AVM Technologies LLC v. Intel Corporation

Filing 688

MEMORANDUM ORDER regarding the motions to exclude (D.I. 437 , 435 , 411 , 413 , and 402 ). Signed by Judge Richard G. Andrews on 4/29/2017. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

AVM TECHNOLOGIES, LLC,
Plaintiff;

v.

Civil Action No. 15-33-RGA

INTEL CORPORATION,
Defendant.
MEMORANDUM ORDER
Presently before the Court is Plaintiff's Motion to Exclude the Testimony of Intel's
Expert Vivek Subramanian (D.I. 437) and related briefing (D.I. 438, 500, 542), Plaintiff's
Motion to Exclude the Testimony of Julie Davis (D.1. 435) and related briefing (D.I. 436, 496,
527), Plaintiff's Motion to Exclude Portions of the Expert Opinion of Lorin Hitt, Ph.D. (D.I. 411)
and related briefing (D.I. 412, 486, 521), Plaintiff's Motion to Exclude the T~stimony of Willy
Shih and Robert Colwell Regarding the Subjects in Their November 14 Reports (D.I. 413) and
related briefing (D.I. 414, 489, 531), and Plaintiff's Motion to Exclude Expert Testimony
Regarding Intel Patents (D.I. 402) and related briefing (D.I. 403, 498, 522). For the reasons that
follow, IT IS HEREBY ORDERED THAT Plaintiff's Motion to Exclude the Testimony of
Intel's Expert Vivek Subramanian (D.I. 437) is DENIED, Plaintiff's Motion to Exclude the
Testimony of Julie Davis (D.I. 435) is GRANTED IN PART and DENIED IN PART,
Plaintiff's Motion to Exclude Portions of the Expert Opinion of Lorin Hitt, Ph.D. (D.I. 411) is
DENIED, Plaintiff's Motion to Exclude the Testimony of Willy Shih and Robert Colwell
Regarding the Subjects in Their November 14 Reports (D.1. 413) is DENIED, and Plaintiff's
Motion to Exclude Expert Testimony Regarding Intel Patents (D.I. 402) is DENIED.
"[T]he district court acts as a gatekeeper" to ensure that expert testimony is reliable and

helpful. Schneider v. Fried, 320 F.3d 396, 404 (3rd Cir. 2003). "The primary locus of this
obligation is [Federal Rule of Evidence] 702." Daubert v. Merrell Dow Pharma., Inc., 509 U.S.
579, 589 (1993). It reads:
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if:
(a) the expert's scientific, technical, or other specialized knowledge will help the
trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the
case.
Fed. R. Evid. 702.
Rule 702, as amended in 2000, codified the Supreme Court's holding in Daubert.
Daubert imposes a "trilogy" of requirements: (1) qualification, (2) reliability, and (3) fit.
Schneider, 320 F.3d at 404. My determination that proffered testimony complies with these

prerequisites is governed by Federal Rule of Evidence 104(a). Daubert, 509 U.S. at 592. As
such, I must find Daubert's trilogy ofrequirements is met by a preponderance of the evidence.
Jn re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 744 (3rd Cir. 1994).

On the one hand, this showing requires the party proffering expert testimony do more
than make a prima facie case of reliability. Id at 743. On the other hand, the "evidentiary
requirement of reliability is lower than the merits standard of correctness." Id The proffering
party does not "have to prove their case twice-they do not have to demonstrate to the judge by a
preponderance of the evidence that the assessments of their experts are correct, they only have to
demonstrate by a preponderance of evidence that their opinions are reliable." Id at 744.
Plaintiff's objections to each of these experts' testimony fall within the reliability prong
of the Daubert trilogy. Under this prong, "an expert's testimony is admissible so long as the
process or technique the expert used in formulating the opinion is reliable." Paoli, 35 F.3d at
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742. Reliability does not require certainty, Daubert, 509 U.S. at 590, but does require "validity,"
Paoli, 35 F.3d at 742. The Third Circuit has warned, however, that "the reliability requirement

must not be used as a tool by which the court excludes all questionably reliable evidence." Id. at
744. An expert's opinion must be founded on good grounds, not perfect ones. Id. I can
conclude there are good grounds for the opinion even if I "think[] there are better grounds for
some alternative conclusion" or that the expert's methodology "has some flaws such that if they
had been corrected, the scientist would have reached a different result." Id. The Third Circuit
has directed that a "judge frequently should find an expert's methodology helpful even when the
judge thinks that the expert's technique has flaws sufficient to render the conclusions
inaccurate." Id. at 744-45.
A.

