Safety Braking Corporation et al v. Six Flags Inc. et al

Filing 405

REPORT AND RECOMMENDATIONS re 341 GRANTING IN PART AND DENYING IN PART the MOTION to Preclude the Testimony of Edward M. Pribonic filed by Riverside Park Enterprises, Inc., Kings Island Company, Universal City Development Partners, LTD, Magic Mountain, LLC, Cedar Fair LP, SF Partnership, Walt Disney Parks and Resorts LLC, Blackstone Group LP, Knott's Berry Farm, Astroworld, L.P., Universal City Studios LLLP, Park Management Corp., Six Flags Over Georgia II, L .P., Tierco Maryland Inc., Texas Flags, LTD, Six Flags St. Louis, LLC, Six Flags Inc., NBC Universal Inc., Busch Entertainment Corp., Walt Disney Co., Elitch Gardens, L.P., Darien Lake Theme Park and Camping Resort, Inc., Paramoun t Parks Inc., Universal Studios Inc., Great America LLC, KKI, LLC, Six Flags Theme Parks Inc., Cedar Fair. Please note that when filing Objections pursuant to Federal Rule of Civil Procedure 72(b)(2), briefing consists solely of the Object ions (no longer than ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. Objections to R&R due by 2/24/2014. Signed by Judge Mary Pat Thynge on 2/7/14. (kjk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
MAGNETAR TECHNOLOGIES CORP.
and G&T CONVEYOR CO.

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C. A. No. 07-127-LPS-MPT

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SIX FLAGS THEME PARKS INC., et al.,
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REPORT AND RECOMMENDATION

I.

INTRODUCTION
In this patent infringement case, plaintiffs Magnetar Technologies Corp.

("Magnetar'') 1 and G&T Conveyor Co. ("G&T") 2 (collectively, "plaintiffs") sued the
defendant theme park operators 3 on March 1, 2007, alleging infringement of U.S.
Patent Nos. 5,277,125 ("the '125 patent") and 6,659,237 ("the '237 patent"). 4 Plaintiffs
assert defendants use infringing magnetic braking systems or assemblies in numerous
amusement park rides. Plaintiffs contend defendants infringe claim 3 of the '125 patent
and/or claims 1 and 10 of the '237 patent.
Presently before the court is the defendants' motion to exclude the testimony of

1

Magnetar is the assignee of the '237 patent and holds an exclusive field-limited license for the
'125 patent. Magnetar's business includes the design and sale of magnetic brake systems for
amusement rides and roller coasters.
2
G&T is the assignee of the '125 patent. G&T's business primarily involves baggage-handling
equipment for airports.
3
Astroworld, L.P., Busch Entertainment Corp., Cedar Fair, Cedar Fair LP, Darien Lake Theme
Park and Camping Resort, Inc., Elitch Gardens, L.P., Great America LLC, KKI, LLC, Kings Island
Riverside Park Enterprises, Inc., Six Flags Over Georgia II, L.P., Six Flags St. Louis, LLC, Six Flags
Theme Parks Inc., and Texas Flags, LTD, Teirco Maryland Inc. (collectively "defendants"). Defendants
are owners or operators of amusement parks in various locations.
4
D.l. 1.

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plaintiffs' lay opinion witness Edward M. Pribonic ("Pribonic"). 5

II.

PRIBONIC FACTUAL BACKGROUND
Pribonic is the founder and President of Magnetar. 6 Pribonic is also the named

inventor on the '237 patent, 7 as well as several other patents relating to magnetic
brakes. 8 He has a bachelor's degree in mechanical engineering, 9 and a professional
engineering license. 10
Pribonic has worked as an engineer for the past forty-three years. 11 After
receiving his bachelor's degree, he worked approximately eighteen years as an
engineer or engineering manager for oil, construction, and steel companies. 12 For the
past twenty-five years, he has worked within the field of amusement rides and
devices. 13
From 1987-1991, Pribonic served as the manager of engineering and
architecture for Disneyland. 14 In this capacity, he was responsible for overseeing sixty
professionals and providing design work for safety improvements, maintenance, and
expansion of all rides within the park. 15 From 1991-1992, he served as senior facility
design manager for Walt Disney lmagineering, and was responsible for the complete

5

0.1. 341. Briefing on this motion is as follows: 0.1. 342 (defendants' opening brief), 0.1. 366
(plaintiffs' answering brief), and 0.1. 385 (defendants' reply brief).
6
0.1. 366, Ex.1 at1f 1.
7
/d., Ex. 1 at 1f 4.
8
/d., Ex. 1 at 1f 4.
9
/d., Ex. 1 at 1f 2.
10
/d., Ex. 1 at 1f 3.
11
/d., Ex. 1 at 1f 5.
12
0.1. 342, Ex. Kat 317-19.
13
0.1. 366, Ex. 1 at 1f 6.
14
/d., Ex. 1 at 1f 7.
15
/d., Ex. 1 at 1f 7.

