Unwired Planet, LLC v. Apple, Inc.
Order Granting in Part and Denying in Part Apple's Motion to Exclude. Signed by Judge Chhabria on 2/14/2017. (vclc3S, COURT STAFF) (Filed on 2/14/2017)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
UNWIRED PLANET, LLC,
Case No. 13-cv-04134-VC
ORDER GRANTING IN PART AND
DENYING IN PART APPLE'S MOTION
Re: Dkt. Nos. 319, 355-14
Apple's motion is granted with respect to the survey data for the '260 patent and all
damages estimates dependent on that data. Given the limited explanation Unwired has offered
for the assumptions underpinning Dr. Allenby's "equilibrium price premium" model, that data
must also be excluded based on the current record. If Unwired believes it can properly explain
how the EPP model fits the facts of this case, the Court will reconsider its conclusion after a
formal Daubert hearing. Apple's motion is otherwise denied.
I. Dr. Allenby's report
Dr. Allenby's survey for the '260 patent measured the value attributed to manual or
automatic "content sharing," which Dr. Allenby described as a "[m]ethod of transferring songs,
movies, and applications across devices . . . owned by the user." Dkt. 318-6 at 26.1 This is not
consistent with any user-facing benefits conferred by the claims asserted on the '260 patent.
Rather, it appears that Dr. Allenby's questions for the '260 patent reflect the claim construction
Unwired initially proposed for "provisioning," which would have made the term essentially
All pincites are to the page numbers of the docket entry rather than the internal page numbers
of the document cited.
synonymous with "providing." Dkt. No. 269 at 4; see also 357-4 at 10. Unwired's proposed
claim construction was rejected in favor of the narrower "enabling or modifying communications
capabilities." Dkt. No. 269 at 7. In light of that construction, "provisioning" features on a user's
device bears no reasonable connection to sharing content across devices. Unwired suggests that
Dr. Allenby's survey was intended to measure the value attributed to automatically provisioning
all of one's devices after manually provisioning a single device. But this would still make the
survey inaccurate, as the benefit of the invention was tied to remote provisioning, not automatic
provisioning. See id. at 3-4. And this would still leave the survey misleadingly ill-defined, as
songs and movies have no effect on communications capabilities and are therefore not
"provisioning" content. The combined result is a survey question – and survey responses –
targeted at an invention other than the one at issue in this litigation. This is a problem of
admissibility rather than weight. See, e.g., Fractus, S.A. v. Samsung, No. 6:09-CV-203-LEDJDL, 2011 WL 7563820, at *1 (E.D. Tex. Apr. 29, 2011). The '260 patent survey results must
therefore be excluded, along with all damages estimates hinging on those survey results.
Unwired has requested an opportunity to correct its questions and redo its conjoint survey. But
where the initial effort misses the mark so badly, it would be inappropriate to incentivize
overreaching by allowing a second attempt. Cf. Network Prot. Scis., LLC v. Fortinet, Inc., No. C
12-01106 WHA, 2013 WL 5402089, at *8 (N.D. Cal. Sept. 26, 2013).
The survey language on the '446 and '092 patents is a closer question. In both cases Dr.
Allenby described the consumer-facing benefit of the invention in terms that clearly exceeded its
incremental improvement over the prior art. The '446 patent doesn't represent the invention of
voice transcription. Dkt. No. 318-6 at 27. The '092 patent doesn't represent the invention of
automatic location detection. Id. at 26. The patents represent modest improvements in these
areas, based on the kinds of minor technical modifications most ordinary consumers likely
wouldn't appreciate. But at this stage, the Court's concern is with limiting evidence that is
irrelevant or unfairly prejudicial, that lacks an adequate technical or scientific ground for
Daubert purposes, and that jurors may find confusing, misleading, or unhelpful. Although these
survey questions perhaps skirt the line, the fundamental problem – their high level of
abstraction – doesn't render the survey results entirely unhelpful in assigning value to the
improvements in the surveyed areas, particularly as Unwired may argue that its improvements
over the prior art were instrumental in making previously existing functionalities effective on the
accused devices. See Sentius Int'l, LLC v. Microsoft Corp., No. 5:13-CV-00825-PSG, 2015 WL
331939, at *3 (N.D. Cal. Jan. 23, 2015). Any flaws in the survey can be adequately drawn out at
cross and mitigated with proper instructions. Nor is this case analogous to VirnetX, where the
damages expert "relied on the entire market value of Apple's products" and "did not even attempt
to subtract any . . . unpatented features from the [royalty] base" if those features weren't
separately sold. VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1328 (Fed. Cir. 2014). The
damages estimate in that case failed to comply with "settled principles of apportionment"
because it adopted the entire market value rule without demonstrating that "the patented features
[drove] the demand for [the] entire multi-component product." See LaserDynamics, Inc. v.
