United States District Court, N.D. California
ORDER GRANTING IN PART AND DENYING IN PART THE
PARTIES' RESPECTIVE MOTIONS IN LIMINE AND FILINGS
REGARDING VARIOUS PRETRIAL ISSUES RE: DKT. NOS. 183, 185,
190, 191, 192, 226, 291, 293, 314, 321
HAYWOOD S. GILLIAM, JR. United States District Judge.
before the Court are the motions in limine filed by
Plaintiff Phoenix Technologies, Ltd. (“Phoenix”)
and Defendant VMware, Inc. (“VMware”),
see Dkt. Nos. 183, 185, 190, 191, 192, 291, 293, as
well as several issues raised by the parties in their joint
pretrial and charging conference statements and various other
filings, see Dkt. Nos. 227,  260, 261, 283, 300, 310,
311, 315, 316, 321, 322, 323. Each motion and nearly
every position on every issue is opposed.
the pretrial conference and specially-set charging
conference, the Court heard arguments on some of the motions
in limine and various other issues raised by the parties.
See Dkt. Nos. 266, 307. After carefully considering
the papers filed in connection with the motions in limine and
other issues, as well as the oral arguments made by the
parties, the Court GRANTS IN PART and DENIES IN PART the
motions in limine and other requests as set forth below.
Because of the sheer number of the parties' disputes, the
Court must rule here in a streamlined fashion without
MOTIONS IN LIMINE
Motions in Limine to exclude expert testimony
has filed the following motions to exclude expert testimony:
First Motion in Limine, Dkt. No. 183 (seeking to exclude the
expert testimony of Richard Harry comparing the quantity of
source code in the BIOS to the quantity of source code in
ESXi and offering Mr. Harry's opinion as to the
“overall value” of the Phoenix BIOS); and Third
Motion in Limine, Dkt. No. 291 (seeking to exclude the expert
testimony and opinions of Julie Davis regarding reasonable
royalty damages as based on the wrong hypothetical
negotiation date). For its part, VMware has filed the
following motions to exclude expert testimony: Third Motion
in Limine, Dkt. No. 294 (seeking to exclude the expert
testimony and opinions of Matthew Lynde regarding actual
damages as based on the wrong hypothetical negotiation date);
Fourth Motion in Limine, Dkt. No. 191 (seeking to exclude the
expert testimony and opinions of Matthew Lynde regarding
actual damages as unduly speculative); and Fifth Motion in
Limine, Dkt. No. 192 (seeking to exclude the expert testimony
and opinions of Matthew Lynde on infringer's profits).
Rule of Evidence 702 governs the admission of testimony by
expert witnesses. A witness who is qualified as an expert by
knowledge, skill, experience, training, or education may
testify in the form of an opinion or otherwise 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. Fed.R.Evid. 702.
expert testimony to be admissible, the expert must be
qualified, Hangarter v. Provident Life & Acc. Ins.
Co., 373 F.3d 998, 1015 (9th Cir. 2004), and the
expert's testimony must be “both relevant and
reliable, ” Estate of Barabin v. AstenJohnson,
Inc., 740 F.3d 457, 463 (9th Cir. 2014) (en banc)
(internal marks omitted); see also Daubert v. Merrell Dow
Pharm., Inc., 509 U.S. 579, 589 (1993). Rule 702
“contemplates a broad conception of expert
qualifications.” Hangarter, 373 F.3d at 1018
(emphasis in original). Courts consider a purported
expert's knowledge, skill, experience, training, and
education in the subject matter of his asserted
expertise. United States v. Hankey, 203 F.3d 1160,
1168 (9th Cir. 2000); see also Fed. R. Evid. 702.
“Relevancy simply requires that the evidence logically
advance a material aspect of the party's case.”
AstenJohnson, 740 F.3d at 463 (internal quotation
marks omitted). Finally, reliability requires that an
expert's testimony have “a reliable basis in the
knowledge and experience of the relevant discipline.”
Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149
(1999) (internal quotation marks and brackets omitted).
determine whether an expert's testimony is reliable,
courts apply a “flexible” inquiry, considering
such factors as (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. However, whether these specific factors are
reasonable measures of reliability in a particular case is a
matter the law grants the trial judge broad latitude to
determine. AstenJohnson, 740 F.3d at 463 (internal
quotation marks and citation omitted). For example, courts
may also consider whether the expert has unjustifiably
extrapolated from an accepted premise to an unfounded
conclusion, see General Elec. Co. v. Joiner, 522
U.S. 136, 146 (1997), and whether the expert has adequately
accounted for obvious alternative explanations, see Claar
v. Burlington N. R.R. Co., 29 F.3d 499, 502 (9th Cir.
1994). Ultimately, “judges are entitled to broad
discretion when discharging their gatekeeping function . . .
not only [in] decid[ing] whether to admit expert
testimony . . . [but also] in deciding how to test
an expert's reliability.” Hankey, 203 F.3d
at 1168 (emphasis in original)). And the Court notes that
some caution is warranted regarding the exclusion of expert
evidence on motions in limine: courts should be cognizant
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 v.
Cook, 598 F.3d 558, 564 (9th Cir. 2010).
the standards described above to the five motions in limine
seeking to exclude expert testimony, see Dkt. Nos.
183, 191, 192, 291, 294, the Court finds that experts Julie
Davis, Matthew Lynde, and Richard Harry are qualified and
that their testimony meets the reliability and relevance
requirements of Rule 702, with two exceptions relating to the
testimony of Richard Harry and Ms. Davis' 2005
hypothetical negotiation date, discussed below.
with regard to VMware's Fourth Motion in Limine, the
Court finds exclusion of Dr. Lynde's testimony to be
unwarranted. While VMware's arguments regarding the
reliability of Dr. Lynde's hypothetical license analysis
may go to the weight of Dr. Lynde's testimony, they do
not constitute grounds for exclusion. VMware's Fourth
Motion in Limine is therefore denied.
with regard to VMware's Fifth Motion in Limine, the Court
finds that Dr. Lynde's measure of apportionment, which
was based in part on the hypothetical amount VMware should
have paid for the additional allegedly infringing uses of the
BIOS, enabled him to calculate a “reasonable
approximation of apportionment of infringer's
profits.” Oracle Am., Inc. v. Google Inc., No.
C 10-03561 WHA, 2016 U.S. Dist. LEXIS 58302, at *16 (N.D.
Cal. May 2, 2016). Given that Phoenix solely seeks damages
for infringer's profits attributable to VMware's use
of the BIOS in ESXi, for which the parties do not have any
real-world license figures, Dr. Lynde necessarily relied in
part on a hypothetical value. That hypothetical value was not
based, as VMware suggests, on a “counterfactual
scenario . . . using a [non-infringing] alternative,
” see Dkt. No. 192 at 2, but on Dr.
Lynde's reasonable estimation of what VMware would have
been required to pay for its allegedly infringing use. In
addition, the Court finds that Dr. Lynde used an appropriate
apportionment base. Dr. Lynde's infringer's profits
analysis was thus reasonable, and VMware's Fifth Motion
in Limine is denied.
as noted above, there are two exceptions to the Court's
denial of the motions in limine relating to expert testimony.
First, with regard to Phoenix's First Motion in Limine,
the Court finds that Mr. Harry, who has worked for VMware for
approximately 10 years, Dkt. No. 194-1 ¶1, is qualified
to compare the quantity of source code comprising the BIOS to
the quantity of code in ESXi. However, the Court does not
find Mr. Harry qualified to opine as to the “relative
lack of importance of [the Phoenix] BIOS” or its
“overall value” to VMware, as he offers no
reliable basis or foundation for reaching that conclusion.
The Court will therefore allow Mr. Harry to testify regarding
the source code quantity comparison, but not as to the
“relative lack of importance” or the
“overall value” of the code to VMware.
the parties' Third Motions in Limine dispute the proper
hypothetical negotiation damages date. See Dkt. Nos.