2

design of Disney theme park facilities from concept through construction. 16 He also
performed feasibility studies to determine the likelihood of success of new facilities and
rides, including roller coasters. 17
After his employment with Disney, Pribonic started a consulting business, which
provides services related to amusement rides and devices. 18 These services include
engineering design, project management, design reviews, feasibility studies, facility
evaluations, ride safety inspections, and the development of ride maintenance
programs. 19 In 2000, he founded Magnetar, which focuses on design, fabrication, sale,
and installation of magnetic brakes. 20 Magnetar has also developed materials for
friction brakes. 21
In 2006, Pribonic believed Magnetar's magnetic braking system infringed claim 3
of the '125 patent. 22 Therefore, he sought a license to claim 3 of the '125 patent to
prevent the risk of litigation or an injunction. 23 However, his testimony and expertise do
not include whether Magnetar's brakes actually infringed the '125 patent at any time. 24
Defendants deposed Pribonic on August 2 and 3, 2011, as the 30(b)(6) designee
for Magnetar. 25 On June 1, 2012, plaintiffs served their Rule 26(a)(2)(C) disclosures of
testimony, which contained a summary of Pribonic's proposed testimony. 26 On

16
17

18
19
20
21

22
23
24

25
26

/d., Ex. 1 at 1f 8.
/d., Ex. 1 at 1f 9.
/d., Ex. 1 at 1f 10.
/d., Ex. 1 at 1f 10.
/d., Ex. 1 at 1f 11 .
/d., Ex. 1 at 1f 11.
/d. at 8-9.
/d. at 9.
See id. at 8-9.
D.l. 342, Ex. K.
/d., Ex. NN.

3

September 25, 2012, plaintiffs served a supplemental Rule 26(a)(2)(C) disclosure
regarding Pribonic's testimony, which listed fourteen possible subject areas of his
proposed testimony. 27

Ill.

STANDARD FOR RELEVANCE: GEORG/A-PACIFIC FACTORS

"Upon finding for the claimant the court shall award the claimant damages
adequate to compensate for the infringement, but in no event less than a reasonable
royalty for the use made of the invention by the infringer, together with interest and
costs as fixed by the court."28 The Georgia-Pacific factors are widely accepted to
calculate a reasonable royalty rate 29 and have been affirmed by the Federal Circuit. 30 A
reasonable royalty is an amount which a person would be willing to pay to use a
particular patent in the market to make a profit. 31 "In the absence of an established
royalty, reasonable royalty is calculated based upon hypothetical negotiations between
a willing licensor and a willing licensee on the date infringement began." 32
As characterized by the Federal Circuit, the hypothetical negotiations model
produces the result "more of the character of a forced settlement where neither party
gets all it would wish." 33 In analyzing the hypothetical negotiation, the court applies the
factors of Georgia-Pacific, which provides a "list of evidentiary facts relevant, in general,

27

/d., Ex. 00.
35 U.S.C. § 284 (2012).
29
Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324-25 (Fed. Cir. 2009); see also
Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554 n.13 (Fed. Cir.1995) (en bane); Radio Steel & Mfg. Co.
v. MTD Prods., Inc., 788 F.2d 1554, 1557 (Fed.Cir.1986}; Masimo Corp. v. Philips Elecs. N. Am. Corp.,
C.A. No. 09-80-LPS-MPT, 2013 WL 2178047, at *23 (D. Del. May 20, 2013).
30
See, e.g., i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831,854 (Fed. Cir. 2010).
31
LG Display Co. v. AU Optronics Corp., 722 F. Supp. 2d 466, 471 (D. Del. 2010).
32 /d.
33
Rite-Hite Corp., 56 F.3d at 1556.
28

4

to the determination of the amount of a reasonable royalty for a patent license .... "34
"[T]here is no formula by which these factors can be rated precisely in the order of their
relative importance or by which their economic significance can be automatically
transduced into their pecuniary equivalent." 35 Thus, in the court's analysis of the
hypothetical negotiation under the Georgia-Pacific factors, some "factors may be of
minimal or no relevance to a particular case and other factors may have to be molded
by the Court to fit the facts of the case at hand." 36

IV.

