Stoneeagle Services, Inc. v. Pay-Plus Solutions, Inc. et al

Filing 202

ORDER: Plaintiff's Amended Motion in Limine to Exclude Defendants' Late-Produced "Referral Agreement" 178 is DENIED as set forth herein. Defendants' Motions in Limine 138 are GRANTED IN PART AND DENIED IN PART. Signed by Judge Virginia M. Hernandez Covington on 6/19/2015. (KNC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
STONEEAGLE SERVICES, INC.,
Plaintiff,
v.

Case No.: 8:13-cv-2240-T-33MAP

PAY-PLUS SOLUTIONS, INC., and
PREMIER HEALTHCARE EXCHANGE, INC.,
Defendants.
_______________________________/
ORDER
This matter comes before the Court pursuant to Plaintiff
StoneEagle

Services,

Inc.’s

Amended

Motion

in

Limine

to

Exclude Defendants’ Late-Produced “Referral Agreement” (Doc.
# 178) and Defendants Pay-Plus Solutions, Inc. (“PPS”) and
Premier Healthcare Exchange, Inc.’s (“PHX”) Motions in Limine
(Doc. # 138). Both Motions are ripe for this Court’s review.
For the reasons set forth at the Motion hearing conducted on
June 17, 2015, and set forth below, the Motions are granted
in part and denied in part as detailed herein.
I.

Background
In this patent infringement action, Plaintiff alleges

that Defendants willfully infringed Plaintiff’s rights under
two patents: Reissue Patent No. US RE43,904 E (“the 904
Patent”) and Reissue Patent No. US RE44,748 E (“the 748

Patent”). (Doc. # 66 at ¶¶ 1, 8-10 & Ex. A, B). Both patents
cover a health care provider reimbursement system, by which
a payor, such as an insurance company, makes “a virtual
payment to a medical provider by transmitting a stored-value
card

account

payment

of

the

authorized

benefit

amount,

together with an explanation of benefits.” (Id. at ¶¶ 14-16
& Ex. A, B). Plaintiff alleges that Defendants’ health care
benefits

payment

processing

system,

“Pay-Plus™

Select,”

directly competes with Plaintiff’s patented system. (Id. at
¶¶

17-18).

Specifically,

Plaintiff

“asserts

different

infringement positions against the Pay-Plus™ Select service:
(1) the ‘one-fax system’ allegedly infringes all of the
asserted claims; and (2) the ‘two-fax system’ and ‘hardcopy
mailing system’ each allegedly infringe claims 7, 13, 19, and
25 of the 748 Patent.” (Doc. # 143 at 8).
On December 2, 2014, Defendants filed Answers to the
operative complaint, including, as an affirmative defense, a
challenge to the validity of the patents pursuant to 35 U.S.C.
§ 101. (Doc. # 67 at 7; Doc. # 68 at 7). Thereafter, on
December 9, 2014, Defendants filed a Motion for Judgment on
the Pleadings arguing that the claims at issue are directed
to patent-ineligible subject matter under 35 U.S.C. § 101,
which warranted judgment in Defendants’ favor. (Doc. # 69).

2

This

Court

denied

Defendants’

Motion

without

prejudice,

partially as claim construction had not occurred in this
action. (See Doc. # 91). This Court held a Markman hearing on
May 11, 2015 (Doc. # 183), and entered an Order on claims
construction on June 4, 2015. (Doc. # 197).
Now before the Court are the parties’ Motions in Limine.
(Doc. ## 138, 178). The Court will address each in turn.
II.

Legal Standard
“A

motion

in

limine

presents

a

pretrial

issue

of

admissibility of evidence that is likely to arise at trial,
and as such, the order, like any other interlocutory order,
remains subject to reconsideration by the court throughout
the trial.” In re Seroquel Prods. Liab. Litig., Nos. 6:06md-1769-Orl-22DAB, 6:07-cv-15733-Orl-22DAB, 2009 WL 260989,
at *1 (M.D. Fla. Feb. 4, 2009). “The real purpose of a motion
in limine is to give the trial judge notice of the movant’s
position so as to avoid the introduction of damaging evidence
which may irretrievably [a]ffect the fairness of the trial.
A court has the power to exclude evidence in limine only when
evidence is clearly inadmissible on all potential grounds.”
Id. (internal quotation omitted).
A motion in limine is not the proper vehicle to resolve
substantive issues, to test issues of law, or to address or

3

narrow the issues to be tried.

See LSQ Funding Grp. v. EDS

Field Servs., 879 F. Supp. 2d 1320, 1337 (M.D. Fla. 2012)
(citing Royal Indem. Co. v. Liberty Mut. Fire Ins. Co., No.
07-80172-CIV, 2008 WL 2323900, at *1 (S.D. Fla. June 5,
2008)). “Denial of a motion in limine does not necessarily
mean that all evidence contemplated by the motion will be
admitted at trial.” In re Seroquel, 2009 WL 260989, at *1
(internal quotation marks omitted). “Instead, denial of the
motion means the court cannot determine whether the evidence
in question should be excluded outside the trial context.”
Id.

