The opinion of the court was delivered by: Irma E. Gonzalez United States District Judge
ORDER GRANTING IN PART AND DENYING IN PART HTC'S MOTION TO EXCLUDE THE REVISED EXPERT OPINIONS OF [Doc. No. 212]
Presently before the Court is Defendant High Tech. Computer Corp. ("HTC")'s motion to exclude the revised expert opinions and testimony of Plaintiff DataQuill Limited ("DataQuill")'s damages expert, Joseph Gemini. [Doc. No. 212.] For the reasons below, the Court GRANTS IN PART and DENIES IN PART HTC's motion to exclude.
This is a patent infringement case concerning two patents. On May 2, 2000, the United States Patent and Trademark Office ("USPTO") issued U.S. Patent No. 6,504,304 ("the '304 Patent") to DataQuill. U.S. Patent No. 6,504,304 (filed May 2, 2000). On November 21, 2006, the USPTO issued U.S. Patent No. 7,139,591 ("the '591 Patent") to DataQuill. U.S. Patent No. 7,139,591 (filed Nov. 21, 2006). The '591 Patent is a continuation of the '304 Patent. See id. The technology at issue for both patents generally relates to handheld mobile devices with remote access capability and optional features such as touch sensitive screens or integrated cameras.
On March 24, 2008, DataQuill filed the present action against HTC alleging infringement of the '304 patent and the '591 patent. [Doc. No. 1, Compl.] Specifically, DataQuill alleges that HTC devices with the Android Operating System and HTC devices with the Microsoft Windows Phone 6.5 and 7.0 Operating Systems infringe certain claims of the patents-in-suit. [Doc. No. 149-4, Verified Expert Report of Dr. Daniel Van der Weide ("Van der Weide Expert Report") at 5-6.]
On September 26, 2011, HTC filed a motion to exclude the expert opinions and testimony of DataQuill's damages expert, Mr. Gemini. [Doc. No. 135.] HTC moved to have Mr. Gemini's testimony excluded on three grounds. [Id. at 1.] First, HTC argued that Mr. Gemini improperly inflated his royalty calculation by relying on HTC licenses that were not comparable to the hypothetical agreement at issue in this case. [Id.] Second, HTC argued that Mr. Gemini applied enhanced royalty rates for certain groups of claims without any factual support. [Id.] Third, HTC argued that Mr. Gemini used the total revenue of the accused products as his royalty base in violation of the entire market value rule. [Id.]
On December 1, 2011, the Court granted in part and denied in part HTC's motion to exclude Mr. Gemini's opinions and testimony. [Doc. No. 192.] The Court excluded Mr. Gemini's testimony to the extent he relied on the "significant patent agreements" in determining the reasonable royalty that would have been reached at the hypothetical negotiation. [Id. at 31-32.] The Court found that Mr. Gemini had not provided any evidence or analysis showing that the "significant patent agreements"--licenses between HTC and heavyweights in the telecommunications industry such as Qualcomm, Ericson, Nokia, Lucent, and Motorola for entire portfolios of patents--were economically comparable to the license that would have been reached at the hypothetical negotiation--a domestic license between HTC and DataQuill for two patents. [Id. at 31.] However, the Court declined to exclude Mr. Gemini's testimony on grounds two and three--that he applied enhanced royalty rates without any factual support and that his testimony violated the entire market value rule. [See id. at 32-37.]
On December 22, 2011, the Court granted DataQuill leave to serve an amended damages expert report. [Doc. No. 203] On January 31, 2012, DataQuill served on HTC Mr. Gemini's amended expert report. [Doc. No. 212-2, Superseding Expert Witness Report of Joseph Gemini ("Amended Gemini Expert Report").] On March 12, 2012, HTC filed the present motion to exclude the opinions and testimony of Mr. Gemini contained in his amended report. [Doc. No. 212] In the present motion, HTC argues that Mr. Gemini's opinions and testimony should be excluded for three reasons. First, HTC argues Mr. Gemini continues to rely on prior licenses that are not comparable to the hypothetical agreement--specifically, the Glenayre, Novatel, and HP licenses. [Id. at 4-11.] Second, HTC argues that Mr. Gemini may not rely on the Google revenue sharing agreement to bolster his reasonable royalty analysis. [Id. at 11-13.] Finally, HTC argues that Mr. Gemini cannot rely on the MPEG LA license to value the patents-in-suit. [Id. at 13-14.]
I. Legal Standard for a Motion to Exclude Expert Testimony
A district court's decision to admit expert testimony under Daubert in a patent case follows the law of the regional circuit. Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1390-91 (Fed. Cir. 2003). When considering expert testimony offered pursuant to Rule 702, the trial court acts as a "gatekeeper" by "making a preliminary determination of whether the expert's testimony is reliable." Elsayed Mukhtar v. Cal. State Univ., Hayward, 299 F.3d 1053, 1063 (9th Cir. 2002); see Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150 (1999); Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597 (1993). Under Rule 702 of the Federal Rules of Evidence, a court may permit opinion testimony from an expert only if such testimony "will assist the trier of fact" and "(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case."
The inquiry into admissibility of expert opinion is a "flexible one," where "[s]haky but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion." Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010) (citing Daubert, 509 U.S. at 594, 596). "Under Daubert, the district judge is 'a gatekeeper, not a fact finder.' When an expert meets the threshold established by Rule 702 as explained in Daubert, the expert may testify and the jury decides how much weight to give that testimony." Id. (quoting United States v. Sandoval-Mendoza, 472 F.3d 645, 654 (9th Cir. 2006)).
II. Legal Standard for Calculating Patent Damages
"Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court." 35 U.S.C. § 284. Two alternative methods exist for calculating damages in a patent case; they "are the patentee's lost profits and the reasonable royalty he would have received through arms-length bargaining." Lucent, 580 F.3d at 1324. DataQuill does not appear to contend that it is entitled to lost profits. [See generally Doc. No. 212-2, Amended Gemini Expert Report; Doc. No. 150.] Accordingly, ...