Dr. Subramanian
Plaintiff first argues that Dr. Subramanian should be precluded from opining on which

circuits are limiting circuits because such testimony would violate Magistrate Judge Thynge's
Order during a discovery dispute. (D.I. 438 at 14). I have already addressed this issue. (D.1.
658 at 5). Dr. Subramanian is not precluded from testifying about which circuits are speedlimiting.
Plaintiff next argues that Dr. Subramanian's supplemental report was untimely and is
prejudicial. (D.I. 438 at 18). This is not an appropriate issue for a Daubert motion.
Furthermore, it seems that if Plaintiff suffered the severe prejudice it claims to have suffered, it
should have brought this issue to my attention at the time the report was filed. The supplemental
report addresses a narrow issue, is only six pages long, was served prior to Dr. Subramanian's
deposition, and serves as a response to Plaintiff's expert's reply report. (D.I. 500 at 18). I fail to
see any prejudice to Plaintiff and I will not exclude this supplemental report.
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Plaintiff next objects to Dr. Subramanian 's opinions as to the "purpose" of including a
delay in the accused products because it is irrelevant to whether the accused products infringe.
(D.I. 438 at 20). Defendant responds that the testimony is not about "intent" but about the
function of the accused circuit element. (D.I. 500 at 22). I agree with Defendant. Dr.
Subramanian's use of the word "purpose" relates to how the circuits function, not whether
Defendant intended to directly infringe. Therefore, I will not exclude this testimony, and
Plaintiff's Motion to Exclude the Testimony of Intel's Expert Vivek Subramanian is denied.
B.

Julie Davis
Plaintiff seeks to exclude Ms. Davis's testimony about the inventor's offer to license the

patent to Defendant in 2006 because the testimony is irrelevant and unreliable. (D.I. 436 at 4). I
disagree. Such an offer is relevant to the parties' hypothetical negotiation and there is evidence
in the record to support its reliability. I will not exclude this testimony.
On the other hand, I will exclude Ms. Davis's testimony regarding the Hitachi litigation

(id. at 11) as it is unnecessary to an assessment as to the parties' relative bargaining position
during the hypothetical negotiation, and, as I have said elsewhere, incredibly prejudicial. (D.I.
637 at 11).
I also exclude Ms. Davis's testimony as to the rulings issued in A VMl. (Id. at 5-6 n.4). I
note that Ms. Davis has stated that she did not use the rulings in A VMl to value the patents, but
only to criticize Dr. Hatch's analysis, so it might also well be the case that this particular point is
moot given the current exclusion of Dr. Hatch's testimony. At the pretrial conference, Intel said
it no longer sought to introduce any of Mr. Evans's testimony from AVMl. To the extent Ms.
Davis relies upon something in Mr. Evans's report, or expects to reference Mr. Evans in her
testimony, I direct Intel to submit a written proffer by May 1, 2017, at noon, specifying what that

