Pulse Medical Instruments, Inc. v. Drug Impairment Detection Services, LLC

Filing 124

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 3/12/12. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
PULSE MEDICAL INSTRUMENTS, INC.
:
v.

:

Civil Action No. DKC 07-1388

:
DRUG IMPAIRMENT DETECTION
SERVICES, LLC

:

MEMORANDUM OPINION
Presently
infringement

pending

case

are

and

ready

for

two

motions:

review

in

Plaintiff’s

this

patent

motion

to

exclude the expert testimony of David J. Harkavy (ECF No. 116),1
and Defendant’s motion to exclude the expert testimony of Carlos
Valeiras (ECF No. 118).

The issues have been fully briefed, and

the court now rules, no hearing deemed necessary.
105.6.

Local Rule

For the following reasons, both motions to exclude will

be denied.

1

PMI also filed a motion to seal Mr. Harkavy’s report due
to DIDS’ designation of the report as confidential.
(ECF No.
117).
For the limited purpose of considering the pending
motions, the motion to seal will be granted.

I.

Background
The facts of this case have already been set forth in ECF

No. 87 and ECF No. 110,2 and will be only briefly summarized
here.

Plaintiff Pulse Medical Instruments, Inc. (“PMI”) was

organized in 1988 to develop and commercialize technology for
measuring

human

eye

responses

to

screen

subjects

alcohol, and sleep deprivation-related impairments.

for

drug,

On June 6,

1995, PMI became the exclusive holder of U.S. Patent 5,422,690
(“the ‘690 Patent”), known as a Fitness Impairment Tester.
‘690

Patent

has

been

used

in

a

variety

of

safety

The

related

industries, such as in coal mining to screen workers operating
heavy equipment and in the criminal justice system to screen
subjects for drug and alcohol use.
On

or

Impairment

about

June

Detection

18,

2004,

Services,

Inc.

PMI

and

(“DIDS”)

Defendant
entered

Drug

into

an

agreement whereby PMI agreed to custom build drug impairment
detection systems known as “FIT 2000 Screeners” (“Screeners”).
In return, DIDS agreed to distribute these Screeners under the
name “PassPoint.”

2

Pulse Med.
Servs., Inc., No.
2010); Pulse Med.
Servs., Inc., No.
2009.

DIDS retained ownership of the Screeners and

Instruments, Inc. v. Drug Impairment Detection
DKC 07-01388, 2010 WL 3781705 (D.Md. Sept. 23,
Instruments, Inc. v. Drug Impairment Detection
DKC 07-01388, 2009 WL 6898404 (D.Md. Mar. 20,
2

leased them to its customers, with charges made on a pay-forservice basis.

DIDS was required to pay PMI a fixed purchase

price for each Screener, plus a 10% royalty for service fees
that DIDS charged to its customers.

DIDS purchased its last

Screener from PMI in October 2004.
In December 2005, DIDS began distributing its own substance
abuse

screener

under

the

modified

name

“PassPoint.net.”

On

January 27, 2006, PMI sent a letter to DIDS terminating their
agreement.

On May 25, 2007, PMI filed a complaint against DIDS

for patent infringement, alleging that PMI’s ‘690 Patent was
infringed by DIDS’s PassPoint.net product line.

(ECF No. 1).

DIDS filed an answer and counterclaims on October 15, 2008.
(ECF No. 8).
After
discovery.

resolution

of

various

motions,

the

parties

began

PMI served the report of its damages expert, Carlos

Valeiras, on DIDS on June 20, 2008.

Pursuant to the parties’

assented-to schedule, on May 2, 2011, DIDS served the responding
report of their damages expert, David J. Harkavy, on PMI.

On

August 1, 2011, PMI filed the pending motion to exclude the
testimony of Mr. Harkavy.
motion on August 15, 2011.
August 31, 2011.

(ECF No. 116).

DIDS opposed PMI’s

(ECF No. 119).

