Fujitsu Limited v. Belkin International, Inc. et al

Filing 507

ORDER Re Defendants' Objections to Exhibits and Demonstratives for Drs. Leonard and Mangum. Signed by Judge Lucy H. Koh on 12/09/12. (lhklc3, COURT STAFF) (Filed on 12/9/2012)

1
2

UNITED STATES DISTRICT COURT

3

NORTHERN DISTRICT OF CALIFORNIA

4

SAN JOSE DIVISION

5
6
7
8
9

United States District Court
For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

FUJITSU LIMITED,

)
)
Plaintiff,
)
)
v.
)
BELKIN INTERNATIONAL, INC.; BELKIN, )
INC.; D-LINK CORPORATION; D-LINK
)
SYSTEMS, INC.; NETGEAR, INC.; ZYXEL )
COMMUNICATIONS CORPORATION; and )
ZYXEL COMMUNICATIONS, INC.,
)
)
Defendants.
)

Case No.: 10-CV-03972-LHK

ORDER RE: OBJECTIONS TO
DEFENDANTS BELKIN AND
NETGEAR’S DIRECT EXAMINATION
DEMONSTRATIVES FOR DR.
GREGORY LEONARD AND D-LINK’S
DIRECT EXAMINATION EXHIBITS
AND DEMONSTRATIVES FOR DR.
RUSSELL MANGUM

After reviewing the parties’ briefing, considering the record in the case, and balancing the
considerations set forth in Federal Rule of Evidence (“FRE”) 403, the Court rules on the parties’
objections as follows:
EXHIBITS/
Court’s Ruling on Objections
DEMONSTRATIVES
Direct Examination
Sustained in part, overruled in part.
Slide #9
Fujitsu objects to Slide 9 of Dr. Leonard’s direct examination, which
identifies several non-parties to this case that NETGEAR and Belkin
contend are “Unlicensed PC Card Sellers” and “Unlicensed or Royalty
Free Router/Access Point Sellers.” Fujitsu contends that this slide should
be excluded for the following reasons: (1) there has been no evidence
presented during trial to establish that these companies make or sell
infringing products that would require a license, thereby making this
evidence irrelevant, misleading, and lacking a proper foundation; and (2)
displaying this demonstrative would be improper in light of the Court’s
prior rulings excluding evidence of third-party products from this case.
Defendants Belkin and NETGEAR argue that this slide lists other
companies to make the point that, because there are so many unlicensed
and non-infringing competitors, Defendants would have been less likely
to agree to a high royalty rate. Defendants contend that this slide is
directly relevant to Georgia Pacific factors 1 and 4, as well as the
bargaining positions of the parties to a hypothetical negotiation.
Defendants also note that Fujitsu’s damages expert, Mr. Meyer, cited the
source document for these lists in coming up with his own market-share
1
Case No: 10-CV-03972-LHK
ORDER RE: OBJECTIONS TO DEFENDANTS BELKIN AND NETGEAR’S DIRECT EXAMINATION
DEMONSTRATIVES FOR DR. GREGORY LEONARD AND D-LINK’S DIRECT EXAMINATION EXHIBITS
AND DEMONSTRATIVES FOR DR. RUSSELL MANGUM

1

allocation. Defendants further argue that, the fact that these products
have not been found to infringe the ’769 patent should not preclude Dr.
Leonard from making the point that companies sell products that
compete with Defendants’ accused products, and have never paid any
money to Fujitsu for licensing fees.

2
3
4

To the extent that Mr. Fuji testified that Fujitsu unsuccessfully contacted
a third party to license the ’769 patent, Defendants may identify those
third parties as unlicensed competitors, such as Buffalo and SOHOware.
Accordingly, Fujitsu’s objection is OVERRULED as to these third
parties.

5
6
7
8

However, to the extent that there has been no evidence that a third party
was ever contacted and accused of infringing the ’769 patent, the Court
agrees with Fujitsu. The jury does not have any basis to assess the
relevance of these third parties, and their inclusion in Slide 9 is likely to
confuse and mislead the jury. Therefore, pursuant to FRE 403, Fujitsu’s
objection is SUSTAINED as to these third parties because the probative
value of their inclusion in this slide is outweighed by the potential of
unfair prejudice to Fujitsu.

