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Personalweb Technologies LLC v. International Business Machines Corp.

United States District Court, N.D. California, San Jose Division

July 26, 2017

PERSONALWEB TECHNOLOGIES LLC, et al., Plaintiffs,
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant.

          SECOND ORDER RE: MOTIONS IN LIMINE RE: DKT. NOS. 269, 279, 285, 313

          EDWARD J. DAVILA United States District Judge

         Presently before the Court is the balance of the parties' motions in limine and other pretrial orders. Dkt. Nos. 269, 279, 285, 313. Having considered the moving and responding papers along with the argument held at the Final Pretrial Conference, the Court rules as follows as to the remaining motions:

1. Plaintiffs' first motion to exclude any reference to accused products, patents, or patent claims previously but no longer asserted in this litigation (Dkt. No. 269) is GRANTED IN PART and DENIED IN PART. Defendant may not introduce that these patents, claims, and products were originally asserted by Plaintiffs in this case but later dropped. Defendant may, however, refer to unasserted patents and accused products to provide background information about the parties or to identify patents that were subject to licenses that have been used in damages calculations.

         Under Federal Rule of Evidence 401, evidence is relevant if: “(a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action.” Under Federal Rule of Evidence 403, relevant evidence can be excluded “if its probative value is substantially outweighed by a danger of . . . unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.” The Court finds that the fact that certain patents, claims, and products were originally asserted by Plaintiffs but have now been dropped are not relevant to any of the issues that remain to be tried. First, infringement is measured by comparing the elements of the asserted claim against the accused product. Gen. Mills, Inc. v. Hunt-Wesson, Inc., 103 F.3d 978, 981 (Fed. Cir. 1997) (“Literal infringement requires that every limitation of the patent claim be found in the accused infringing device.”). Thus, whether Plaintiffs have dropped certain patent claims has no relevance as to whether TSM infringes claim 166 of the '420 patent. Second, willfulness turns on the egregiousness of an accused infringer's infringement of an asserted patent. See Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S.Ct. 1923, 1933, 195 L.Ed.2d 278 (2016) (“Awards of enhanced damages . . . are . . . designed . . . for egregious infringement behavior. . . . [C]ulpability is generally measured against the knowledge of the actor at the time of the challenged conduct.”). Thus, the fact that Plaintiffs have dropped certain patent claims has no bearing on whether Defendant's conduct with respect to the '420 patent was egregious. Third, inducement requires “knowledge that the induced acts constitute patent infringement”-i.e., knowledge of infringement of the asserted patent. Glob.-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766 (2011). The dropped patent claims do not inform whether Defendant had specific knowledge of its alleged infringement of claim 166 of the '420 patent. Finally, although certain unasserted patents may be relevant to damages if they are part of the licenses used in the damages calculations, the fact that these patents were originally asserted in this case is not. Thus, the fact that certain patents, claims, and products were originally asserted but dropped should be excluded under Rule 401.

         Further, even if this evidence were relevant, the Court finds that the probative value is substantially outweighed by a danger of unfair prejudice and misleading the jury. Introducing the fact that certain patents, claims, and products were dropped may permit the jury to draw the unfair inference that Plaintiffs' case is weak. It may also mislead the jury, who is not accustomed to the fact that claims are routinely narrowed in patent infringement cases. Thus, exclusion is also proper under Rule 403.

         Nevertheless, the Court finds that the parties should not be entirely prohibited from mentioning patents or products that happen to not be asserted in this case. For example, introducing the fact that Plaintiff owns X patents or Defendant makes Y products may be helpful background information. In addition, the parties may wish to mention certain unasserted patents if they are subject to the licensing agreements used by damages experts. References to unasserted patents and products in this limited manner are relevant and not prejudicial. Accordingly, the Court will not exclude these usages.

         2. Defendant's second motion to exclude from trial opinions not disclosed in expert reports (Dkt. No. 284) is, with respect to Dr. Akemann, DENIED AS MOOT. As discussed further below, Dr. Akemann's opinions are excluded under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).

         2. Defendant's third motion to exclude from trial undisclosed infringement theories

         (Dkt. No. 279) is GRANTED.