(ECF No. 122).
3

PMI replied on

Also on August 1, 2011, DIDS

filed its own motion to exclude the testimony of Mr. Valeiras.
(ECF No. 118).

PMI filed opposition papers on August 17, 2011.

(ECF No. 120).

On August 31, 2011, DIDS replied.

(ECF No.

121).
II.

Standard of Review
Under Federal Rule of Evidence 702, the district court has

“a

special

obligation

.

.

.

to

‘ensure

that

any

and

all

scientific testimony . . . is not only relevant, but reliable.’”
Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999) (quoting
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993)).
Rule 702 provides,
[i]f
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
the
product
of
reliable
principles and methods, and (3) the witness
has applied the principles and methods
reliably to the facts of the case.
The

United

States

Court

of

Appeals

for

the

Fourth

explained Rule 702 as follows:
The first prong of this inquiry necessitates
an examination of whether the reasoning or
methodology
underlying
the
expert’s
proffered opinion is reliable — that is,
4

Circuit

whether
it
is
supported
by
adequate
validation to render it trustworthy. See
[Daubert, 509 U.S.] at 590 n.9, 113 S.Ct.
2786.
The second prong of the inquiry
requires an analysis of whether the opinion
is relevant to the facts at issue. See id.
at 591-92, 113 S.Ct. 2786.
Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th

Cir.

1999); see also Buchanan v. Consol. Stores Corp., 217 F.R.D.
178, 196 (D.Md. 2003).
To be considered reliable, an expert opinion “must be based
on scientific, technical, or other specialized knowledge and not
on belief or speculation, and inferences must be derived using
scientific or other valid methods.”

Oglesby v. Gen. Motors

Corp., 190 F.3d 244, 250 (4th Cir. 1999) (citing Daubert, 509
U.S. at 592-93).

The district court enjoys “broad latitude” in

determining

the

reliability

testimony,

and

its

deference.

and

determination

admissibility
receives

of

expert

considerable

Kumho Tire Co., 526 U.S. at 142 (citing Gen. Elec.

Co. v. Joiner, 522 U.S. 136, 143 (1997)); see also Oglesby, 190
F.3d at 250.

5

III. Analysis
A.

PMI’s Motion to Exclude Mr. Harkavy’s Testimony

1.

Mr. Harkavy’s Testimony Regarding His Reasonable
Royalty Analysis

PMI

advances

two

primary

arguments

for

excluding

the

portions of Mr. Harkavy’s report that address his estimation of
damages suffered by PMI.

First, PMI argues that Mr. Harkavy

improperly “usurps the role of the Court in instructing the
trier of fact” by discussing the case of Georgia-Pacific Corp.
v.

United

1970).

States

Plywood

Corp.,

(ECF No. 116, at 7).

318

F.Supp.

1116

(S.D.N.Y.

Second, PMI argues that Mr.

Harkavy is not an expert in negotiations and should be barred
from opining on the “hypothetical negotiations” that GeorgiaPacific advocates for use in determining a reasonable royalty
rate

for

patent

damages

purposes.

(Id.

at

7-10).

DIDS

disagrees on both fronts, pointing to Mr. Harkavy’s extensive
education and experience related to damages issues in response.
PMI’s first argument has no merit.
seminal

case

in

patent

law

because

of

Georgia-Pacific is a
its

articulation

of

fifteen factors that a court may consider when determining a
reasonable royalty rate for estimating patent damages.

6

See Ga.-

Pac. Corp., 318 F.Supp. at 1120.3
Appeals

3

for

the

Federal

Circuit

The United States Court of
has

repeatedly

endorsed

The fifteen factors are:
1.
The
royalties
received
by
the
patentee for the licensing of the patent in
suit, proving or tending to prove an
established royalty.
2. The rates paid by the licensee for
the use of other patents comparable to the
patent in suit.
3. The 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.
4. The licensor’s established policy
and marketing program to maintain his patent
monopoly by not licensing others to use the
invention or by granting licenses under
special conditions designed to preserve that
monopoly.
5. The commercial relationship between
the licensor and licensee, such as, whether
they are competitors in the same territory
in the same line of business; or whether
they are inventor and promoter.
6. The effect of selling the patented
specialty
in
promoting
sales
of
other
products of the licensee; the existing value
of the invention to the licensor as a
generator of sales of his non-patented
items; and the extent of such derivative or
convoyed sales.
7. The duration of the patent and the
term of the license.
8. The established profitability of the
product
made
under
the
patent;
its
commercial
success;
and
its
current
popularity.
7

