United States District Court, S.D. California
CARUCEL INVESTMENTS, L.P., a Delaware limited partnership, Plaintiff,
NOVATEL WIRELESS, INC., a Delaware corporation; VERIZON COMMUNICATIONS, INC., a Delaware corporation; and CELLCO PARTNERSHIP d/b/a/VERIZON WIRELESS, a Delaware general partnership, Defendants.
(1) GRANTING IN PART AND DENYING IN PART PLAINTIFF'S
DAUBERT MOTIONS; [DOC. NOS. 163, 210.] (2) DENYING WITHOUT
PREJUDICE DEFENDANTS' DAUBERT MOTIONS; [DOC. NOS. 154,
207.] (3) DENYING WITHOUT PREJUDICE PLAINTIFF'S MOTIONS
IN LIMINE; AND [DOC. NOS. 232, 233, 234, 235.] (4) GRANTING
IN PART AND DENYING PART DEFENDANTS' MOTIONS IN LIMINE
[DOC. NOS. 238, 239, 240, 241, 242, 287.]
MARILYN L. HUFF, District Judge
January 27 and February 24, 2017, the parties each filed
Daubert motion to exclude portions of the testimony
and opinions of the opposing party's damages expert.
(Doc. Nos. 154, 163, 207, 210.) On March 20, 2017, the
parties filed their respective oppositions to the
Daubert motions. (Doc. Nos. 248, 249, 256, 257.) On
March 27, 2017, the parties filed their respective replies.
(Doc. Nos. 267, 274, 279, 280.)
March 13, 2017, the parties each filed their respective
motions in limine. (Doc. Nos. 232, 233, 234, 235, 238, 239,
240, 241, 242.) On March 20, 2017, the parties filed their
respective oppositions to the motions in limine. (Doc. Nos.
252, 253, 254, 255, 258, 259, 260, 261, 262.) On March 27,
2017, the parties filed their respective replies. (Doc. Nos.
268, 269, 270, 271, 272, 281, 282, 283, 284.)
Court held a hearing on the matter on April 3, 2017. Robert
F. Ruyak, Robert M. Harkins, Jr., and Michael K. Lindsey
appeared for Plaintiff. Amardeep L. Thakur, David M. Grable,
Joshua L. Sohn, and Viola Trebicka appeared for Defendants.
For the reasons below, the Court: (1) grants in part and
denies in part without prejudice Plaintiff's
Daubert motions; (2) denies without prejudice
Defendants' Daubert motions; (3) denies without
prejudice Plaintiff's motions in limine; and grants in
part and denies in part without prejudice Defendants'
motions in limine.
27, 2015, Plaintiff Carucel Investments, L.P. filed a
complaint for patent infringement in the United States
District Court for the Southern District of Florida against
Defendants Novatel Wireless, Inc., AT&T Mobility LLC,
Verizon Communications, Inc., and TigerDirect, Inc., alleging
infringement of U.S. Patent No. 7, 221, 904, U.S. Patent No.
7, 848, 701, U.S. Patent No. 7, 979, 023, U.S. Patent No. 8,
463, 177, U.S. Patent No. 8, 718, 543, and U.S. Patent No. 8,
849, 191. (Doc. No. 1, Compl.) Specifically,
Plaintiff alleges that Defendants' mobile broadband
hotspot devices, their MiFi devices, infringe the
patents-in-suit. (Id. ¶¶ 28-29.)
September 15, 2015, Carucel dismissed its claims against
Defendant TigerDirect, Inc. with prejudice. (Doc. No. 11.) On
December 16, 2015, Carucel filed a first amended complaint
alleging infringement of the same six patents and adding as a
new Defendant Cellco Partnership d/b/a Verizon Wireless.
(Doc. No. 58.)
January 15, 2016, the action was transferred to the Southern
District of California. (Doc. Nos. 69-70.) On September 19,
2016, the Court issued a claim construction order construing
the disputed terms in the patents-in-suit. (Doc. No. 131.) On
December 9, 2016, the Court dismissed Defendant AT&T with
prejudice. (Doc. No. 139.) On March 2, 2017, the Court denied
Defendants' motion for summary judgment. (Doc. No. 226.)
patents-in-suit are all entitled “Mobile Communication
System with Moving Base Station” and share an
essentially identical specification. (See Doc. No.