“The

court

will

entertain

objections

on

individual

proffers as they arise at trial, even though the proffer falls
within the scope of a denied motion in limine.”

Id.

The district court has broad discretion to determine the
admissibility of evidence, and the appellate court will not
disturb

this

Court’s

judgment

absent

a

clear

abuse

of

discretion. United States v. McLean, 138 F.3d 1398, 1403 (11th
Cir. 1998); see also United States v. Jernigan, 341 F.3d 1273,
1285 (11th Cir. 2003)(“Inherent in this standard is the firm
recognition that there are difficult evidentiary rulings that
turn on matters uniquely within the purview of the district
court, which has first-hand access to documentary evidence

4

and is physically proximate to testifying witnesses and the
jury.”).
III. Analysis
a. Plaintiff’s Motion
Plaintiff requests that this Court exclude from trial
and from any consideration by the Court a Referral Agreement
produced by Defendants “well after close of discovery,” as
well as any testimony, argument or evidence relating to that
Referral Agreement. (Doc. # 178 at 1).
According to Plaintiff, although the Referral Agreement
was executed by Defendants on January 29, 2015, before the
discovery deadline of March 3, 2015, Defendants withheld it
from production until after Plaintiff deposed Defendants’
corporate representatives (CEOs and CFOs) on February 25-27,
2015, after the discovery deadline, and after the dispositive
motion deadline. (Id. at ¶ 3). Plaintiff suspects that the
Referral Agreement is a:
[D]esperate attempt by Defendants to create
evidence re-characterizing PHX’s sales of, and
offers to sell, the Defendants’ infringing product
as mere “referrals,” while avoiding any discovery
regarding that attempted re-characterization. By
doing so, Defendants seek to bolster their claim
that PHX does not sell or offer to sell infringing
products and, therefore, does not induce or

5

contribute to the
patents at issue.

infringement

of

Plaintiff’s

(Id. at ¶ 6).
While

Defendants

contend

that

they

disclosed

the

relevant terms of the Referral Agreement, Plaintiff submits
that PPS’ designated representative – Mr. Jay Ver Hulst denied that any such written document existed during his
deposition on January 19, 2015:
Q: Is there an agreement between the individuals
who are compensated for making sales of PPS
services?
A: No. “No” being a written agreement.
(Doc. # 185 at 3-4). Because Defendants denied the very
existence of a written Referral Agreement and failed to
produce a copy of the Referral Agreement, Plaintiff contends
that it did not, and could not have, obtained “specific,
detailed testimony regarding the Referral Agreement from both
PPS and PHX witnesses” during the discovery period. (Id. at
4). Specifically, Plaintiff’s counsel suggests that he was
hindered from asking a single question about the terms and
conditions of the written Referral Agreement. (Id. at 4-5).
Plaintiff submits that these terms bear on critical issues in
this case. (Id. at 5). Furthermore, without the Referral
Agreement, Plaintiff’s counsel did not know when he deposed

6

Defendants’

corporate

Agreement’s

express

representative’s

representatives
terms

testimony.

that

contradicted
(Id.).

the

Referral

the

corporate

Therefore,

Plaintiff

requests that the Referral Agreement be excluded under Fed.
R. Civ. P. 37(c)(1). (See Doc. ## 178, 185).
Plaintiff also argues that the Court should exclude the
Referral Agreement under Fed. R. Evid. 403, as the Referral
Agreement is more prejudicial than probative. (Doc. # 178 at
6). Defendants timely produced “commission reports,” which
characterized payments by PPS to PHX employees relating to
the sales of PPS’ products as “commissions.” (Id.). According
to Plaintiff, the Referral Agreement seeks to re-cast those
payments as being for “referrals” not commissions for sales.
(Id.). Plaintiff submits that this is an attempt by Defendants
to create evidence – that contradicts previously produced
documents – to support Defendants’ position that PHX does not
“sell” or “offer for sale” the allegedly infringing Pay-Plus™
Select system. (Id.). Because the Referral Agreement was
created

so

late

in

these

proceedings

and

contradicts

previously produced documents, Plaintiff asserts that it has
little if any probative value relating to the nature of the
payments. (Id. at 6-7).

