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Viasat, Inc. v. Space Systems/Loral, Inc.

United States District Court, S.D. California

August 8, 2014



MARILYN L. HUFF, District Judge.

On April 10, 2014, Defendants Space Systems/Loral, Inc. and Loral Space & Communications, Inc. (collectively, "SS/L") filed a motion for judgment as a matter of law on damages. (Doc. No. 966.) On June 13, 2014, SS/L filed motions for judgment as a matter of law or for new trial regarding: breach of contract damages (Doc. No. 1046); reasonable royalty damages (Doc. No. 1036); lost profit damages (Doc. No. 1040); and double counting of damages (Doc. No. 1042). On July 11, 2014, Plaintiff ViaSat, Inc. ("ViaSat") filed an omnibus response in opposition to SS/L's motions. (Doc. No. 1120.) On July 25, 2014, SS/L filed replies in support of its motions. (Doc. Nos. 1145, 1147, 1155, 1157.) The Court held a hearing on August 7, 2014. Charles K. Verhoeven, Sean S. Pak, Adam B. Wolfson, and Michelle A. Clark appeared for ViaSat. William C. Carmody, Jacob W. Buchdahl, Joseph S. Grinstein, and Amanda K. Bonn appeared for SS/L. For the following reasons, the Court grants Defendants' motions for a new trial on damages.

On June 13, 2014, ViaSat filed a motion for prejudgment and post-judgment interest. (Doc. No. 1059.) On July 11, 2014, SS/L filed a response in opposition to ViaSat's motion. (Doc. No. 1097.) On July 25, 2014, ViaSat filed a reply in support of its motion. (Doc. No. 1151.) In light of the Court's order for a new trial on damages, the Court denies ViaSat's motion as moot.

I. Background

This case arises from a dispute between two companies in the satellite communications industry over contractual provisions and intellectual property. ViaSat is a corporation that develops commercial and military satellite and digital communication technologies. (Doc. No. 475 ¶¶ 9-11.) SS/L is in the business of manufacturing communications satellites and is a wholly owned subsidiary of Loral. (Doc. No. 475 ¶ 14; Doc. No. 901 at 90.) In 2006, ViaSat and SS/L began negotiating over the possibility of collaborating on a major satellite construction project ("ViaSat-1"). (Doc. No. 475 ¶ 32; Doc. No. 486 ¶ 32.) Eventually, ViaSat and SS/L entered into contractual agreements, including a contract for the construction of ViaSat-1 (the "Build Contract") and multiple nondisclosure agreements ("NDAs"). (Doc. No. 475 ¶¶ 40-51; Doc. No. 486 ¶¶ 40-51.)

Around the same time, SS/L commenced a separate satellite project with Hughes Network Systems ("Hughes") to build a satellite known as the Jupiter-1. (Doc. No. 475 ¶ 56; Doc. No. 486 ¶ 56.) According to ViaSat, SS/L gained access to confidential information about ViaSat's technologies over the course of the ViaSat-1 project and then passed this information on to Hughes for use on the Jupiter-1. (Doc. No. 475 ¶¶ 55-72.)

On February 1, 2012, ViaSat filed this lawsuit, and on November 14, 2013, it filed a fourth amended complaint. (Doc. Nos. 1, 475.) ViaSat alleged that SS/L and Loral had infringed United States Patents No. 8, 107, 875 ("the '875 patent"), No. 8, 010, 043 ("the '043 patent"), No. 8, 068, 827 ("the '827 patent"), and No. 7, 773, 942 ("the '942 Patent"). (Doc. No. 475 at 73-88, 89-104, 105-120, 121-136.) ViaSat also alleged that SS/L and Loral had breached the Build Contract and NDAs. ( Id. at 137-151.) SS/L filed counterclaims alleging that ViaSat had infringed United States Patents No. 6, 400, 696 and No. 7, 219, 132. (Doc. No. 486 at 38-40, 40-41.) ViaSat later withdrew its claims based on the '942 Patent, and SS/L withdrew its counterclaims. (See Doc. No. 842 at 8-9; Doc. No. 1014.)

