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Evolved Wireless, LLC v. Apple, Inc.

United States District Court, D. Delaware

March 12, 2019

EVOLVED WIRELESS, LLC, Plaintiff,
v.
APPLE INC., Defendant. EVOLVED WIRELESS, LLC, Plaintiff,
v.
HTC CORPORATION and HTC AMERJCA, INC., Defendants. EVOLVED WIRELESS, LLC, Plaintiff,
v.
LENOVO GROUP LTD., LENOVO UNITED STATES INC., and MOTOROLA MOBILITY, Defendants. EVOLVED WIRELESS, LLC, Plaintiff,
v.
SAMSUNG ELECTRONICS CO., LTD. and SAMSUNG ELECTRONICS AMERICA, INC. Defendants EVOLVED WIRELESS, LLC, Plaintiff,
v.
ZTE (USA) INC., Defendant. EVOLVED WIRELESS, LLC, Plaintiff,
v.
MICROSOFT CORPORATION, MICROSOFT MOBILE OY and NOKIA INC., Defendants.

          MEMORANDUM AND ORDER

          JOSEPH F. BATAILLON, SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the Court on the following motions: defendant Apple Inc.'s (“Apple”) motion (D.I. 275)[1] and the joint motion by defendants in the above captioned related cases (“the defendants”)(D.I. 278)[2] to preclude testimony of Dr. Jonathan D. Putnam pursuant to Federal Rule of Evidence 702; the defendants' motion to preclude the testimony of Dr. Todor Cooklev under Federal Rules of Evidence 702 and 403 (D.I. 280);[3] and plaintiff Evolved Wireless LLC's (“Evolved”) motion to preclude the defendants' experts Ms. Shirley Webster, Dr. Michael Walker, Dr. Vernon Palmer, and Dr. Harry Bims) (D.I. 283).

         I. LAW

         In Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993), the Supreme Court explained that Federal Rule of Evidence 702 creates “a gatekeeping role for the [trial] judge” in order to “ensur[e] that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand.” In general, the Federal Circuit applies the law of the otherwise applicable regional circuit to issues not unique to patent law, including the admissibility of expert testimony. Summit 6, LLC v. Samsung Elecs. Co., 802 F.3d 1283, 1294 (Fed. Cir. 2015) (“Whether proffered evidence is admissible at trial is a procedural issue not unique to patent law, and we therefore review the district court's decision to admit expert testimony under the law of the regional circuit”).

         The rule requires that expert testimony “help the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid. 702(a). Expert testimony is admissible only if “the testimony is based on sufficient facts or data, ” “the testimony is the product of reliable principles and methods, ” and “the expert has reliably applied the principles and methods to the facts of the case.” Fed.R.Evid. 702(b)-(d). The Third Circuit explains: “Rule 702 embodies a trilogy of restrictions on expert testimony: qualification, reliability and fit.” Schneider ex rel. Estate of Schneider v. Fried, 320 F.3d 396, 404 (3d Cir. 2003). Qualification refers to the requirement that the witness possess specialized expertise and the Third Circuit “interpret[s] this requirement liberally, holding that ‘a broad range of knowledge, skills, and training qualify an expert.'” Schneider, 320 F.3d at 404 (quoting In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 742 (3rd Cir. 1994)). “Secondly, the testimony must be reliable; it ‘must be based on the ‘methods and procedures of science' rather than on ‘subjective belief or unsupported speculation” and “the expert must have ‘good grounds' for his or her belief.” Id. (quoting In re Paoli, 35 F.3d at 742. Finally, Rule 702 requires that the expert testimony must fit the issues in the case. Id.“In other words, the expert's testimony must be relevant for the purposes of the case and must assist the trier of fact.” Id. (noting that Rule 702's “helpfulness” standard requires a valid scientific connection to the pertinent inquiry as a precondition to admissibility).

         An expert's opinion on a legal conclusion “is neither necessary nor controlling.” See High Point Design LLC v. Buyers Direct, Inc., 730 F.3d 1301, 1313 (Fed. Cir. 2013) (quoting Avia Grp. Int'l, Inc. v. L.A. Gear Cal., Inc., 853 F.2d 1557, 1564 (Fed.Cir.1988), abrogated on other grounds by Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) (en banc). That said, an expert's opinion may be relevant to the factual aspects of the analysis leading to that legal conclusion. Id. When an expert's methodology is sound, and the evidence relied upon is sufficiently related to the case at hand, disputes about the degree of relevance or accuracy (above this minimum threshold) may go to the testimony's weight, but not its admissibility.” i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 852 (Fed. Cir. 2010), aff'd, 564 U.S. 91 (2011).