7

Rule 37(c), Fed. R. Civ. P., generally provides that
“[i]f a party fails to provide information or identify a
witness as required by Rule 26(a) or (e), the party is not
allowed to use that information or witness to supply evidence
on a motion, at a hearing, or at a trial, unless the failure
was substantially justified or is harmless.”
Rule 26(e), Fed. R. Civ. P. states, in relevant part:
(1) In General. A party who has made a disclosure
under Rule 26(a) – or who has responded to an
interrogatory, request for production, or request
for admission – must supplement or correct its
disclosure or response:
(A) in a timely manner if the party learns
that in some material respect the disclosure
or response is incomplete or incorrect, and if
the additional or corrective information has
not otherwise been made known to the other
parties during the discovery process or in
writing; or
(B) as ordered by the court.
Fed. R. Civ. P. 26
As such, if violations of Rule 26 have indeed occurred,
a court may preclude the violator from relying on untimely
disclosed

information

unless

the

violations

are

“substantially justified” or “harmless.” Fed. R. Civ. P.
37(c). “In determining whether the failure to disclose was

8

justified

or

harmless,

[the

Court]

consider[s]

the

non-

disclosing party’s explanation for its failure to disclose,
the importance of the information, and any prejudice to the
opposing party if the information had been admitted.” Lips v.
City of Hollywood, 350 F. App’x. 328, 340 (11th Cir. 2009)
(citing Romero v. Drummond Co., 552 F.3d 1303, 1321 (11th
Cir. 2008)). “Prejudice generally occurs when late disclosure
deprives the opposing party of a meaningful opportunity to
perform discovery and depositions related to the documents or
witnesses

in

question.”

Berryman-Dages

v.

City

of

Gainesville, No. 1:10-cv-177-MP-GRJ, 2012 WL 1130074, at *2
(N.D. Fla. Apr. 4, 2012).
At the Motion hearing, Defendants continued to argue
against

exclusion

of

the

Referral

Agreement.

However,

Defendants’ counsel admitted that the Referral Agreement
should have been immediately produced, but due to human error,
a delay in producing the document occurred.
For the reasons discussed at the Motion hearing, the
Court denies Plaintiff’s Motion, subject to the resolution
described by the parties. Particularly, the parties are to
confer regarding scheduling the depositions of Mr. Anthony
Vigorito, Mr. Robert Hammer, Mr. Jay Ver Hulst, and Mr. Todd

9

Roberti. These depositions shall be limited in scope to
matters stemming from the relevant Referral Agreement.
Defendants

are

responsible

for

costs

incurred

by

Plaintiff’s counsel to travel to take these depositions.
However, the Court declines to award Plaintiff’s counsel
attorneys’ fees in taking these depositions. In the event the
parties are unable to resolve these issues, Plaintiff may
renew its Motion for resolution by this Court.
b. Defendants’ Motions
Defendants

request

an

Order

“precluding

Plaintiff,

Plaintiff’s counsel, or any of Plaintiff’s witnesses, from
mentioning,

referring

to,

or

offering

any

evidence,

testimony, or argument relating to the following subjects. .
. .” (See Doc. # 138).
i. Plaintiff Should Be Precluded From Offering
Testimony, Evidence, or Argument Regarding Any
Allegations of False or Misleading Advertising.
As this is a patent infringement action, Defendants
contend that “testimony, evidence, or argument regarding any
other

purported

torts

irrelevant

to

the

Defendants

suggest

case
that

or

wrongdoing

at

hand.”

“the

by

(Id.

probative

Defendants

at

8).

value

is

Further,
of

such

testimony, evidence, or argument is substantially outweighed

10

by the danger of unfair prejudice to Defendants and confusion
of issues, as to potentially mislead the jury.” (Id.).
In

particular,

Defendants

submit

that

Plaintiff

previously sought leave to file its third amended complaint
in order to add allegations against Defendants related to
false and misleading advertising in violation of Section
43(a) of the Lanham Act. (Id.). “The proposed amendments
involved

allegations

.

.

.

related

to

Defendants’

advertisements across various mediums, including statements
on its website regarding Pay-Plus™ Select Plus and statements
that

its

product

uses

a

‘patent

pending’

process,

a

‘reloadable card,’ and/or has three different versions.”
(Id.). However, this Court denied Plaintiff’s Motion for
Leave to Amend. (See Doc. # 104). The Court notes that in its
Order on the Motion for Leave to Amend, the Court’s analysis
was limited to Rule 16(b)(4), Fed. R. Civ. P.: the Court
determined – given the procedural posture of this action Plaintiff failed to provide a sufficient basis for the Court
to grant its request. (Id.). The Court did not address the
merits of Plaintiff’s proposed amendments.
In response to Defendants’ current request, Plaintiff
argues that Defendants falsely advertised their infringing
payment process known as Pay-Plus™ Select. (Doc. # 157 at 4).

11

Defendants also engaged in a “‘bait and switch’ scheme by
advertising – for over 3 years – a payment system that they
could

not

sell.”

(Id.).

