Mformation Techs., Inc. v. Research in Motion, Ltd.
Mformation Techs., Inc. v. Research in Motion, Ltd.
2012 WL 1142537 (N.D. Cal. 2012)
March 29, 2012
Ware, James, United States District Judge
Summary
The court denied the defendants' motion for sanctions, which sought to exclude evidence due to the late production of ESI. The court found that the defendants had ample opportunity to cure any prejudice caused by the late production, and that there was no likelihood of the trial being disrupted. The ESI was privileged and filed under seal.
Additional Decisions
MFORMATION TECHS., INC., Plaintiff,
v.
RESEARCH IN MOTION LTD., et al., Defendants
v.
RESEARCH IN MOTION LTD., et al., Defendants
No. C 08–04990 JW
United States District Court, N.D. California
March 29, 2012
Counsel
Shawn Edward McDonald, Amardeep Lal Thakur, Justin Edwin Gray, Foley & Lardner LLP, San Diego, CA, Allen A. Arntsen, Foley & Lardner LLP, Madison, WI, Lisa Marie Noller, Foley and Lardner LLP, Chicago, IL, for Plaintiff.Aaron D. Charfoos, Eugene Goryunov, Ferlillia Victoria Roberson, Jessica Christine Kaiser, Linda S. Debruin, Maria A. Maras, Meredith Zinanni, Michael Daley Karson, Michael Anthony Parks, Tiffany Patrice Cunningham, Christopher R. Liro, Kirkland & Ellis, LLP, Chicago, IL, Marc Howard Cohen, Kirkland & Ellis LLP, Los Angeles, CA, Michael S. Feldberg, Allen and Overy LLP, New York, NY, for Defendants.
Ware, James, United States District Judge
ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO EXCLUDE EXPERT TESTIMONY; DENYING MOTION TO BIFURCATE TRIAL; DENYING MOTION FOR PRECLUSIVE SANCTIONS
*1 Presently before the Court are: (1) Plaintiff's Motion to Exclude Portions of the Expert Report of Dr. Anthony Acampora;[1] (2) Defendants' Motion to Exclude the Opinions of Mr. Roy Weinstein;[2] (3) Defendants' Motion to Exclude the Opinions of Dr. Vijay Madisetti;[3] (4) Defendants' Motion to Bifurcate;[4] and (5) Defendants' Motion for Sanctions.[5] The Court finds it appropriate to take the Motions under submission without oral argument. See Civ. L.R. 7–l(b). Based on the papers submitted to date, the Court DENIES Plaintiff's Motion to Exclude Portions of the Expert Report of Dr. Anthony Acampora, GRANTS in part and DENIES in part Defendants' Motion to Exclude the Opinions of Mr. Roy Weinstein, DENIES Defendants' Motion to Exclude the Opinions of Dr. Vijay Madisetti, DENIES Defendants' Motion to Bifurcate and DENIES Defendants' Motion for Sanctions.
A. Standards
1. Expert Testimony
Rule 702 requires that a testifying expert be “qualified as an expert by knowledge, skill, experience, training, or education.” Fed.R.Evid. 702. The threshold for qualification is low; a minimal foundation of knowledge, skill, and experience suffices. Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1015–16 (9th Cir.2004); see also Thomas v. Newton Int'l Enters., 42 F.3d 1266, 1269 (9th Cir.1994). When faced with a proffer of expert testimony, a district court must determine whether the testimony is both reliable and relevant. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) (“Daubert I” ). The court has broad discretion in assessing both requirements. See United States v. Alatorre, 222 F.3d 1098, 1100 (9th Cir.2000).
The reliability requirement ensures “that an expert, whether basing testimony on professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). The offering party must show by a preponderance of the evidence (1) that the expert is qualified to render the opinion and (2) that the opinion offered has adequate support. Daubert I, 509 U.S. at 588–90. Expert testimony is not admissible if it is speculative. See Gen. Elec. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). To satisfy the relevance requirement, the proffered expert testimony must assist the trier of fact in understanding or determining a fact in issue. Daubert I, 509 U.S. at 591. In assessing relevance, the court must look to the governing substantive legal standard. See Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311, 1320 (9th Cir.1995) (“Daubert II” ).
2. Bifurcation
Federal Rule of Civil Procedure 42(b) states: “For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues....” “In the Ninth Circuit, ‘[b]ifurcation ... is the exception rather than the rule of normal trial procedure.’ “ GEM Acquisitionco, LLC v. Sorenson Grp. Holdings, LLC, No. C 09–01484 SI, 2010 WL 1729400, at *3 (N.D.Cal. Apr.27, 2010) (citation omitted). The party seeking bifurcation “has the burden of proving that bifurcation is justified.” Spectra–Physics Lasers, Inc. v. Uniphase Corp., 144 F.R.D. 99, 101 (N.D.Cal.1992).[6] Courts “consider several factors in determining whether bifurcation is appropriate, including separability of the issues, simplification of discovery and conservation of resources, and prejudice to the parties.” McDermott v. Potter, No. C 07–06300 SI, 2010 WL 956808, at *1 (N.D.Cal. Mar.12, 2010) (citations omitted). The question of whether to bifurcate a trial is committed to the discretion of the trial court. See Danjaq LLC v. Sony Corp., 263 F.3d 942, 961 (9th Cir.2001).