         An expert should not be excluded “simply because the trial court does not deem the proposed expert to be the best qualified or because the proposed expert does not have the specialization that the court considers most appropriate.” Pineda v. Ford Motor Co., 520 F.3d 237, 244 (3d Cir. 2008) (allowing an engineer to testify about the inadequacy of a service manual warning for an automobile liftgate, even though the expert had not designed automobile liftgates or drafted service manuals). The question of whether the expert is credible, or the opinion is correct, is generally a question for the fact finder, not the court. Summit 6, LLC, 802 F.3d at 1296; see Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1314 (Fed. Cir. 2014), overruled en banc in part not relevant here, Williamson v. Citrix Online, LLC, 792 F.3d 1339, 1349 (Fed. Cir. 2015). “Indeed, ‘[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.'” Summit 6, LLC, 802 F.3d at 1296 (quoting Daubert, 509 U.S. at 596).

         The Federal Circuit Court of Appeals recognizes that estimating a reasonable royalty is not an exact science. Id.The record may support a range of reasonable royalties, rather than a single value. Id. Likewise, there may be more than one reliable method for estimating a reasonable royalty.” Id.(quoting Apple, 757 F.3d at 1315). An expert's proposed reasonable royalty rate must be tied to the facts of the case. Exmark Mfg. Co. Inc. v. Briggs & Stratton Power Prods. Grp., LLC, 879 F.3d 1332, 1349 (Fed. Cir. 2018). “Questions about what facts are most relevant or reliable to calculating a reasonable royalty are for the jury.” i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 856 (Fed. Cir. 2010), aff'd, 564 U.S. 91 (2011).

         When the accused infringing products have both patented and unpatented features, measuring this value requires a determination of the value added by such features. Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014). Also, when dealing with SEPs, not only must the patented feature be apportioned from all the unpatented features reflected in the standard, but the royalty must be premised on the value of the patented feature, not any value added by the standard's adoption of the patented technology. Id. at 1232. The question of whether license agreements are sufficiently comparable generally goes to the weight of the evidence, not its admissibility. Id. at 1227-28.

         As with other testimony, even expert testimony that is relevant and reliable may be challenged under Federal Rules of Evidence 403, which permits the exclusion of evidence on grounds of prejudice, confusion or waste of time. SeeFed. R. Evid. 403; Banks v. United States, 93 Fed.Cl. 41, 47 (2010) (“And, as with other testimony, even expert testimony which is relevant and reliable may be challenged under FRE 403, which permits the exclusion of evidence on grounds of prejudice, confusion or waste of time”). Under Rule 403, “the probative value of the evidence must be ‘substantially outweighed by the danger of unfair prejudice . . .' before it may be excluded.” Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 1581 (Fed. Cir. 1993) (emphasis in original). “Unfair prejudice” within its context means an undue tendency to suggest decision on an improper basis, commonly, though not necessarily, an emotional one. Id.; see Rule 403 Advisory Committee Note.

         II. DISCUSSION

         A. Defendants' Motions

1. Dr. Jonathan D. Putnam
a. Apple's Motion (D.I. 275)

         Dr. Putnam is Evolved's damages expert. Apple challenges Dr. Putnam's “top-down” approach to calculate per patent royalty rates. It also challenges Dr. Putman's calculation of damages using a lump-sum payment structure, in recognition of Apple's strong preference, and common practice, of structuring license agreements as a lump sum, and LGE's preference for lump sum compensation in negotiations for a license agreement with Apple.

         Apple asserts that Dr. Putnam's lump-sum damages calculation includes damages for future Apple products that Evolved has not accused in this case. It contends Dr. Putnam's lump-sum methodology is flawed in that seeking damages for these products violates the basic principle that a plaintiff in a patent suit may only be awarded damages for an infringer's use of the patented invention in infringing products, arguing that if a product is not accused in the case, it cannot be an infringing product.[4]

         In opposition, Evolved contends that a lump sum royalty determination may consider sales of future products. It points to the difference between a lump-sum and a running royalty and argues that Dr. Putnam was justified in looking to forecasts of Apple's future LTE sales to support his lump sum calculation. Evolved asserts that the credibility of any forecast is an issue of weight that should be left for the jury.

         The Court finds Apple's motion should be denied. Any alleged flaws in the expert's damages theory concern the weight to be afforded the testimony, not its admissibility. Effective cross-examination and the presentation of contrary evidence should be adequate to prevent the jury from being misled. Challenges to the testimony may require a ...


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