RELEVANCE ANALYSIS: PRIBONIC'S TESTIMONY
Defendants dispute four categories of Pribonic's proffered testimony: (1)

relationship of Magnetar's brakes to claim 3 of the '125 patent; (2) advantages of
magnetic brakes over other types of brakes, including friction brakes; (3) importance of
roller coasters to amusement park rides; and, (4) importance of magnetic brakes in the
construction of roller coasters. 37 The following analysis examines whether the four
categories are relevant to a hypothetical negotiation under the Georgia-Pacific factors.

A.

Relationship of Magnetar's brakes to claim 3 of the '125 patent
1.

Factor One

The first Georgia-Pacific factor is "[t]he royalties received by the patentee for the
licensing of the patent in suit, proving or tending to prove an established royalty." 38
"Courts and commentators alike have recognized that the royalties received by the

34
Ga.-Pac. Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116,1120 (S.D.N.Y. 1970) (outlining the
factors relevant to the determination of a reasonable royalty).
35
Ga.-Pac. Corp., 318 F. Supp. at 1120-21.
36
Proctor & Gamble Co. v. Paragon Trade Brands, Inc., 989 F. Supp. 547,607 (D. Del. 2001).
37
See D.l. 342.
38
Ga.-Pac. Corp., 318 F. Supp. at 1120.

5

patentee for the licensing of the patents in suit is the 'most influential factor' in
determining a reasonable royalty." 39
Here, the '125 patent in suit is licensed to Magnetar by G&T for a six percent
royalty rate of all products sold with a limit of up to $3 million during a given accounting
year. 40 As the founder and president of Magnetar, Pribonic negotiated this royalty rate
with G&T. 41 Pribonic has personal knowledge from the perspective of a licensee to the
'125 patent. 42 Therefore, presuming plaintiffs demonstrate infringement, Pribonic's
testimony of why he sought a license, including his understanding that claim 3 of the
'125 patent covers Magnetar's brakes, 43 is relevant to the hypothetical negotiation of the
royalty rate in calculating damages under Georgia-Pacific factor one.

2.

Factor Two

The second Georgia-Pacific factor is "[t]he rates paid by the licensee for the use
of other patents comparable to the patent in suit." 44 "This factor examines whether the
licenses relied on by the patentee in proving damages are sufficiently comparable to
the hypothetical license at issue in suit." 45 "This factor focuses on the licensing customs
of the industry and has been interpreted broadly, encompassing even those licenses to
which the licensee is not a party." 46

39

Mobil Oil Corp. v. Amoco Chems. Corp., 915 F. Supp. 1333, 1353 (D. Del. 1994) (quoting
Chisum, 5 Patents§ 20.03[3] at 20-159).
40
D.l. 342, Ex. Kat 140-41.
41
/d., Ex. Kat 141-42.
42
/d., Ex. Kat 141-42.
43
/d., Ex. Kat 140-44. In so finding and in light of its previous ruling on Pribonic's testimony, the
court is not suggesting he may testify regarding whether the accused products or systems are covered by
the '125 patent, or whether Magnetar's braking system is the same as or similar to the accused braking
systems.
44
Ga.-Pac. Corp., 318 F. Supp. at 1120.
45
Lucent Techs., Inc., 580 F.3d at 1325.
46
Proctor & Gamble Co., 989 F. Supp. at 607-08.

6

In the present matter, the '125 patent is the subject of the license agreement
between Magnetar and G&T. 47 Joseph Gemini, plaintiffs' damages expert, relies on the
license between Magnetar and G&T as one of the two licenses in his damages report. 48
In analyzing the license between Magnetar and G& T, Gemini relies on Pribonic's
testimony that he acquired the license to sell magnetic braking systems to avoid
infringement of the '125 patent. 49 In relation to that license, Pribonic is personally
familiar with when "he learned of the '125 patent around 2006, believed his Magnetar
brakes, when installed on a ride, infringed the patent, and sought a license to the patent
because he did not want to risk litigation or an injunction." 50
Defendants contend Pribonic's testimony regarding the license between
Magnetar and G& T is irrelevant because he fails to connect Magnetar's brakes with any
product accused of infringement in this case. 5 1 Defendants further argue whether
Magnetar's brakes infringe is meaningless, unless there is some corresponding
evidence that these brakes are the same as the patents in suit. 52 Indeed, if such
evidence was supplied by plaintiffs, Pribonic cannot provide such testimony because he
is not permitted to opine regarding infringement. 53 However, Pribonic's testimony is
advanced for use in a damages analysis as part of a hypothetical negotiation to
establish a reasonable royalty rate-not whether the accused products or systems

