United States District Court, N.D. California
ORDER DENYING PLAINTIFF'S MOTION TO STRIKE CERTAIN EXPERT TESTIMONY OF LANCE GUNDERSON AND PLAINTIFF'S MOTION IN LIMINE NO. 4 Re: Dkt. Nos. 116, 162, 208
HAYWOOD S. GILLIAM, Jr., District Judge.
Pending before the Court are Plaintiff TVIIM, LLC's motion to strike certain expert testimony of Lance Gunderson and motion in limine No. 4 regarding evidence and argument that the joint venture agreement is a measure of damages. Dkt. Nos. 116, 162, 208. For the reasons stated below, the Court DENIES both motions.
The following facts are drawn from the parties' briefing and are not in dispute unless otherwise indicated.
On June 15, 1999, U.S. Patent Application No. 09/333, 547 ("the 547 Application") was filed on behalf of five named inventors. The 547 Application claimed the functionality of a security software program called HostCHECK. On August 20, 1999, the inventors assigned their interests in the 547 Application to their employer, DMW World Wide, Inc. ("DMW"). DMW did not commercialize HostCHECK.
The former owner of DMW, Frank Ricotta, Jr., sold the company in December of 2000 and founded a new security consulting firm called Innerwall, Inc. ("Innerwall"). Innerwall purchased HostCHECK and the pending 547 Application from DMW for $100, 000 in cash and a $25, 000 credit for unspecified costs ("Innerwall Transaction"). Innerwall also never commercialized HostCHECK.
In May of 2005, United States Patent No. 6, 889, 168 ("the 168 Patent") issued to Innerwall. The application that ultimately issued as the 168 Patent shares the same title and claims as the 547 Application.
In 2007, one of Innerwall's customers, Enterprise Information Management, Inc. ("EIM"), acquired certain interests of Innerwall, including the 168 Patent, in exchange for a 20% equity interest in EIM. EIM did not commercialize the 168 Patent. By the end of 2012, EIM was no longer generating revenues, in part due to the cancellation of a $50 million government contract in June 2012.
In January 2013, EIM entered into a joint venture with ThinkVillage Investments, LLC ("ThinkVillage"). Pursuant to the joint venture agreements, EIM contributed a portfolio of three patents and three patent applications-including the 168 Patent-and ThinkVillage agreed to fund, up to $1, 000, 000, the costs associated with the enforcement of the patent portfolio. EIM would have the right to recover any enforcement proceeds in excess of ThinkVillage's investment, up to the amount of that investment, and then 50% of any proceeds in excess of two times ThinkVillage's investment. The joint venture's operating agreement provides that the "fair market value" of the intellectual property contributed by EIM was $10, 000. See Dkt. No. 131-21 at VOCK000860, 893-95. Plaintiff TVIIM is the entity created by the joint venture agreements.
In late 2010, Defendant began developing a vulnerability scanner feature to add to its consumer computer security software products. In its motion to exclude, Plaintiff asserts that Defendant "had completed the coding of the intended features for the initial release" of the vulnerability scanner in April 2012 and "released for testing a beta version of [its software] that included the vulnerability scanner" in June 2012. Dkt. No. 116 ("Mot.") at 4. Defendant disputes Plaintiff's characterization of these facts. See Dkt. No. 131 ("Opp.") at 12-13. It is undisputed that Defendant began selling the version of its computer security software that includes the vulnerability scanner feature in October 2012.
Defendant retained Lance Gunderson as an expert in this litigation to opine on damages. In his affirmative opinion, Mr. Gunderson opines that "damages that would adequately compensate [Plaintiff] for [Defendant's] alleged infringement of the 168 patent is a fully paid up, lump-sum reasonable royalty between $10, 000 (the price of a portfolio including the 168 patent in January 2013) and $100, 000." Dkt. No. 207-1 ("Gunderson Report") at 5.
A. Legal Standard
Daubert v. Merrill Dow Pharmaceuticals, Inc.,
509 U.S. 579, 597 (1993), requires that expert testimony offered at trial "both rests on a reliable foundation and is relevant to the task at hand." Federal Rule of Evidence 702, amended in response to Daubert, allows an expert witness to offer opinion testimony if "(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 test is "not the correctness of the expert's conclusions but the soundness of his methodology." Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010) (internal quotation marks and citations omitted). "Under Daubert, the district judge is a gatekeeper, not a ...