The '043 Patent is entitled "Capacity Maximization for a Unicast Spot Beam Satellite System." (Doc. No. 501-2 at 6.) The '043 Patent involves the effects that interference and noise in a satellite system have on the system's data-carrying capacity. According to ViaSat, prior satellite designs sought to minimize interference in a satellite system so that the signal-to-interference ratio of the system ("C/I") would be greater than the signal-to-noise ratio ("C/N"). (Doc. No. 990 at 91-92.) According to ViaSat, the key insight of the '043 Patent was to instead allow an interference-dominated environment: that is, a satellite system in which C/I is less than C/N. (Id.) The '043 Patent discloses a method for adjusting the values of interference and noise in a system in order to maximize its data-carrying capacity, rather than attempting to limit interference. ( Id. at 92-95.)

The '827 patent is entitled "Non-interfering Utilization of Non-geostationary Satellite Frequency Band for Geostationary Satellite Communication." (Doc. No. 504-3 at 2; Doc. No. 901 at 12.) A satellite can be geostationary ("GSO"), meaning that the satellite orbits the earth so that it remains in a fixed location relative to the ground, or non-geostationary ("NGSO"), meaning that the satellite does not orbit the earth in synchronization with the earth's rotation. (Doc. No. 901 at 83-84; Doc. No. 990 at 141.) The Federal Communications Commission ("FCC") assigns one segment of radio frequencies preferentially to GSO satellites ("the GSO spectrum") and one segment preferentially to NGSO satellites ("the NGSO spectrum"). (See Doc. No. 1051-4.) The '827 Patent involves technology that enables a GSO satellite to use the NGSO spectrum without interfering with NGSO satellites. (Doc. No. 990 at 141-42.)

The '875 Patent is entitled "Placement of Gateways Near Service Beams." (Doc. No. 1053-2 at 2; Doc. No. 901 at 11.) Designers of satellite systems can achieve different outcomes through different geographic arrangements of gateway terminals and service beams. The purpose of the '875 Patent is to increase data-carrying capacity of a satellite system through a more efficient geographic placement of gateway terminals and service beams. (Doc. No. 923 at 248-49.)

Prior to trial, SS/L moved to exclude testimony based on an expert report from ViaSat's damages expert, Dr. Slottje. (Doc. No. 535.) In that motion, SS/L challenged Dr. Slottje's expert report on lost profit damages, arguing that ViaSat could not recover lost profit damages because it did not compete head-to-head with SS/L, and questioning certain assumptions on which Dr. Slottje made his calculations. ( Id. at 12-17.) SS/L also challenged Dr. Slottje's expert report as it related to reasonable royalty damages on the grounds that Dr. Slottje's royalty figure was unreasonably high and inappropriately based on non-comparable transactions. ( Id. at 20-28.) The Court ruled that Dr. Slottje could testify on ViaSat's lost profits and reasonable royalty damages, without prejudice to contemporaneous objection at the time of trial or request for an appropriate limiting instruction. (Doc. No. 772 at 12.)

In addition, SS/L filed a pretrial partial summary judgment motion asking the Court to limit damages stemming from ViaSat's breach of contract claims as a matter of law. (Doc. No. 538.) SS/L argued that no concepts disclosed in ViaSat's patent applications could be the basis for damages, nor could any pre-2008 disclosures. ( Id. at 18-20, 20-25.) The Court ruled that genuine issues of material fact precluded summary judgment. (Doc. No. 710.)

The parties tried their case to a jury beginning on March 25, 2014. (Doc. No. 901.) The jury reached a verdict on April 24, 2014. (Doc. No. 1021 at 3.) The jury determined that SS/L was liable for breach of contract and infringement of the '043, '827, and '875 patents based on the Jupiter-1. (Doc. No. 1014.) The jury awarded reasonable royalty damages and lost profits damages for all three patents, as well as breach of contract damages. (Id.) The jury found no contributory or induced infringement, no infringement by the NBN satellite, and no liability for Loral. (Id.)