According

to

Plaintiff,

this

purported false advertising relates directly to Defendants’
infringement of the relevant patents. (Id.). In fact, “the
un-contradicted

testimony

of

Defendants’

own

witnesses

establishes that Defendants made various false advertising
claims.” (Id.). Thus, Plaintiff submits that this testimony
is relevant to Defendants’ invalidity defenses, damages, and
their willful infringement, as well as to rebut Defendants’
defense that Plaintiff’s patented inventions are obvious and
invalid. (Id. at 6).
For the reasons stated on the record at the Motion
hearing, the Court denies Defendants’ Motion, and as a result,
this testimony may be presented at trial. Whether and how
Defendants advertised their products is directly related and
relevant to the patent infringement claims at issue.
ii. Plaintiff’s Expert Robert Allen Should be
Precluded From Offering Opinions or Evidence
Regarding
Defendants’
Highly
Confidential
Information.
Plaintiff’s expert Robert Allen is also Plaintiff’s CEO.
(Doc. # 138 at 9). Defendants explain that Mr. Allen is
prohibited from accessing information and materials produced

12

by Defendants designated as either “HIGHLY CONFIDENTIAL –
ATTORNEYS’

EYES

ONLY”

or

“HIGHLY

CONFIDENTIAL

–

OUTSIDE

COUNSEL ONLY.” (Id.). This information is restricted to only
outside counsel, in-house counsel (but only with respect to
the lower designation), professional vendors, the Court, and
independent outside experts. (Id.).
As Mr. Allen does not fit into one of these categories,
his expert report is devoid of opinions or evidence relating
to

Defendants’

Therefore,

highly

Defendants

confidential
argue

that

information.

Mr.

Allen

(Id.).

should

be

precluded from offering any testimony, evidence, or argument
at trial relating to or referring to any of Defendants’ highly
confidential information. (Id.).
In response, Plaintiff recognizes the nature of the
documents, but argues that if Defendants choose to use their
highly confidential information at trial, and have their
experts rely on such evidence, then Mr. Allen should be able
to rely on it as well. (Doc. # 157 at 6-7).
Upon consideration, the Court grants Defendants’ Motion
in part. To that end, if Defendants introduce this highly
confidential information at trial, and their experts rely on
this information, then Mr. Allen should be allowed to offer
testimony, evidence, and argument at trial related to these

13

matters.

However,

if

Defendants

refrain

from

using

this

information, then likewise, Mr. Allen should be precluded
from offering testimony, or otherwise, on these matters.
iii. Plaintiff’s Damages Expert Should Be Precluded
From Offering Opinions or Conclusion Regarding
the Georgia-Pacific Factors.
“Upon a showing of infringement, a patentee is entitled
to ‘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.’” ResQNet.com, Inc. v.
Lansa, Inc., 594 F.3d 860, 868 (Fed. Cir. 2010)(quoting 35
U.S.C. § 284).

According to Defendants, the Federal Circuit

has consistently held that the factors identified in GeorgiaPacific Corp v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120
(S.D.N.Y. 1970), guide the reasonable royalty calculation.
(Doc. # 138 at 10).
Plaintiff’s damages expert, Mr. Weston Anson, however,
“explicitly disclaimed use of the Georgia Pacific factors in
his analysis and opinions.” (Id.). Instead, Mr. Anson relied
on a “Market Approach” to arrive at his reasonable royalty
rate.

(Id.).

“Similarly,

at

his

deposition,

Mr.

Anson

referred to the Georgia Pacific factors as ‘outmoded,’” and
indicated that they were not appropriate in this case. (Id.

14

at 11). Thus, Defendants argue that Mr. Anson should be
precluded from offering opinions or conclusions at trial
regarding the Georgia Pacific factors. (Id. at 10-11).
In response, Plaintiff argues that Defendants’ rebuttal
damages expert critiqued Mr. Anson’s decision not to utilize
the

Georgia

Pacific

factors.

(Doc.

#

157

at

7).

Thus,

Plaintiff contends that Mr. Anson should be able to respond
to the opinions of Defendants’ rebuttal damages expert, which
may include discussion of the Georgia-Pacific factors. (Id.).
According to Plaintiff, to preclude him from doing so “would
be to permit him to be unfairly attacked without giving the
jury an opportunity to hear his response to the criticism of
the Defendants’ expert.” (Id.).
After

due

consideration,

and

based

on

Plaintiff’s

counsel’s representations at the Motion hearing, the Court
denies Defendants’ Motion. This Court denied Defendants’
Motion to Exclude Mr. Anson (Doc. # 144), and determined that
Mr. Anson’s opinions – which utilized the “Market Approach”
as opposed to the Georgia-Pacific factors in determining a
reasonable royalty rate in this action – were based on sound
and reliable methodology. Mr. Anson should be able to respond
to the opinions of Defendants’ rebuttal damages expert, which
criticize the approach chosen by Mr. Anson. Specifically, Mr.