B. Discussion
1. Motions to Exclude Expert Testimony
a. Anthony Acampora
*2 Plaintiff moves to exclude portions of the expert report of Dr. Anthony Acampora (“Acampora”),[7] Defendants' invalidity expert, on the ground that those portions of the Acampora Report improperly rely solely on uncorroborated witness testimony.[8] Plaintiff contends that because uncorroborated testimony cannot invalidate a patent as a matter of law, those portions of the Acampora Report that are not corroborated should be stricken. (Id.) Defendants respond that the Report is sufficiently corroborated, as point-by-point corroboration is not required for testimony supporting the invalidation of a patent.[9]
Generally, “corroboration is required of any witness whose testimony alone is asserted to invalidate a patent, regardless of his or her level of interest.” Finnegan Corp. v. Int'l Trade Comm'n, 180 F.3d 1354, 1369 (Fed.Cir.1999) (emphasis added). However, the Federal Circuit has “not imposed an impossible standard of independence on corroborative evidence by requiring that every point ... be corroborated by evidence having a source totally independent of the witness.” Lazare Kaplan Int'l Inc. v. Photoscribe Techs., Inc., 628 F.3d 1359, 1374 (Fed.Cir.2010) (emphasis added) (internal citations omitted). Rather, the Federal Circuit has rejected the notion that a prior use claim “must be proved in detail by an unbroken chain of corroboration.” Cooper v. Goldfarb, 154 F.3d 1321, 1330 (Fed.Cir.1998) (citation omitted). Thus, a claim of prior use “does not require corroboration for every factual issue contested by the parties.” Id.
Here, Plaintiff contends that the Court should exclude twenty-three paragraphs of the Acampora Report because the opinions expressed in these paragraphs cite only to the uncorroborated deposition testimony of three third-party witnesses. (Acampora Motion at 1–2.) As a threshold matter, the Court observes that eighteen of the paragraphs Plaintiff moves to exclude rely on other evidence.[10] Thus, for purposes of this Motion, the Court considers only the five paragraphs in which Dr. Acampora relied solely on the testimony of a single witness.[11]
Upon review, the Court does not find good cause to strike the five paragraphs at issue. In particular, the Court finds that Dr. Acampora bases his opinions on numerous prior art documents and sworn testimony from multiple witnesses.[12] Thus, because the Federal Circuit has made clear that every point need not be independently corroborated, the Court finds that it need not strike the paragraphs at issue for lack of corroboration. Moreover, the Court finds that Plaintiff's remaining objections to the paragraphs at issue go to the weight, rather than the admissibility, of the testimony.[13]
Accordingly, the Court DENIES Plaintiff's Motion to Exclude Portions of the Expert Report of Dr. Anthony Acampora.
b. Roy Weinstein
Defendants move to exclude the testimony of Mr. Roy Weinstein (“Weinstein”), Plaintiff's damages expert, on the grounds that his opinions are unreliable and improperly inflate Plaintiff's alleged damages. (Weinstein Motion at 2.) Specifically, Defendants contend that Weinstein's opinions[14] are not reliable because: (1) he relies on the “Nash Bargaining Solution” in determining a royalty rate, which is an inadmissible rule of thumb; and (2) he attributes the entire market value of Defendants' product to the allegedly infringing technology, ignoring the value of non-infringing components. (Id. at 4, 7.) Plaintiff responds that Weinstein's analysis is based on reliable economic tools and Defendants' objections go to the weight, and not the admissibility, of his opinions.[15]
i. Royalty Rate
*3 At issue is whether Weinstein's royalty rate calculation should be excluded because the economic theories upon which he relies are not sufficiently reliable or applicable to the facts at issue.