In its post-trial motions, SS/L asks the Court to rule that, as a matter of law under Rule 50(b) of the Federal Rules of Civil Procedure, ViaSat is not entitled to the damages that the jury awarded. Alternatively, SS/L moves for a new trial on damages pursuant to Rule 59. (Doc. Nos. 966, 1036, 1040, 1042, 1046.)

II. Legal Standards

A. Legal Standard for Judgment as a Matter of Law

The law of the regional circuit, here the Ninth Circuit, governs the standards for deciding a Rule 50 motion for judgment as a matter of law. See, e.g., Leader Techs., Inc. v. Facebook, Inc. , 678 F.3d 1300, 1305 (Fed. Cir. 2012). Under Federal Rule of Civil Procedure 50, a court should render judgment as a matter of law when "a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue...." Fed.R.Civ.P. 50(a)(1); see Reeves v. Sanderson Plumbing Prods. , 530 U.S. 133, 149 (2000). In other words, the jury verdict should be overturned and motion for judgment as a matter of law granted if the evidence "permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict." Pavao v. Pagay , 307 F.3d 915, 918 (9th Cir. 2002); accord Lucent Techs., Inc. v. Gateway, Inc. , 580 F.3d 1301, 1309 (Fed. Cir. 2009); see also Hangarter v. Provident Life & Accident Ins. Co. , 373 F.3d 998, 1005 (9th Cir. 2004) ("Judgment as a matter of law should be granted only if the verdict is against the great weight of the evidence, or it is quite clear that the jury has reached a seriously erroneous result.'").

In deciding a motion for judgment as a matter of law, the district court must view the evidence in the light most favorable to the non-moving party and draw all reasonable evidentiary inferences in favor of the non-moving party. Reeves , 530 U.S. at 150; Lakeside-Scott v. Multnomah Cnty. , 556 F.3d 797, 802 (9th Cir. 2009). A district court must uphold a jury's verdict even if the record contains evidence that might support a contrary conclusion to the jury's verdict. Pavao , 307 F.3d at 918. The court "is not to make credibility determinations or weigh the evidence." Wintaro v. Toshiba Am. Elec. Components, Inc. , 274 F.3d 1276, 1283 (9th Cir. 2001). "The court must accept the jury's credibility findings consistent with the verdict." Id . (internal quotation marks omitted). Finally, the district court must "accept the jury's credibility findings consistent with the verdict" and "disregard all evidence favorable to the moving party that the jury is not required to believe" because "[w]hen two sets of inferences find support in the record, the inferences that support the jury's verdict of course win the day." Wintaro , 274 F.3d at 1283, 1286-87.

B. Legal Standard for New Trial

Under Federal Rule of Civil Procedure 59(a), a court may grant a new trial on some or all of the issues and to any party after a jury trial. Fed.R.Civ.P. 59(a)(1). Rule 59 does not specify specific grounds for new trial, but a court is bound to grant a new trial for "grounds that have been historically recognized." Zhang v. Am. Gem Seafoods, Inc. , 339 F.3d 1020, 1035 (9th Cir. 2003); Molski v. M.J. Cable, Inc. , 481 F.3d 724, 729 (9th Cir. 2007) (internal citations and quotation marks omitted). In patent cases, the law of the regional circuit, here the Ninth Circuit, governs the standards for deciding a Rule 59 motion for new trial. Finisar Corp. v. DirecTV Grp, Inc. , 523 F.3d 1323, 1328 (Fed. Cir. 2008). In the Ninth Circuit, "a district court may not grant a new trial simply because it would have arrived at a different verdict." Wallace v. City of San Diego , 479 F.3d 616, 630 (9th Cir. 2007) (quoting Silver Sage Partners, Ltd. v. City of Desert Hot Springs , 251 F.3d 814, 818 (9th Cir. ...

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