VIA Technologies, Inc. (a California corporation) et al v. ASUS Computer International et al

Filing 314

ORDER REGARDING 260 261 262 266 267 268 269 MOTIONS IN LIMINE. Signed by Judge Beth Labson Freeman on 7/19/2017. (patentlcsjS, COURT STAFF) (Filed on 7/19/2017)

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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 8 VIA TECHNOLOGIES, INC. (A CALIFORNIA CORPORATION), et al., Plaintiffs, 9 v. Case No. 14-cv-03586-BLF ORDER REGARDING MOTIONS IN LIMINE 10 United States District Court Northern District of California 11 12 ASUS COMPUTER INTERNATIONAL, et al., Defendants. 13 14 Plaintiffs VIA Technologies, Inc., VIA Technologies, Inc., and VIA Labs, Inc., 15 (collectively, “VIA” or “Plaintiffs”) bring this lawsuit against Defendants ASMedia Technology 16 Inc., ASUSTeK Computer Inc., and ASUS Computer International (collectively, “ASUS” or 17 “Defendants”), currently alleging trade secret misappropriation in violation of Cal. Civ. Code 18 §§ 3426 et seq. (“CUTSA”) and 18 U.S.C. §§ 1836 et seq. (“DTSA”). This Order addresses the 19 parties’ motions in limine. For the reasons explained below and on the record at the July 13, 2017 20 pretrial conference, the motions are decided as follows: 21 Plaintiffs’ Motion in Limine No. 1: GRANTED IN PART and DENIED IN PART. 22 Plaintiffs’ Motion in Limine No. 2: GRANTED. 23 Plaintiffs’ Motion in Limine No. 3: GRANTED IN PART and DENIED IN PART. 24 Plaintiffs’ Motion in Limine No. 4: DENIED. 25 Defendants’ Motion in Limine No. 1: DENIED. 26 Defendants’ Motion in Limine No. 2: GRANTED IN PART and DENIED IN PART. 27 Defendants’ Motion in Limine No. 3: DENIED. 28 1 I. PLAINTIFFS’ MOTIONS IN LIMINE A. 2 3 Plaintiffs’ Motion in Limine No. 1 to Exclude Evidence and Argument Relating to Intellectual Property of ASUS and Theories of Liability that are No Longer at Issue Plaintiffs move to exclude evidence or argument relating to: (1) intellectual property (such 4 as patents and trade secrets) belonging to Defendants, and/or (2) dropped or dismissed theories of 5 liability, such as claims that Defendants misappropriated designs for PCIE and infringed United 6 States Patent No. 8,476,747 (“the ’747 patent”). ECF 266. Plaintiffs argue that this evidence is 7 irrelevant and would confuse the jury, result in undue delay, and waste time. Id. 8 Defendants respond that they do not intend to use evidence of their own intellectual 9 property as a defense to patent infringement or trade secret misappropriation. ECF 286. However, 10 Defendants argue that they should be permitted to introduce evidence of their own intellectual 11 United States District Court Northern District of California property to show lack of malicious theft of trade secrets. Id. Defendants argue this evidence is 12 relevant because it suggests a corporate culture of creativity and respect for others’ creativity. Id. 13 at 2-3. 14 The Court agrees with Defendants that general evidence of their corporate culture, 15 including that they own intellectual property, is relevant rebuttal evidence to malicious theft of 16 trade secrets. Accordingly, the Court DENIES Plaintiffs’ motion with respect to evidence relating 17 to the intellectual property of ASUS. 18 The Court, however, agrees with Plaintiffs that evidence relating to dropped or dismissed 19 theories of liability, in general, should be excluded. However, it may be the case that, even if such 20 evidence is not allowed to be introduced in the first instance, it may be proper rebuttal. 21 Accordingly, the Court GRANTS Plaintiffs’ motion with respect to evidence relating to dropped 22 or dismissed theories of liability. Defendants may, however, move for modification of this order 23 if such evidence become relevant to a defense. 24 25 26 B. Plaintiffs’ Motion in Limine No. 2 to Preclude Defendants from Misrepresenting at Trial that VIA’s Trade Secret Claims Only Concern 29 Analog Schematics Plaintiffs move to preclude Defendants from representing at trial that Plaintiffs’ trade 27 secret claims as to analog circuit schematics are limited to only 29 schematics. ECF 267. On 28 October 12, 2016, Magistrate Judge Lloyd issued an order “limit[ing] the scope of [Plaintiffs’] 2 1 requested [trade secret] discovery to 24 analog schematics of its choice, in addition to those 2 schematics included in the power efficiency combination trade secret,” as well as the “list of 39 3 digital designs” (i.e., Verilog source code) identified in its May 27, 2016 