The plaintiff generally bears the burden of proving damages in a patent infringement case. Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed.Cir.2009). To properly carry this burden, a plaintiff's expert must “sufficiently [tie his testimony on damages] to the facts of the case.” Daubert I, 509 U.S. at 591. The calculation of damages for infringement generally involves a determination of a “reasonable royalty rate” for the infringer's use of the invention. See 35 U.S.C. § 284. The calculation of a reasonable royalty rate “is often determined on the basis of a hypothetical negotiation, occurring between the parties at the time that infringement began.” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1312 (Fed.Cir.2011). “The hypothetical negotiation tries, as best as possible, to recreate the ex ante licensing negotiation scenario and to describe the resulting agreement. In other words, if infringement had not occurred, willing parties would have executed a license agreement specifying a certain royalty payment scheme.” Lucent, 580 F.3d at 1324. In constructing a hypothetical negotiation, the Federal Circuit has “consistently upheld” the reliability of expert testimony where the expert considers the factors enumerated in Georgia–Pacific Corp. v. U.S. Plywood Corp.[16] See i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 854 (Fed.Cir.2010) (citations omitted).[17]
Because the negotiation at issue is hypothetical, “any reasonable royalty analysis ‘necessarily involves an element of approximation and uncertainty.’ “ Lucent, 580 F.3d at 1325 (citation omitted). “Daubert and Rule 702 are safeguards against unreliable or irrelevant opinions, not guarantees of correctness.” i4i Ltd. P'ship, 598 F.3d at 854. “When the methodology is sound, and the evidence relied upon sufficiently related to the case at hand, disputes about the degree of relevance or accuracy (above this minimum threshold) may go to the testimony's weight, but not its admissibility.” Id. at 852 (citations omitted).
Here, the Court finds that Weinstein engaged in extensive analysis of the Georgia–Pacific factors, including, inter alia, considerations of analogous licensing agreements, the prevalence of the relevant technology in Defendants' products, and Defendants' profits since the '917 Patent was issued.[18] Thus, the Court finds that Weinstein's royalty rate calculation is sufficiently tied to the facts of the case.[19] i4i Ltd. P'ship, 598 F.3d at 852–54.
Accordingly, the Court finds that Weinstein's royalty rate calculation should not be excluded.
ii. Royalty Base
At issue is whether Weinstein's calculation of a royalty base is sufficiently reliable. Defendants contend that Weinstein's use of a certain dollar amount as the royalty base is improper because it includes the entire market value of all devices of a certain type sold by Defendants, even though a certain software used in those devices includes features and software components that are entirely unrelated to the patented methods at issue. (Weinstein Motion at 7–9.)
*4 “Under certain circumstances, a trial court may exercise its discretion to apply the ‘entire market value rule’ in calculating the reasonable royalty base.” Cornell Univ. v. Hewlett–Packard Co., 609 F.Supp.2d 279, 285 (N.D.N.Y.2009) (citing King Instruments Corp. v. Perego, 65 F.3d 941, 951 n. 4 (Fed.Cir.1995)). “The entire market value rule allows a patentee to assess damages based on the entire market value of the accused product.” Uniloc, 632 F.3d at 1318. However, the entire market value rule is only applicable “where the patented feature creates the ‘basis for customer demand’ or ‘substantially create[s] the value of the component parts.’ “ Id. (citation omitted). Application of “[t]he entire market value rule in the context of royalties requires adequate proof of three conditions: (1) the infringing components must be the basis for customer demand for the entire machine including the parts beyond the claimed invention; (2) the individual infringing and non-infringing components must be sold together so that they constitute a functional unit or are parts of a complete machine or single assembly of parts; and (3) the individual infringing and non-infringing components must be analogous to a single functioning unit.” Cornell, 609 F.Supp.2d at 285–87 (internal citations omitted). “Notably, these requirements are additive, not alternative ways to demonstrate eligibility for application of the entire market value rule.” Id. at 287.
Here, Weinstein opines that Defendants made a total profit of a certain amount from a certain number of devices sold by Defendants between December 2005 and February 2011.[20] Weinstein applies this entire profit to the royalty rate derived above, because “it is [his] understanding that all [of Defendants'] devices have the capability to infringe the Patent–in–Suit when connected with a [certain] system.” (Id. (emphasis added).)
Upon review, the Court finds that the application of the entire market value rule is not warranted in this case, because Weinstein did not adequately attribute all of Defendants' customer demand to use of the Patent–In–Suit. Even if all of Defendants' devices are capable of infringing Plaintiff's patent when connected with the system at issue, it does not establish that customer demand was driven by this capability, as opposed to other features of the device. See Cornell, 609 F.Supp.2d at 285–87. Further, the Court finds that in light of Weinstein's failure to tie the allegedly infringing technology to customer demand, unfair prejudice would result from letting the jury hear that the accused devices generated a certain amount in profits.[21] Thus, the Court excludes Weinstein's testimony as to the total profitability of Defendants' products.[22]
Accordingly, the Court GRANTS in part and DENIES in part Defendants' Motion to Exclude the Opinions of Mr. Roy Weinstein. Weinstein may testify as to his calculation of damages using the profit-per-product methodology disclosed in his report.[23] He may not testify as to the total profitability of Defendants' allegedly infringing products.
c. Vijay Madisetti
*5 Defendants move to exclude Dr. Vijay Madisetti's (“Madisetti”) opinions on secondary considerations of non-obviousness. (Madisetti Motion at 2.) Defendants contend that as to each secondary consideration of non-obviousness, Madisetti did not perform any analysis and failed to establish a nexus between the consideration and the claimed invention. (Id.) Plaintiff responds that because it will establish the requisite nexus as to each consideration at trial, the fact that Madisetti did not do so in his report[24] is not grounds for exclusion.[25] The Court considers each secondary consideration of non-obviousness in turn.
i. Long–Felt Need and Failure of Others
At issue is whether Madisetti's opinions on long-felt need and failure of others are reliable.