the

9. The utility and advantages of the
patent property over the old modes or
devices, if any, that had been used for
working out similar results.
10.
The
nature
of
the
patented
invention; the character of the commercial
embodiment of it as owned and produced by
the licensor; and the benefits to those who
have used the invention.
11. The extent to which the infringer
has made use of the invention; and any
evidence probative of the value of that use.
12. The portion of the profit or of the
selling price that may be customary in the
particular
business
or
in
comparable
businesses to allow for the use of the
invention or analogous inventions.
13. The 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.
14. The opinion testimony of qualified
experts.
15. The 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.
Ga.-Pac. Corp., 318 F.Supp. at 1120.
8

analysis of these factors as a reliable method of estimating
patent damages.

E.g., Micro Chem., Inc. v. Lextron, Inc., 317

F.3d 1387, 1393 (Fed. Cir. 2003).
While it is ultimately within the province of the trier of
fact to make the final determination of damages should liability
be found, the estimation of damages is an issue for which courts
time

and

Indeed,

again
courts

consistently
factors.

seek
in

looked

the
this
to

assistance
circuit

experts

to

as

of

experts

well

apply

the

as

to

resolve.

others

have

Georgia-Pacific

E.g., Monsanto Co. v. David, 516 F.3d 1009, 1018-19

(Fed. Cir. 2008); Freeman v. Gerber Prods. Co., 450 F.Supp.2d
1248, 1261-63 (D.Kan. 2006); Domestic Fabrics Corp. v. Sears,
Roebuck & Co., 325 F.Supp.2d 612, 619 (E.D.N.C. 2003).
Mr.

Harkavy’s

reasonable.

discussion

of

the

Georgia-Pacific

Here,

factors

is

Far from being testimony regarding “pure questions

of law,” as PMI contends (ECF No. 116, at 7), Mr. Harkavy’s
references to these factors in Exhibit 4 of his report are in
the context of the facts of this case.

As such, Mr. Harkavy’s

analysis of the Georgia-Pacific factors can assist the trier of
fact regarding the damages issue and is therefore admissible.
PMI’s second argument fares no better for largely the same
reasons.

The application of the Georgia-Pacific factors for the
9

purpose
damages

of

determining

is

a

a

framework

reasonable
for

royalty

envisioning

rate
a

for

patent

hypothetical

negotiation between the parties.

See Third Wave Techs., Inc. v.

Stratagene

991,

Corp.,

405

F.Supp.2d

1011-12

(W.D.Wis.

2005)

(“To [award a prevailing patentee in a patent case ‘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’], courts engage in a fiction:

they imagine a

negotiation between the patentee and infringer taking place at
the

moment

factors,

the

damages

infringement

began.”).

experts

called

hypothetical negotiation.

are

upon

In
to

applying
opine

these

about

a

Whether characterized as “applying

the Georgia-Pacific factors” or as “conducting a hypothetical
negotiation,” the process is one and the same, and courts have
accepted this process as falling within the bailiwick of damages
experts.

See, e.g., i4i Ltd. P’ship v. Microsoft Corp., 598

F.3d 831, 852-53 (Fed. Cir. 2010) (affirming a damages expert’s
analysis of a “hypothetical negotiation” between the parties and
the Georgia-Pacific factors to determine a reasonable royalty
rate).

No

separate

showing

of

needed.

