Dolby Laboratories Licensing Corporation et al v. Adobe Systems Incorporated

Filing 348

PRETRIAL ORDER NO. 4 RE: MOTIONS IN LIMINE. Signed by Judge Yvonne Gonzalez Rogers on 1/7/2020. (fs, COURT STAFF) (Filed on 1/7/2020)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DOLBY LABORATORIES LICENSING
CORPORATION,
PLAINTIFF,

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PRETRIAL ORDER NO. 4 RE: MOTIONS
IN LIMINE

V.

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Case No. 18-cv-1553 YGR

ADOBE INC. F/K/A, ADOBE SYSTEMS
INCORPORATED

United States District Court
Northern District of California

DEFENDANT.
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____________________________________
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AND RELATED COUNTERCLAIM
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Before the Court are the parties’ respective motions in limine (“MIL”). (Dkt. Nos. 250, 251,

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253, 254, 255, 254, 257, 258, 260, 261, 262, 263, 264, 266, 267, 268, 269, 271, 272, 274.) Having
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considered the papers submitted, the filings to date, and the other arguments and submissions at the
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Pretrial Conference held on December 20, 2019, the Court finds the following as to each motion in
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limine:
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Dolby’s MIL

Requested Relief and Basis for Relief

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MIL 1:

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Fourth “Adobe
Offerings Chart”

Dolby need not offer the Fourth Adobe Offerings Chart into
evidence with the prior versions, and that version is excluded,
because Adobe should not be permitted to take back facts that
were undisputed until the very end of discovery.

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The motion is DENIED. The fourth offerings chart is admissible evidence in this case, as are all
prior versions of the chart, the deadline for the close of fact discovery, and Adobe’s purported
representations about what Dolby technology was in Adobe’s products. The jury may afford as
much weight to the fourth offerings chart as it deems appropriate in light of all the evidence.

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United States District Court
Northern District of California

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MIL 2:
Evidence of Adobe
Software Provided
for Dolby
Employees’
“Personal Use”

Documents and other evidence regarding versions of Adobe
software products allegedly provided to certain Dolby employees
for “personal use” are not relevant or admissible evidence. (Fed.
R. Evid. 401, 403.)

The motion is DENIED. The proffered evidence is circumstantial evidence regarding the
knowledge of Dolby employees who, at the time they purportedly had access to Adobe products
for “personal use,” were representing Dolby in its business relationship with Adobe. Insofar as
the evidence may be prejudicial to Dolby, it is not unduly so, and thus, exclusion of all such
evidence is not warranted.
MIL 3:
Christian Tregillis
Testimony
Regarding the
Audit

Mr. Tregillis’ testimony regarding third-party Connor
Consulting’s attempted audit of Adobe’s royalty payments to
Dolby is based on “observations” only; because he has no opinions
regarding the subject, he cannot provide admissible testimony.
(Fed. R. Evid. 401, 402, 702.)

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As an initial matter, the parties may not violate this Court’s standing order by stipulating to reserve
arguments for motions in limine that should be brought in Daubert motions. Dolby should have
raised the arguments set forth in this motion in Dolby’s Daubert motion regarding Mr. Tregillis.
Thus, on this basis alone, Court is inclined to deny the motion as untimely. Further, to the extent
this motion raises arguments already raised in Dolby’s Daubert motion, this motion is an improper
motion for reconsideration. That said, the motion appears to have some measure of merit and,
accordingly, is DENIED IN PART, AND GRANTED IN PART.

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As this Court held in its order on the Daubert motions and has previously articulated, reports
themselves are not admissible. Insofar as Mr. Tregillis summarizes Mr. Meyer’s opinions or other
admissible evidence in paragraphs 160-164 of his rebuttal report, he is permitted to testify to those
opinions to the extent they actually rebut opinions offered by Mr. Meyer during trial. Further,
insofar as the evidence referenced in paragraphs 190-206 is admitted through an appropriate
source, Mr. Tregillis can rely on the same for his opinion in paragraphs 207-208. He himself
though cannot attest to the same. The same is true of the evidence referenced in paragraphs 209220 and 223-237. Mr. Tregillis’ opinion testimony may be solicited by way of hypotheticals (i.e.
assuming certain testimony exists or is found to be true) or by establishing the foundation for an
expert opinion on a particular topic (i.e. how royalty audits are performed and the standards that
govern such audits) and then soliciting the opinion on the same with reference to the basis (again,
assuming the evidence is in the record).
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MIL 4:
Evidence of
Overpayments by
Adobe Before
Proof of Certain
Preliminary Facts

Adobe cannot introduce evidence of alleged overpayments unless and until
Adobe provides that it requested a refund or took other action to obtain a
credit before the next quarterly payment was due which is a required
precondition under the contract. (Fed. R. Evid. 401, 104(b).)