15

Anson should be able to explain why he chose not to use the
Georgia-Pacific factors in his analysis.
iv. Plaintiff’s Damages Expert Should be Precluded
from Offering Opinions or Conclusions on
Technical Matters.
Under Fed. R. Evid. 702, an expert witness may offer
opinion testimony within the expert’s area of expertise.
Thus, a technical expert is unqualified under Rule 702 when
he

or

she

does

not

possess

“relevant

expertise

in

the

pertinent area.” See Fed. R. Evid. 702; (Doc. # 138 at 11).
Here, Defendants argue that Plaintiff’s expert Mr. Anson
“possesses no training or experience in the pertinent art of
the asserted patents . . . or any related technical field.”
(Id. at 12). Further, at his deposition, Mr. Anson “admitted
that he was not hired in this case as a technical expert.”
(Id.). Thus, Defendants suggest that Mr. Anson is unqualified
to

give

expert

invalidity,

testimony

infringement,

on

technical

matters
of

interpretation

such

asserted

the

as

patents, or other technical matters. (Id.). Furthermore,
because Mr. Anson lacks specialized training or knowledge in
payment processing systems, Defendants contend that he cannot
properly

offer

comparability

of

opinion
the

testimony

subject

16

matter

on
of

the
these

technical
license

agreements with the subject matter of the 904 and 748 Patents.
(Id. at 12-13).
Plaintiff admits that Mr. Anson is not a technical
expert. (Doc. # 157 at 8). However, “[a]s a highly educated
individual with extensive licensing experience,” Plaintiff
asserts that Mr. Anson should be allowed to testify as to why
he thinks the technology in the licenses – which he identified
in his expert report - is comparable to the technology covered
by Plaintiff’s patents in suit. (Id.).
For the reasons stated at the Motion hearing, the Court
denies Defendants’ Motion. To the extent Defendants contend
that Mr. Anson is unqualified to give an opinion on certain
matters, Defendants can address these concerns on crossexamination.
v. Plaintiff Should Be Precluded From Offering
Testimony, Evidence, or Argument Regarding
Plaintiff’s Licensing Negotiations.
Defendants request that the Court preclude Plaintiff
from offering testimony, evidence, or argument regarding
license negotiations that have taken place between Plaintiff
and third parties, which relate to the 904 and 748 Patents,
or any related patent, including but not limited to the 686
parent

patent,

and

any

documents,

materials,

and

communications that may have been exchanged during the course

17

of those negotiations. (Doc. # 138 at 13-14). According to
Defendants,

“[a]ny

probative

value

of

such

testimony,

evidence, or argument is substantially outweighed by the
danger of unfair prejudice to Defendants due to Plaintiff’s
protection of such license negotiations during discovery.”
(Id. at 14).
Defendants explain that during discovery, “Defendants
sought production of documents and information from Plaintiff
relating to any licensing negotiations concerning any of the
asserted patents or subject matter thereof.” (Id.). However,
Plaintiff refused to produce the documents and information
sought by Defendants because the requested information was
(1) not relevant and (2) protected under a confidentiality
agreement with a third party. (Id.). Defendants moved to
compel the production of the documents and information, which
Plaintiff opposed. (Id.). The Court denied Defendants’ motion
with

respect

to

these

requests

regarding

the

licensing

negotiations. (See Doc. # 110).
Thus,

Defendants

argue

that

“based

on

its

explicit

statement of non-relevance and its overall protection of such
discovery,” Plaintiff should be precluded from offering any
testimony (including expert opinions), evidence, or argument

18

relating to any license negotiations that have taken place
between Plaintiff and third parties. (Doc. # 138 at 14).
According to Plaintiff, its counsel previously proposed
that neither party should be permitted to offer such evidence,
but

Defendants

refused.

(Doc.

#

157

at

8).

Plaintiff

reiterates its proposal – all parties should be precluded
from offering such testimony, evidence, or argument. However,
the proposal applies to both parties as there is “no reason
for Defendants to make any argument or introduce evidence at
trial regarding this topic.” (Id. at 9). If Defendants do
make such argument or offer such evidence, Plaintiff contends
that fairness dictates that Plaintiff be permitted to respond
in kind with argument and evidence. (Id.).
After hearing the parties’ arguments, the Court denies
Defendants’ Motion without prejudice. At the Motion hearing,
Defendants

failed

to

provide

sufficient

information

on

exactly what testimony they sought to exclude. Defendants may
renew this Motion at trial, if appropriate, once the Court
has the benefit of hearing the testimony in trial context.
vi. Plaintiff Should Be Precluded From Offering
Testimony, Evidence, or Argument Regarding
Design, Operation, or Success of Plaintiff’s Own
Product.

19

Defendants request the Court preclude Plaintiff from
offering

testimony,

evidence,

or

argument

regarding

Plaintiff’s products, such as the design, operation, and
capabilities of Plaintiff’s products or associated sales or
revenue data. (Doc. # 138 at 15). According to Defendants,
Plaintiff “intentionally withheld such information during
discovery.” (Id.). As such, “[g]iven Plaintiff’s failure to
provide

this

information

requested

by

Defendants

under

Federal Rule of Civil Procedure 26, Plaintiff is not allowed
to use this information at trial under Federal Rule of Civil
Procedure 37(c)(1).” (Id. at 16).
At the Motion hearing, the parties agreed that a limiting
instruction

at

circumstances;

trial

would

specifically,

be
so

appropriate
that

the

under

jury

the

does

not

consider testimony of (1) Plaintiff’s commercial success of
its

products

considerations
success.”

(Doc.

and
of
#

(2)

its

finances

non-obviousness
200).

