Versata Software, Inc., et al v. Ford Motor Company

Filing 534

ORDER (1) Denying in Part Plaintiff's #354 and #358 MOTION for Summary Judgment, (2) Granting in Part and Denying in Part Defendants' #379 and #380 MOTION for Summary Judgment, and (3) Granting Defendants' Request to File Supplemental Expert Reports. Signed by District Judge Matthew F. Leitman. (HMon)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
FORD MOTOR COMPANY,
Plaintiff,

Case No. 15-cv-10628
(consolidated with Case No. 15-11624)
Hon. Matthew F. Leitman

v.
VERSATA SOFTWARE, INC. et al.
Defendants.
_________________________________/

ORDER (1) DENYING IN PART PLAINTIFF’S MOTION FOR SUMMARY
JUDGMENT (ECF ## 354, 358), (2) GRANTING IN PART AND DENYING
IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT (ECF
## 379, 380), AND (3) GRANTING DEFENDANTS’ REQUEST TO FILE
SUPPLEMENTAL EXPERT REPORTS
Defendant/Counter-Plaintiffs Versata Software, Inc., Versata Development
Group, Inc., and Trilogy, Inc. (collectively, “Versata”) are computer software
developers based in Austin, Texas. (See Sec. Am. Counterclaims at ¶6, ECF #244 at
Pg. ID 12997.)

For more than two decades, Versata licensed automotive

configuration software programs called “ACM,” “MCA,” and “ACS” (collectively,
the “Versata Software”) to Plaintiff Ford Motor Company. (See id. at ¶8, Pg. ID
12997.) In 2014, Ford decided to replace the Versata Software with an automotive
configuration software program that it developed internally. (See Sec. Am. Compl.
at ¶46, ECF #226 at Pg. ID 11723.) Ford called this software “PDO.” (See id.)

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In this action, Ford seeks a declaratory judgment that PDO does not infringe
and/or misappropriate patents, copyrights, and trade secrets belonging to Versata.
(See generally, id.) Ford also claims Versata breached certain licensing agreements
and contracts that the parties had executed, including a “Master Subscription and
Services Agreement” executed in 2004 (the “MSSA”). (See id.) Versata has filed
counterclaims for infringement of the same patents and copyrights, misappropriation
of the same trade secrets, and breaches of the same contracts. (See Ans. and Sec.
Am. Counterclaims, ECF #244.)
On February 1, 2018, and February 13, 2018, Ford and Versata filed crossmotions for summary judgment with respect to many of these claims and
counterclaims. (See Ford Mot., ECF ## 354, 358; Versata Mot., ECF ## 379, 380.)
On July 10, 2018, the Court entered an order referring the patent portions of the
summary judgment motions to Special Master Lawrence Graham. (See ECF #509.)
The Court then held a hearing on the non-patent portions of the cross-motions on
July 24, 2018. (See ECF #497.) During that hearing, the Court ruled on some
portions of the cross-motions, and it took other aspects of the motions under
advisement. (See ECF #516.)

The Court now issues this order resolving the

remaining non-patent portions of the summary judgment motions.

2

I
(Ford’s Motion for Summary Judgment on Counts 4 and 6 of its Second
Amended Complaint and Counts 9 and 13 of Versata’s Counterclaims –
Dispute Regarding Who Owns the Relevant Trade Secrets)
In Count 4 of Ford’s Second Amended Complaint, Ford seeks a declaratory
judgment that it “owns, or is licensed to reproduce” the ACM software. (See Sec.
Am. Compl. at ¶¶ 73-78, ECF #226 at Pg. ID 11728-29.) In Count 6 of Ford’s
Second Amended Complaint, Ford seeks a declaratory judgment that it did not
misappropriate, and indeed could not have misappropriated, the trade secrets
embedded in the Versata Software because, among other things, it “either owns, or
has a royalty-free license to reproduce the [Versata] [S]oftware.” (Id. at ¶89, Pg. ID
11731.)
Versata raises the same ownership issues in Counts 9 and 13 of its
counterclaims. In those counterclaims, Versata says that it “developed and owns”
the trade secrets embedded in the Versata Software and that Ford “misused,
misappropriated, and disclosed” those trade secrets. (Sec. Am. Counterclaims at ¶¶
136-139, 160-166, ECF #244 at Pg. ID 13029-30, 13034-36.)
Ford moved for summary judgment on the claims and counterclaims
identified above on the ground that it “owns” the trade secrets embedded within the