10

expertise

in

negotiating

is

Here, PMI attempts a sleight of hand by focusing on the
tool employed by damages experts like Mr. Harkavy to estimate
patent damages rather than his area of expertise.
challenge

Mr.

however,

Harkavy’s

making

it

credentials

appropriate

for

as
him

a
to

PMI does not

damages
opine

expert,

within

the

boundaries of the subject of damages, which includes using the
tools

of

the

trade.

These

tools

include

imagining

a

hypothetical negotiation to determine a reasonable royalty rate.
See Interactive Pictures Corp. v. Infinite Pictures, Inc., 274
F.3d

1371,

1384

(Fed.

Cir.

2001)

(endorsing

“the

conceptual

framework of a hypothetical negotiation between the patentee and
the infringer as a means for determining a reasonable royalty”).
To the extent Mr. Harkavy’s negotiating experience is, in fact,
deficient, this sort of gap in his knowledge “go[es] to the
weight

of

Charles

[his]

A.

Procedure
Lorillard,

§

testimony,

Wright
6265
Inc.,

&

Victor

(2011);
878

not
J.

see

F.2d

its

Gold,

also

791,

admissibility.”
Federal

Thomas

799

(4th

J.

Practice

Kline,

Cir.

See

and

Inc.

1989)

29

v.

(“One

knowledgeable about a particular subject need not be precisely
informed about all details of the issues raised in order to
offer an opinion.”).

11

In any event, any concerns about Mr. Harkavy not having the
requisite

background

in

negotiating

are

misplaced,

as

the

hypothetical negotiation for determining a reasonable royalty
differs

substantially

Cummins-Allison

Corp.

(E.D.Tex. 2008).
uses

“common,

from
v.

a

SBM

“real-world”
Co.,

584

negotiation.

F.Supp.2d

916,

See
917-18

The Georgia-Pacific hypothetical negotiation

fixed

assumptions,”

which

are

by

definition

“artificial” to enable a reasonable royalty calculation.

Id. at

918; see also Ariba, Inc. v. Emptoris, Inc., 567 F.Supp.2d 914,
917

&

n.2

(refraining

from

expanding

the

well-settled

assumptions that accompany a Georgia-Pacific analysis).

Because

of this artificiality, there has simply been no showing that Mr.
Harkavy lacked the necessary negotiating expertise to be able to
assist the trier of fact in understanding a damages analysis
that relies on the Georgia-Pacific factors.
Harkavy’s

testimony

regarding

his

own

Accordingly, Mr.

reasonable

royalty

estimate for damages purposes is admissible.
2.

Mr. Harkavy’s Testimony Regarding Mr. Valeiras’s “Lost
Opportunity” Analysis

PMI advances three arguments for excluding the portions of
Mr. Harkavy’s report that directly rebut Mr. Valeiras’s “lost
opportunity” analysis.
Harkavy’s

background

First, PMI contends that because Mr.
is

not

identical
12

to

Mr.

Valeiras,

Mr.

Harkavy is not qualified to opine about Mr. Valeiras’s expert
testimony.

(ECF No. 116, at 10-11).

Harkavy’s

extensive

education

DIDS again points to Mr.

and

experience

in

response.

Second, PMI argues that portions of Mr. Harkavy’s report do not
constitute rebuttal.
but

states

support

that

Mr.

the

(Id. at 11-12).
portions

Harkavy’s

in

question

affirmative

reasonable royalty analysis.

DIDS essentially agrees,
were

testimony

intended

regarding

to
his

Third, PMI asserts that because

the portion of Mr. Harkavy’s report that directly address’s Mr.
Valeiras’s discounted cash flow analysis was based on another
person’s work, that portion should be excluded.
DIDS

responds

that

this

section

was

(Id. at 12-13).

prepared

“under

the

direction and supervision” of Mr. Harkavy and is admissible.
(ECF No. 119, at 6).
As to PMI’s first argument, Federal Rule of Evidence 702
has been liberally construed to allow witnesses to be qualified
to testify as experts based on a variety of different methods,
specifically

identifying

“knowledge,

skill,

experience,

training, or education” as different bases for qualification.
See

Kopf

v.