However,

for

based
the

“secondary

on

commercial

Court

finds

that

Plaintiff should be allowed to explain its product (design
and capabilities), as this information is directly related to
the patent infringement claims at issue. Accordingly, the
Court denies Defendants’ Motion.

20

vii. Plaintiff Should be Precluded From Offering
Testimony, Evidence, or Argument Regarding the
Post-Issuance Decisions From the Patent Office
Regarding the 904 Patent.
Defendants suggest that Plaintiff should be precluded –
under Fed. R. Evid. 401, 402, and/or 403 - from offering
evidence, testimony, or argument regarding (1) the PTAB’s
decision denying Defendants’ petition for Inter Partes Review
with respect to the 904 Patent and (2) the PTAB’s decision
denying Covered Business Method Patent Review (CBM) with
respect to the 904 Patent. (Doc. # 138 at 19). According to
Defendants,

these

procedures

“have

distinctly

different

standards, parties, purposes, and outcomes compared to civil
litigation.” (Id. at 18)(quoting In re Swanson, 540 F.3d 1368,
1377

(Fed.

Cir.

2008)).

Accordingly,

“different

results

between those forums and the current forum may be entirely
reasonable.” (Id.)(quoting Ethicon, Inc. v. Quiqq, 849 F. 2d
1422, 1428 (Fed. Cir. 1998)). Therefore, Defendants argue
that this evidence is irrelevant and highly prejudicial to
the jury’s determination. (Id. at 19-20).
Defendants suggest that “numerous district courts have
[ ] excluded testimony, evidence, and argument regarding
Patent Office proceedings – a predecessor to the new IPR and
CBM proceedings.” (Id. at 18-20)(citing Ultratec, Inc. v.

21

Sorenson Comm’ns, Inc., No. 13-cv-346-bbc, 2014 WL 5023098,
at *2 (W.D. Wis. Oct. 8, 2014); Belden Techs., Inc. v.
Superior Essex Commc’ns, LP, 802 F. Supp. 2d 555, 569 (D.
Del. 2011); Server Tech., Inc. v. Am. Power Conversion Corp.,
No. 3:06-cv-698-LRH, 2014 WL 1308617, at *4 (D. Nev. Mar. 31,
2014); Personalized User Model, L.L.P. v. Google, Inc., No.
9-525-LPS, 2014 WL 807736, at *3 (D. Del Feb. 27, 2014);
Interdigital Commc’ns, Inc. v. Nokia Corp., No. 13-10-RGA,
2014 WL 8104167, at *1 (D. Del. Sept. 19, 2014)(excluding
evidence regarding a similar PTAB decision denying IPR review
in view of the “marginal relevance” and “significant risk of
confusion of the issues.”)).
According

to

Plaintiff,

the

cases

relied

upon

by

Defendants are inapplicable to the present circumstances.
(Doc. # 157 at 12). Furthermore, unlike the situation in
Interdigital Comm., Inc. v. Nokia, Corp., 690 F.3d 1318 (Fed.
Cir. 2012), the petition for Inter Partes Review of the 904
Patent was instituted by Defendant Pay-Plus Solutions, Inc.
and the PTAB expressly concluded in its decision “Petitioner
fails to demonstrate a reasonable likelihood of prevailing in
showing

the

un-patentability

of

any

of

the

challenged

claims.” (Id.). Therefore, Plaintiff submits that no basis

22

exists to hide the results of the three contested proceedings
from the jury. (Id.).
Upon consideration of the parties’ arguments and based
on Plaintiff’s counsel’s representations, the Court denies
Defendant’s Motion. The Court can and will instruct the jury
on the appropriate law to apply to this case and can, if
requested, further instruct the jury that different standards
apply to these various proceedings (i.e., the PTAB’s decision
denying Defendants’ petition for Inter Partes Review with
respect to the 904 Patent and the PTAB’s decision denying
Covered Business Method Patent Review with respect to the 904
Patent). The Court directs the parties to work together to
formulate a specific joint instruction on these particular
matters.
viii. Plaintiff Should be Precluded From Offering
Testimony, Evidence, or Argument Asserting That
the Reissued Nature of the Asserted Patents or
the Post Issuance Decisions From the Patent
Office Strengthen the Presumption of Validity of
the Asserted Patents.
Defendants

seek

to

exclude

any

one-sided

evidence,

testimony, or argument that suggests that the U.S. Patent
Office

is

“infallible,”

as

its

probative

value

is

substantially outweighed by the danger of unfair prejudice to
the

Defendants.

(Doc.

#

138

23

at

20-21).