47

48
49
50

51
52

53

D.l. 342, Ex. Kat 137-39.
/d., Ex. Hat 1f 38.
/d., Ex. Hat W 14, 39.
D. I. 366 at 8-9; D.l. 342, Ex. 00 at 2.
D.l. 385 at 4.
/d.
See D.l. 343-1, Ex. PP at 67-70.

7

infringe claim 3 of the '125 patent. 54 Therefore, Pribonic's testimony regarding the
royalty rate between Magnetar and G&T is relevant to the hypothetical negotiation of
the royalty rate in calculating damages under Georgia-Pacific factor two.

3.

Factor Three

The third Georgia-Pacific factor is "[t]he nature and scope of the license, as
exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or with
respect to whom the manufactured product may be sold." 55 "Non-exclusive licenses
generally command lower royalties." 56
Here, Magnetar holds a non-exclusive license from G& T of the '125 patent. 57
Similarly in the present matter, this patent would involve a non-exclusive license in the
hypothetical negotiation because there are multiple alleged infringers. 58 Therefore,
Pribonic's testimony regarding the royalty rate between Magnetar and G& T is relevant
to the hypothetical negotiation of the royalty rate in calculating damages under Georgia-

Pacific factor three.
4.

Factors Seven & Fifteen

The seventh Georgia-Pacific factor is "[t]he duration of the patent and the term of
the license."59 "The theory behind giving weight to the patent's duration is that the
parties would have been more likely to have negotiated a higher royalty rate the longer
the remaining term of the patent, because a longer term would better allow the licensee

54

See D.l. 366 at 9.
Ga.-Pac. Corp., 318 F. Supp. at 1120.
56
Lucent Techs., Inc., 580 F.3d at 1335.
57
See D.l. 342, Ex. Kat 138 (explaining that the license agreement between Magnetar and G&T
retained exclusivity for G&T in particular fields).
58
D. I. 342, Ex. Hat 1f 50, pp. 20-21.
59
Ga.-Pac. Corp., 318 F. Supp. at 1120.
55

8

to establish stronger customer relations." 60 The fifteenth Georgia-Pacific factor is:
[t]he amount that a licensor (such as the patentee) and a licensee (such
as the infringer) would have agreed upon (at the time the infringement
began) if both had been reasonably and voluntarily trying to reach an
agreement; that is, the amount which a prudent licensee- who desired, as
a business proposition, to obtain a license to manufacture and sell a
particular article embodying the patented invention- would have been
willing to pay as a royalty and yet be able to make a reasonable profit and
which amount would have been acceptable by a prudent patentee who
was willing to grant a license. 5 1
"The fifteenth factor sets forth the 'willing buyer/willing seller' hypothetical negotiation
through which the other fourteen factors are to be considered." 62
Here, Pribonic's testimony covers provisions regarding the duration of the patent
and the term of the license, as well as the negotiations between the willing buyer and
the willing seller which address Georgia-Pacific factors seven and fifteen.

B.

Advantages of magnetic brakes over other types of brakes, including
friction brakes

The ninth Georgia-Pacific factor is "[t]he utility and advantages of the patent

property over the old modes or devices, if any, that had been used for working out
similar results." 63
Defendants contend Pribonic's proffered testimony concerning the advantages of
magnetic brakes over friction brakes64 is irrelevant, because it relates to the entire field
of magnetic brakes, and not to the brakes at issue. 65 Plaintiffs argue Pribonic's

60
61

62
63
64
65

Proctor & Gamble Corp., 989
Ga.-Pac. Corp., 318 F. Supp.
Proctor & Gamble Corp., 989
Ga.-Pac. Corp., 318 F. Supp.
D.l. 385, Ex. A at 4-5.
/d. at 4.