The “proper inquiry for determining the admissibility of evidence proffered to support a secondary consideration ... is whether the proffered evidence has any tendency, either by itself or in conjunction with other evidence, permits the trier of fact to infer the existence of the secondary factor.” Rambus Inc. v. Hynix Semiconductor Inc., 254 F.R.D. 597, 603 (N.D.Cal.2008). A court may exclude an expert opinion on secondary considerations for lack of reliable methodology where the expert performs no analysis. See id. at 605.
“Evidence that an invention satisfied a long-felt and unmet need that existed on the patent's filing date is a secondary consideration of non-obviousness.” Perfect Web Tech., Inc. v. InfoUSA, Inc., 587 F.3d 1324, 1332 (Fed.Cir.2009). “A ‘long-felt need’ implies the existence of an articulated and identified problem in the art calling out for a solution. The existence of a ‘long-felt need’ for a solution to the problem suggests that others of skill in the art tried to solve the problem.” Rambus, 254 F.R.D. at 607 (citations omitted). “A sufficient showing should include some minimum effort to survey industry publications or consider the efforts of multiple persons in the field to solve the alleged [ ] problem, at least absent evidence of extensive experience ... in the [ ] industry. Id. at 608. Further, the claimed invention must satisfy or meet the long-felt need.[26]
Here, Madisetti opines that the '917 Patent's claimed invention satisfied a long-felt need for certain features, based on statements by the National Security Agency expressing a need for a certain feature, descriptions of Plaintiff's technology by Defendants' employees, and a research panel study in which 90% of respondents expressed an interest in certain features. (Madisetti Report ¶ 367 .) Upon review, the Court finds that Madisetti's opinion as to long-felt need and failure of others is not sufficiently unreliable to merit exclusion. Although Madisetti does not explain his analysis at length, in light of his education and experience in the field,[27] the Court finds that his opinion as to the long-felt need for this technology is nonetheless helpful to the jury. In addition, although Defendants contend that Madisetti has failed to establish a nexus between the long-felt need and the claimed invention, the Court finds that under clear Federal Circuit precedent, Plaintiff may establish this nexus through the presentation of separate evidence at trial.[28] Thus, the failure of Madisetti to establish this nexus within his Report does not merit exclusion of his testimony.
ii. Unexpected Results
*6 At issue is whether Madisetti's opinion on unexpected results is reliable.
Evidence of unexpected results can be used to rebut a prima facie case of obviousness. Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1369 (Fed.Cir.2007). “When unexpected results are used as evidence of non-obviousness, the results must be shown to be unexpected compared with the closest prior art.” Id. at 1370. Alternatively, unexpected results may be used as evidence of non-obviousness where “the [prior] art in any material respect taught away from the claimed invention.” In re Geisler, 116 F.3d 1465, 1469 (Fed.Cir.1997). In this context, unexpected results mean “that the claimed invention exhibits some superior property or advantage that a person of ordinary skill in the relevant art would have found surprising or unexpected.” Id.
Here, Madisetti opines that the '917 Patent's claimed invention produced unexpected results, based on his opinion that, to his knowledge, no one had previously designed a wireless device remote management system that implemented any of the claims of the '917 Patent. (Madisetti Report ¶ 370.) Although Madisetti does not explicitly discuss prior art in reference to his opinion, his evaluation of prior art earlier in his report makes clear that he reviewed the relevant art in detail. Thus, the Court finds that exclusion of Madisetti's testimony as to unexpected results is not warranted.
iii. Industry Respect
At issue is whether Madisetti's opinion on industry respect is reliable.
Awards or praise by others may be a secondary consideration of non-obviousness. See Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1328 (Fed.Cir.2008). For an award to be a relevant indicia of non-obviousness, there must be a nexus between the award and the claimed invention. Id. An expert opinion may be excluded where the expert failed to analyze the nexus between an award and the claimed invention. See Rambus, 254 F.R.D. at 609.