Second Amended Trade 4 Secret Disclosures. ECF 182. Plaintiffs argue that, even though discovery proceeded on this limited basis, they should 5 6 not be precluded from arguing the full scope of their analog circuit schematics trade secret claims 7 at trial, which, according to Plaintiffs, consist of 1,116 schematics relating to certain 8 subcomponents of technologies in USB 3.0. ECF 267 at 2. Plaintiffs argue this is the case 9 because Magistrate Judge Lloyd’s order only concerned discovery, not dispositive issues, and in fact Magistrate Judge Lloyd lacked jurisdiction under 28 U.S.C. § 636(b)(1)(A) to render a 11 United States District Court Northern District of California 10 dispositive order that would foreclose Plaintiffs from proceeding on any trade secret claims. Id. at 12 2-3. Plaintiffs also argue that trade secret misappropriation and misuse can be proven 13 circumstantially, and they should be allowed to use the 29 schematics to prove by way of example 14 that Defendants misappropriated the full 1,116 schematics. Id. at 4-5. Defendants respond that the purpose of Magistrate Judge Lloyd’s order was to limit the 15 16 scope of the trade secret case, and the Court should continue to enforce its boundaries at trial. 17 ECF 287. Defendants argue that Plaintiffs’ jurisdictional arguments are waived because they did 18 not, pursuant to 28 U.S.C. § 636(b)(1) and Fed. R. Civ. P. 72(a), object to Magistrate Judge 19 Lloyd’s order within 14 days. Id. at 2. Defendants also argue that Plaintiffs’ jurisdictional 20 arguments are incorrect because courts have an inherent power to control their dockets. Id. at 3. 21 Defendants additionally disagree that Plaintiffs can prove trade secret misappropriation by 22 example, arguing that Plaintiffs must specifically identify the precise aspects of the analog circuit 23 schematics (which are a hybrid of trade secrets and publicly known information) that are trade 24 secrets and prove how each derives independent economic value from not being generally known 25 to the public or to other persons who can obtain economic value from its disclosure or use. Id. at 26 4-6. 27 28 The Court agrees with Plaintiffs that Magistrate Judge Lloyd’s October 12, 2016 order does not limit their trade secret claims to 29 schematics. Magistrate Judge Lloyd’s order is a 3 1 discovery order. Its analysis is conducted according to Federal Rule of Civil Procedure 26(b), 2 which covers “Discovery Scope and Limits.” See ECF 182 at 3-7. At no point does it indicate 3 that it limits the reach of Plaintiffs’ claims. See id. Indeed, the closest it comes is an observation 4 that “[i]t is impossible for VIA to effectively prosecute and for ASMedia to effectively defend a 5 claim regarding so many trade secrets in a two-week trial.” Id. at 5. However, this statement was 6 made in the context of assessing whether interests would be served by allowing broader 7 discovery—it stands simply to observe that the amount of discovery that Plaintiffs sought was 8 greater than what would be manageable at trial. This does not mean that Plaintiffs would be 9 required to be so limited, though. 10 Moreover, regardless of its wording, Magistrate Judge Lloyd’s order must be a discovery United States District Court Northern District of California 11 order, as he did not have authority to issue an order limiting Plaintiffs’ claims. Where, as here, the 12 parties did not consent to proceeding before a magistrate judge, a magistrate judge may only 13 handle pretrial motions that are referred by a district court judge. Flam v. Flam, 788 F.3d 14 1043,1045-46 (9th Cir. 2015); 28 U.S.C. § 636; Fed. R. Civ. P. 72. Absent party consent, 28 15 U.S.C. § 636(b)(1)(A) only empowers magistrates to decide non-dispositive motions. Flam, 788 16 F.3d at 1046. Interpreting Magistrate Judge Lloyd’s order as limiting the number of Plaintiffs’ 17 trade secret claims would convert it into a dispositive order, which is not allowed under § 636. 18 Finally, interpreting the order as a discovery order most closely aligns with Defendants’ 19 original objectives in seeking this relief. In the briefing leading up to Magistrate Judge Lloyd’s 20 order, Defendants’ primary rationale for seeking a limitation on the number of schematics they 21 needed to produce to Plaintiffs was reducing their discovery burden. See ECF 177 at 6-10. 