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Acceleration Bay LLC v. Activision Blizzard Inc.

United States District Court, D. Delaware

October 17, 2018

ACCELERATION BAY LLC, Plaintiff,
v.
ACTIVISION BLIZZARD INC., Defendant.

          MEMORANDUM ORDER

         Presently before the Court is Defendant's Motion to Preclude Inadmissible and Undisclosed Damages Theories and Evidence. (D.I. 581). The Parties have briefed the issues. (D.I. 581, 583, 587). For the reasons set out below, Defendant's Motion is GRANTED-IN-PART.

         I. Background

         On August 29, 2018, 1 excluded the opinion of Plaintiff s reasonable royalty expert, Dr. Christine Meyer, to the extent that it relied on a jury verdict from Uniloc USA, Inc. v. EA, No. 6:13-cv-00259-RWA (E.D. Tex. Dec. 15, 2014). (D.I. 578 at 27-28). This ruling led the parties to correspond regarding Plaintiffs damages case. (See D.I. 581 at 1; D.I. 583 at 4-5). In a letter dated September 21, 2018, Plaintiff described the evidence of damages it intends to provide at trial. (D.I. 581-1, Exh. 2). Plaintiff identified three royalty bases and a royalty rate of 15.5%. (Id.). Defendant takes issue with all the evidence supporting Plaintiffs proposed reasonable royalty.

         II. Discussion

         Reasonable royalty damages must be awarded if infringement is proven. See Dow Chemical Co. v. Mee Industries, Inc., 341 F.3d 1370, 1381-82 (Fed. Cir. 2003) (holding that district court erred in concluding that "no damages could be awarded, in light of the presumption of damages when infringement is proven"). "That reasonable royalty damages must be awarded if infringement is found, however, does not mean that the rules of evidence do not apply to proposed testimony." AVM Techs., LLC v. Intel Corp., 927 F.Supp.2d 139, 146 (D. Del. 2013).

         Plaintiff proposes to support its 15.5% royalty rate by presenting the jury with: (1) the testimony of John Garland, Plaintiffs Vice President of Licensing; (2) the testimony of John Ward, Plaintiffs CEO; (3) an "industry report" Plaintiff "had in its files" when researching industry rates; and (4) a document showing a royalty Defendant pays to Microsoft. (D.I. 583 at 9-10).

         /. Testimony of John Garland, Vice President of Licensing

         Plaintiff proposes that Mr. Garland will provide testimony, "based on his decades of experience licensing intellectual property," that in his opinion "the 15.5% starting point rate is consistent with ... the 'high profit, low cost' nature of licensing software." (D.I. 583 at 9). Defendant responds that Plaintiff did not offer Mr. Garland as an expert and he has not provided an expert report. (D.I. 587 at 4). Furthermore, Defendant argues that Mr. Garland cannot offer a lay opinion on this topic. (Id.).

         Mr. Garland cannot properly testify about a reasonable royalty in this case. Federal Rule of Evidence 701 precludes most opinion testimony by lay witnesses. It provides:

If a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is:
(a) rationally based on the witness's perception;
(b) helpful to clearly understanding the witness's testimony or to determining a fact in issue; and
(c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

(Fed. R. Ev. 701). An opinion on a reasonable royalty is necessarily based on specialized knowledge. Thus, because he is not serving as an expert, Mr. Garland's opinion that the ...


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