Here, Madisetti opines that Plaintiff “has garnered substantial respect in the industry,” and that Plaintiff has been recognized “as a leader in wireless device remote management technologies.” (Madisetti Report ¶ 371.) In support of this conclusion, Madisetti relies on twelve industry awards received by Plaintiff. (Id.) At no point does Madisetti analyze the nexus between the awards and the claimed invention or Plaintiff's products. (See id .) However, as discussed above, failure to establish a nexus within the report itself is not grounds for exclusion. Thus, the Court finds that exclusion of Madisetti's testimony as to industry respect is not warranted.
iv. Commercial Success
At issue is whether Madisetti's opinion on commercial success is reliable.
Commercial success is a secondary consideration of non-obviousness. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538–39 (Fed.Cir.1983). A showing of commercial success requires a “nexus between [the] commercial success and the claimed features.” Brown & Williamson Tobacco Corp. v. Philip Morris Inc. ., 229 F.3d 1120, 1130 (Fed.Cir.2000). Where a product is not co-extensive with the claimed invention, a nexus cannot be presumed, and the patentee must introduce evidence that the claimed invention contributed to or caused the product's commercial success. See Rambus, 254 F.R.D. at 602. “This showing can take many forms, but it must explain how the product's commercial success was caused, at least in part, by the claimed invention and not by other economic and commercial factors unrelated to the technical quality of the patented subject matter.” Id. (citation omitted).
*7 Here, Madisetti opines that certain products covered under the '917 Patent “have been commercially successful in the marketplace,” based on the reaction of wireless carriers to Plaintiff's products, the profitability of Defendants' devices incorporating this technology, and comments from Defendants' employees regarding the technology. (Madisetti Report ¶ 369.) In addition, Plaintiff has identified specific pieces of evidence that it will introduce at trial to support the inference of the requisite nexus.[29] Thus, for the reasons discussed above with regards to other secondary considerations, the Court finds that exclusion of this testimony based on failure to establish a nexus would be premature at this time.
In sum, the Court finds that exclusion of Dr. Madisetti's opinions is not warranted because Plaintiff may establish a sufficient nexus as to each secondary consideration of non-obviousness at trial.
Accordingly, the Court DENIES Defendants' Motion to Exclude the Opinions of Dr. Madisetti.
2. Motion to Bifurcate
Defendants move to bifurcate the trial on the grounds that: (1) bifurcating the trial would reduce the risk of jury confusion; (2) bifurcation would “likely conserve judicial resources and save substantial litigation expenses”; (3) the issues that Defendants propose to address in a second trial-namely, the issues of indirect infringement, damages and willfulness-are separable from the issues that Defendants propose in a first trial-namely, the issues of direct infringement and invalidity; and (4) bifurcation would “avoid prejudice.”[30] Plaintiff responds that the trial should not be bifurcated, on the grounds that: (1) the evidence that Defendants contend would be “unfairly prejudicial if introduced in the first phase of a bifurcated trial” is evidence that would have to be “considered by the jury when making findings on [Defendants'] obviousness invalidity defenses,” which are defenses that Defendants “would necessarily raise during the first phrase of a bifurcated trial”; (2) Defendants have failed to establish a risk of prejudice to them if the trial is not bifurcated; and (3) bifurcation would cause unnecessary delay and would prejudice Plaintiff.[31]
Upon review, the Court does not find good cause to bifurcate the trial. First, the Court finds that Defendants do not meet their burden of showing that bifurcation would conserve judicial resources or litigation expenses, insofar as bifurcation would result in two separate trials rather than one.[32] Second, the Court finds that Defendants do not meet their burden of showing that they would be prejudiced if the trial is not bifurcated. In particular, the Court finds that Defendants' contentions as to how they would be prejudiced by a non-bifurcated trial are predicated on certain emails which, Defendants contend, would be “highly inflammatory” and would “confuse and distract the jury.”[33](Motion to Bifurcate at 10.) However, Defendants also contend that they intend to file a motion in limine to exclude those emails. (Id. at 9 n. 1.) Thus, the Court finds that these emails do not constitute a ground to bifurcate the trial.
*8 Accordingly, the Court DENIES Defendants' Motion to Bifurcate.
3. Motion for Sanctions
Defendants move to preclude Plaintiff from introducing certain late-produced source code into evidence, or relying upon the late-produced code, on the ground that Plaintiff's failure to timely produce the code caused unfair prejudice to Defendants. (See Sanctions Motion.) Plaintiff responds that its brief delay in producing the code caused no prejudice to Defendants, and that Defendants have deliberately avoided conducting discovery pertaining to the code because the code defeats one of Defendants' invalidity contentions.[34]
Federal Rule of Civil Procedure 26 requires that as a part of the discovery process, each party shall provide “a copy-or a description by category and location-of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment.” Fed.R.Civ.P. 26(a)(1)(A)(ii). Federal Rule of Civil Procedure 37 enunciates the consequences of a failure to comply with Rule 26; it states that:
If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. In addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard: (A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure; (B) may inform the jury of the party's failure; and (C) may impose other appropriate sanctions.