The motion is DENIED. The Court is not persuaded that there was a “condition precedent” to the
refund of any overpayment. Even if there was, however, the proffered evidence is relevant to
the issue of damages. The jury is entitled hear such relevant evidence, which may support
Adobe’s position regarding overpayment, and weigh that in light of the totality of the evidence.
MIL 5:
Evidence of
Dolby’s Annual
Licensing Revenues

Dolby’s annual revenues from its overall licensing program have
no relevance to this case and the monetary consequences of
Adobe’s breaches of contract and infringement. (Fed. R. Evid.
401, 402, 403.)

United States District Court
Northern District of California

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The motion is GRANTED WITHOUT PREJUDICE to Adobe introducing this evidence on crossexamination after asking for and receiving permission from the Court at the time of trial. Although
evidence that Dolby receives a portion of its revenue from licensing may be relevant to the issues
in this case, the Court anticipates that the likelihood of prejudice from introducing specific revenue
figures may outweigh any relevance. The balancing of these issues depends on the parties’
positions at trial and the testimony of their witnesses, hence the need to discuss the issue in
advance with the Court.

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MIL 6:
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Evidence of
Prejudgment
Interest

The Court should exclude any reference during the jury trial to
prejudgment interest as this will be applied to the judgment by the
Court after the jury enters its verdict. (Fed. R. Evid. 401, 402,
403.)

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The motion is DENIED. At the Pretrial Conference, Dolby represented that it was seeking
prejudgment interest based on a contractual, rather than statutory, rate. As such, evidence of
prejudgment interest is relevant and admissible.
MIL 7:
Evidence of Other
Audits

Dolby’s audits of other third-party licensees are entirely irrelevant
to this case where the only relevant audit is the audit of Adobe.
(Fed. R. Evid. 401, 402, 403.)

The motion is DENIED WITHOUT PREJUDICE to Dolby reasserting the objection at the time of
trial on the basis of relevance or under Rule 403. Although the minute details of Dolby’s audits
of third-party licensees appear irrelevant to this case, depending on the parties’ positions at trial
and the testimony offered by their witnesses, aspects of the proffered evidence may be relevant
to the credibility of the persons testifying and whether Dolby breached the covenant of good
faith and fair dealing when performing its audit of Adobe in 2015.

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Adobe’s MILs

Requested Relief and Basis for Relief

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MIL 1:

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Adobe’s Revenues
and Form 10-Ks

Motion to exclude any evidence, inquiry, or argument regarding Adobe’s
Form 10-Ks, including Dolby’s use of the securities filings as a vehicle to
discuss either Adobe’s revenues or profits. (Fed. R. Evid. 402, 403.)

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The motion is GRANTED IN PART and DENIED IN PART. Adobe’s Form 10-Ks can be admitted
without an authenticating witness. Whether the Form 10-Ks ultimately are admitted at trial,
however, depends on their relevance, which, in turn, depends on Adobe’s posture at trial. That is,
portions of the proffered evidence are potentially relevant to a defense that the alleged damages
are unreasonable and to the use of the words “consumer” and “professional.” As such, the motion
is GRANTED. The motion is otherwise DENIED WITHOUT PREJUDICE to Adobe reasserting the
objection at the time of trial on the basis of relevance. Further, for purposes of trial, Dolby shall
sub-designate only those portions of the Form 10-Ks that it intends to use. Unless the Court is
convinced otherwise, the Form-10Ks will not be admitted in their entirety and should used to
address issues specifically raised during the trial.

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MIL 2:

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Extrinsic Evidence
to Construe the
Creative Cloud
Letter

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United States District Court
Northern District of California

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Motion to prohibit Dolby from introducing or relying on any extrinsic
evidence to support its position on the meaning of the Creative Cloud
Letter. (Fed. R. Evid. 401, 403; Court’s instruction at the Pre-Summary
Judgment Conference on July 8, 2019.)

