PersonalWeb Technologies LLC et al v. International Business Machines Corporation

Filing 379

UNSEALED ORDER DENYING 364 IBM'S RENEWED MOTION TO EXCLUDE/STRIKE THE OPINIONS OF DR. MICHAEL AKEMANN. Signed by Judge Edward J. Davila on 8/7/2017. (patentlcsjS, COURT STAFF) (Filed on 8/14/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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PERSONALWEB TECHNOLOGIES LLC,
et al.,
Plaintiffs,

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v.

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United States District Court
Northern District of California

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INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Case No. 16-cv-01266-EJD
ORDER DENYING IBM'S RENEWED
MOTION TO EXCLUDE/STRIKE THE
OPINIONS OF DR. MICHAEL
AKEMANN
Re: Dkt. No. 364

Defendant.
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Before the Court is Defendant International Business Machines Corp.’s (“IBM”) motion to

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exclude and strike the opinions of Plaintiffs PersonalWeb Technologies, LLC et al.’s

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(“PersonalWeb”) damages expert, Dr. Michael Akemann. Dkt. No. 354. For the reasons

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discussed below, IBM’s motion is DENIED.

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I.

BACKGROUND

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On July 26, 2017, the Court granted IBM’s motion to exclude the opinions of Dr.

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Akemann in part because he did not reliably apportion for the value of the ’420 patent from the

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portfolio patents that were the subject of the licenses he relied on. Dkt. No. 345 at 5-7. On July

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28, 2017, PersonalWeb moved for leave to submit a supplemental report from Dr. Akemann to

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cure the deficiencies in his apportionment analysis. See Dkt. No. 348. The Court granted

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PersonalWeb’s motion for that limited purpose. Dkt. No. 352. The Court’s order provided that

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Dr. Akemann was not permitted to give new opinions, but was allowed clarify his methodology

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and conclusion that there should be a “substantial downward adjustment” that is “not necessarily .

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Case No.: 16-cv-01266-EJD
ORDER DENYING IBM'S RENEWED MOTION TO EXCLUDE/STRIKE THE OPINIONS OF
DR. MICHAEL AKEMANN
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. . too large” to account for apportionment. Id.
Dr. Akemann served a supplemental report on July 31, 2017 and was deposed by IBM on

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August 3, 2017. Dkt. Nos. 365-5, 365-6, 367-3. In his supplemental report, Dr. Akemann used

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forward citation analysis to derive a quantitative factor by which the value of the ’420 patent could

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be apportioned. Dkt. No. 365-5. In particular, Dr. Akemann opined that because the “Truename

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patents” in the portfolio were “all built on the same core invention and ideas that, from an

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economic perspective, have substantially overlapping value . . . the value of the ’420 patent is less

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than the value of the portfolio as a whole, but is comprised of the core overlapping value of the

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Truename patents plus the incremental value associated with that specific patent.” Id. ¶ 10. He

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implemented this theory by picking the three Truename patents that issued “substantially earlier”

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United States District Court
Northern District of California

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than the other Truename patents, interpreting their forward citations as representing the “core

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overlapping value” of the Truename patents, and combining this with the forward citations for the

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’420 patent (which he interpreted as representing the “incremental value” of the ’420 patent) to

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arrive at a percentage for the apportioned value of the ’420 patent. Id. ¶¶ 18-19.

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II.

DISCUSSION
IBM attacks Dr. Akemann’s supplemental report on two grounds: (1) it discloses new

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opinions that should be excluded under Federal Rules of Civil Procedure 26 and 37; and (2) it is

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unreliable under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals,

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Inc., 509 U.S. 579 (1993). The Court finds neither of these persuasive.

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First, IBM argues that Dr. Akemann’s supplemental report discloses new opinions because

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it includes a new, quantitative apportionment analysis and relies on new considerations relating to

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terminal disclaimers and post-grant proceedings. Mot. 1-2, Dkt. No. 364. The Court disagrees.

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Dr. Akemann’s supplemental report reaches the same conclusion from his original report that there

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should be a “substantial downward adjustment” that is “not necessarily . . . too large” to account

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for apportionment. See Dkt. No. 365-5 ¶¶ 19-20. His quantitative apportionment analysis and

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discussion of terminal disclaimers and post-grant proceedings clarify what this “adjustment” is

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Case No.: 16-cv-01266-EJD
ORDER DENYING IBM'S RENEWED MOTION TO EXCLUDE/STRIKE THE OPINIONS OF
DR. MICHAEL AKEMANN
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and reasonably elaborate on how he reached his conclusion that it should be “substantial[ly]

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downward” but “not necessarily . . . too large.” As such, it falls within the scope of

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supplementation that the Court’s July 28 order permitted.

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Second, IBM argues that the opinions in Dr. Akemann’s supplemental report are unreliable

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because (1) his ultimate conclusion relies on the same final royalty amount from his original

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report, and (2) his new quantitative apportionment analysis is unreliable. Mot. 2-3, Dkt. No. 364.

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The Court disagrees on both points. As to Dr. Akemann’s final royalty amount, the Court finds

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that this does not render Dr. Akemann’s opinions unreliable. In Dr. Akemann’s original report, he

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came up with a “range of lump sum royalties comparable to the Hypothetical License royalty” and
then picked a final royalty amount as a “conservative” figure that was “somewhat below the

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United States District Court
Northern District of California

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midpoint of the range.” Dkt. No. 309-8 ¶ 203. Although it is possible that Dr. Akemann could

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have chosen his final number in a more rigorous way, he still used a sufficiently reasoned

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approach (i.e., using the midpoint of a range). At trial, IBM can cross-examine Dr. Akemann on

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this choice and the jury will be able to assess the credibility of his opinion. It is not a grounds for

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exclusion at this stage.

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As to Dr. Akemann’s quantitative apportionment analysis, the Court also does not find that

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this is unreliable. Dr. Akemann’s report walks through the reasons for his opinion that the value

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of the ’420 patent should include some “core overlapping value,” Dkt. No. 309-8 ¶¶ 3-11, and he

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also gives an explicit reason for why he selected the three patents he did as representing this

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value—they “issued substantially earlier than the other[s],” id. ¶ 18. Whether there truly is some

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“core overlapping value” and whether the three patents selected accurately capture that value are

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factual issues that IBM can explore on cross-examination. Indeed, in assessing the opinions of

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IBM’s own damages expert, the Court found that similar types of factual assumptions did not

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warrant exclusion. See Dkt. No. 343 at 4 (“Plaintiffs hone in on a factual assumption—that the

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patents . . . are sufficiently distinct . . . that a citation to one does not suffice as a citation to all.

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Whether this assumption was accurate . . . is something that Plaintiffs can explore on cross-

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Case No.: 16-cv-01266-EJD
ORDER DENYING IBM'S RENEWED MOTION TO EXCLUDE/STRIKE THE OPINIONS OF
DR. MICHAEL AKEMANN
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examination.”). The Court reaches this same result here.
Accordingly, Dr. Akemann’s opinions, as disclosed in his original December 9, 2016

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report and supplemented in his July 31, 2017 report, should not be excluded under either Rules 26

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and 37 or Rule 702/Daubert. Dr. Akemann will be permitted to testify consistent with these

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disclosed opinions.

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IT IS SO ORDERED.
Dated: August 7, 2017
______________________________________
EDWARD J. DAVILA
United States District Judge

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United States District Court
Northern District of California

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Case No.: 16-cv-01266-EJD
ORDER DENYING IBM'S RENEWED MOTION TO EXCLUDE/STRIKE THE OPINIONS OF
DR. MICHAEL AKEMANN
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