Fed.R.Civ.P. 37(c).
Thus, “[w]hen a party fails to make the disclosures required by Rule 26(a), the party is not allowed to use the [information or witness] ... at trial unless it establishes that the failure was substantially justified or is harmless.” Goodman v. Staples The Office Superstore, LLC, 644 F.3d 817, 826 (9th Cir.2011). “Rule 37(c)(1) is a self-executing, automatic sanction designed to provide a strong inducement for disclosure.” Id. at 827 (citation and quotation omitted). The burden is on the party facing sanctions to prove harmlessness. See Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1107 (9th Cir.2001).
In determining whether a violation of Rule 26 is substantially justified or harmless, courts should consider the following factors: “(1) prejudice or surprise to the party against whom the evidence is offered; (2) the ability of that party to cure the prejudice; (3) the likelihood of disruption of the trial; and (4) bad faith or willfulness involved in not timely disclosing the evidence.” Lanard Toys Ltd. v. Novelty, Inc., 375 Fed. Appx. 705, 713 (9th Cir.2010) (citation omitted). District courts are given “particularly wide latitude” in determining whether to issue sanctions under Rule 37. Yeti by Molly, 259 F.3d at 1106.
*9 Upon review, the Court finds that each of the Lanard Toys factors weighs against the exclusion of evidence in this case. With regard to the first two factors-namely, (1) “prejudice or surprise” to Defendants and (2) the ability of Defendants to cure the prejudice-the Court finds that Defendants have had ample opportunity to cure whatever prejudice may have been caused by the late production. Notably, Defendants opted not to inspect the source code for nearly a year after being informed by Plaintiff that it had been produced. In light of this delay, the Court finds that any additional delay caused by Plaintiff's failure to properly load the source code at issue is not significant enough to warrant preclusive sanctions. With regard to the third factor-namely, the likelihood of disruption of the trial-the Court finds that because the code was produced over fifteen months prior to trial, there is no likelihood of the trial being disrupted. Finally, with regard to the fourth factor-namely, Plaintiff's “bad faith or willfulness”-the Court finds that there is no basis upon which to conclude that Plaintiff acted in bad faith. Rather, the Court finds that Plaintiff's responses to Defendants' inquiries regarding the source code demonstrate a good faith effort on Plaintiff's part to correct what appears to have been an error in uploading the code. Thus, while Defendants may have been required to conduct some additional discovery in response to the source code's late production, the Court finds that exclusion is not warranted under the factors provided by Lanard Toys.
Accordingly, the Court DENIES Defendants' Motion for Sanctions.[35]
C. Conclusion
The Court: (1) DENIES Plaintiff's Motion to Exclude Portions of the Opinion of Dr. Acampora; (2) GRANTS in part and DENIES in part Defendants' Motion to Exclude the Opinion of Dr. Weinstein; (3) DENIES Defendants' Motion to Exclude the Opinions of Dr. Madisetti; (4) DENIES Defendants' Motion to Bifurcate; and (5) DENIES Defendants' Motion for Sanctions.
Footnotes
(Plaintiff's Motion to Exclude Portions of the March 4, 2011 Expert Report of Defendants' Expert, Dr. Anthony Acampora, hereafter, “Acampora Motion,” Docket Item No. 419 (filed under seal).)
(Research in Motion Ltd.'s and Research in Motion Corp.'s Notice of Motion and Motion Under Daubert to Exclude the Opinions of Mr. Roy Weinstein, hereafter, “Weinstein Motion,” Docket Item No. 416 (filed under seal).)
(RIM's Notice of Motion and Motion Under Daubert to Exclude Dr. Vijay Madisetti's Opinions on Secondary Considerations of Non–Obviousness, hereafter, “Madisetti Motion,” Docket Item No. 708 (filed under seal).)
(RIM's Notice of Motion and Motion to Bifurcate Trial Pursuant to Federal Rule of Civil Procedure 42(B) [sic], hereafter, “Motion to Bifurcate,” Docket Item No. 697 (filed under seal).)
(Research in Motion Limited's and Research in Motion Comporation's Renewed Motion and Memorandum for Sanctions, hereafter, “Sanctions Motion,” Docket Item No. 747 (filed under seal).)
In patent cases, as in other types of cases, bifurcation “is the exception, not the rule.” Real v. Bunn–O–Matic Corp., 195 F.R.D. 618, 620 (N.D.Ill.2000); see also WeddingChannel.com, Inc. v. The Knot, Inc., No. 03 Civ. 7369(RWS), 2004 WL 2984305, at *1 n. 1 (S.D.N.Y. Dec.23, 2004) (noting that it “is not unusual in patent infringement cases to try all issues in a single trial”).