1, Compl. Exs. A-C, E-F.) The invention disclosed in the
patents-in-suit “relates to cellular telephone systems
in which a mobile unit communicates by wireless communication
to a base station connection to the wire telephone network
and more particularly to cellular telephone systems adapted
for use with fast-moving mobile units.” '904 Patent
at 1:16-19. The specification details the problems that prior
art telecommunications systems have with fast-moving mobile
units, particularly the problem of dealing with transfers of
fast-moving mobile units between stationary cell sites as the
mobile units move through the cellular network. See
id. at 1:22-2:61. The specification provides the
following summary of the invention:
These and other problems of the prior art are overcome in
accordance with this invention by means of a moving base
station which is interposed between a moving mobile telephone
unit and a fixed base station. In accordance with this
invention, a movable base station moves with the traffic at a
rate of speed which is comparable to the speed of the traffic
and communicates with a moving mobile telephone unit via
standard mobile radio transmission. The movable base station
further communicates by radio signals with a plurality of
fixed antennas spaced along the path of travel of the mobile
base station. The several fixed antennas are connected to a
telephone wire line network via a telephone gateway office in
a standard fashion. In accordance with this invention, the
fixed radio ports are synchronized and the interface between
the moving base station and the fixed radio ports is a time
division multiplexed (TDM)-direct-sequence, spread-spectrum
Id. at 3:18-34. Figure 1 of the '904 patent
displays an embodiment of the claimed system:
example of the claimed invention, Claim 22 of the '904
An apparatus adapted to move in accordance with a movement of
a mobile unit moving relative to a plurality of fixed radio
ports, the apparatus comprising:
a receiver adapted to receive a plurality of signals, each of
the plurality of signals transmitted from each of the
plurality of fixed radio ports within a frequency band having
a lower limit greater than 300 megahertz;
a transmitter adapted to transmit, within the frequency band,
a resultant signal to the mobile unit in accordance with at
least one of the plurality of signals; and
a processor adapted to maximize an amount of transferred
information to the mobile unit by evaluating a quality of
each of the plurality of signals transmitted from the
plurality of fixed radio ports.
Id. at 12:65-13:11. Currently, Plaintiff asserts
that Defendants' accused products (the MiFi 5510L, MiFi
6620, MiFi 4510L, MiFi 4620, and MiFi 2200) literally
infringe claims 22 and 30 of the '904 patent; claims 10
and 15 of the '701 patent; claims 11 and 23 of the
'023 patent; and claim 10 of the '543 patent. (Doc.
No. 198; Doc. No. 277 at 5-6.) By the present motions, the
parties move to exclude certain opinions, arguments,
testimony and evidence from the trial.
Legal Standards for Daubert Motions
district court's decision to admit expert testimony under
Daubert in a patent case is governed by the law of
the regional circuit. Summit 6, LLC v. Samsung Elecs.
Co., 802 F.3d 1283, 1294 (Fed. Cir. 2015). 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,
509 U.S. at 597. Under Rule 702 of the Federal Rules of
Evidence, a court may permit opinion testimony from an expert
only if “(a) the expert's scientific, technical, or
other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b)
the testimony is based on sufficient facts or data; (c) the
testimony is the product of reliable principles and methods;
and (d) the expert has reliably applied the principles and
methods to the facts of the case.”
test for reliability of expert testimony is flexible and
depends on the particular circumstances of the case.
Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc.,
738 F.3d 960, 969 (9th Cir. 2013). “To aid courts in
exercising [their] gatekeeping role, the Supreme Court has
suggested a non-exclusive and flexible list of factors that a
court may consider when determining the reliability of expert
testimony, including: (1) whether a theory or technique can
be tested; (2) whether it has been subjected to peer review
and publication; (3) the known or potential error rate of the
theory or technique; and (4) whether the theory or technique
enjoys general acceptance within the relevant scientific
community.” Messick v. Novartis Pharm. Corp.,
747 F.3d 1193, 1197 (9th Cir. 2014); Estate of Barabin v.
AstenJohnson, Inc., 740 F.3d 457, 463 (9th Cir. 2014)
(en banc). The Ninth Circuit has stressed that this list of
factors is meant to be helpful, not definitive. Alaska
Rent-A-Car, 738 F.3d at 969.