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Versata Software.1 (Ford Mot., ECF #354 at Pg. ID 18659.) The Court concludes
that Ford is not entitled to summary judgment on that ground. When Ford agreed to
the MSSA in 2004, it “irrevocably acknowledge[d] … that [it] ha[d] no ownership
interest in the Software….” (MSSA at § 6.1, ECF #366-16 at Pg. ID 20774. See also
MSSA at § 7.6, Pg. ID 20774: “Subject to the licenses granted herein, Ford has no
ownership interest in the Software….”).

And as defined in the MSSA, the

“Software” that Ford disclaimed an ownership interest in included the Versata
Software.2 Based on this unambiguous acknowledgment, Ford cannot now claim an
ownership interest in the trade secrets embedded in the Versata Software.
Ford counters that the trade secrets embedded within the Versata Software are
distinct from the Versata Software itself. Ford therefore insists that even if it
disclaimed ownership of the Versata Software, it still may claim an ownership

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Ford also argued that it is entitled to summary judgment on Count 6 of its Second
Amended Complaint and Counts 9 and 13 of Versata’s Second Amended
Counterclaims because Versata did not take reasonable measures to maintain the
secrecy of the trade secrets at issue. (See Ford Mot., ECF #354 at Pg. ID 18643-58.)
The Court denied this portion of Ford’s motion on the record at the summary
judgment hearing. (See ECF #516 at Pg. ID 40420-21.)
2

The MSSA defined “Software” as, among other things, “the Applications listed in
any Subscription Schedule issued hereunder.” (MSSA, ECF #366-16 at Pg. ID
20770.) Subsequent Subscription Schedules listed “Automotive Configuration
Services (ACS) v.2.1,” “Material Cost Analytics (MCA) v.05,” and “the Trilogy
ACM Software” as “Applications.” (See ECF #372-2 at Pg. ID 22562; ECF #372-3
at Pg. ID 22572.) Therefore, the Versata Software qualifies as “Software” under the
MSSA.
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interest in the relevant trade secrets. The Court simply is not persuaded that, for
ownership purposes, the trade secrets are distinct from the software that Ford
“irrevocably acknowledge[d]” it did not own.
Accordingly, because Ford “irrevocably acknowledge[d]” in the MSSA that
it did not own the Versata Software, the Court DENIES Ford’s motion for summary
judgment with respect to Counts 4 and 6 of its Second Amended Complaint and
Counts 9 and 13 of Versata’s Second Amended Counterclaims.
II
(Versata’s Motion for Summary Judgment on Counts 4 and 5 of Ford’s
Second Amended Complaint – Dispute Regarding Who Owns the Relevant
Trade Secrets)
As noted above, in Count 4 of Ford’s Second Amended Complaint, Ford seeks
a declaratory judgment that it owns the ACM software. (See Sec. Am. Compl. at ¶¶
73-78, ECF #226 at Pg. ID 11728-29.) And in Count 5 of Ford’s Second Amended
Complaint, Ford seeks a declaratory judgment that it owns other “software
deliverables” that Versata produced and delivered to Ford (i.e., the Versata
Software). (Id. at ¶¶ 79-83, Pg. ID 11729-30.)
Versata sought summary judgment on these two counts of Ford’s Second
Amended Complaint on the basis that it (Versata), not Ford, owns the Versata
Software and the trade secrets embedded within that software. (See Versata Mot.,
ECF #379 at Pg. ID 22787-89.) The Court agrees. For all of the reasons stated in
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Section I above, Versata owns the Versata Software under the MSSA. Indeed, Ford
“irrevocably acknowledge[d]” in the MSSA that it did not own the Versata Software.
(MSSA at § 6.1, ECF #366-16 at Pg. ID 20774.)
Thus, because Versata owns the Versata Software and the trade secrets
embedded within that software under the MSSA, the Court GRANTS Versata
summary judgment on Counts 4 and 5 of Ford’s Second Amended Complaint.3
III
(Versata’s Motion for Summary Judgment of Count 11 of its Second
Amended Counterclaims – Versata’s Allegations that Ford Breached the
MSSA By “Reverse Engineering” the Versata Software)
In Count 11 of Versata’s Second Amended Counterclaims, Versata alleges,
among other things, that Ford breached Section 1.7 of the MSSA when Ford
developed PDO. (See Sec. Am. Counterclaims at ¶¶ 148-156, ECF #244 at Pg. ID
13032-33.) Section 1.7 prohibits Ford from “reverse engineering” the Versata
Software. (See id. at ¶155, Pg. ID 13033.)