In

particular,

Defendants seek exclusion of any reference or suggestion that
(1) the “reissue” nature of the 904 and 748 Patents, (2) the
PTAB’s decision denying Defendants’ petition for Inter Partes
Review with respect to the 904 Patent and (3) the PTAB’s
decision denying Covered Business Method Patent Review with
respect to the 904 Patent strengthens the presumption of
validity with respect to either asserted patent. (Id.).
According to Plaintiff, to the extent Defendants seek a
ruling prohibiting Plaintiff from presenting “any one-sided
evidence, testimony, or argument that suggests that the US
Patent Office is infallible,” Plaintiff claims it has never
suggested any intent to offer this kind of evidence. (Doc. #
157 at 13). However, Plaintiff’s counsel indicated that this
“odd and vague” request leads it to “guess what can be said
and not be said about Plaintiff’s patents.” (Id.).
For

the

reasons

set

forth

at

the

Motion

hearing;

specifically, based on Plaintiff’s counsel’s representations
on this matter, the Court denies Defendants’ Motion without
prejudice. Defendants may renew this request at trial, if
appropriate.
ix. Plaintiff Should be Precluded From Offering
Testimony, Evidence, or Argument Regarding
Willful
Infringement
Based
on
Defendants’
Knowledge of the 686 Patent.

24

Here, Defendants contend that Plaintiff’s allegations of
willful infringement are based at least in part on Defendants’
alleged knowledge of the 686 parent patent. (Doc. # 138 at
24). Defendants state that, pursuant to 35 U.S.C. § 251, the
686 patent was “‘surrendered’ upon issuance of the reissue
patents,

further

evidencing

the

lack

of

notice.”

(Id.).

Further, under 35 U.S.C. § 252, the two reissued patents have
“the same effect and operation in law

. . . as if [they] had

been originally granted” only if “the claims of the original
patent and reissued patents are substantially identical. . .
.” (Id.). With the exception of claim 2 of the 904 Patent,
Defendants claim that the claims of the 904 and 748 Patents
are not “substantially identical” to the original claims of
the 686 patent. (Id.).
In light of this, Defendants argue that Plaintiff should
be precluded from offering testimony, evidence, or argument
regarding willful infringement based on Defendants’ alleged
knowledge of the 686 patent for any newly added claim to
either the 904 or 748 Patent. (Id. at 25). Namely, Defendants
suggest that their knowledge of the now surrendered 686 patent
is irrelevant to Plaintiff’s claim of willful infringement,
which requires actual knowledge of the 904 and 748 Patents.
(Id.). Also, the probative value of such testimony, evidence,

25

or argument is substantially outweighed by the danger of
unfair prejudice to Defendants and confusion of issues, as to
potentially mislead the jury. (Id.).
In response, Plaintiff points to the issue raised by
Defendants – what must Defendants have known about when they
began their infringement for it to be willful? (Doc. # 157 at
14). Defendants suggest that the answer is the asserted
patent. (Id.). Even if true, Plaintiff argues that Defendants
attempt to “brush” past the fact that they did have knowledge
of the asserted patent. (Id.). Namely, Defendants admit that
claim 2 of the 904 Patent remained after the 686 patent
reissued, and it is not a newly added claim. (Id. at 8).
Upon review, the Court denies Defendants’ Motion. In
order to willfully infringe a patent, the alleged infringer
must know of the patent. i4i Ltd. P’ship. v. Microsoft Corp.,
598 F.3d 831, 860 (Fed. Cir. 2010) (“Infringement is willful
when the infringer was aware of the asserted patent, but
nonetheless ‘acted despite an objectively high likelihood
that

its

actions

constituted

infringement

of

a

valid

patent.’”); Pandora Jewelry LLC v. Cappola Capital Corp., No.
8:06-cv-845-T-24MSS, 2009 WL 2029964, *1 (M.D. Fla. 2009)
(holding that knowledge of the patent is required for willful
infringement).

26

Plaintiff

should

be

allowed

to

provide

testimony

regarding whether Defendants had the requisite knowledge of
the

686

patent

to

establish

willful

infringement,

and

Defendants can then provide testimony of a potential good
faith defense. Furthermore, if appropriate, the Court can, if
requested, apply a limiting instruction regarding what is
necessary to find willful infringement.
x. Plaintiff Should be Precluded From Offering
Testimony, Evidence, or Argument Regarding Prior
Convictions (or Related Acts) of Mr. Todd
Roberti, CEO of Defendant Premier Healthcare
Exchange Inc.
In the mid-1990s, Mr. Todd Roberti – the CEO of PHX –
pled

guilty

to

criminal

counts

related

to

securities

violations. (Doc. # 138 at 25). Defendants suggest that these
criminal convictions are generally inadmissible pursuant to
Fed. R. Evid. 404, and are irrelevant to this case. (Id.). To
begin, Defendants argue that the underlying acts occurred
nearly

20

criminal

years
counts

relationship
Defendants

to

ago.
nor
the

provide

(Id.).
the

securities

issues
that

Additionally,

in
any

this

“neither

violations
case.”

probative

had

(Id.).

value

of

the
any

Thus,
the

convictions or violations is substantially outweighed by the
danger of unfair prejudice to Defendants. (Id.).