F. Supp. at 610.
at 1120.
F. Supp. at 613.
at 1120 (emphasis added).

9

testimony is relevant to show damages under a hypothetical negotiation. 56
Probonic's testimony relates to the advantages of magnetic brakes over other
types of brakes in commercial rides. 67 In particular, Pribonic opines roller coasters
running at higher speeds cannot operate with friction brakes. 68 Plaintiffs' damages
expert relies on this testimony as a basis for forming his opinion in his damages
analysis. 69 Plaintiffs argue the advantages of magnetic brakes weighed against other
technology, such as friction brakes, is relevant to what a licensor would be willing to pay
for the patented magnetic braking technology. 70
This Georgia-Pacific factor requires a nexus be established between magnetic
brakes in general and the patented technology in the instant matter. 71 Although the
patented technology in this case relates to magnetic brakes, 72 plaintiffs fail to proffer
any evidence concerning the advantages of the specific patents in suit compared to
other technology, as required by factor nine. 73 Plaintiffs must demonstrate the
advantages and utility of patented magnetic brake technology at issue is the same or
similar to magnetic brakes and how the patented brake technology provides
advantages over older modes or devices. 74 Therefore, Pribonic's testimony regarding
advantages of magnetic brakes in general over other types of brakes, such as friction
brakes, is irrelevant under factor nine of the Georgia-Pacific factors.

66
67

68
69

D. I. 366 at 9.
See D.l. 342, Ex. 00 at 4.
D. I. 342, Ex. Hat 'If 32.
D.l. 366 at 9.

70

/d.

71

See Ga.-Pac. Corp., 318 F. Supp. at 1120.
D.l. 366 at 1.
See id. at 9-10.
Proctor & Gamble Co., 989 F. Supp. at 611.

72

73
74

10

C.

Importance of roller coasters to amusement park rides

As discussed above, the ninth Georgia-Pacific factor is "[t]he utility and
advantages of the patent property over the old modes or devices, if any, that had been
used for working out similar results." 75 The tenth Georgia-Pacific factor is "[t]he nature
of the patented invention; the character of the commericial embodiment of it as owned
and produced by the licensor; and the benefits to those who have used the invention." 76
Here, similar to the analysis under the section above, 77 Pribonic's testimony is
irrelevant under Georgia-Pacific factor nine because plaintiffs merely proffer the
importance of roller coasters to amusement parks in general, as opposed to the
importance of the roller coasters in suit and their accused braking systems as required
by factor nine. 78 Absent this established nexus, Pribonic's testimony in this regard is
irrelevant under factor nine.
Similar to the factor nine analysis, Pribonic's testimony is irrelevant under factor
ten. Factor ten concerns the nature and benefits of the patented invention. 79 Instead,
plaintiffs' proffer evidence of the importance of roller coasters in general, as opposed to
the value of the accused roller coasters because they are purportedly covered by the
patents in suit. 80 Therefore, Pribonic's testimony regarding the general importance of
roller coasters to amusement parks is irrelevant under factors nine and ten.

D.

75
76

77

78
79

80

Importance of magnetic brakes in the construction of roller coasters

Ga.-Pac. Corp., 318 F. Supp. at 1120 (emphasis added).
/d. (emphasis added).
See supra Part IV.B.
See Ga.-Pac. Corp., 318 F. Supp. at 1120.
/d.
Proctor & Gamble, 989 F. Supp. at 611; See 0.1. 366 at 10-12.

11

1.

Factor Eight

The eighth Georgia-Pacific factor is "[t]he established profitability of the product

made under the patent; its commercial success; and its current popularity." 81
Here, the connection between roller coaster revenue and magnetic brakes is, at
best, tenuous. Plaintiffs argue roller coasters are key revenue generators in the
amusement park business. 82 In furtherance of this argument, they insinuate the
increased revenue to parks from a roller coaster is due to its magnetic braking system. 83
Plaintiffs fail, however, to advance or demonstrate any nexus between the profitability
of a roller coaster ride and any magnetic braking system, including the patented
magnetic braking system. 84 Therefore, Pribonic's testimony regarding the revenue
generated from roller coaster rides is irrelevant under factor eight.

2.