(Expert Report of Dr. Anthony Acampora Regarding the Invalidity of U.S. Patent No. 6,970,917, hereafter, “Acampora Report,” Docket Item No. 605 (filed under seal).)
(Acampora Motion at 1–2.) Specifically, Plaintiff seeks to exclude the following paragraphs of Dr. Acampora's Report: 141, 142, 269, 280, 333, 340, 346, 348, 352, 354, 399, 409, 410, 418, 420, 421, 427, 430, 434, 438, 439, 451, 454, 457, 461, 462, 463 and 467. (Id. at 1.) Because five of these paragraphs relate to patent claims that have been previously dismissed by the Court, the Court only addresses Plaintiff's Motion as to the remaining twenty-three paragraphs. (See Acampora Report ¶¶ 346–354 (discussing Claim 7 of the '917 Patent); Acampora Report ¶ 467 (discussing Claim 8 of the '917 Patent).)
(RIM's Opposition to Mformation's Motion to Exclude Portions of the March 4, 2011 Expert Report of Defendants' Expert, Dr. Anthony Acampora at 1, hereafter, “Acampora Opp'n,” Docket Item No. 651 (filed under seal).)
Paragraphs 141, 142, 269, 280, 333, 340, 399, 409, 410, 418, 420, 421, 427, 434, 438, 439, 451, and 462 rely on corroborative documentary evidence. (Declaration of Meredith Zinanni in Support of RFM's Opposition to Mformation's Motion to Exclude Portions of the March 4, 2011 Expert Report of Defendants' Expert, Dr. Anthony Acampora, hereafter, “Zinanni Deck,” Ex. 10, Table of Supporting Evidence, Docket Item No. 652 (filed under seal).) Paragraph 280 relies on testimony from multiple witnesses and documentary evidence. (See Acampora Report ¶ 280.)
See, e.g., Adenta GmbH v. OrthoArm, Inc., 501 F.3d 1364, 1372 (Fed.Cir.2007) (concluding that assessing the sufficiency of corroborating evidence regarding patent invalidity is a matter for the jury).
The opinions at issue are discussed in Weinstein's expert report. (See Declaration of Tiffany P. Cunningham in Support of RIM's Notice of Motion and Motion Under Daubert to Exclude the Opinions of Mr. Roy Weinstein, Ex. A, Expert Report of Roy Weinstein, hereafter, “Weinstein Report,” Docket Item No. 417–1 (filed under seal).) Because the entirety of the Weinstein Report was filed under seal, the Court discusses its contents, and the parties' contentions regarding its contents, solely in general terms.
(Mformation Technologies, Inc.'s Opposition to Research in Motion LTD's and Research in Motion Corp.'s Motion Under Daubert to Exclude the Opinions of Mr. Roy Weinstein, hereafter, “Weinstein Opp'n,” Docket Item No. 654 (filed under seal).)
318 F.Supp. 1116, 1120 (S.D.N.Y.1970) modified sub nom. Georgia–Pac. Corp. v. U.S. Plywood–Champion Papers, Inc., 446 F.2d 295 (2d Cir.1971).
The Georgia–Pacific factors include: (1) royalties received by the patentee for licensing the patent to others; (2) rates paid by the licensee for the use of comparable patents; (3) the nature and scope of the license; (4) any established policies or marketing programs by the licensor to maintain its patent monopoly; (5) the commercial relationship between the licensor and licensee; (6) the effect of selling the patented specialty in promoting sales of other products of the licensee; (7) the duration of the patent and license term; (8) the established profitability of the product made under the patent; (9) the utility and advantages of the patent property over old modes or devices; (10) the nature of the patented invention and the benefits to those who have used the invention; (11) the extent to which the infringer has used the invention and the value of that use; (12) the portion of profit or of the selling price that may be customary in the particular business to allow for use of the invention; (13) the portion of the realizable profit that should be credited to the invention; (14) the opinion testimony of qualified experts; and (15) the results of a hypothetical negotiation between the licensor and licensee. See i4i Ltd. P'ship, 598 F.3d at 853 n. 3.
In addition to performing an extensive Georgia–Pacific analysis, Weinstein also used the Nash Bargaining Solution system “as a check” on the reasonableness of the rate reached through his Georgia–Pacific analysis. (See Weinstein Report at 23.) Because Weinstein used this system in addition to, rather than in lieu of, the Georgia–Pacific analysis, the Court finds that it does not constitute a ground for exclusion of his testimony.
(Weinstein Report ¶ 160.)