That section defines “reverse

engineering” in relevant part as follows:

3

The Court notes for clarity that in Counts 4 and 5 of Ford’s Second Amended
Complaint, Ford seeks only a declaration that it owns the Versata Software. Versata
has not moved for summary judgment on its affirmative claim that Ford
misappropriated Versata’s trade secrets, and the Court makes no such holding today.
The Court holds only that Versata, not Ford, owns the Versata Software – and the
trade secrets embedded within that software – under the MSSA and that Versata is
therefore entitled to summary judgment on Counts 4 and 5 of Ford’s Second
Amended Complaint. Whether Ford misappropriated Versata’s trade secrets is an
issue to be decided at trial.
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Disassembling, Decompiling, and reverse engineering
include[s], without limitation, “(i) converting the Software
from a machine-readable form into a human-readable
form;” [….] (iii) examining the machine-readable object
code that controls the Software’s operation and creating
the original source code or any approximation thereof by,
for example, studying the Software’s behavior in response
to a variety of inputs;” [and] (iv) performing any other
activity related to the Software that could be construed to
be reverse engineering, disassembling, or decompiling.
(MSSA at § 1.7, ECF #366-16 at Pg. ID 20771.)
In Versata’s summary judgment motion, it argues that Ford “reverse
engineered” the Versata Software in violation of Section 1.7 when Ford inputted
identical data into both ACM and PDO and then “studied” the “outputs” from
Versata’s software “for the purpose of ensuring that [PDO] produced identical
outputs.” (Versata Mot., ECF #379 at Pg. ID 22790.)
The Court declines to grant Versata summary judgment on the basis that Ford
breached Section 1.7 by “reverse engineering” the Versata Software. For the reasons
stated on the record in the Court’s questions to the parties on this issue at the
summary judgment hearing, the “reverse engineering” clause in Section 1.7 is
ambiguous and not subject to interpretation as a matter of law. (See 7/24/2018
Hearing Tr., ECF #519 at Pg. ID 40587-95.) In particular, it is not clear whether
Section 1.7 prohibits any and all “studying [of] the Software’s behavior in response
to a variety of inputs,” or whether Section 1.7 prohibits only such studying that is
part of an effort to “examin[e] the machine-readable object code that controls the
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Software’s operation and create[e] the original source code or any approximation
thereof….” This ambiguity precludes summary judgment because, on this record, a
jury could reasonably find that even if Ford studied the Versata Software’s output in
response to certain inputs, it did not do so as part of an effort to examine the Versata
Software’s machine-readable object code and/or to create the original source code
or an approximation thereof.
Therefore, the Court DENIES Versata summary judgment on its claim in
Count 11 of its Second Amended Counterclaims that Ford breached Section 1.7 by
“reverse engineering” the Versata Software.
IV
(Versata’s Motion for Summary Judgment of Count 14 of its Second
Amended Counterclaims – Versata’s Allegation That Ford Infringed
Versata’s Copyrights)
In Count 14 of Versata’s Second Amended Counterclaims, Versata alleges
that Ford infringed Versata’s “exclusive copyrights” in the Versata Software in a
variety of ways. (Sec. Am. Counterclaims at ¶¶ 172-73, ECF #244 at Pg. ID 1303637.) In Versata’s summary judgment motion, it moved for summary judgment on
its copyright infringement claim in two respects. The Court concludes that Versata
is not entitled to summary judgment in either respect.
First, Versata argued in its summary judgment motion that Ford infringed its
(Versata’s) copyrights when Ford used the Versata Software in a manner that
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exceeded Ford’s license under the MSSA. (See Versata Mot., ECF #379 at Pg. ID
22797.)