Skyrm,

993

F.2d

374,

377

(4th

Cir.

1993)

(“The

witness’ qualifications to render an expert opinion are also
liberally judged by Rule 702.”).
13

There is no requirement that

experts share identical backgrounds to be able to opine about
the same subject.

See Wright & Gold, supra, § 6265 (stating

that the requirement that the area of an expert’s competence
match the subject matter of his testimony “does not mean that an
opinion on a given issue can only be given by an expert in a
single, specific discipline”).

In fact, an expert witness need

not have an identical background as another expert witness to
rebut the latter’s testimony, so long as both witnesses are
qualified to testify as experts on the same designated issues.
See United States v. Madoch, 935 F.Supp. 965, 972 (N.D.Ill.
1996).
Here, both Mr. Harkavy and Mr. Valeiras have been put forth
by

the

parties

as

their

respective

damages

experts.

As

discussed above, PMI does not take issue with Mr. Harkavy’s
general

qualifications

as

a

damages

expert.

Therefore,

Mr.

Harkavy is qualified to testify as to all issues relevant to
damages
PMI’s

in

this

damages

case,

which

expert.

Any

necessarily
issues

that

include
PMI

rebuttal

has

with

of
Mr.

Harkavy’s qualifications vis-à-vis Mr. Valeiras’s background are
more

“properly

testimony’s

explored

weight

and

on

cross-examination,”

credibility

—

not

its

going

to

“his

admissibility.”

See McCullock v. H.B. Fuller Co., 61 F.3d 1038, 1043 (2d Cir.
14

1995); see also Avondale Mills, Inc. v. Norfolk S. Corp., No.
1:05-2817-MBS, 2008 WL 6928257, at *3 (D.S.C. Feb. 6, 2008)
(denying motion to exclude expert in part because his expertise
within a specific industry may be tested on cross-examination).
PMI’s second argument is easily dismissed.

PMI contests

the relevance of Sections III and IV of Mr. Harkavy’s expert
report with respect to rebutting Mr. Valeiras’s report.
explained,

however,

these

sections,

which

address

As DIDS

background

facts and information to give context to Mr. Harkavy’s damages
valuation method, are relevant to Mr. Harkavy’s overall expert
opinion in his report.

Nothing in Rule 702 precludes an expert

witness from giving some context to his opinion.

Indeed, Rule

702 itself states that an expert witness may testify if, among
other things, “the testimony is based upon sufficient facts or
data.”

Fed.R.Evid. 702.

Some factual discussion is therefore

expected in an expert report.

Here, sections III and IV of Mr.

Harkavy’s report do not read as anything other than general
background to his report and are therefore proper.
PMI’s third argument is likewise easily dismissed.

Courts

in this circuit and across the country have consistently held
that an expert may rely on the work of others when preparing an
expert report, particularly when it is the sort of work that is
15

reasonably

relied

expertise.

upon

by

experts

in

the

relevant

area

of

See, e.g., Dura Auto. Sys. of Ind., Inc. v. CTS

Corp., 285 F.3d 609, 612-13 (7th Cir. 2002); Bouygues Telecom,
S.A.

v.

Tekelec,

472

F.Supp.2d

722,

728

(E.D.N.C.

2007);

McReynolds v. Sodexho Marriott Servs., Inc., 349 F.Supp.2d 30,
36-37 (D.D.C. 2004).
Here,

Mr.

Harkavy

has

unequivocally

testified

that

he

supervised the preparation of his expert report, including the
portions that address the discounted cash flow analysis that is
at the heart of Mr. Valeiras’s report.

He admits to relying on

the work of Mitch Rosen, but he consistently states that Rosen’s
work only formed the basis of his report and that he is the
ultimate author of the findings contained therein.

