Fleming v. Escort Inc. et al

Filing 267

MEMORANDUM DECISION AND ORDER denying 221 Sealed Motion to Exclude. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
HOYT A. FLEMING,
Plaintiff,

Case No. CV 09-105-S-BLW

v.

MEMORANDUM DECISION
AND ORDER

ESCORT, INC. and BELTRONICS
USA, INC.,
Defendants.

INTRODUCTION
The Court has before it a motion by Escort to exclude portions of Vincent O’Brien’s
testimony. The motion is fully briefed and at issue. For the reasons expressed below, the Court
will deny the motion.
ANALYSIS
Fleming seeks a royalty of $25 per unit. In support, Fleming’s financial expert O’Brien
intends to testify about licensing arrangements for his patents that post-date the date of the
alleged first infringement in 2007. One of the deals was in 2010 and another in 2012. Escort
seeks to exclude this testimony on two grounds: (1) The law forbids evidence of licensing deals
that post-date the date of first infringement, which is the date established for the hypothetical
negotiation that is the key to royalty calculation; and (2) O’Brien never explained in his expert
reports why a licensing deal entered into years after the hypothetical negotiation date would be
relevant.
Memorandum Decision & Order - 1

The Court disagrees with both grounds. First, the case law sets up no automatic bar, and
in fact allows such evidence if appropriate. See, e.g., Lucent Tech., Inc. v. Gateway, Inc., 580
F.3d 1301, 1333-34 (Fed. Cir. 2009) (stating that “[c]onsideration of evidence of usage after
infringement started can, under appropriate circumstances, be helpful to the jury and the court in
assessing whether a royalty is reasonable”). Second, O’Brien provided the explanatory link in
his Rebuttal Report:
A standard way for uncertainty about the volume of sales to be resolved is through
the use of a running royalty. In this case, that was the path taken in the actual license
negotiation between Fleming and K40 [one of the licensing deals entered into after
2007]. I have no reason to believe that Escort would have preferred a lump sum
payment in advance of knowing its own volume of sales. But [Escort’s expert]
would like to ignore the uncertainty about the volume that existed at the date of the
hypothetical to select a lump sum license that, in retrospect, undervalues the patent.
See Rebuttal Report (Dkt. No. 244-4) at ¶¶ 9-10. O’Brien is explaining here how the licensing
deals after 2007 show what the parties would have done in a hypothetical negotiation in 2007. In
essence, O’Brien is saying that in 2007, Fleming would have insisted on a running royalty
because of the uncertainty of sales volume. Thus, the relevance of the running royalty licensing
deals entered into after 2007 was explained by O’Brien and is not being revealed for the first
time on the eve of trial.
For all these reasons, the Court will deny the motion.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motion to exclude (docket no.
221) is DENIED.

Memorandum Decision & Order - 2

DATED: June 15, 2012

B. LYNN WINMILL
Chief Judge
United States District Court

Memorandum Decision & Order - 3