22 Defendants never sought relief from this Court to limit the number of dispositive issues, even 23 though they could have. Indeed, issue narrowing is a common practice in patent cases, which, 24 until very recently, this case was one. Defendants cannot now escape these strategic choices at 25 this late stage. Accordingly, the Court finds that Plaintiffs’ trade secret claims are not limited to 26 29 schematics. Plaintiffs’ motion is GRANTED. 27 28 4 C. 1 Plaintiffs’ Motion in Limine No. 3 to Exclude the Opinions of Defendants’ Damages Expert that are Based on Product Sales Plaintiffs move to exclude the trade secret damages opinions of Defendants’ expert, Mr. 2 3 James Pampinella, that are based on product sales, as disclosed in paragraphs 41, 47, 48, 55, and 4 56 of his January 27, 2017 report. ECF 258. Plaintiffs argue that because they only seek trade 5 secret damages based on a theory of unjust enrichment and because the only unjust enrichment 6 they allege is avoided R&D costs, product sales are irrelevant and should not be part of the 7 damages calculation. Id. at 3-4. Plaintiffs specifically take issue with two sales-related aspects of 8 Mr. Pampinella’s opinion: (1) his comparison of Defendants’ U.S. sales with the amount of R&D 9 expenses that Plaintiffs’ expert, Ms. Melissa Bennis, determined Defendants avoided through their misappropriation of Plaintiffs’ trade secrets (discussed in paragraph 41); and (2) his opinion that 11 United States District Court Northern District of California 10 Ms. Bennis should have apportioned her damages figure to “reflect U.S. sales,” because the R&D 12 benefit that Defendants allegedly received through misappropriation is the same regardless of how 13 many products they subsequently sold in the U.S. (discussed in paragraphs 47, 48, 55, and 55). Id. 14 at 4-5. 15 Defendants respond that product sales is an alternative approach to estimating avoided 16 R&D costs, which has been recognized and supported by industry publications. ECF 269 at 3-4. 17 Defendants also complain that Plaintiffs have taken a shifting sands approach to damages: 18 according to Defendants, Plaintiffs represented at the May 14, 2015 motion to dismiss hearing that 19 they were only seeking relief for “use” of their alleged trade secrets in the United States, but, in 20 their expert report, they seek damages based on the value of R&D expenses avoided by ASMedia 21 in Taiwan. Id. at 2-3. 22 Rule 702 requires that “expert testimony be both relevant and reliable.” Ollier v. 23 Sweetwater Union High Sch. Dist., 768 F.3d 843, 860 (9th Cir. 2014) (internal citation and 24 alteration omitted). “This requires district courts, acting in a ‘gatekeeping role,’ to assess ‘whether 25 the reasoning or methodology underlying the testimony’ is valid and ‘whether that reasoning or 26 methodology properly can be applied to the facts in issue.’” Id. (quoting Daubert v. Merrell Dow 27 Pharm., Inc., 509 U.S. 579, 592-93, 597 (1993)). In other words, “[i]t is not ‘the correctness of 28 the expert’s conclusions’ that matters, but ‘the soundness of his methodology.’” Id. (quoting 5 1 2 Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 463 (9th Cir. 2014)). The Court finds that Mr. Pampinella’s comparison of Defendants’ alleged avoided R&D 3 expenses to U.S. sales should not be excluded. Although it is not always the case that sales prices 4 exceed R&D costs (and vice versa), Mr. Pampinella’s comparison of the two is relevant rebuttal to 5 Ms. Bennis’s opinion, as it provides the jury with another data point to use in weighing her 6 credibility. Accordingly, Plaintiffs’ motion with respect to paragraph 41 of his report is DENIED. 7 On the other hand, the Court finds that Mr. Pampinella’s opinion that Ms. Bennis should 8 have apportioned her damages figure to “reflect U.S. sales” should be excluded. “Where the 9 plaintiff’s loss does not correlate directly with the misappropriator’s benefit . . . [a] defendant’s unjust enrichment might be calculated based upon cost savings or increased productivity resulting 11 United States District Court Northern District of California 10 from use of the secret.” Ajaxo Inc. v. E*Trade Fin. Corp., 187 Cal. App. 4th 1295, 1305 (2010). 12 However, “[t]here is no standard formula to measure it.” Id. Accordingly, Ms. Bennis was not 13 legally required to apportion her damages figure to reflect U.S.-only sales. Mr. Pampinella’s 14 opinion to the contrary is neither relevant nor reliable, and, if anything, could confuse the jury’s 15 deliberations on damages. As such, exclusion is warranted. Plaintiffs’ motion with respect to Mr. 16 Pampinella’s apportionment opinion in paragraphs 47, 48, 55, and 56 is GRANTED. 