United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S SECOND MOTION IN
LIMINE RE: DKT. NO. 187
HAYWOOD S. GILLIAM, JR. United States District Judge.
before the Court is Defendant VMware, Inc.'s
(“VMware”) second motion in limine
seeking to preclude Plaintiff Phoenix Technologies, Inc.
(“Phoenix”) from introducing evidence or argument
that “(1)  departs from its contention, throughout
the case, that both VMware's ESX and ESXi products
infringe Phoenix's copyrights, or (2)  the removal of
the Linux [operating system] from ESX to create ESXi
introduced a ‘new' infringing feature in
ESXi.” Dkt. No. 187 at 5. Phoenix opposes. Dkt. No. 19.
Having carefully considered the papers filed in connection
with this motion and oral arguments made by the parties at
the pretrial conference and a subsequent telephonic
conference, the Court GRANTS VMware's
motion in limine for the reasons set forth below.
clarify the basis for VMware's motion, the Court first
recounts Phoenix's shifting characterization of its
theory of infringement.
filed its complaint on March 27, 2015, alleging that several
VMware products infringed Phoenix's copyright in four
ways. See Dkt. No. 1. Specifically, Phoenix alleged
VMware's unauthorized and infringing [u]ses include, but
are not limited to, its [u]se of the 440BX Program (or
derivatives thereof) in VMware vSphere, VMware ESX, VMware
ESXi, GSX Server, VMware Server and other VMware products
that incorporate these technologies (the “Infringing
Products”). VMware introduced the different Infringing
Products at different points in time beginning no later than
2001. These Infringing Products violate the MLA for at least
the following reasons:
(a) They are not “Licensee's Products”
because they are designed to run on servers instead of
“standard PC platforms;”
(b) Certain VMware server products are not
“Licensee's Products” because they operate
with their own host kernel, without a host operating system,
and are thus not compatible with “standard PC operating
(c) They support processors other than the Intel Pentium
processor, in violation of the limitation set forth in the
(d) They support multiple processors beyond the limitation of
two processors as set forth in the MLA.
Id. ¶ 68.
then propounded an interrogatory asking Phoenix to
“[i]dentify each [VMware] product that [Phoenix]
contend[ed] infringe[d] [Phoenix's] copyright and for
which [Phoenix] [sought] damages.” Dkt. No. 295-7 at 5.
In response, on April 13, 2016, Phoenix identified
VMware's GSX Server, VMware Server, ESX, and ESXi
products, and stated that they each infringed through the
“[u]nlicensed use of [Phoenix] BIOS beyond the terms of
the MLA and its amendments, as set forth in the
Complaint.” Id. at 6-7. Phoenix's response
further stated that “the basis for [Phoenix's]
contention that each product or product version infringes
involves expert issues that will be the subject of the
reports of Phoenix's experts. Phoenix incorporates by
reference all such expert reports and testimony.”
Id. at 7. At the time of this response, of course,
there were not yet any expert reports to incorporate.
13, 2016, fourteen days after the close of fact discovery,
Phoenix experts, Dr. Nathaniel Polish and Dr. Robert Zeidman,
filed reports noting a distinction between ESX and ESXi not
alleged in Phoenix's complaint. Dkt. Nos. 120-4
¶¶ 60-65, 122-2 ¶ 67. For example, Dr. Polish
stated that ESXi's “removal of the Linux OS Service
Console further demonstrates that ESXi neither installs on
nor operates with any standard PC operating system.”
Dkt. No. 122-2 ¶ 67. Dr. Zeidman stated that
“VMware's ESXi product functions entirely
independently of any standard operating system, let alone a
standard PC operating system, as that term is defined by Dr.
 Polish . . . [because] VMware's ESX product is also
installed on physical servers without a standard operating
system, but incorporates and relies upon a Linux-based
operating system to launch, ” while “ESXi
eliminates this use of Linux and therefore operates without
the use of any standard operating system.” Dkt. No.