9

United States District Court
For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Slide 8 of Dr.
Leonard’s direct
examination and
Slides 26, 29, and 31 of
Dr. Mangum’s direct
examination

Sustained.
Fujitsu objects to Slide 8 of Dr. Leonard’s direct examination because it
contains “royalty rates” for the CSIRO, Acticon, and Linex licenses that
Dr. Leonard calculated using all of Defendants’ accused products, not
just the eight products per Defendant selected for this case. Similarly,
Fujitsu objects to Slide 26 of Dr. Mangum’s direct examination because
it discusses the “effective” royalty rate of the Acticon-GPC/D-Link
Systems License. Dr. Mangum calculated the “effective” royalty rate by
dividing the lump sum amount by the number of units of all cards
accused in this case to determine a per-unit royalty of $0.12. Fujitsu
notes that neither Dr. Leonard nor Dr. Mangum has updated any of these
calculations since the Court ordered Fujitsu to limit the products at issue
in this trial to only 8 per Defendant.
The Court finds that Defendants’ damages experts’ assumptions that the
licenses at issue cover the Belkin and NETGEAR products originally
accused in this case and D-Link’s “Licensed Products” is speculative.
Moreover, in at least one instance involving the Acticon license, DLink’s corporate representative testified in deposition that he did not
know which D-Link products constituted “Licensed Products.”
Moreover, Defendants’ trial evidence about which of their products is
covered by the licenses at issue also is unclear. Furthermore, at multiple
Case Management Conferences, this Court asked the Defendants to
consider stipulating to representative products to streamline the case and
the trial. Defendants steadfastly refused, and claimed that the products

2
Case No: 10-CV-03972-LHK
ORDER RE: OBJECTIONS TO DEFENDANTS BELKIN AND NETGEAR’S DIRECT EXAMINATION
DEMONSTRATIVES FOR DR. GREGORY LEONARD AND D-LINK’S DIRECT EXAMINATION EXHIBITS
AND DEMONSTRATIVES FOR DR. RUSSELL MANGUM

1
2
3
4
5
6
7
8
9

United States District Court
For the Northern District of California

10

Exhibits to Dr.
Mangum’s expert
reports designated for
his direct examination
(DTX 313, 314, and
315, 325, 328, 866)

11
12
13

originally accused in this case had material differences. Thus, to
streamline the trial, this Court ordered Fujitsu to select 8 accused
products for Belkin, NETGEAR, and D-Link (D-Link Systems and DLink Corp.) respectively, and the issue of whether the parties will
conduct a trial on the remaining accused products is not resolved.
Therefore, because Dr. Leonard and Dr. Mangum’s calculations are not
linked to the eight accused products in this case and are overly
speculative, pursuant to FRE 403, the Court finds that the probativeness
of Defendants’ exhibits and testimony regarding “royalty rates” based on
the Linex, Acticon, and CSIRO licenses is outweighed by the risk of
confusing the issues and misleading the jury.
Sustained.
Fujitsu argues that Exhibits DTX 313, 314, and 315, purport to show
calculations for all accused cards, kits, and external devices—the very
type of calculation regarding non-selected products that Defendants have
objected to Fujitsu showing to the jury. In addition, designated portions
of DTX 866—Exhibits 19 and 20 to Dr. Mangum’s supplemental
report—calculate and use ratios of sales of selected products for trial
versus accused products not selected for trial. Finally, Exhibits 325 and
328 reflect the $0.12 royalty rate calculation for the Acticon-GPC/DLink Systems License based on all accused products.

14
Defendants D-Link Systems and D-Link Corp. contend that these
exhibits will not be referenced or introduced into evidence in
Defendants’ direct examination of Dr. Mangum. However, Defendants
do “reserve[] the right to rely on these exhibits if ‘Fujitsu impeaches [Dr.
Mangum] on the basis that his opinions lack support that can be found in
those exhibits.’” ECF No. 506.

15
16
17
18

Defendants’ position is inconsistent with their trial objections to Fujitsu’s
reference to accused products that have not been selected for this trial.
The Court has sustained those objections. Defendants open the door to
accused products not selected for trial at their own peril.

19
20
21

Pursuant to FRE 403 balancing, the Court sustains Fujitsu’s objection to
these exhibits that are unfairly prejudicial to Fujitsu and could mislead
the jury.

22
23
24

IT IS SO ORDERED.

25
Dated: December 9, 2012
26
27

_________________________________
LUCY H. KOH
United States District Judge

28
3
Case No: 10-CV-03972-LHK
ORDER RE: OBJECTIONS TO DEFENDANTS BELKIN AND NETGEAR’S DIRECT EXAMINATION
DEMONSTRATIVES FOR DR. GREGORY LEONARD AND D-LINK’S DIRECT EXAMINATION EXHIBITS
AND DEMONSTRATIVES FOR DR. RUSSELL MANGUM