17 18 D. Plaintiffs’ Motion in Limine No. 4 to Exclude Newly Identified Evidence and Arguments Based Thereon Plaintiffs move to preclude Defendants from relying on any evidence that was not 19 disclosed in interrogatory responses that were not served prior to the depositions of relevant 20 30(b)(6) witnesses and other fact witnesses. ECF 269. This motion revolves around a series of 21 events relating to certain discovery responses, which the parties do not appear to dispute: On 22 April 26, 2016, Plaintiffs served the following interrogatories on Defendants: 23 24 25 26 27 28 INTERROGATORY NO. 21: “Set forth in detail the complete basis for the contention in your Answer that . . . ‘Plaintiffs’ alleged proprietary information . . . is readily available in the public document [sic] and ascertainable by proper means including descriptions in trade journals, reference books, or other published materials/literature,’ including identifying with specificity all facts and documents that support this contention and all persons with knowledge of such facts and documents.” INTERROGATORY NO. 22: “Set forth in detail the complete basis for the contention . . . that ‘Defendants independently developed or acquired the 6 1 2 information Plaintiffs’ [sic] are claiming as their trade secrets,’ including identifying with specificity all facts and documents that support this contention and all persons with knowledge of such facts and documents.” Ex. 5 to Mot. at 6-7, ECF 270-5. Defendants responded on June 2, 2016, citing five documents in 3 their response to Interrogatory No. 21 and citing the same five documents and one spreadsheet in 4 their response to Interrogatory No. 22. Ex. 7 to Mot. at 20-22; ECF 270-7. In October 2016, 5 Plaintiffs served 30(b)(6) deposition notices on the following topics: 6 7 8 AMENDED FIRST NOTICE – TOPIC 11: “The conception, design, research, development, test, and manufacture of each of ASM’s USB 3.0 Chips, including without limitation, each of the Infringing Chips and Trade Secret Chips . . . .” 10 AMENDED SECOND NOTICE – TOPIC 1: “The public documents, including trade journals, reference books, or other published materials/literature, from which you are asserting that Persons can readily and properly ascertain VIA’s trade secrets . . . .” 11 Ex. 1 to Mot. at 12-13, ECF 270-1; Ex. 2 to Mot. at 9, ECF 270-2. Plaintiffs took the deposition 12 of Defendants’ designee on these topics on November 11, 2016. Ex. 10 to Mot., ECF 270-10. United States District Court Northern District of California 9 13 Meanwhile, on October 12, 2016, Magistrate Judge Lloyd issued an order directing 14 Plaintiffs to select any “24 analog schematics of [their] choice” plus any of the schematics 15 included in the power efficiency combination trade secret on which they could pursue further 16 discovery. ECF 182. Ten days later, on October 22, 2016, Plaintiffs disclosed their selection. Ex. 17 1 to Opp., ECF 290-2. Sixteen days later, on November 7, 2016, Defendants produced analog 18 schematics corresponding to Plaintiffs’ election. Ex. 2 to Opp., ECF 290-3. 19 On November 18, 2016, the last day of fact discovery, Defendants produced the 20 development documents corresponding to Plaintiffs’ selected schematics. They also identified 21 additional documents evidencing public knowledge and supplemented their responses to 22 Interrogatories Nos. 21 and 22 to identify additional supporting documents. Ex. 11 to Mot., 265- 23 19. One month later, on December 19, 2016, Plaintiffs served their opening expert report on trade 24 secret misappropriation. ECF 263-2. Defendants served their rebuttal report on January 27, 2017. 25 ECF 263-13. 26 Plaintiffs contend that, because Defendants waited until the last day of fact discovery and 27 the completion of relevant 30(b)(6) depositions to supplement their interrogatory responses and 28 produce corresponding documents, they hid the full scope of their defenses and hindered 7 1 Plaintiffs’ ability to seek relevant 30(b)(6) deposition testimony (and potentially other fact 2 discovery) on these topics. ECF 269. Plaintiffs argue that courts have excluded evidence based 3 on similar tactics, and urges the Court should do so here. Id. at 4-5. Plaintiffs also argue that the 4 fact that they could depose Defendants’ technical expert on these allegedly late-identified 5 documents does not cure this problem, because Defendants’ expert did not have personal 6 knowledge of these documents and Plaintiffs were still deprived of the opportunity to get relevant 7 discovery into the factual bases for Defendants’ updated interrogatory responses. Id. at 5. 