The motion is DENIED. Under California law, if a Court decides, “after considering th[e]
evidence, that the language of a contract, in light of all the circumstances, is ‘fairly susceptible
of either one of the two interpretations contended for,’ extrinsic evidence relevant to prove either
of such meanings is admissible.” Pac. Gas & Elec. Co. v. G. W. Thomas Drayage & Rigging
Co., 69 Cal. 2d 33, 40 (1968) (en banc) (citations omitted). Here, in its order on the parties’
cross-motions for summary judgment, the Court found that the Creative Cloud Letter is
ambiguous. Thus, extrinsic evidence of its meaning is admissible.

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MIL 3:
Adobe’s IP
Licenses and
Audits of Adobe’s
Licensees

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Motion to exclude Dolby from referencing or offering any evidence
regarding Adobe’s IP licenses, including Adobe’s terms of use for
purposes of interpreting the license agreements and audit clause at issue
here, and Adobe’s audits of its licensees, including any testimony on
these topics by Mr. Conroy Shum and Mr. Joe Perry, for the purpose of
arguing whether Adobe complied with its contractual obligations to
provide the information called for by the Dolby audit at issue in this case.
(Fed. R. Evid. 401, 403.)

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The motion is DENIED WITHOUT PREJUDICE to Adobe reasserting the objection at the time of
trial on the basis of relevance or under Rule 403. The Court’s decision with respect to this
motion parallels its decision with respect to Dolby’s motion in limine number 7. Although the
minute details of third-party licenses and audits appear irrelevant to this case, depending on the
parties’ positions at trial and the testimony offered by their witnesses, aspects of the proffered
evidence may be relevant to Adobe’s credibility and consistency with respect it being audited by
Dolby in 2015. The Court is not persuaded that admission of this evidence, including Mr.
Shum’s or Mr. Perry’s testimony, would be so confusing to the jury as to warrant exclusion.

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MIL 4:

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Extrinsic Evidence
Regarding
Meaning of Terms
“Professional” and
“Consumer”

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United States District Court
Northern District of California

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Motion to exclude Dolby from offering extrinsic evidence regarding the
meaning of the terms “professional” and “consumer” in the parties’
contracts, including from Adobe’s Forms 10-K. (Fed. R. Evid. 402, 403.)

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The motion is GRANTED IN PART and DENIED IN PART for the same reasons as Adobe’s motion
in limine number 1, with which there is significant overlap. Specifically, Adobe’s Form 10-Ks
cannot be admitted in their entirety, but relevant portions can be admitted, without an
authenticating witness, as extrinsic evidence regarding the meaning of ambiguous terms in the
parties’ contracts. Insofar as the Court DENIES the motion, however, it does so WITHOUT
PREJUDICE to Adobe reasserting the objection at the time of trial on the basis of relevance.
Further, the Court again advises Dolby that any portions of Adobe’s securities filings that it
intends to use at trial must be sub-designated.
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MIL 6:
Testimony by
Undisclosed
Witnesses and
Documents

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United States District Court
Northern District of California

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Motion to exclude (1) testimony by Dolby witness James Cowdery,
(2) testimony by an unidentified “Representative of MainConcept
GmbH” or “Representative of Brambles NSD, Inc.”; and (3) written
materials concerning MainConcept that Dolby failed to produce in
discovery, including emails and documentary evidence. (Fed. R. Civ. P.
26, 37.)

The motion is GRANTED IN PART and DENIED IN PART. Insofar as the motion seeks to exclude
the proffered witnesses based upon alleged delay in disclosure, it is denied because Adobe’s own
litigation strategy resulted in any delayed rebuttal testimony. Relatedly, with respect to the
purportedly undisclosed documents related to MainConcept, the motion is DENIED. Without a
clear articulation of one’s legal position, a party is not required to disclose that which is does not
know is relevant. Further, Adobe did not pursue discovery of document produced by Dolby
pursuant to Request for Production No. 24.
However, Dolby misinterprets this Court’s order requiring identification of trial witnesses.
Surprises at trial are not welcome. If a witness is anticipated, regardless of whether a trial
subpoena may need to issue, the witness should be identified. Failure to do so risks exclusion.
The Court will grant a motion to exclude a witness who is not identified according to the schedule
set forth at the Pretrial Order No. 3.
Motion prohibiting Dolby from introducing any testimony or evidence
from its designated rebuttal experts, John. M. Strawn and Lorin M. Hitt,
Rebuttal Experts in during its case in chief. (Fed. R. Evid. 611.)
Dolby’s Case-InChief
MIL 7:

The motion is DENIED as to Dr. Strawn. Any delay in Dolby’s disclosure of Dr. Strawn as its
technical expert in large part was due to Adobe’s own litigation strategy. Moreover, as the Court
found in its order on the parties’ Daubert motions, “Adobe has had a full and fair opportunity to
rebut [Dr. Strawn’s] opinions through Ronald Schnell’s expert report.”
At the Pretrial Conference on December 20, 2019, both parties stipulated to withdraw their
respective industry experts: Dr. Kursh for Adobe, and Dr. Hitt for Dolby. Accordingly, this
portion of the motion is DEEMED WITHDRAWN.

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MIL 8:

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Metrics Relating to
Dolby Digital Plus
Technology

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Motion excluding any evidence, inquiry, or argument relating to the use of
metrics relating to Dolby Digital Plus technology (including metrics such
as royalty rates and revenues) as a basis for calculating metrics, including
royalty rates or hypothetical royalty rates, relating to Dolby Digital
technology. (Fed. R. Evid. 403.)

The motion is DENIED as untimely. With this motion, Adobe challenges the basis for the
calculations performed by Dolby’s damages expert, Mr. Meyer. This argument should have been
raised at the Daubert motion stage when Adobe sought to exclude portions of Mr. Meyer’s expert
testimony on related grounds. Moreover, Adobe’s arguments go to the weight the jury may afford
to Mr. Meyer’s testimony and are not grounds for exclusion of the proffered evidence.

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MIL 9:
Dolby Digital
Patents Not
Disclosed During
Discovery

Motion excluding any evidence or argument about any Dolby patents that
were not disclosed during discovery. (Fed. R. Evid. 403; Fed. R. Civ. P.
37.)

United States District Court
Northern District of California

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The motion is DENIED WITHOUT PREJUDICE to Adobe reasserting the objection at the time of
trial on the basis of relevance and under Rule 403. Adobe has not substantiated its argument for
exclusion based on Dolby’s alleged failure to disclose during discovery. Further, although the
Court cannot determine the relevance of the proffered evidence at this juncture, depending on the
parties’ positions at trial, the evidence may be relevant to rebut an argument by Adobe regarding
the expiration of certain Dolby patents.

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MIL 10:

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Testimony from
Chris Choi on
AICPA Standards,
Adobe’s Provision
of Information, and
the Parties’ State of
Mind.

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Motion to exclude any references, evidence, inquiry, or argument from
Dolby’s expert witness, Chris Choi, on (1) Conner Consulting’s
performance of its audit pursuant to AICPA standards, (2) Adobe’s
alleged failure to provide certain information during the audit, and (3) the
parties’ state of mind as to the audit. (Fed. R. Evid. 401, 402, 403, 701,
702.)

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The motion is GRANTED IN PART and DENIED IN PART. As discussed with respect to Dolby’s
motion in limine number 3, the parties may not violate this Court’s standing order by stipulating
to reserve arguments for motions in limine that should be brought in Daubert motions. Although
the motion therefore is untimely, given that the parties essentially challenge the admissibility of
all expert testimony regarding auditing, the Court nevertheless addresses the motion on the merits.
Specifically, the motion is GRANTED with respect to Mr. Choi’s testimony regarding the parties’
state of mind, which generally is not an appropriate subject for expert testimony. The motion is
DENIED, however, with respect to Mr. Choi’s testimony regarding AICPA standards and Adobe’s
alleged failure to cooperate during the audit. Mr. Choi’s testimony on these topics goes to the
weight of the evidence and therefore is admissible.

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MIL 11:
Copyright
Damages from
Extraterritorial
Infringement or
Exploitation of
Asserted Works

Motion to exclude any references, evidence, inquiry, or argument, in
connection with Dolby’s claim for copyright damages, relating to any
Adobe offerings licensed outside the United States or for use outside the
United States. (Fed. R. Evid. 401, 402.)