For example,

Mr. Harkavy testified at his deposition that:
A: With my supervision, Mitch [Rosen] worked
on schedules of the report and I believe one
of [the] sections of the report.
Because
Mitch
worked
on
certain
schedules,
he
assisted in the writing of the Exhibit 5 to
my report entitled, Deficiencies in Mr.
Valeiras’[s]
Discounted
Cash
Flow
Calculation.
(ECF No. 116-3, Harkavy Dep., at 5) (emphases added).

Even the

deposition testimony that PMI points to in this regard (ECF No.
116,

at

12)

does

not

indicate

Rosen’s work:
16

any

unreasonable

reliance

on

A: First Mitch went through Val[ei]ras’[s]
calculations
and
we
talked
about
the
omissions, lack of support, unexplained
assumptions
in
Mr.
Val[ei]ras’[s]
calculation. So we went through each one of
those items and determined what we were
going to say in my report. So it’s sort of
a team effort to get through this section.
Mitch was responsible for drafting some of
the language and, under my supervision, I
worked with him and this is the result,
Exhibit 5.
(ECF No. 116-3, Harkavy Dep., at 5) (emphases added).

Given the

complexity of damages issues in patent infringement cases, it is
reasonable that Mr. Harkavy would have relied on the work of
others to complete his report.

As with the previously discussed

issues, PMI is free to question the weight and credibility that
should be afforded Mr. Harkavy’s opinion on this issue, but the
section of his report that relies on Rosen’s work is nonetheless
admissible.
Accordingly, PMI’s motion to exclude the expert testimony
of David J. Harkavy will be denied.
B.

Defendant’s Motion to Exclude Mr. Valeiras’s Testimony

DIDS puts forth four arguments for excluding Mr. Valeiras
from testifying as PMI’s damages expert.

First, DIDS argues

that Mr. Valeiras is not qualified to testify as an expert with
respect to damages.

(ECF No. 118, at 3-4).

PMI responds by

pointing to Mr. Valeiras’s credentials and experience.
17

Second,

DIDS

argues

comport

that

with

the

Mr.

Valeiras’s

requirements

of

theory

of

damages

Daubert,

and,

not

specifically,

that it does not follow the Georgia-Pacific analysis.
4-8).

does

(Id. at

In response, PMI notes that Daubert’s requirements are

not comprehensive, and that Mr. Valeiras’s report does, in fact,
track some of the Georgia-Pacific factors.
that

Mr.

Valeiras’s

damages

speculation and conjecture.

theory

Third, DIDS argues

relies

(Id. at 9-13).

too

heavily

PMI disagrees.

on
And

fourth, DIDS argues that Mr. Valeiras is improperly biased in
favor of PMI, which potentially taints his conclusions.
13-15).

(Id. at

Again, PMI disagrees, and PMI further notes that even

if Mr. Valeiras were found to be biased, that is not a basis for
exclusion under the Federal Rules of Evidence.
Regarding

DIDS’s

first

argument,

for

many

of

the

same

reasons that DIDS’s expert, Mr. Harkavy, is qualified to testify
as to damages, Mr. Valeiras is also qualified to testify.

Rule

702 is liberally construed to allow witnesses to be qualified to
testify as experts based on a variety of different methods,
specifically

identifying

“knowledge,

skill,

experience,

training, or education” as different bases for qualification.
See Kopf, 993 F.2d at 377.

Here, Mr. Valeiras has had extensive

education and experience in the valuation of “patents, licenses,
18

and other forms of tangible property.”
Rep., at 2).

(ECF No. 116-1, Valeiras

There is no reason to conclude that he cannot

assist the trier of fact in the estimation of damages in this
case.
DIDS’s second argument is also unavailing.
Daubert

to

challenged

expert

testimony,

consider several factors, including:

When applying

courts

typically

(1) whether the expert

opinion can be tested; (2) whether the expert opinion has been
subjected to peer review; (3) the rate of error of the methods
employed by the expert; and (4) whether the expert’s method has
been

generally

accepted

by

his

community.

Anderson

v.

Westinghouse Savannah River Co., 406 F.3d 248, 261 (4th Cir.
2005) (citing Daubert, 509 U.S. at 592-94).