27

Furthermore, to the extent Defendants call Mr. Roberti
as a witness, Defendants request that Plaintiff be precluded
from impeaching Mr. Roberti with evidence of his criminal
conviction. (Id.). Pursuant to Fed. R. Evid. 609(b), a party’s
attack of a witness’ character for truthfulness by evidence
of a criminal conviction is limited “if more than 10 years
have passed since the witness’s conviction.” (Id.). In that
instance, evidence of the conviction is only admissible if
“its

probative

value

.

.

.

substantially

outweighs

its

prejudicial effect.” (Id.). Here, Defendants posit that more
than 10 years have passed since the conviction, and the
probative value of the conviction, which has nothing to do
with the merits of this case, does not substantially outweigh
its prejudicial effect. (Id.). Thus, given Mr. Roberti’s
position as CEO of PHX, Defendants claim that any probative
value

of

the

conviction

for

impeachment

purposes

is

substantially outweighed by its prejudicial effect and the
risk of jury confusion as to the purpose of such testimony.
(Id. at 26-27).
In
Roberti’s

contrast,

however,

criminal

activity

Plaintiff
–

and

its

argues

that

Mr.

ongoing

financial

consequences during the period of infringement – are relevant
to this case. (Doc. # 157 at 15). While Mr. Roberti was acting

28

as PHX’s CEO and Defendants’ alleged willful infringement was
occurring,

Mr.

Roberti

still

owed

over

$1

million

as

restitution for his criminal acts. (Id.). Also, the order
directing such restitution was entered in 2006, less than 10
years

ago.

(Id.).

Further,

Plaintiff

contends

that

Mr.

Roberti remains a majority shareholder of PHX, directs the
activities of PHX, and PPS is a wholly-owned subsidiary of
PHX. (Id.). To the extent that any prejudice exists, Plaintiff
argues that it is a result of Mr. Roberti’s decisions to
engage in criminal activity, not by the argument and evidence
regarding his claims. (Id. at 15-16).
Pursuant to Fed. R. Evid. 609(b)
(b) Limit on Using the Evidence After 10 Years.
This subdivision (b) applies if more than 10 years
have passed since the witness's conviction or
release from confinement for it, whichever is
later. Evidence of the conviction is admissible
only if:
(1) its probative value, supported by specific
facts and circumstances, substantially outweighs
its prejudicial effect; and
(2) the proponent gives an adverse party reasonable
written notice of the intent to use it so that the
party has a fair opportunity to contest its use.
Fed. R. Evid. 609(b)(emphasis added).

29

At the Motion hearing, Plaintiff’s counsel argued that
Mr. Roberti’s criminal conviction should be admitted as (1)
the conviction occurred only twelve years ago (2003) and (2)
Mr. Roberti is subject to a restitution order that was entered
in 2006. However, when the Court inquired as to whether
Plaintiff’s counsel had any legal authority allowing the
Court

to

admit

a

twelve-year-old

conviction,

under

the

circumstances, Plaintiff failed to provide such authority.
Furthermore, Plaintiff failed to sufficiently demonstrate how
the probative value of Mr. Roberti’s conviction substantially
outweighs its prejudicial effect. Therefore, upon review, the
Court grants Defendants’ Motion. See United States v. Cathey,
591 F.2d 268 (5th Cir. 1979)(“The rule which allows the use
of

prior

convictions

more

than

ten

years

old

in

some

circumstances establishes a presumption against the use of
convictions over ten years old.”).
xi. Parties
Should
be
Precluded
From
Making
Reference to any Prior Rulings by This Court.
Defendants argue that the parties should be precluded
from referring to any prior briefings or any rulings of this
Court, including denial of any motion for summary judgment or
any aspect of the claim construction briefing, except to the
extent

necessary

to

present

30

the

Court’s

ordered

claim

constructions to the jury. (Doc. # 138 at 27). According to
Defendants,

these

prior

briefings

and

rulings

on

legal

matters are irrelevant to the jury’s fact finding process,
and reference to such rulings creates potential for prejudice
and jury confusion. (Id.). Thus, any reference to the Court’s
prior rulings, other than on claim construction, should be
precluded under Fed. R. Evid. 402 and 403. (Id.).
Plaintiff agrees to Defendants’ request with one caveat
– the parties may refer to such rulings, for purposes of
impeachment. According to Plaintiff, such caveat ensures that
none of the witnesses seeks to mislead the jury regarding the
knowledge of what has happened while this case has been
pending.

(Doc.

#

157

at

16).

At

the

Motion

hearing,

Defendants’ counsel accepted Plaintiff’s caveat and suggested
that this Court deny the Motion, subject to renewal at trial
by way of objection, if appropriate. For these reasons, the
Court denies Defendants’ Motion.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Plaintiff’s

Amended

Motion

in

Limine

to

Exclude

Defendants’ Late-Produced “Referral Agreement” (Doc. #
178) is DENIED as set forth herein.

31

(2)

Defendants’ Motions in Limine (Doc. # 138) are GRANTED
IN PART AND DENIED IN PART.
DONE and ORDERED in Chambers in Tampa, Florida, this

19th day of June, 2015.

Copies: All counsel of record

32