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The motion is DENIED. As with motion in limine number 8, Adobe’s motion presents arguments
regarding extraterritorial damages that it should have raised in its Daubert motion with respect to
Dolby’s damages expert, Mr. Meyer. The motion therefore is untimely. Additionally, Dolby
argues that it cannot allocate damages for enterprise term license agreements including non-U.S.
licenses because only Adobe has the necessary information to perform such an allocation. At the
Pretrial Conference, Adobe failed to rebut this argument.
MIL 12:

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United States District Court
Northern District of California

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Exhibits from the
Expert Rebuttal
Report of John
Strawn

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Motion to exclude attachments to the Expert Rebuttal Report of John
Strawn. (Fed. R. Evid. 801, 802, 402, 403.)

The motion is GRANTED IN PART and DENIED IN PART. With respect to exhibits that summarize
Dr. Strawn’s analysis of Adobe’s products for evidence that Dolby’s copyrighted source code
was contained therein, namely Dolby1765 and Dolby1766, are admissible insofar as they
present, in list form, a list of Dr. Strawn’s technical findings. However, other portions of those
documents that do not serve this purpose, such as the first paragraphs of Dolby1765, are
inadmissible. Dolby may either sub-designate two new exhibits or replace the exhibits with
annotated versions. With respect to exhibits that contain publicly-available third-party source
code, namely Dolby1767, Dolby1768, Dolby1769, Dolby1770, Dolby1771, Dolby1772, and
Dolby1773 are admissible as long as Dr. Strawn authenticates and lays a foundation for each.
The publicly-available research materials, namely Dolby1764 and Dolby1774, do not appear
admissible as exhibits themselves although it is possible that Dr. Strawn may have relied upon
them for purposes of his analysis.

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MIL 13:

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“May-Call”
Witnesses in CaseIn-Chief

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Motion prohibiting Dolby from calling “may-call” witnesses listed on its
pre-trial fact witness disclosures in its case-in-chief. (Fed. R. Evid. 403,
611.)

The motion is GRANTED IN PART and DENIED IN PART, largely for the same reasons as Adobe’s
motion in limine number 6. Specifically, Dolby appears to have complied with the Court’s
standing order insofar as it sets a deadline for disclosure of “likely” witnesses.

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United States District Court
Northern District of California

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However, as discussed, if a witness is anticipated, regardless of whether a trial subpoena may need
to issue, the witness should be identified based on the schedule set forth at the Pretrial Order No.
3. Failure to timely identify any witness to be called risks exclusion.
MIL 14:
Schedules
Appended to
Dolby’s Damages
Expert’s Reports

Motion to exclude the schedules appended to Dolby’s damages expert’s
opening and rebuttal reports, plus updates, revisions, and other appendices
and attachments to such damages reports, on the ground that they are not
admissible under Fed. R. Evid. 1006.

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The motion is DENIED WITHOUT PREJUDICE to Adobe renewing the objection at the time of trial
on the basis of a lack of foundation. The schedules Adobe seeks to exclude summarize and provide
the underlying data for the opinions of Dolby’s damages expert, Mr. Meyer, and thus may be
admissible under Federal Rule of Evidence 1006, which permits use of a “summary, chart, or
calculation to prove the content of voluminous writings[.]” The alternative, that is, requiring the
jury to note or remember all of the data underlying Mr. Meyer’s damages calculation, would
impede the fair, orderly, and efficient trial of the case. See Davis & Cox v. Summa Corp., 751
F.2d 1507, 1516 (9th Cir. 1985) (purpose of FRE 1006 is to “allow the use of summaries when
the documents are unmanageable or when the summaries would be useful to the judge and jury”).
Insofar as the schedules are admissible, the underlying data for the schedules also is admissible
because it is necessary to authenticate the numbers set forth in the schedules. For the documents
to be admitted, however, Mr. Meyer must lay a proper foundation for their admission.

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This Order terminates Docket Numbers 250, 251, 253, 254, 255, 254, 257, 258, 260, 261,
262, 263, 264, 266, 267, 268, 269, 271, 272, and 274.
IT IS SO ORDERED.
Dated: January 7, 2020
______________________________________
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

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