As Daubert itself

cautioned, however, these four guideposts are not necessarily
comprehensive.

Daubert, 509 U.S. at 593 (“Many factors will

bear on the inquiry [of whether the reasoning or methodology
underlying the testimony is scientifically valid and of whether
that reasoning or methodology properly can be applied to the
facts in issue], and we do not presume to set out a definitive
checklist
Tecumseh

or

test.”);

Prods.

Co.,

see

also

Fireman’s

767

F.Supp.2d

549,

Fund

Ins.

553

(D.Md.

Co.

v.

2011)

(holding that the indicia of reliability of expert testimony
19

“may, but need not, include” the four Daubert factors).

As

such, while courts should be discerning when an expert presents
a

novel

approach

to

resolving

an

issue,

they

automatically dismiss that approach out-of-hand.

should

not

The burden,

however, of establishing admissibility is always on the party
seeking admission of the expert testimony.

Fireman’s Fund Ins.

Co., 767 F.Supp.2d at 553.
Damages in patent infringement cases are provided for by
statute.

35 U.S.C. § 284 (“[T]he 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

.

.

.

.”).

“Despite

the

broad

damages language of § 284, patentees tend to try to fit their
damages cases into the ‘lost profits’ framework, or else fall
back on the statutory grant of a reasonable royalty.”

Mars,

Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1366 (Fed. Cir.
2008) (citing 7 Donald S. Chisum, Chisum on Patents § 20.01
(2005)), amended by 557 F.3d 1377 (Fed. Cir. 2009).

The Federal

Circuit in Mars, Inc. recognized, however, that the two most
common methods for estimating patent damages, lost profits and
reasonable
methods.

royalty
See id.

rate,

are

not

necessarily

the

only

such

Thus, even though the Federal Circuit has
20

repeatedly endorsed analysis of the Georgia-Pacific factors to
estimate

a

reasonable

royalty

rate

for

the

purposes

of

calculating patent damages, e.g., Micro Chem., Inc., 317 F.3d at
1393,

as

a

matter

of

law,

analysis

of

the

Georgia-Pacific

factors and a lost profits analysis are not the only methods of
assessing potential damages.
Here, Mr. Valeiras veers from the well-trod path of courtapproved patent damages calculation methods by first calculating
a “lost opportunity” value for PMI and then using that “lost
opportunity” value to estimate a licensing fee of 13.5%, which
appears to be tantamount to a reasonable royalty rate.
generally ECF No. 116-1, Valeiras Rep.).4

(See

As DIDS points out,

Mr. Valeiras does not refer even once in his report to the
Georgia-Pacific factors.5

While Mr. Valeiras’s approach is not

one of the traditional methods of estimating patent damages, it
is not unreasonable that Mr. Valeiras’s approach might in the

4

In fact, DIDS refers to Mr. Valeiras’s calculation of the
13.5% licensing fee as “his royalty rate.” (ECF No. 121, at 5).
5

In its opposition, PMI attempts to shoehorn the contents
of Mr. Valeiras’s report into a Georgia-Pacific framework,
managing to match the points he makes with five of the fifteen
factors. As discussed in this opinion, however, this effort is
unnecessary because Georgia-Pacific is not, as a matter of law,
the only way to calculate damages.
21

end

be

a

better

method

traditional methods.

for

calculating

damages

than

the

Mr. Valeiras notes in his report:

In this case, . . . it is my opinion that
the value of the patent alone does not
capture the damages suffered by [PMI].
One
needs to look at the potential for sales of
its equipment had PMI invested in sales and
marketing efforts.
One also needs to
consider the lost income over the past four
years due to the focus that [DIDS] placed on
product development rather than marketing.
(ECF No. 116-1, Valeiras Rep., at 3).