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.” Primiano v. Cook, 598
F.3d 558, 564-65 (9th Cir. 2010). “‘[T]he test
under Daubert is not the correctness of the
expert's conclusions but the soundness of his
methodology.'” Primiano, 598 F.3d at 564.
“Shaky but admissible evidence is to be attacked by
cross examination, contrary evidence, and attention to the
burden of proof, not exclusion.” Id. (citing
Daubert, 509 U.S. at 594, 596); accord Summit
6, 802 F.3d at 1296. “Basically, the judge is
supposed to screen the jury from unreliable nonsense
opinions, but not exclude opinions merely because they are
impeachable.” Alaska Rent-A-Car, 738 F.3d at
969. Further, the Ninth Circuit has explained that
“Rule 702 should be applied with a ‘liberal
thrust' favoring admission.” Messick, 747
F.3d at 1196.
to admit or exclude expert testimony lies within the trial
court's discretion. Gen. Elec. Co. v. Joiner,
522 U.S. 136, 141-42 (1997); United States v.
Verduzco, 373 F.3d 1022, 1032 (9th Cir. 2004) (“We
. . . have stressed that the ‘trial court has broad
discretion to admit or exclude expert
testimony'.”). The Ninth Circuit has explained that
“[a] trial court not only has broad latitude in
determining whether an expert's testimony is reliable,
but also in deciding how to determine the testimony's
reliability.” Ellis v. Costco Wholesale Corp.,
657 F.3d 970, 982 (9th Cir. 2011).
Plaintiff's Daubert Motions
two Daubert motions, Plaintiff moves to exclude
certain opinions contained in Defendants' damages expert
Dr. McDuff's rebuttal expert report and his supplemental
rebuttal expert report for various reasons. (Doc. Nos. 167,
210-1.) The Court addresses each of these challenges in turn
expert report, Dr. McDuff applies a two-step apportionment to
the relevant royalty base to determine the reasonable royalty
in this case. (Doc. No. 168-1, McDuff Report at 43.) First,
Dr. McDuff reduces the royalty base according to survey data
regarding the use of the MiFi that occurs while the user and
device are in transit - what Defendants refer to as a
“relevant use apportionment.” (Id. at
21, 43, 52-55.) Second, Dr. McDuff reduced the royalty base
by comparing the price of later models of the accused
products to the original MiFi 2200 in order to account for
the value of non-infringing features - what Defendants refer
to as a “price-based apportionment.”
(Id. at 43, 53.) Plaintiff argues that Dr.
McDuff's apportionment opinions should be excluded. (Doc.
No. 167 at 3-14.)
initial matter, Plaintiff argues that Dr. McDuff's
analysis is inappropriate because he engages in a double
apportionment. (Doc. No. 167 at 6.) In response, Defendants
argue that Plaintiff's challenge to Dr. McDuff's
two-step apportionment is not supported by any authority and
this his two-step apportionment was proper. (Doc. No. 268 at
Court agrees with Defendants. Plaintiff has failed to provide
the Court with any authority holding that it is improper for
a damages expert to engage in a two-step apportionment. To
the contrary, the Federal Circuit has sanctioned multi-step
apportionments in appropriate circumstances. See,
e.g., Summit 6, 802 F.3d at 1296-97 (approving
the damages expert's multi-step apportionment).
Accordingly, the Court declines to exclude Dr. McDuff's
analysis on the basis that he utilizes a two-step
argues that the Court should exclude Dr. McDuff's use
apportionment because it is based on the incorrect assumption
that the accused products have non-infringing uses. (Doc. No.
167 at 3-7.) Plaintiff explains that the claims at issue are
apparatus claims, not method claims, and, under patent law,
unlike with a method claim, a device that directly infringes
an apparatus claim always infringes. (Id. at 5.)