Factor Thirteen

The thirteenth Georgia-Pacific factor is "[t]he portion of the realizable profit that
should be credited to the invention as distinguished from non-patented elements, the
manufacturing process, business risks, or significant features or improvements added
by the infringer."85 "This factor attempts to take into account the relative contribution of
the patented feature to the success of the product. If the patented feature forms only a
small part of the product, either physically or economically, it is generally the case that a
licensee would have been less disposed to agree to a high royalty." 86

81
82
83
84

85
86

Ga.-Pac. Corp., 318 F. Supp. at 1120 (emphasis added).
See D.l. 366 at 12-13.
See id.
See id.
Ga.-Pac. Corp., 318 F. Supp. at 1120 (emphasis added).
Proctor & Gamble Corp., 989 F. Supp at 612-13 (citation omitted).

12

In order for Pribonic's testimony to be relevant under factor thirteen, it must show
the realizable profit credited to the patented magnetic braking system. Pribonic offers
no testimony quantifying revenue attributed to magnetic braking systems, let alone the
patented braking system-his testimony only relates to the value or importance of roller
coaster rides in general. 87
For Pribonic's testimony to be relevant under factor thirteen, it must distinguish
the profit realized from the patented invention from that profit attributable to nonpatented elements and other factors. Pribonic fails to offer any evidence attributing
revenue to non-patented elements of roller coasters. 88 Therefore, his testimony that
roller coaster rides are key revenue generators in the amusement park business is
irrelevant under factor thirteen.

V.

STANDARD FOR LAY AND EXPERT TESTIMONY
A.

FED. R. C1v. P. 26(a)(2)(C) Disclosure Statement

Federal Rule of Civil Procedure ("FED. R. C1v. P.") 26(a)(2)(C) provides
requirements for witnesses who do not provide a written report:
Unless otherwise stipulated or ordered by the court, if the witness is not
required to provide a written report, this disclosure must state:
(i) the subject matter on which the witness is expected to present
evidence under [FED. R. EVID] 702, 703, or 705; and
(ii) a summary of the facts and opinions to which the witness is expected
to testify.

B.

701 Lay Opinion Testimony

The admissibility of lay opinion testimony is governed by FED. R. EVID. 701,

87
88

See D.l. 366 at 12-13.
See id.

13

which states in pertinent part:
If a witness is not testifying as an expert, testimony in the form of an
opinion is limited to one that is:
(a) rationally based on the witness's perception;
(b) helpful to clearly understanding the witness's testimony or to
determining a fact in issue; and
(c) not based on scientific, technical, or other specialized knowledge
within the scope of Rule 702.
The Third Circuit interprets Rule 701 "to permit individuals not qualified as
experts, but possessing experience or specialized knowledge about particular things, to
testify about technical matters that might have been thought to lie within the exclusive
province of experts." 89 "[F]or lay opinion as to technical matters ... to be admissible, it
must derive from a sufficiently qualified source as to be reliable and hence helpful to the
jury." 90 "In determining whether a lay witness has sufficient special knowledge or
experience to ensure that the lay opinion is rationally derived from the witness's
observation and helpful to the jury, the trial court should focus on the substance of the
witness's background and its germaneness to the issue at hand." 91

C.

702 Expert Opinion Testimony

The admissibility of expert testimony is governed by FED. R. EVID. 702, which
states in pertinent part:
If scientific, technical or other specialized knowledge will assist the trier of
fact to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training or
education, may testify thereto in the form of an opinion or otherwise, if (1)
the testimony is based upon sufficient facts or data, (2) the testimony is

89

Asplundh Mfg. Div. v. Benton Harbor Eng'g, 57 F.3d 1190, 1193 (3d Cir. 1995) (emphasis

90

/d. at 1201.
/d. at 1202.

added).
91

14

the product of reliable principles and methods, and (3) the witness has
applied the principles and methods reliably to the facts of the case. 92
In Daubert v. Merrell Dow Pharmaceuticals, Inc., the Supreme Court interpreted
FED. R. EVID. 702 to "confide[] to the judges some gatekeeping responsibility in deciding

questions of the admissibility of proffered expert testimony." 93 The Third Circuit has
analyzed Rule 702 as "embodying three distinct substantive restrictions on the
admission of expert testimony: qualifications, reliability, and fit." 94 Important facts to
consider in evaluating the reliability of a particular scientific or technical methodology
include:
(1) whether a method consists of a testable hypothesis; (2) whether the
method has been subject to peer review; (3) known or potential rate of
error; (4) the existence and maintenance of standards controlling the
technique's operation; (5) whether the method is generally accepted; (6)
the relationship of the technique to methods which have been established
to be reliable; (7) the qualifications of the expert witness testifying based
on the methodology; and (8) the non-judicial uses to which the method
has been put. 95
"In Paoli, [the Third Circuit] explained that even if the judge believes 'there are
better grounds for some alternative conclusion,' and that there are some flaws in the
scientist methods, if there are 'good grounds' for the expert's conclusions, it should be
admitted."96 The question of whether an expert's testimony is admissible based on his
qualifications, reliability, and fit is committed to the court's discretion. 97