Thus, in Mr. Valeiras’s

opinion, the facts of this case appear to be different enough
from

the

typical

patent

infringement

case

alternative method for calculating damages.
has not foreclosed that possibility.
at

1366

(“The

correct

measure

of

to

warrant

an

The Federal Circuit

See Mars, Inc., 527 F.3d
damages

is

a

highly

case-

specific and fact-specific analysis.”).
Although DIDS takes issue with the fact that Mr. Valeiras
did

not

advances

correctly
no

other

employ

the

argument

why

should be disregarded.

Georgia-Pacific
Mr.

Valeiras’s

factors,
method

it

itself

In contrast, PMI has sufficiently argued

that Mr. Valeiras’s testimony is, at the very least, admissible.
As

such,

his

expert

testimony

will

ground.

22

not

be

excluded

on

this

As to DIDS’s third argument, DIDS attempts to poke multiple
holes

in

arguing
The

that

same

here,

Mr.

Valeiras’s
his

flaw

“lost

underlying

undermines

however:

the

opportunity”

assumptions

each

of

various

are

DIDS’s

methodology
too

speculative.

specific

assumptions

by

assertions

underlying

Mr.

Valeiras’s report that DIDS takes issue with presuppose that Mr.
Valeiras should have been applying the Georgia-Pacific factors
or a lost profits analysis in the first place.

For example,

DIDS cites to DSU Medical Corp. v. JMS Co., 471 F.3d 1293 (Fed.
Cir. 2006), to attack Mr. Valeiras’s opinion, but DSU Medical
Corp. concerned the calculation of lost profits.

Id. at 1308.

Similarly, DIDS’s citation to Rosco, Inc. v. Mirror Lite Co.,
626 F.Supp.2d 319 (E.D.N.Y. 2009), is of no avail because that
case had to do with application of Georgia-Pacific.
As

already

method

for

discussed,

Mr.

Valeiras

estimating

damages

in

presents

patent

an

Id. at 332.6
alternative

infringement

cases,

which reasonably carries with it its own set of assumptions.
Disputing the reasonableness of these assumptions against those
of

a

lost

profits

or

reasonable

royalty

analysis,

although

potentially analogous, is inapposite.

6

DIDS also cites to KW Plastics v. United States Can Co.,
131 F.Supp.2d 1289 (M.D.Ala. 2001), but that case dealt with
lost profits as well. Id. at 1292.
23

Having reviewed Mr. Valeiras’s report, it cannot be said
that his assumptions behind his “lost opportunity” analysis are
unwarranted, at least for the purposes of admissibility.

This

is not to say that Mr. Valeiras’s methodology is impervious to
criticism.

Indeed, many of his assumptions should be tested by

DIDS on cross-examination.

At this juncture, however, only the

admissibility of Mr. Valeiras’s opinion is at issue, not the
weight

it

should

be

afforded,

and

his

opinion

passes

that

threshold.
DIDS’s
Alleged

bias

fourth
is

and

final

ordinarily

argument

a

question

is

easily

of

dismissed.

credibility,

not

admissibility, Wright & Gold, supra, § 6265 (“[T]he courts may
not consider credibility questions such as bias when exercising
their

discretion

[as

to

whether

a

witness

qualifies

as

an

expert].”); see also Dixon v. Int’l Harvester Co., 754 F.2d 573,
580 (5th Cir. 1985) (holding that attacks on an expert witness’s
credibility

are

for

allegations

the

concerning

jury

potential

to

resolve).

bias

on

the

Here,
part

DIDS’s
of

Mr.

Valeiras have no bearing on his qualifications to testify as a
damages expert.

DIDS is nonetheless free to cross-examine Mr.

Valeiras on these issues.

24

Accordingly, DIDS’s motion to exclude the expert testimony
of Carlos Valeiras will be denied.
IV.

Conclusion
For the foregoing reasons, both the motion to exclude the

testimony of DIDS’s expert David J. Harkavy filed by Plaintiff
PMI and the motion to exclude the testimony of PMI’s expert
Carlos

Valeiras

filed

by

Defendant

DIDS

will

be

denied.

separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

25

A