Plaintiff argues, therefore, that it was improper for Dr.
McDuff to restrict the economic value of the patents-in-suit
to the period in which the accused devices are used at high
response, Defendants argue that Dr. McDuff does not
improperly assume that the accused products only infringe
when used at high speeds. (Doc. No. 288 at 7-8.) Defendants
argue that Dr. McDuff properly utilizes data showing how
often MiFi users actually utilize the claimed inventions
technology to determine the actual economic value of the
patents-in-suit. (Id. at 3-4, 8-9.)
Court recognizes that system and apparatus claims do not
require the performance of any method steps and can be
infringed by a device that is merely capable of operating in
the relevant infringing mode even if it even though it may
also be capable of noninfringing modes of operation.
Finjan, Inc. v. Secure Computing Corp., 626 F.3d
1197, 1204 (Fed. Cir. 2010). Nevertheless, how often a user
of an accused device actually uses the relevant infringing
technology can be relevant to the reasonable royalty
determination. The Federal Circuit has “has sanctioned
the use of the Georgia-Pacific factors to frame the
reasonable royalty inquiry.” Uniloc USA, Inc. v.
Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 2011).
Georgia-Pacific factor 10 considers
“‘the nature of the patented invention, its
character in the commercial embodiment owned and produced by
the licensor, and the benefits to those who used
it.'” AstraZeneca AB v. Apotex Corp., 782
F.3d 1324, 1338 (Fed. Cir. 2015). How often a user of an
accused product actually utilizes the infringing technology
is relevant to an analysis of how the claimed invention
benefits the user, regardless of whether the claimed
invention involves system/apparatus or method claims. Cf.
Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301,
1327 (Fed. Cir. 2009) (“the more frequently most
inventions are used, the more valuable they generally
Court's role is not to make credibility decisions in
deciding a Daubert issue. See Primiano, 598
F.3d at 564-65. The patent's benefit to the user is a
recognized factor under Georgia-Pacific. As a
result, the proper apportionment, if any, based on use goes
to the weight of the damages expert's testimony, not its
admissibility. See Finjan, Inc. v. Blue Coat Sys.,
Inc., No. 13-CV-03999-BLF, 2015 WL 4272870, at *6 (N.D.
Cal. July 14, 2015). The Ninth Circuit has explained that
“[s]haky but admissible evidence is to be attacked by
cross examination, contrary evidence, and attention to the
burden of proof, not exclusion.” Primiano, 598
F.3d at 564; accord Summit 6, 802 F.3d at 1296.
Accordingly, the Court declines to exclude Dr. McDuff's
use apportionment at this time.
also challenges the usage data relied on by Dr. McDuff to
perform his use apportionment. (Doc. No. 167 at 7-12.)
Plaintiff argues that Dr. McDuff cannot rely on the Verizon
“Use Survey” and the “American Time Use
Survey” because the surveys are heavily flawed and
contain incomplete and speculative data. (Id.)
response, Defendants argue that Dr. McDuff's reliance on
these usage statistics is reasonable and reliable. (Doc. No.
288 at 11-14.) Defendants argue that any flaws contained in
the surveys are matters for cross-examination, not exclusion.
(Id. at 12.)
expert report to perform his use apportionment, Dr. McDuff
relies on data Verizon collected from users of the accused
products during two 24-hour periods in two cities. (Doc. No.
168-1, McDuff Report at 21-22, Attachment D-2.) In addition,
Dr. McDuff relies on an “American Time Use Survey,
” which is based on a Bureau of Labor Statistics 2015
survey of “American Time Use, ” and a Department
of Transportation 2001 National Household Travel Study.
(Id. at 22-23, Attachment D-3.)
Ninth Circuit has “long held that survey evidence
should be admitted ‘as long as [it is] conducted
according to accepted principles and [is]
relevant.'” Fortune Dynamic, Inc. v.
Victoria's Secret Stores Brand Mgmt., Inc., 618 F.3d
1025, 1036 (9th Cir. 2010).
