United States District Court, D. Delaware
REPORT AND RECOMMENDATION
CHRISTOPHER J. BURKE UNITED STATES MAGISTRATE JUDGE
before the Court in this patent infringement action is
Defendant Ubisoft Inc.'s ("Ubisoft" or
"Defendant") Daubert motion, filed
pursuant to Federal Rule of Evidence 702, which seeks to
strike the expert report of Plaintiff Princeton Digital Image
Corp.'s ("Plaintiff or "PDI") expert Mr.
David Yurkerwich and to exclude Mr. Yurkerwich's
testimony (the "Motion"). (D.I. 239) For the
reasons that follow, the Court recommends that Ubisoft's
Motion be GRANTED.
filed the instant case on February 27, 2013. (D.I. 1) On July
17, 2013, Chief Judge Leonard P. Stark referred this case to
the Court to hear and resolve all pretrial matters, up to and
including the resolution of case-dispositive motions. (D.I.
on the instant Motion was completed on October 26, 2018,
(D.I. 316), and the Court held oral argument on the Motion
(as well as another motion) on December 7, 2018. A 5-day
trial is set to begin on April 8, 2019. (D.I. I4\;see
also D.I. 15 at 11)
Court hereby incorporates by reference its discussion of the
legal standard applicable to review of Daubert
motions that are filed pursuant to Rule 702, which was set
out in a prior November 7, 2018 Report and Recommendation
("the November 7 R&R") in this matter. (D.I.
336) The November 7 R&R's discussion of the standard
of review focused in particular on the reliability and
relevance prongs of Daubert, which are the two
prongs at issue in the instant Motion. (D.I. 240 at 1)
Motion, Ubisoft makes three arguments as to why all or
portions of Mr. Yurkerwich's expert report should be
stricken. The Court will address these in turn.
Sony/Immersion Jury Verdict
Ubisoft asserts that: (1) the "anchor of Mr.
Yurkerwich's reasonably royalty damages analysis" is
his reliance in his initial expert report (the "initial
report") on "an $82 million jury verdict in a case
between unrelated parties (Sony [Computer Entertainment
America, Inc. ("Sony") and] Immersion [Corporation
("Immersion")]) relating to unrelated patents"
and (2) this renders Mr. Yurkerwich's reasonable royalty
conclusions unreliable. (D.I. 240 at 2-3; see also
D.I. 247, ex. 1 at ¶ 40) Some courts have appeared to
conclude that it is per se unreliable for a damages
expert, when attempting to establish a reasonable royalty for
infringement of the patent-in-suit, to rely on a jury verdict
from a different case involving entirely unrelated parties
and different patents. See, e.g., Acceleration Bay LLC v.
Activision Blizzard, Inc., 324 F.Supp.3d 470, 489 (D.
Del. 2018) (finding, in a case where the plaintiffs expert
sought to rely on a jury verdict in another litigation
involving unrelated parties and different patents in order to
establish a reasonable royalty for infringement of the
patents-in-suit, that "OJury determined damages are not
evidence of arm's-length negotiations between parties,
and will not help the trier of fact determine a
royalty"); Atlas IP, LLC v. Medtronic, Inc.,
No. 13-CIV-23309, 2014 WL 5741870, at *6 (S.D. Fla. Oct. 6,
2014) ("[I]t is self-evident jury-determined damages are
not evidence of arm's-length negotiations between
parties."). For example, in Acceleration Bay LLC v.
Activision Blizzard, Inc., 324 F.Supp.3d 470 (D. Del.
2018), a case from this Court, Judge Andrews suggested that
this type of jury verdict could never be a helpful data point
in the reasonable royalty calculus, in part because: (1) it
simply amounts to the "judgment of twelve (or maybe
fewer) random non-experts" or "at best, an informed
lay opinion" on the subject; and (2) it relates to
different technology than what is at issue in the present
case. 324 F.Supp.3d at 489.
Court is not prepared to say a patent damages expert may
never, under any circumstances, rely on a jury
verdict from a case involving different parties and different
patents in order to help frame what is a reasonable royalty
in a given case. Cf. 2-Way Computing, Inc. v. Sprint
Sols., Inc., No. 2:11-CV-12 JCM (PAL), 2015 WL 2365648,
at *5 (D. Nev. May 18, 2015) ("[T]he court has found no
rule that prohibits an expert from considering a jury verdict
in his royalty rate calculations if that jury verdict
pertains to a matter that is sufficiently comparable to the
instant matter."); In re Innovatio IP
Ventures, LLC Patent Litig., MDL Docket No. 2303, No. 11
C 9308, 2013 WL 5593609, at *33 (N.D. 111. Oct. 3, 2013)
(stating in a patent case that "jury verdicts can be
data points providing a comparable license rate for use in
hypothetical negotiations"). But under the facts here,
reliance on the Sony/Immersion verdict amounts to an
unreliable method of analysis.
so not only due to the inherent limitations involved in
relying on any such verdict, as described in Acceleration
Bay LLC-though those limitations are definitely a factor
in the Court's calculus. It is also due to
another reason that is relevant to this particular
jury verdict: the Sony/Immersion verdict form did not
indicate what royalty rate the jury actually applied to
controllers and games (i.e., the types of accused products at
issue in this case). (D.I. 247, ex. 2 at 15) This was because
the Sony/Immersion case involved accused products including
not just controllers and games, but also consoles. Even
though the Sony/Immersion verdict form shows that the jury
returned a verdict (of "$82 million"),
(id.), and even though the revenue base for all of
the different accused products combined could be discerned,
the verdict form did not indicate what amount of the damages
was associated with each of the various accused products at
issue (such that one would not know what the jury's
chosen royalty rate was only as to controllers, or only as to
games, or only as to consoles), (id., ex. 3 at
208-09, 214-16). As a result, Mr. Yurkerwich was required to
speculate or guess about what rate the Sony/Immersion jury
might have been allocating to controllers (he chose
2%) and games (he chose 5%) as opposed to consoles (he chose
0.99%); once Mr. Yurkerwich did that, he then blended his
chosen rate for controllers and games (to get a rate of
3.5%). (Id., ex. 1 at ex. 4.2; see also
id., ex. 1 at ¶ 50 (Mr. Yurkerwich noting that by
reviewing the Sony/Immersion verdict and a related court
order, he was able to ascertain how "the jury
potentially calculated the damages amount"
there and how the jury "may have obtained their
damages award") (emphasis added); id. at ¶
51 (Mr. ...