291, 294. While Phoenix's expert Dr. Lynde
“focus[ed] on market conditions at the time of a
hypothetical negotiation that would have transpired in late
2007, ” Dkt. No. 182-22 ¶ 16, VMware's expert
Julie Davis contemplated two different scenarios with
hypothetical negotiations that would have taken place in
and 2006, see Dkt. No. 181-7 at 27. Ms. Davis first
“opine[d] that damages may be determined by
ascertaining Phoenix's lost license revenue if the
parties' actual September 2005 license negotiations
included an express license for the accused products.”
Dkt. No. 233 at 1; see also Dkt. No. 181-1 at 27-28.
In contrast, Ms. Davis' 2006 and Dr. Lynde's 2007
hypothetical negotiation dates were based on the date each
party alleged that VMware first infringed the copyright.
See Dkt. Nos. 181-1 at 28, 182-22 ¶ 51.
“‘[a]ctual damages' are the extent to which
the market value of a copyrighted work has been injured or
destroyed by an infringement, ” which “can be
awarded in the form of lost profits, [or]
hypothetical-license damages.” Oracle Corp. v. SAP
AG, 765 F.3d 1081, 1087 (9th Cir. 2014). “To
calculate the ‘market value' of the injury to the
plaintiff based on a hypothetical-license theory, we look to
‘the amount a willing buyer would have been reasonably
required to pay a willing seller at the time of the
infringement for the actual use made by [the infringer] of
the plaintiff's work.'” Id. (quoting
Wall Data Inc. v. L.A. Cnty. Sheriff's
Dep't, 447 F.3d 769, 786 (9th Cir. 2006) (internal
quotation marks omitted)). In addition, “there is
nothing to suggest that [a court] should tie a hypothetical
negotiation to a prior infringement no longer at
issue.” Applied Med. Res. Corp. v. U.S. Surgical
Corp., 435 F.3d 1356, 1364 (Fed. Cir. 2006) (holding
that the hypothetical negotiation date for a surgical was
device properly based on the infringement by that device,
rather than the past infringement by an earlier iteration of
proper hypothetical negotiation date here is thus
VMware's alleged date of first infringement with regard
to ESXi-an event VMware contends occurred in June
2006 and Phoenix contends occurred in December 2007 “at
the earliest.” See Dkt. No. 291 at 2.
Accordingly, while Ms. Davis' 2005 hypothetical license
theory is based on an incorrect hypothetical negotiation date
such that it will be excluded,  Ms. Davis' 2006 and Dr.
Lynde's 2007 hypothetical dates are properly tied to the
alleged dates of first infringement and are therefore
admissible. To the extent the parties' Third Motions in
Limine dispute VMware's actual date of first
infringement, that is a question of fact to be decided by the
jury. See Micro Chem., Inc. v. Lextron, Inc., 317
F.3d 1387, 1392 (Fed. Cir. 2003) (“When, as here, the
parties' experts rely on conflicting sets of facts, it is
not the role of the trial court to evaluate the correctness
of facts underlying one expert's testimony.”). The
Court therefore denies VMware's Third Motion in Limine,
and grants Phoenix's Third Motion in Limine only insofar
as it relates to Ms. Davis' 2005 hypothetical negotiation
Motions in Limine to exclude other evidence
other motions in limine are before the Court. Phoenix's
Second Motion in Limine seeks to exclude a 2015 agreement
between VMware and a third-party corporation, in which VMware
licensed a “purported [BIOS] replacement” (the
“Agreement”). See Dkt. No. 183-13 at 1.
Phoenix argues that (1) the Agreement is irrelevant to a
damages determination because it postdates the date of
infringement and is not “sufficiently comparable to a
hypothetical license for Phoenix's BIOS”; (2)
VMware's corporate representative was unaware of the
Agreement; and (3) the Agreement is unfairly prejudicial and
confusing. Id. at 3 (internal quotation marks
omitted). In response, VMware contends that the Agreement
“is relevant to multiple disputed issues, including the
jury's evaluation of . . . non-accused alternatives to
the Phoenix BIOS, . . . Phoenix's damages claims, and . .
. VMware's estoppel and laches defenses.” Dkt. No.