Ninth Circuit has explained that:
Treatment of surveys is a two-step process. First, is the
survey admissible? That is, is there a proper foundation for
admissibility, and is it relevant and conducted according to
accepted principles? This threshold question may be
determined by the judge. Once the survey is admitted,
however, follow-on issues of methodology, survey design,
reliability, the experience and reputation of the expert,
critique of conclusions, and the like go to the weight of the
survey rather than its admissibility. These are issues for a
jury or, in a bench trial, the judge.
Clicks Billiards, Inc. v. Sixshooters, Inc., 251
F.3d 1252, 1263 (9th Cir. 2001); see also Wendt v. Host
Int'l, Inc., 125 F.3d 806, 814 (9th Cir. 1997)
(“Challenges to survey methodology go to the weight
given the survey, not its admissibility.”).
the usage data relied on by Dr. McDuff is relevant to the
reasonable royalty determination in this case, specifically,
as explained above, it is relevant to an analysis of at least
Georgia-Pacific factor 10. See also Lucent,
580 F.3d at 1327 (explaining that usage data can, under
appropriate circumstances, be relevant to the reasonable
royalty determination, and that such data may come from
surveys and other sources). Plaintiff raises several
challenges to the methodologies contained in the surveys and
the conclusions Dr. McDuff draws from the surveys. (Doc. No.
167 at 7-12.) But those challenges go to the weight to be
given the surveys, not their admissibility. See Clicks
Billiards, 251 F.3d at 1263; see also Wendt,
125 F.3d at 814. Thus, the surveys are admissible, and Dr.
McDuff may appropriately rely on the data contained in the
surveys under Federal Rule of Evidence 703 to form his
damages opinions. See i4i Ltd. P'ship v. Microsoft
Corp., 598 F.3d 831, 856 (Fed. Cir. 2010) (holding that
district court did not abuse its discretion in admitting
usage survey into evidence and allowing damages expert to
rely on the survey under Rule 703). Accordingly, the Court
declines to exclude Dr. McDuff's reliance on the usage
statistics in his expert report.
argues that Dr. McDuff's price-based apportionment should
be excluded because it violates the entire market value rule.
(Doc. No. 167 at 12-14.) Specifically, Plaintiff argues that
this apportionment runs afoul of the entire market value rule
because Dr. McDuff fails to identify or analyze the
components of the accused products to determine what
components are infringing and non-infringing. (Id.
response, Defendants argue that Dr. McDuff's analysis
does not violate the entire market value because his
reasonable royalty determination is not based on the entire
market value of the accused products. (Doc. No. 288 at 14.)
Defendants argue that contrary to Plaintiff's assertions,
the entire market value rule does not mandate a single
correct methodology for performing an apportionment.
Court rejects Plaintiff's arguments. The Court agrees
with Defendants that Dr. McDuff's analysis does not
violate the entire market value rule because his reasonable
royalty analysis is not based on the entire market value of
the accused products. Under the entire market value rule, a
party “can rely on the end product's entire market
value as the royalty base” only if the party “can
prove that the patented invention drives demand for the
accused end product.” Commonwealth Sci. &
Indus. Research Organisation v. Cisco Sys., Inc., 809
F.3d 1295, 1302 (Fed. Cir. 2015). Here, Dr. McDuff does not
attempt to rely on the end product's entire market value
as the royalty base in his reasonable royalty determination.
(See generally Doc. No. 168-1, McDuff Report.) Thus,
his analysis does not run afoul of the entire market value
the Court rejects Plaintiff's assertion that Dr. McDuff
was required to conduct a component analysis of the accused
products in order to perform an apportionment. The Federal
Circuit has recognizes that “under th[e] apportionment
principle, ‘there may be more than one reliable method
for estimating a reasonable royalty.'”
Commonwealth Sci., 809 F.3d at 1301. In his expert
report, Dr. McDuff explains: “For non-infringing
functionality, I apportion based on the ratio of the first
accused MiFi device (MiFi2200) divided by the observed
average sales price over time . . . This allows for removal
of non-infringing functionality that has been added to the
products over time, which improve the products value but do
not relate to the patents-in-suit.” (Doc. No. 168-1,
McDuff Report at 43.) Here, Dr. McDuff provides a reasonable
explanation for his ...