8 Defendants argue that their production of documents and supplementation of their 9 interrogatory responses was reasonable under the circumstances, as Defendants did not know which analog circuit schematics Plaintiffs would select until they received Plaintiffs’ selection on 11 United States District Court Northern District of California 10 October 22, 2016. ECF 290 at 4. After that, Defendants point out, they took less than one month 12 to produce the schematics and corresponding design documents. Id. Defendants also contend that 13 their supplemental responses were substantially harmless to Plaintiffs, as an entire month passed 14 between Defendants’ supplementation and the issuance of Plaintiffs’ expert report. Id. at 4-5. 15 The Court agrees with Defendants that this evidence should not be precluded. Although 16 Defendants supplemented their interrogatory responses and produced additional documents on the 17 last day of fact discovery, fact discovery was open nonetheless. At that point, Plaintiffs still had a 18 full month before their opening expert reports were due. If Plaintiffs believed that Defendants’ 19 document production warranted additional 30(b)(6) deposition testimony, Plaintiffs could have 20 sought leave to extend the fact discovery deadline to allow for these additional depositions. 21 Plaintiffs did not do this. As such, Plaintiffs complain of a problem that seems to be at least in 22 part of their own making. Plaintiffs’ motion to preclude Defendants from relying on documents 23 and discovery responses served after relevant 30(b)(6) depositions is DENIED. 24 Nevertheless, the Court recognizes that the timing of Defendants’ supplementation and 25 production may have hindered Plaintiffs’ ability to get relevant information from certain 30(b)(6) 26 witnesses. For that reason, the Court ORDERS that Defendant make one 30(b)(6) witness 27 available for deposition in the U.S. who is prepared to testify on deposition topics no. 1 and 11. 28 The deposition shall last no more than one day and must be concluded by July 31, 2017. 8 1 2 3 4 5 6 7 II. DEFENDANTS’ MOTIONS IN LIMINE A. Defendants’ Motion in Limine No. 1 and Daubert Motion to Preclude the Use of Any Testimony From or Reference to the Opinions of Defendants’ “Unjust Enrichment” Arising from its Alleged Use of VIA’s Trade Secrets Defendants seek to exclude the opinions and testimony of Plaintiffs’ damages expert, Ms. Melissa Bennis, regarding Defendants’ alleged unjust enrichment arising from its misappropriation of Plaintiffs’ trade secrets. ECF 259-8. Defendants’ challenge is twofold: First, Defendants argue that Ms. Bennis’ opinion contradicts Plaintiffs’ express representation to this Court at the May 14, 2015 motion to dismiss hearing that they would only seek recover for “use” 8 of its alleged trade secrets in the United States. Id. at 3-4. In contrast, say Defendants, Ms. 9 Bennis’s opinion asks for damages based on a percentage of Plaintiffs’ global research and 10 development expenses, which Defendants contend is a new theory that was disclosed for the first 11 United States District Court Northern District of California time through her expert report. Id. at 4-5. 12 Second, Defendants challenge Ms. Bennis’ opinion as unreliable because she does not 13 attempt to measure the actual benefit received by Defendants from their alleged trade secret 14 15 misappropriation. Id. at 5-8. At a high level, Ms. Bennis calculates Defendants’ alleged savings in R&D fees by totaling Plaintiffs’ mask design fees for the 139 projects they allege contributed to 16 the development of the accused trade secrets, multiplying this by the ratio of total R&D expenses 17 to total mask fees (to estimate total expenses for the 139 projects), and using surface area ratios to 18 apportion for the features that relate to trade secrets. Ex. B to Mot. at 38-41, ECF 259-4. She 19 assigns surface area ratios to each of the 139 projects by dividing them into five groups, selecting 20 1-2 representative mask designs for each of those five groups, and then calculating the percentage 21 of that surface area corresponds to trade secret-related features. Id. at 39-41. Defendants claim 22 her methodology is unreliable for several reasons: (1) she uses mask design fees, even though 23 24 25 mask designs are not part