232 at 2.
from the requirement that hypothetical negotiation dates must
be determined based on the date of first infringement, the
Court is unaware of any Ninth Circuit precedent directly
addressing whether courts may otherwise consider
post-negotiation information when determining a reasonable
royalty. However, the Federal Circuit has held that while
courts are “not require[d]” to exclude
post-infringement evidence when determining a reasonable
royalty, post-dated evidence “certainly” may be
excluded. Odetics, Inc. v. Storage Tech. Corp., 185
F.3d 1259, 1276-77 (Fed. Cir. 1999). This position has been
adopted by at least one court in this Circuit. See Memry
Corp. v. Kentucky Oil Tech. N.V., No. C-04-03843 RMW,
2007 WL 4208317, at *11 (N.D. Cal. Nov. 27 2007) (stating
that “courts have the discretion to permit
consideration of post-negotiation information when
formulating a reasonable royalty”). While the Court has
some skepticism about the extent to which an agreement from
2015 is indicative of what a hypothetical negotiation would
have looked like in 2006 or 2007, such questions go to the
weight of that evidence rather than its admissibility.
Because the Agreement may be relevant to the parties'
damages theories, the Court will not exclude evidence of the
Agreement at this stage.
part, VMware's First Motion in Limine seeks to prevent
Phoenix from presenting evidence at trial that was not
disclosed during discovery, including for example, (1)
evidence of “projections”; (2) Phoenix's
employees' knowledge of VMware's use of the BIOS; and
(3) what Phoenix would have charged for a fully-paid up
license in 2005. See Dkt. No. 293. The Court denies
this motion without prejudice, and will defer consideration
of these potential issues until the objections are tied to
particular pieces of evidence.
ADDITIONAL ISSUES RAISED BY THE PARTIES
parties raise numerous other pretrial issues, each of which
the Court addresses below.
Admissibility of complaint
seeks to preclude VMware from introducing its complaint as an
exhibit at trial. See Dkt. No. 227 at 11. Phoenix
contends that because it has “narrow[ed] the claims
asserted in its Complaint for purposes of trial . . . by
streamlining the trial to the infringing ESXi products,
” “[t]he Court should bar VMware from introducing
Phoenix's Complaint as evidence or referring to legal
theories or legal conclusions in the Complaint that Phoenix
does not assert at trial.” Id. at 11-12. In
response, VMware argues that “[t]he allegations in the
Phoenix complaint are relevant to motive, credibility, and to
VMware's defenses, including estoppel and the statute of
limitations, ” and amount to judicial admissions.
Id. at 14.
initial matter, the Court finds that the allegations
contained in Phoenix's complaint do not constitute
judicial admissions, as only factual-as opposed to
legal-assertions constitute judicial admissions. See
Foley v. JetBlue Airways, Corp., No. C10-3882 JCS, 2011
WL 3359730, at *9 (N.D. Cal. Aug. 3, 2011) (“in order
to constitute a judicial admission, the party against whom
the admission is sought must have admitted a
fact.”) (emphasis in original). Second, this issue
is closely related to VMware's Second Motion in Limine,
which seeks to preclude Phoenix from asserting contentions
not disclosed during discovery. See Dkt. No. 187;
see also Dkt. No. 227 at 15 (VMware arguing that
Phoenix's factual assertions “regarding how certain
products infringed” “inform the meaning of
certain contractual terms as applied to ESXi, not the least
of which is whether ESX and ESXi operate in a different
manner for purposes of the contracts.”). However, given
the Court's recent order on that motion in limine,
see Dkt. No. 325, the Court finds the relevance of
Phoenix's complaint to be low. Motive is not an element
of any claim or defense in this action. To the extent the
complaint may be marginally relevant as to credibility, the
Court finds that the potential to confuse the jury and waste
time by referring to claims Phoenix does not intend to assert
at trial substantially outweighs any such relevance. See
Duarte v. Catalina Foothill Sch. Dist. No. 16,
CV-12-00844-TUC-JAS, 2014 WL 5094128, at *2 (D. Ariz. Oct.
10, 2014) (denying admission of complaint under Fed.R.Evid.
403 because Plaintiff had voluntarily dismissed one
discrimination claim, and “any reference to this
dismissed claim at trial is outweighed by Rule 403
considerations.”). The Court will therefore exclude the
complaint under Rule 403.
Admissibility of ...