120-4 ¶ 65. Similarly, Phoenix's damages
expert, Dr. Matthew Lynde, testified that for purposes of
drafting his expert report he “was asked to
assume” that ESXi was the infringing product, rather
than ESX, and that “[i]f [he] were asked to assume that
ESX were in breach of the  license agreement [as well],
that would require further economic analysis.” Dkt. No.
193-11 at 10:15, 14:16-19.
in Phoenix's June 6, 2016 Second Supplemental Responses
and Objections to VMware's Interrogatory Nos. 7-10,
Phoenix stated that while it “[did] not concede that
other VMware products comply with the [Master License
Agreement (“MLA”)] (as defined in the Complaint),
it [would] not seek hypothetical license damages in
connection with VMware products other than the ESXi products
based on  information made available to Phoenix in
discovery.” Dkt. No. 130-1 at 4:2-5. Instead, Phoenix
stated that it intended to seek damages specifically relating
to VMware's infringing use of the Phoenix BIOS in
VMware's ESXi products, because those products “(1)
run on servers instead of ‘standard PC
platforms'”; (2) “operate with their own host
kernel, without a host operating system, and are thus not
compatible with ‘standard PC operating
systems'”; (3) “support multiple processors
beyond the limitation of two processors”; and (4)
require the Phoenix BIOS to “interact with a virtual
chipset that is not a 440BX chipset.” Id. at
4:26-5:5 (internal quotation marks omitted). Three weeks
later, Dr. Lynde submitted a Sur-Rebuttal Expert Report
stating that “[t]he 2005 and 2006 dates that
[VMware's damages expert] assumes as the dates of the
hypothetical negotiation are unsupported and predate the sale
of ESXi, the first accused product, by at least 18
months.” Dkt. No. 215-20 at 5.
22, 2016, Phoenix filed a motion for summary judgment
arguing, in part, that VMware's “ESXi software
violates [the MLA] licensing restriction” because the
MLA's definition of “‘Licensee's
Products' can only be construed in one way: the hardware
platform on which ESXi runs must have a standard PC operating
system.'” Dkt. No. 121 at 16:6-9. Phoenix reasoned
that because “ESXi, in contrast to prior versions of
[VMware's] software, ‘operates independently from
any general-purpose operating system [(“OS”)],
'” there was “no room for doubt that the ESXi
products violate the ‘Licensee's Products'
restriction . . . .” Id. at 16:13-20. Phoenix
further stated that ESXi's removal of the general purpose
Linux OS that was incorporated into ESX constituted a
“significant departure from its prior
technology.” Id. at 9:22.
August 26, 2016, Phoenix opposed VMware's cross-motion
for summary judgment, arguing that VMware “misleadingly
conflate[d] [the] ESX and ESXi products, referring to them
jointly as ‘ESX/ESXi' in its Motion, [when]
VMware's own marketing materials demonstrate[d] these
products [were] markedly different.” Dkt. No. 212 at
7:3-5. Instead, Phoenix argued that ESXi was the “only
product at issue here.” Id. at 6:20.
Furthermore, Phoenix stated that “[t]he only component
of VMware's earlier products[, such as ESX, ] that
conceivably constituted a ‘standard PC operating
system' was the Linux operating system in the service
console of the software, ” which VMware removed from
ESXi, thereby “eliminating] any colorable claim that
the ESXi software runs on ‘platforms with a standard PC
operating system' and introduc[ing] new grounds for
finding infringement.” Id. at 9:2-6,
9:8-10 (emphasis added).
September 16, 2016, Phoenix filed a reply in support of its
motion for summary judgment, again arguing that VMware's
ESX and ESXi products were “markedly” different
“in that [ESXi] eliminated all reliance on a general
purpose operating system.” Dkt. No. 158 at 1 n.2.
Phoenix therefore contended that VMware's opposition to
its motion for summary judgment, in which VMware argued that
Phoenix's claims were barred by the doctrines of
copyright estoppel and waiver, Dkt. No. 216 at 24-25,
“misleadingly conflate[d] ESXi with [ESX], ...