See Uniloc, 632 F.3d at 1320 (“This case provides a good example of the danger of admitting consideration of the entire market value of the accused where the patented component does not create the basis for customer demand.... The disclosure that a company has made $19 billion dollars in revenue from an infringing product cannot help but skew the damages horizon for the jury, regardless of the contribution of the patented component to this revenue.”).
Additionally, Defendants contend that Weinstein disclosed a new calculation for the first time at his deposition on May 18, 2011, and thus move to exclude “all opinions not timely disclosed.” (RIM's Reply in Support of Its Motion Under Daubert to Exclude the Opinions of Mr. Roy Weinstein, Docket Item No. 668 (filed under seal).) The Court finds, however, that Defendants have not demonstrated any prejudice from additional details regarding Weinstein's methodology being revealed at his deposition, and, accordingly, DENIES Defendants' request to exclude latedisclosed opinions.
(See Declaration of Amar L. Thakur in Support of Mformation Technologies, Inc.'s Opposition to RIM's Motion for Summary Judgment that U.S. Pat. No. 6,970,917 Is Not Entitled to Claim Priority to U.S. Prov. Pat. Appl. 60/251,304 and that Claim 1 of the '917 Patent Is Invalid Under 35 U.S.C. § 102, Ex. A, Expert Report of Dr. Vijay Madisetti Regarding Validity, Docket Item No. 591–1 (filed under seal).) Only a portion of this Report is at issue in the present Motion. (See Declaration of Maria A. Maras in Support of RIM's Notice of Motion and Motion Under Daubert to Exclude Dr. Vijay Madisetti's Opinions on Secondary Considerations of NonObviousness, Ex. 1, Expert Report of Vijay Madisetti, PH.D. [sic] Regarding Validity of U.S. Patent No. 6,970,917, hereafter, “Madisetti Report,” Docket Item No. 709–1 (filed under seal).) Because the Madisetti Report was filed under seal, the Court discusses its contents, and the parties' contentions regarding its contents, solely in general terms.
(Mformation Technologies, Inc.'s Opposition to RIM's Motion Under Daubert to Exclude Dr. Vijay Madisetti's Opinions on Secondary Considerations of Non–Obviousness, hereafter, “Madisetti Opp'n,” Docket Item No. 731.)
See Perfect Web, 587 F.3d at 1332; In re Gardner, 449 Fed. Appx. 917 (Fed.Cir.2011).
(Declaration of Vijay Madisetti, PH.D [sic] in Support of Memorandum in Opposition to RIM's Motion For Summary Judgment of Noninfringement of U.S. Patent No. 6,970,917, Ex. A, Curriculum Vitae of Professor Vijay K. Madisetti, ECE, Docket Item No. 317–1.)
See Pro–Mold and Tool Co., Inc. v. Great Lakes Plastics, Inc. ., 75 F.3d 1568, 1574 (Fed.Cir.1996) (“It is within the providence of the fact-finder to resolve these factual disputes regarding whether a nexus exists between the commercial success of the product and its patented features, and to determine the probative value of [plaintiff's] evidence of secondary considerations for rebutting the prima facie case of obviousness.”).
(Motion to Bifurcate at 5–11.)
(Mformation Technologies, Inc.'s Opposition to RIM's Motion to Bifurcate Trial Pursuant to Fed.R.Civ.P. 42(b) at 1–18, Docket Item No. 717 (filed under seal).)
As to this issue, Defendants contend that given the “substantial non-infringement and invalidity defenses that [they have] raised, [Plaintiff's] claims are likely to be defeated during the first phase [of a bifurcated trial].” (Motion to Bifurcate at 7.) However, a moving party's mere contention that judicial economy would be promoted by bifurcation, insofar as a second phase of a bifurcated trial would be rendered unnecessary if the moving party prevails at the first phase, is not sufficient to meet that party's burden of showing that bifurcation is appropriate. See, e .g., John Middleton, Inc. v. Swisher Int'l, Inc., No. Civ.A. 03–3908, 2004 WL 792762, at *l–2 (E.D.Pa. Apr. 8, 2004).
(See also RIM's Reply in Support of its Motion to Bifurcate Trial Pursuant to Federal Rule of Civil Procedure 42(B) [sic] at 1–5, Docket Item No. 728 (clarifying that Defendants' position regarding bifurcation centers on their contention that “[b]ifurcation of the issues is necessary to avoid prejudice to [Defendants],” and further clarifying that the “prejudice” at issue centers on an “irrelevant and highly prejudicial storyline [Plaintiff] seeks to present through the emails discussed above”).)
(Mformation Technologies, Inc.'s Opposition to RIM's Renewed Motion for Sanctions at 13, Docket Item No. 753 (filed under seal).) Because a significant portion of the evidence submitted in support of Defendants' Motion for Sanctions and Plaintiff's Opposition involves privileged communications and was filed under seal, the Court does not recite the factual basis for this Motion in this Order.