Trustees of Boston University v. Everlight Electronics Co., Ltd. et al

Filing 1507

Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. The defendant's motion to strike the expert report of Russell W. Mangum, III (Docket No. 1420 ) is ALLOWED in part, DENIED in part, and DENIED WITHOUT PREJUDICE in part. (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
_______________________________
)
TRUSTEES OF BOSTON UNIVERSITY, )
Plaintiff,
)
) Consolidated Civil Action No.
v.
) 12-11935-PBS
)
EVERLIGHT ELECTRONICS CO., LTD.,)
et al.,
)
Defendants.
)
)
)
TRUSTEES OF BOSTON UNIVERSITY, )
Plaintiff,
)
) Civil Action No. 12-12326-PBS
v.
)
)
EPISTAR CORPORATION, et al.,
)
Defendants.
)
)
)
TRUSTEES OF BOSTON UNIVERSITY, )
Plaintiff,
)
) Civil Action No. 12-12330-PBS
v.
)
)
LITE-ON INC., et al.,
)
Defendants.
)
)

MEMORANDUM AND ORDER
October 23, 2015
Saris, C.J.

The plaintiffs have moved to strike the report of Russell

W. Mangum, III, the defendant’s damages expert (Docket No.
1420). BU argues (1) that Mangum is not competent to rebut Dr.
Lebby’s testimony as to the “design win” theory; (2) that Mangum

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applies a license defense that has not been pled; (3) that
Mangum utilized flawed methodology vis-à-vis the hypothetical
negotiation calculation; and (4) that Mangum serves as a
“mouthpiece” by summarizing certain hearsay testimony of the
Defendants’ employees. After a review of the papers, the motion
is ALLOWED in part, DENIED in part, and DENIED WITHOUT PREJUDICE
in part.
AS to BU’s first argument that Mangum should be precluded
from debunking Lebby’s design-win testimony, the Court has
already ruled that design-win arguments are deferred until after
the jury verdict (Docket No. 1476). For this reason, I will not
address Mangum’s competency to testify on this point now. To
this extent, the motion to strike is DENIED WITHOUT PREJUDICE.
BU also challenges Mangum’s reliance on a license defense
that it asserts was not properly pled. I have ruled that the
defendants are entitled to rely on the license defense (Docket
No. 1473), and to this extent, the motion to strike is DENIED.
BU’s arguments as to Mangum’s royalty rate calculation are
more complicated. The parties agree that the hypothetical
negotiation approach is the correct method to use to determine
the reasonable royalty in this case, and that the hypothetical
license should be non-exclusive. They also both use the BU-Cree
exclusive license agreement for the ‘738 patent as a starting
point to derive the royalty rate.
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However, while BU’s damages expert looks to the entire BUCree license agreement—including royalties Cree paid to BU for
direct sales of products practicing the patent and royalties
Cree paid to BU for sublicensee sales—Mangum focuses on the
royalties Cree paid to BU for sublicensee sales. Mangum argues
that the sublicensee royalties better represent what BU would
have been willing to accept for the hypothetical non-exclusive
license between BU and Epistar because the sublicenses were also
non-exclusive. BU argues that this initial decision to focus on
the sublicensee royalties Cree paid to BU is wrong and “infects”
his entire report, making it unreliable under Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Docket No. 1426,
at 11.
BU also disagrees with Mangum on the significance of a
number of other factors underlying the BU-Cree license
negotiation to the hypothetical negotiation including: whether
BU wanted to only license domestic manufacturers at the time of
the hypothetical negotiation in 2000, whether the BU-Cree
license assumed the ‘738 patent was valid and infringed, why
Cree took a license to the ‘738 patent in the first place, and
BU’s objectives in entering into the license agreement with
Cree. This dispute ultimately turn on “questions regarding which
facts are most relevant for calculating a reasonable royalty,”
which “are properly left to the jury.” Virnetx, Inc. v. Cisco
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Sys., Inc., 767 F.3d 1308, 1328 (Fed. Cir. 2014). Thus, the
motion to strike Mangum’s testimony on the reasonable royalty
rate calculation is DENIED.
Finally, BU argues that Mangum merely acted as a mouthpiece
for the defendants and the defendants’ employees. Much of
Mangum’s reliance on employee testimony was in service of the
design-win theory and thus not relevant to the upcoming trial.
But to the extent that Mangum relied on employee testimony in
service of his royalty theory, he is entitled to do so, and the
motion to strike is DENIED. An expert may rely on hearsay
evidence under Fed. R. Evid. 703 provided that he “form[s] his
own opinions by applying his extensive experience and a reliable
methodology to the inadmissible materials.” United States v.
Mejia, 545 F.3d 179, 197 (2d Cir. 2008); see, e.g., Int’l
Adhesive Coating Co., Inc. v. Bolton Emerson Intern., Inc., 851
F.2d 540, 545 (1st Cir. 1988) (accountant damages expert
entitled to rely on interviews with company personnel and
company’s business and financial records). Moreover, the parties
stipulated that all experts were entitled to rely on the
testimony of lay witnesses such as defendant employees so long
as those witnesses would be made available for cross-examination
at trial. See Docket No. 1362.
However, Mangum cannot merely “parrot” the out-of-court
statements of employees, for an expert who does as much is
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merely a “ventriloquist’s dummy.” United States v. Brownlee, 744
F.3d 479, 482 (7th Cir. 2014). Rule 703 “was never intended to
allow oblique evasions of the hearsay rule” or to
allow a witness, under the guise of giving expert testimony,
to in effect become the mouthpiece of the witnesses on whose
statements or opinions the expert purports to base his
opinion.
Factory Mut. Ins. Co. v. Alon USA L.P., 705 F.3d 518, 524 (5th
Cir. 2013) (citation omitted). To that limited extent, the
motion to strike is ALLOWED. For example, Mangum’s report
states:
According to Titus Chang, the Associate Vice President of
Epistar Coropration, since at least 2007, all of the purchase
orders from Bridgelux for the accused products were received
in Epistar’s Taiwan office.
If the defendants seek to introduce this testimony, Mr. Chang
must take the stand and offer it himself. Mangum cannot simply
recite the words of those lay witnesses he interviewed.
ORDER
The defendant’s motion to strike the expert report of
Russell W. Mangum, III (Docket No. 1420) is ALLOWED in part,
DENIED in part, and DENIED WITHOUT PREJUDICE in part.

/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge

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