of Plaintiffs’ allegations; (2) she blindly assumes, based on conversations with Plaintiffs’ engineers and expert, that there is a general correlation between surface area and design effort; (3) she blindly relies on Plaintiffs’ engineers to group each of the 26 139 mask designs into a specific category, select representative mask design(s) for each category, 27 and determine the percentage surface area for each representative design; (4) the representative 28 9 1 designs are not statistically significant; and (5) using surface area as a proxy for design effort is a 2 methodology that has not been used in any other case or scientific or industry publication. ECF 3 259-8 at 5-8. 4 Plaintiffs disagree on both fronts. With respect to Defendants’ first challenge, Plaintiffs 5 argue that they only represented that their theory of liability—not damages—was premised on 6 Defendants’ alleged use of their trade secrets in the United States. ECF 292 at 1-2. Plaintiffs also 7 argue that their unjust enrichment theory of damages is well supported under California and 9th 8 Circuit law, and that they timely put Defendants on notice of this theory through their responses to 9 Interrogatory No. 11 and production of their own R&D documents. Id. at 3-4. Plaintiffs also argue that there is no risk of double recovery from the Taiwan proceedings because they are only 11 United States District Court Northern District of California 10 seeking lost profits (not unjust enrichment) in Taiwan; thus, Plaintiffs’ unjust enrichment theory 12 also should not be precluded on that basis. Id. at 4-5. 13 With respect to Defendants’ second challenge, Plaintiffs argue that Ms. Bennis’s 14 methodology is reliable because courts have upheld damages models for avoided R&D costs that 15 relied on a plaintiff’s records where there is indicia of their reliability. Mot. at 6-7. Plaintiffs 16 contend this is the case here because Ms. Bennis’s opinion is based on contemporaneous 17 documents that were created in the normal course of business and Ms. Bennis appropriately spoke 18 with Plaintiffs’ employees and technical expert to evaluate their reliability. Id. Plaintiffs also 19 argue that Ms. Bennis’s surface area apportionment analysis is reliable because issues such as the 20 correlation between surface area and design effort and the representativeness of certain mask 21 designs are technical questions for which Ms. Bennis appropriately relied on Plaintiffs’ engineers. 22 Id. at 8-9. Plaintiffs also point out that apportionment based on surface area has also been upheld 23 by other courts. Id. at 8. Plaintiffs also maintain that Ms. Bennis’s reliance on mask fees was 24 reasonable because they were well documented on a per-project basis (whereas other types of 25 R&D expenses are not) and Plaintiffs must incur mask design fees throughout the process of 26 developing functional trade secrets. Id. at 10. 27 28 The Court finds that neither of the grounds advanced by Defendants warrants exclusion of Ms. Bennis’s testimony. First, the Court is not convinced that Plaintiffs waived their right to 10 1 present their current damages theory at the May 14, 2015 motion to dismiss hearing. Plaintiffs’ 2 representations to the Court pertained to the scope of liability (i.e., that their theory of liability was 3 based on Defendants’ improper use of trade secrets in the U.S.), not damages. See ECF 69 (“At 4 oral argument, Plaintiffs acknowledged that, while their FAC may have been unclear as to this 5 point, they are seeking relief in this suit only for actions that took place in the United States.”). 6 Moreover, the Court is not persuaded that an entire damages theory could be waived by simple 7 representations at a hearing on a motion to dismiss. Accordingly, Defendants’ first challenge fails. 8 Second, the Court disagrees that Ms. Bennis’s opinions are unreliable. Rule 702 “requires district courts, acting in a ‘gatekeeping role,’ to assess ‘whether the reasoning or methodology 10 underlying the testimony’ is valid and ‘whether that reasoning or methodology properly can be 11 United States District Court Northern District of California 9 applied to the facts in issue.’” Ollier, 768 F.3d at 860 (quoting Daubert, 509 U.S. at 592-93, 597). 12 “Daubert and Rule 702 are safeguards against unreliable or irrelevant opinions, not guarantees of 13 correctness.” i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 854 (Fed.Cir.2010) aff’d, 131 S.Ct. 14 2238 (2011). So long as an expert’s methodology is sound and his opinions satisfy the 15 requirements of Rule 702, underlying factual disputes and how much weight to accord the expert’s 16 opinion are questions for the jury. Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1392 (Fed. 17 Cir. 2003); Primiano v. Cook, 598 F.3d 558, 565 (9th Cir. 2010). 18 The Court finds that each of the reliability challenges raised by Defendants is more 19 properly material for cross examination, rather than grounds for exclusion. First, with respect to 20 Ms. Bennis’s use of mask fees, Ms. Bennis relied on contemporaneous VIA documents that were 21 created in the normal course of business. She also discloses in her report that she used mask fees 22 in part because “VIA has well documented project specific mask fees,” which she could correlate 23 to the 139 projects which Plaintiffs identified as contributing to the development of their trade 24 secrets. Ex. 2 to Mot. at 38, ECF 259-4. Further, she adjusted her calculation of total mask fees to 25 total R&D fees using a ratio obtained from contemporaneous VIA documents that were created in 26 the normal course of business. Id. at 39. Although it is true that the accused trade secrets do not 27 relate to mask design, the Court finds Ms. Bennis’s methodology sufficiently reliable and cannot 28 exclude her opinion on this basis. 11 1 Second, with respect to Ms. Bennis’s use of surface area ratios—including her assumption 2 that there is a general correlation between surface area and design effort, her grouping each of the 3 139 mask designs into a specific category, her selection of representative designs, and her 4 calculation of percentage surface area—, this implicates technical information and assumptions 5 which Ms. Bennis received from Plaintiffs’ engineers and technical expert. As a damages expert, 6 Ms. Bennis was entitled to rely on this information. In her report, Ms. Bennis disclosed the names 7 of the specific people from whom she received this information, as well as explained the general 8 methodology that followed to arrive at the calculated surface area ratios. Id. at 39-40. It may be 9 that some of this information is incorrect or that the extent to which Ms. Bennis relied on these 10 United States District Court Northern District of California 11 technical assessments renders her less credible, but these are topics for cross examination. The only somewhat non-technical aspect of Ms. Bennis’s surface area ratios methodology 12 that Plaintiffs challenge is the statistical significance of the representative designs. In her 13 calculations, Ms. Bennis relied on only one representative design for three of the mask design 14 categories, two representative designs with arguably high variance for one of the categories, and 15 no representative design for the final category. Ex. 2 to Mot. at 40-41, ECF 259-4. However, this, 16 in and of itself, is not enough to render her opinion unreliable—Ms. Bennis was still bounded by a 17 technical assessment of which designs were representative, and it is possible that even a sample 18 size of one could be sufficient for her purposes. As such, the Court finds that this is an issue for 19 cross examination, and will not exclude Ms. Bennis’s opinions on that basis. 20 In sum, Ms. Bennis’s opinions pass muster under Daubert and Rule 702. Defendants’ 21 challenges pertain more to underlying factual assumptions and Ms. Bennis’s credibility as a 22 witness, which are determinations for the jury. Defendants’ motion to exclude the opinions and 23 testimony of Ms. Bennis is DENIED. 24 25 26 B. Defendants’ Motion in Limine No. 2 to Preclude Plaintiffs from Presenting Any Evidence of or Making Any Reference to the Taiwanese Criminal Proceedings and/or Prosecutor Searches Defendants move to preclude Plaintiffs from presenting evidence, testimony, arguments, or 27 making any reference to the related criminal proceeding pending in Taiwan. ECF 261. 28 Defendants argue that this evidence is irrelevant, highly prejudicial, and would result in juror 12 1 confusion and a waste of time. Id. at 3-5. Defendants also offer that they are willing to stipulate 2 that certain of Plaintiffs’ documents were found in ASMedia’s office, so long as there is no 3 reference to the underlying criminal investigation that resulted in this discovery. Id. at 4. 