan Judge.

         I. Introduction

         On February 22, 2017, 1 entered a summary judgment order excluding Parallel Networks' theory of indirect infringement. (Docket Item ("D.I.") 367.) At the same time, I denied as moot a motion filed by IBM pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), that sought to exclude the testimony of Mr. John R. Bone (Parallel Networks' damages expert) relating to Parallel Networks' theory of indirect infringement. Shortly after I entered that order, IBM filed a motion in limine seeking to exclude all testimony from Mr. Bone. (D.I. 382 Ex. 6 at 14.) That motion is the subject of this opinion.[1]

         After the entry of partial summary judgment, IBM learned that Parallel Networks intended to use Mr. Bone's report to support a damages theory relating to the alleged direct infringement by IBM of the asserted patent claims via IBM's use of its website, IBM.com.[2] (D.I. 390 (Tr.)[3] at 30-31 ("[S]o we call Parallel Networks after the summary judgment ruling and we say we assume ... that you won't be calling Bone because he has no opinion on damages for IBM.com, [but] they say no, we're going to call him, he did discuss IBM.com.").) The parties now dispute whether Mr. Bone offered an opinion on damages related to such infringement, and, if Mr. Bone did offer that opinion, whether the opinion satisfies the requirements of Daubert and Federal Rule of Evidence 702.

         At the pre-trial conference, I expressed my preliminary views that Mr. Bone had not offered an opinion on damages related to that theory of direct infringement (id. at 41) and that IBM had "ma[de] a pretty strong Daubert case" (id. at 42), However, because the first round of motion-in-limine briefing was limited to only a few pages, I elected to give Parallel Networks a chance to more fully brief the significant issues in play. (Id. at 41 ("I want to give you a chance to more fully brief both [issues.]".)

         Having now reviewed the briefing and given the matter further consideration, I conclude that Mr. Bone did not offer an opinion on damages relating to IBM's use of its website and that any opinion he now purports to offer does not satisfy the requirements of Daubert and Rule 702.

         II. Legal Standards

         A. Adequate Disclosure

         Federal Rule of Civil Procedure 26(a)(2)(B)(i) requires that expert reports contain "a complete statement of all opinions the witness will express and the basis and reasons for them[.]" "If a party fails to provide information ... as required by Rule 26(a)... the party is not allowed to use that information ... at a trial, unless the failure was substantially justified or is harmless." Fed.R.Civ.P. 37(c)(1); Coal, to Save Our Children v. Bd. of Educ. of Del, 90 F.3d 752, 775-76 (3d Cir. 1996) (concluding that the district court did not abuse its discretion when it excluded undisclosed, "surprise" expert testimony). Together, Rules 26 and 37 provide trial courts with discretion to exclude opinions that are not disclosed in expert reports. Johnson v. Vanguard Mfg., Inc., 34 Fed.App'x 858, 859 (3d Cir. 2002) ("A party that fails to disclose evidence required by Rule 26(a) will not be allowed to use that evidence unless the failure to disclose the evidence is harmless."); Inline Connection Corp. v. AOL Time Warner Inc., 477 F.Supp.2d 604, 614-15 (D. Del. 2007) (granting motion to exclude an opinion that was not disclosed in an expert report); see also ZFMeritor, LLC v. Eaton Corp., 696 F.3d 254, 297 (3d Cir. 2012) ("A plaintiff omits evidence necessary to sustain a damages award at its own risk."). Adequate disclosure is important because it enables other parties to prepare for cross-examination, to seek other expert opinions, and to prepare their litigation positions. E.g., Metavante Corp. v. Emigrant Sav. Bank, 619 F, 3d 748, 762 (7th Cir. 2010).

         B. Expert Evidence

         The admissibility of expert testimony is governed by Federal Rule of Evidence 702. Under that rule, expert testimony is admissible only if it "will help the trier of fact to understand the evidence[, ] ... is based on sufficient facts or data[, ] .., is the product of reliable principles and methods[, ] and ... reliably applie[sj the principles and methods to the facts of the case." Fed.R.Evid. 702. The role of the district court is to serve as a "gatekeeper" - to protect the jury from evidence that is unreliable, confusing, or unduly prejudicial. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 145, 147-48 (1999); Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589-92 (1993). There must, in that regard, be both reliable methodology in the analysis and an adequate "fit" between the offered expert opinion and the facts at issue in the case. Daubert, 509 U.S. At 591 (quoting United States v. Downing, 753 F.2d 1224, 1242 (3d Cir. 1985)). Expert conclusions that do not have an adequate analytical connection to the facts are excludable. See Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997) ("A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered.").

         Pursuant to Federal Rule of Evidence 104, the burden of proof with respect to fit and reliability under Rule 702 lies on the party attempting to offer the expert evidence. See Fed. R. Evid. 702 advisory committee's note to 2000 amendment ("[T]he admissibility of all expert testimony is governed by the principles of Rule 104(a). Under that rule, the proponent has the burden of establishing that the pertinent admissibility requirements are met by a preponderance of the evidence.").

         III. ...


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