92

FED. R. EVID. 702.
509 U.S. 579, 600 (1993) (Rehnquist, J., concurring in part and dissenting in part).
94
Elcock v. Kmart Corp., 233 F.3d 734, 741 (3d Cir. 2000) (explaining In re Paoli R.R. Yard PCB
Litig., 35 F.3d 717, 741-43 (3d Cir. 1994)).
95
In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 742 n.8 (3d Cir. 1996).
96
Heller v. Shaw Indus., Inc., 167 F.3d 146, 152-53 (3d Cir. 1999) (quoting In re Paoli, 35 F.3d at
744).
97
In re Paoli, 35 F.3d at 749.
93

15

The trial judge has broad latitude in determining whether the Daubert factors are
reasonable measures of reliability. 98 In Paoli, the Third Circuit found that proffers of
expert testimony do not have to "demonstrate ... by a preponderance of evidence that
the assessments of their experts are correct, they [need] only ... demonstrate by a
preponderance of evidence that their opinions are reliable." 99 Daubert recognized
"vigorous cross examination, presentation of contrary evidence, and careful instruction
on the burden of proof are the traditional and appropriate means of attacking shaky but
admissible evidence." 100 Daubert emphasized the trial court must "focus" solely on
principles and methodology, and not on the conclusions generated. 101 A trial judge,
however, is to scrutinize whether such methods have been properly applied to the facts
of the case. 102
As previously stated, the determination of whether to exclude expert evidence is
at the court's discretion. 103 The Third Circuit has noted, however:
While evidentiary rulings are generally subject to a particularly high level
of deference because the trial court has a superior vantage point to
assess the evidence, evaluating the reliability of scientific methodologies
and data does not generally involve assessing the truthfulness of the
expert witness and thus is often not significantly more difficult on a cold
record. Moreover, here there are factors that counsel in favor of a hard
look at (more stringent review of) the district court's exercise of discretion.
For example, because the reliability standard of 702 and 703 is
somewhat amorphous, there is significant risk that district judges will set
the threshold too high and will in fact force plaintiffs to prove their case
twice. Reducing this risk is particularly important because the Federal

98

See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 139 (1999).
In re Paoli, 35 F.3d at 744.
100
Daubert, 509 U.S. at 596.
101
/d. at 580.
102
See id.
103
In re Paoli, 35 F.3d at 749.

99

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Rules of Evidence display a preference for admissibility. 104
The Third Circuit has identified several factors for the court to consider in
determining whether to exclude expert testimony:
(1) the prejudice or surprise in fact of the party against whom the excluded
witness would have testified, (2) the ability of the party to cure the
prejudice, (3) the extent to which waiver of the rule against calling unlisted
witnesses would disrupt the orderly and efficient trial of the case or of
other cases in the court, and (4) bad faith or willfulness in failing to comply
with the district court's order. 105
Additionally, the "'importance of the excluded testimony' should be considered." 106
VI.

LAY AND EXPERT OPINION ANALYSIS

A.

701 Lay Opinion

Defendants initially argue Pribonic's testimony should be barred under FED. R.
EVID. 702 expert testimony. However, plaintiffs reply by representing Pribonic's
testimony is offered as 701 lay opinion testimony as opposed to 702 expert testimony.
Therefore, defendants' Daubert analysis is moot. Since the relationship of Magnetar's
brakes to claim 3 of the '125 patent is the only relevant category of Pribonic's testimony,
it will be analyzed as to whether Pribonic and his opinion are qualified under FED. R.
EVID. 701.

1.