4 Plaintiffs respond that this evidence is highly relevant because it helps rebut Defendants’ 5 statute of limitations defense. ECF 293. Plaintiffs point out that, in arguing that this action should 6 be barred under the statute of limitations, Defendants have made references to Plaintiffs’ original 7 Complaint in this action and their Criminal Complaint in Taiwan and argued that, in these 8 documents, Plaintiffs made certain “admissions” about their state of mind that show that they were 9 aware of Defendants’ misappropriation in 2009 and 2010. Id. at 2-3. Plaintiffs argue that evidence about the Taiwanese prosecutor searches and criminal proceedings are necessary to put 11 United States District Court Northern District of California 10 these “admissions” in context, because it shows that these “admissions” are actually hindsight 12 statements, which were made only after the Taiwanese prosecutor searches had uncovered 13 materials suggesting potential misappropriation. Id. at 3-4. 14 In addition to the statute of limitations, Plaintiffs also argue that the Taiwanese prosecutor 15 searches and criminal proceedings evidence is relevant to its misappropriation claims because they 16 are highly probative of Defendants’ access and knowing improper use of Plaintiffs’ trade secrets. 17 Id. at 4-5. Plaintiffs argue that Defendants’ proposed stipulation is inadequate because it 18 eliminates telling details and deprives Plaintiffs of the fair and legitimate weight of this evidence. 19 The Court agrees with Defendants that references to criminal proceedings in Taiwan are 20 highly prejudicial and likely to result in juror confusion. However, the Court also agrees with 21 Plaintiffs that evidence relating to these proceedings is relevant to and probative of the statute of 22 limitations issue. Thus, the Court GRANTS IN PART and DENIES IN PART Defendants’ 23 motion: the Court will allow Plaintiffs to present evidence relating to the criminal proceedings in 24 Taiwan, so long as it is properly sanitized. Specifically, at least the words “prosecutor,” 25 “criminal,” “raid,” and “search” cannot be used. The proceedings must also be referred to in a 26 neutral manner, such as “Taiwan government investigation,” “agency action,” or “proceedings in 27 Taiwan.” Before the commencement of trial, the parties shall meet and confer to identify any 28 additional sanitization measures that may be necessary. During trial, Defendants may object to 13 1 2 any evidence that is not properly sanitized. C. 3 4 Defendants’ Motion in Limine No. 3 to Preclude Plaintiffs from Presenting Any Evidence of Any Alleged Trade Secret or Misappropriation Thereof Beyond the Specific Trade Secrets Permitted Under Magistrate Judge Lloyd’s October 12, 2016 Order (Dkt. No. 182) Defendants move to preclude Plaintiffs from presenting evidence, testimony, and 5 arguments regarding misappropriation of any trade secret beyond the 29 analog circuit schematics 6 and 39 digital designs (e.g., Verilog source code) expressly permitted by Magistrate Judge Lloyd’s 7 October 12, 2016 order. ECF 262. Defendants argue that they would be severely prejudiced if 8 Plaintiffs were allowed argue misappropriation of trade secrets not covered by this order because 9 Defendants have not had the opportunity to take discovery or get expert testimony on these trade 10 secrets, nor have Plaintiffs identified these trade secrets with sufficient particularity. Id. at 5-6. 11 United States District Court Northern District of California Defendants also argue that not restricting Plaintiffs in this way would result in jury confusion, 12 13 14 needlessly consume the Court’s resources, and make trial unmanageable. Id. Plaintiffs respond that Magistrate Judge Lloyd’s order only pertained to discovery, and cannot operate to limit the scope of Plaintiffs’ claims. ECF 294. Plaintiffs also argue that 15 Defendants will not suffer undue prejudice because Defendants had ample notice and opportunity 16 to defend itself against the full 1,116 analog circuit trade secrets that Plaintiffs claim Defendants 17 misappropriated. Id. at 3-4. Plaintiffs also maintain that they are entitled to prove 18 misappropriation circumstantially, using the 29 ana0log circuit schematics as examples. Id. at 4-5. 19 20 Defendants’ motion presents the same issue as that of Plaintiffs’ Motion in Limine No. 2. Accordingly, for the same reasons given with respect to that motion, Defendants’ motion is 21 DENIED. 22 IT IS SO ORDERED. 23 24 Dated: July 19, 2017 25 26 27 ______________________________________ BETH LABSON FREEMAN United States District Judge 28 14

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