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would be. The fact that I excluded Mr. Evans's report in A VMl does not necessarily mean Ms.
Davis cannot rely on anything in that report. Experts might rely upon the reports of other experts
in reaching conclusions. In sum, absent explicit permission from me after the submission of the
above-referenced proffer, Ms. Davis cannot testify about Mr. Evans, and cannot describe him as
AVM's expert in prior litigation.
Ms. Davis is not precluded from testifying about downbinning to the extent that her
testimony is not inconsistent with Magistrate Judge Thynge's order (i.e., limited to 100 days for
Sandy Bridge and Ivy Bridge). (D.I. 637 at 12).
On the other hand, I will exclude Ms. Davis's testimony as to Plaintiff's litigation
funding agreements. (Id. at 14). These agreements are not patent licensing agreements and are
not otherwise relevant to the hypothetical negotiation between the parties. The best that can be
said about litigation funding agreements is that they are informed gambling on the outcome of
litigation. They are so far removed from the hypothetical negotiation that they have no
relevance. I further note that if they were determined to have some marginal relevance, that I
would exclude them under Rule 403 as their probative value is more than substantially
outweighed by the danger of unfair prejudice to A VM and ofconfusing the issues, as their
introduction would just invite a sideshow on the economics of patent litigation.
Finally, as I am not excluding any of the expert testimony Plaintiff objects to Ms. Davis's
reliance on, this portion of Plaintiff's motion is moot.

C.

Loren Hitt
Plaintiff seeks to exclude Dr. Hitt's supplemental expert report and an errata correcting

some of his regression results because they were untimely and prejudicial. (D.l. 412 at 6). This
is not an appropriate issue for a Daubert motion. Plaintiff should have addressed this with the

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Court when the issue first arose. Furthermore, the supplemental report was served before Dr.
Hitt was deposed and consists of only eight paragraphs. (D.I. 486 at 4). The errata corrects an
error identified by Plaintiff. (Id.). I fail to see any prejudice to Plaintiff and I will not exclude
this testimony. As I am not excluding any of the expert testimony Plaintiff objects to Dr. Hitt's
reliance on, this portion of Plaintiffs motion is moot.
D.

Willy Shih and Robert Colwell
Plaintiff seeks to exclude testimony from Dr. Shih about comparable patent agreements

as unreliable because he excluded settlement agreements as a "categorical rule of thumb" that he
failed to apply consistently. (D.I. 414 at 8). Plaintiff also criticizes Dr. Shih's technological
comparability analysis. (Id. at 14). Even if Plaintiff's characterization of Dr. Shih's
methodology is correct, and I am not convinced that it is, I do not think this renders his testimony
unreliable under Daubert. Plaintiff also seeks to exclude Dr. Shih' s testimony about patent
stacking as unreliable because he did not identify any actual evidence of patent stacking. (Id. at
22). I am not persuaded. Dr. Shih did not use "abstract recitations of royalty stacking theory" to
arrive at a damages calculation. Commonwealth Sci. & Indus. Research Organisation v. Cisco
Sys., Inc., 809 F .3d 1295, 1302 (Fed. Cir. 2015). Rather, he opined on the comparability of other

patent licenses and discussed patent stacking to provide context for the parties' hypothetical
negotiation. (D.1. 489 at 17) I will not exclude this testimony. Finally, I will not exclude Dr.
Shih's testimony about the inventor's offer to license the patent or any testimony that relies on
Larry Evans's opinion from A VMl for the same reasons discussed above with respect to Dr.
Davis. On the other hand, any testimony that relies on Larry Evans's opinion from A VMl
should be produced as part of the "Julie Davis proffer" described above, and is subject to the
same analysis, including, in particular, that it is not to be introduced absent my express
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permission.
I also decline to exclude Dr. Colwell's related testimony. (D.I. 414 at 22). I am not
moved by Plaintiff's conclusory statement that Dr. Colwell "had no clue about the use, value, or
significance of the licensed patent." (Id).

E.

Intel Patents
Plaintiff seeks to exclude the testimony of four of Defendant's experts about Intel's own

patents. (D.1. 403 at 4). I decline to do so. The existence of these patents is relevant to the
hypothetical negotiations and to the calculation of a reasonable royalty. Furthermore, I am not
persuaded by Plaintiff's complaint that Dr. Colwell's and Dr. Subramanian's analyses of the
eleven Intel patents practiced by the accused products lack a proper claim construction analysis.
(Id at 13). Plaintiff has not specified which terms are allegedly in dispute, nor does it appear

that Plaintiff questioned these experts about any specific disputed terms during their depositions.
(D.I. 498 at 14-15). I do not think this testimony is unreliable and I will not exclude it under
Daubert.

Entered this

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.lJ day of April, 2017.