701(a)

"Rule 701's requirement that the opinion be 'rationally based on the perception of
the witness' demands more than the witness have perceived something firsthand;

104

/d. at 749-50 (emphasis in original} (internal citation omitted).
In re Paoli, 35 F.3d at 791 (quoting Meyers v. Pennypack Woods Home Ownership Ass'n, 559
F.2d 894, 904-05 (3d Cir. 1977)).
106
Konstantopoulos v. Westvaco Corp., 112 F.3d 710,719 (3d Cir. 1997) (quoting Meyers, 559
F.2d at 904).
105

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rather, it requires that the witness's perception provide a truly rational basis for his or
her opinion." 107 This requirement is "the familiar requirement of first-hand knowledge or
observation." 108
Here, Pribonic has more than mere first-hand knowledge of the relationship of
Magnetar's brakes to claim 3 of the '125 patent-he directly participated in negotiations
of the license agreement between Magnetar and G&T. 109 In addition, Pribonic signed
the license agreement on behalf of Magnetar. 110 Therefore, presuming plaintiffs
establish infringement of the patents in suit, Pribonic is qualified under 701 (a) to testify
in regard to the relationship between Magnetar's brakes and claim 3 of the '125 patent.

2.

701(b)

"[T]he second requirement-that the opinion be 'helpful to a clear understanding
of the witness's testimony or the determination of a fact in issue'-demands more than
that the opinion have a bearing on the issues in the case; in order to be 'helpful,' an
opinion must be reasonably reliable." 111 In other words, "for lay opinion as to technical
matters ... to be admissible, it must derive from a sufficiently qualified source as to be
reliable and hence helpful to the jury." 112 In Joy Manufacturing Co. v. So/a Basic

Industries, Inc., the lay witness had "extensive personal knowledge of [plaintiff's] plants,
its on-going heat treating processes, and the two furnaces in question." 113 The Third
Circuit concluded the lay witness had "sufficient personal knowledge of [plaintiff's] heat

107

Asplundh Mfg. Div., 57 F.3d at 1201.
/d. at 1196.
109
D.l. 342, Ex. Kat 140-41.
110
/d., Ex. Kat 137-38.
111
Asplundh Mfg. Div., 57 F.3d at 1201.
108

112
113

/d.
697 F.2d 104, 111 (3d Cir. 1982).

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treating facility to make an estimate of what amount of downtime was due to the hearth
problems." 114
In the instant matter, Pribonic may testify based on his specialized knowledge as
a lay witness as opposed to an expert witness. Similar to the lay witness in Joy,
Pribonic has sufficient personal knowledge of the '125 patent, Magnetar's brakes, and
the license agreement between Magnetar and G&T. 115 In 2006, Pribonic concluded
Magnetar's braking system infringed claim 3 of the '125 patent, and sought a license
from G&T. 116 Therefore, Pribonic is qualified to testify to relationship between
Magnetar's brakes and claim 3 of the '125 patent as a lay witness under FED. R. EVID.
701.

B.

Limited Scope of Pribonic's Testimony

Defendants contend Pribonic does not offer any evidence that Magnetar's
brakes are the same or similar to the patents in suit. Indeed, he cannot provide such
testimony in light of the court's previously ruling that he may not opine on infringement
of the patents in suit. 117
Pursuant to plaintiffs' representation, Pribonic is not proffered as an expert;
therefore, FED. R. EVID. 702 is inapplicable to his testimony. Similarly, FED. R. C1v. P.
26(a)(2)(C) is inapplicable to Pribonic because Rules 702, 703, and 705 do not apply to
701 lay opinion testimony. His testimony is limited to the hypothetical negotiation for a
reasonable royalty.

114
115
116
117

/d. at 112.
See D.l. 342, Ex. K.
D.l. 366 at 9.
See D.l. 343-1, Ex. PP at 67-70.

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VII.

RECOMMENDED DISPOSITION

Consistent with the findings herein,
IT IS RECOMMENDED that:
(1) Defendants' Motion to Exclude the Testimony of Edward M. Pribonic (D.I.
341) is granted in part and denied in part.
Pursuant to 28 U.S.C. § 636(b)(1 )(B), FED. R. CIV. P. 72(a) and D. DEL. LR 72.1,
any objections to the Report and Recommendation shall be filed within fourteen (14)
days limited to ten (10) pages after being served with the same. Any response is
limited to ten (1 0) pages.
The parties are directed to the Court's Standing Order in Non-Pro Se matters for
Objections Filed under FED. R. C1v. P. 72 dated October 9, 2013, a copy of which is
available on the court's website, www.ded.uscourts.gov.
Date: February 7, 2014

Is/ Mary Pat Thynge
UNITED STATES MAGISTRATE JUDGE

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