Quanta Computer, Inc., 694 F.3d 51, 67 (Fed. Cir. 2012). A survey that approximates damages
for a patented feature at a high level of abstraction is committing "error" of a different order, and
doesn't give rise to a per se admissibility problem. See VirnetX, 767 F.3d at 1330 ("[W]e have
long acknowledged that any reasonable royalty analysis necessarily involves an element of
approximation and uncertainty." (citations and internal quotation marks omitted)). Apple's
motion is therefore denied with respect to the survey data for the '446 and '092 patents.
Apple overstates its argument for excluding Dr. Allenby's EPP model. The EPP isn't
entirely Dr. Allenby's "own creation," but an adaptation of existing methods. See Dkt. No. 353-4
at 7; Greg M. Allenby et al., Valuation of Patented Product Features, 57 J.L. & Econ. 629, 63233, 655-56 (2014). To the extent Apple is challenging the validity of the assumptions behind
game theory itself, the Court suspects those challenges could be overcome, as game-theoretic
models have longstanding and widespread acceptance in economics and other disciplines. But it
is the proponent of the expert testimony who bears the burden of demonstrating admissibility by
a preponderance of the evidence. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 593 n.10
(1993). At this stage, Unwired has not adequately explained – and, in large part, has not even
attempted to explain – the basis for and importance of the assumptions supporting Dr. Allenby's
approach. See, e.g., Dkt. No. 357-4 at 12 n.7; Dkt. No. 323-12 at 49-52. Without this detail, the
Court has no way of determining how and to what extent Dr. Allenby's assumptions affect the
model's results. This makes it impossible to determine the model's appropriateness for the facts
of this case and leaves the Court no reason to believe jurors will be capable of meaningfully
weighing the data they're confronted with. Cf. Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d
1292, 1313 (Fed. Cir. 2011). That some of the assumptions underpinning the EPP model were
published in a peer-reviewed paper does not itself justify their application here. See Dkt. No.
357-4 at at 13. Nor does the fact that the EPP model yields relatively conservative results offer
assurance that those figures are useful or reliable, even as a basis for comparison. See id. at 12.
Instead, by shrouding the EPP results in an air of legitimacy, these factors raise the risk of juror
confusion, making it all the more essential that the Court exercise its gatekeeping function until
admission is adequately supported. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 154
(1999). The Court will reconsider its conclusion after a Daubert hearing with expert testimony if
Unwired wishes to pursue that option.
II. Mills's damages report
Apple objects to Mills's reliance on the Lenovo license in calculating a "willingness to
accept." Apple suggests the Microsoft license as a more comparable alternative. But for
Daubert purposes, Unwired is not required to prove that all alternatives are demonstrably worse;
it only has to prove that the license in question offers a reasonable enough basis for comparison
that a jury can then be expected to weigh the damages evidence it's presented with. Lucent
Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1326 (Fed. Cir. 2009). Here, the Lenovo license
doesn't suffer from significantly different or more numerous flaws than the Microsoft license
Apple proposes. To the extent there are concerns about the degree of comparability, these are
factual rather than methodological concerns – issues well within the province of the jury.
ActiveVideo Networks, Inc. v. Verizon Commc'ns, Inc., 694 F.3d 1312, 1333 (Fed. Cir. 2012).
And in any event, the adjustments necessary to correct for differences in the Lenovo license are
largely the same as those necessary to correct for differences in the Apple license. Apple
suggests that the back-of-the-envelope calculations borrowed from Robbins amount to an
impermissible "rule of thumb." But it isn't imprecision that makes for a rule of thumb; it is
arbitrariness, or lack of grounding in the facts of the case. VirnetX, 767 F.3d at 1331. Robbins
provides sufficient case-specific justification for the license adjustments to make the figures
admissible. What weight to assign to the figures in light of that justification is a question for the
Apple's request to exclude Robbins's testimony is denied. See Dkt. No. 357-4 at 19.
IT IS SO ORDERED.
Dated: February 14, 2017
United States District Judge
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