         Federal Rule of Civil Procedure 26(e) requires that a party “who has responded to an interrogatory . . . must supplement or correct its disclosure . . . in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect.” Parties who fail to comply with Rule 26(e) become subject to a sanction under Rule 37(c)(1), which provides that: “[i]f a party fails to provide information . . . as required by Rule 26(a) or (e), the party is not allowed to use that information . . . to supply evidence . . . at a trial, unless the failure was substantially justified or is harmless.” In this district, the patent local rules “provide[] for a ‘streamlined' mechanism to replace the ‘series of interrogatories that defendants would likely have propounded' in its absence.” FusionArc, Inc. v. Solidus Networks, Inc., No. C 06-06760RMW(RS), 2007 WL 1052900, at *2 (N.D. Cal. Apr. 5, 2007).

         Defendant moves to preclude Plaintiffs from pursuing untimely infringement theories at trial-namely, its indirect infringement theories. Patent Local Rule 3-1(d) requires “an identification of any direct infringement and a description of the acts of the alleged indirect infringer that contribute to or are inducing that direct infringement.” As the Court found at summary judgment, Plaintiffs did not comply with this rule. Dkt. No. 245 at 27 (“PersonalWeb's infringement contentions make no mention of any indirect infringement theory, let alone provide any ‘description of the acts of [IBM] that contribute to or are inducing that direct infringement' As such, they fail to comply with Patent Local Rule 3-1(d).”). To be sure, Plaintiffs' infringement contentions provided information on how the “hardware” limitation of claim 166 was allegedly infringed. Dkt. No. 217-6 at 1-3. However, this does not negate the fact that Plaintiffs' contention that Defendant indirectly infringes-an interrogatory response which it was required to provide in the form of patent local rule infringement contentions-is “information” within the meaning of Rule 26(a) which it was required to disclose. Thus, under Rule 37(c), Plaintiffs are precluded from presenting this theory at trial unless they can show that this “failure was substantially justified or is harmless.” On this point, Plaintiffs appear to argue that their failure was substantially justified and/or harmless because (1) the E.D. Texas Patent Local Rules do not require explicit disclosure of indirect infringement theories, Dkt. No. 303 at 5 n.4; and (2) its infringement contentions and/or expert report provided information on how the “hardware” limitation was satisfied and pointed to examples of how IBM promotes and advertises the use of TSM to its customers, Dkt. No. 303 at 3-6. The Court finds neither of these persuasive. First, as discussed in the Court's summary judgment order, “[t]he fact that this case originated in the Eastern District of Texas does not immunize [Plaintiffs'] shortcomings. Once this case was transferred, this district's patent local rules governed the case [and Plaintiffs] could have sought leave to amend [their] infringement contentions so that they complied with the local rules of this district.” Dkt. No. 245 at 23-24. Indeed, Plaintiffs' own actions seem to admit this, as they moved to amend their infringement contentions after transfer to modify the accused products and claims. Dkt. No. 139. They also could have included indirect infringement in this request, but chose not to. Second, providing information on the “hardware” limitation or IBM customer materials[1] is not enough to remove the prejudice that Defendant suffered by not knowing Plaintiffs' specific indirect infringement allegations. To be sure, Defendant was aware that Plaintiffs accused it of indirect infringement in its complaint. Dkt. No. 29. This, however, is not enough. A defendant should not be left to read the tea leaves and guess as to the contours of a plaintiff's infringement theories. Because Plaintiffs forced Defendant to do precisely this, their failure to comply with their Rule 26(a) obligations was not harmless.

         3. Defendant's motion to exclude the opinions of Dr. Michael Akemann (Dkt. No. 285) is GRANTED.

         Federal Rule of Evidence 702 permits an expert to testify 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. Read together, Rule 702 and Daubert, 509 U.S. 579, broadly require that an expert not only be qualified, but also that the expert's testimony be reliable and relevant.

         When faced with a challenge to an expert, “[t]he trial judge must perform a gatekeeping function to ensure that the expert's proffered testimony” meets this standard. United States v. Redlightning, 624 F.3d 1090, 1111 (9th Cir. 2010). The role is a flexible one, such that the judge is afforded ‚Äúconsiderable leeway in deciding in a particular case how to go about determining ...


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