For example, Versata asserted that Ford copied Versata’s copyrighted

“.jar” files into Ford’s “PDO repository” for the purpose of “reverse engineering”
the Versata Software. (Id.) Versata insisted that because Section 1.7 of the MSSA
prohibited “reverse engineering,” Ford’s copying and use of Versata’s copyrighted
files in this manner was unlicensed, and thus constituted copyright infringement.
(See id.) However, for all of the reasons stated in Section III above, a jury could
reasonably find that Ford did not conduct “reverse engineering” in violation of
Section 1.7. Therefore, the Court cannot conclude as a matter of law that Ford’s
actions exceeded the scope of its software license under the MSSA and constituted
infringement of Versata’s copyrights.
Second, Versata argued in its summary judgment motion that its copyrighted
“.jar” files “existed in Ford’s PDO environment after [Ford’s] license to the ACM
software expired.” (Id. at Pg. ID 22798.) Versata insisted that this unlicensed use of
the Versata Software also infringed its copyrights. But Ford has presented evidence
that, if credited by a jury, could establish that it did not have any of Versata’s
copyrighted files in its possession after Ford’s license to use the files terminated.
(See ECF #464-10.)4 Therefore, there is a material factual dispute with respect to

4

This exhibit consists of screenshots from Ford’s PDO software repository which
show, according to Ford, that Versata’s copyrighted “.jar” files were “missing” and
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whether Ford possessed any of Versata’s copyrighted software files after its software
license expired.
For all of these reasons, the Court DENIES Versata’s motion for summary
judgment on its claim in Count 14 of its Second Amended Counterclaims that Ford
infringed Versata’s copyrights.
V
(Ford’s Motion for Summary Judgment of Count 1 of Ford’s Complaint in
Case No. 15-cv-11264 and Count 14 of Versata’s Second Amended
Counterclaims – Versata’s Allegation That Ford Infringed Versata’s
Copyrights)
In Count 1 of Ford’s Complaint in Case No. 15-cv-11264, Ford seeks a
declaratory judgment that its PDO software “does not infringe any rights [Versata]
claim[s] under the Copyright Act or otherwise violate other applicable federal or
state laws.”5 (Compl. at ¶65, Case No. 15-cv-11264, ECF #1 at Pg. ID 14.) As
described above, in Count 14 of Versata’s Second Amended Counterclaims, Versata
alleges that Ford infringed Versata’s copyrights in the Versata Software. (Sec. Am.
Counterclaims at ¶¶ 172-73, ECF #244 at Pg. ID 13036-37.) In Ford’s summary

did not exist in the repository after Ford’s license to use the Versata Software
expired.
5

On July 14, 2015, the Court entered a stipulated order consolidating this action
(Case No. 15-cv-10628) with the action Ford filed in Case No. 15-cv-11624. (See
ECF #28.) The parties have made all subsequent filings in this action. Unless
otherwise indicated, all citations and ECF references in this order correspond to the
docket numbers in this action (Case No. 15-cv-10628).
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judgment motion, it moved for summary judgment on these claims on two grounds.
The Court concludes that Ford is not entitled to summary judgment on either ground.
First, Ford argued that it only used the Versata Software in accordance with
its license, and it did not “reverse engineer” the Versata Software in violation of
Section 1.7 of the MSSA. (See Ford Mot., ECF #354 at Pg. ID 18664-65.) Ford
therefore insisted that its use of the Versata Software could not have infringed
Versata’s copyrights. (See id.)

However, as described above, the “reverse

engineering” language in Section 1.7 is ambiguous and is not susceptible to
interpretation as a matter of law. A jury could reasonably conclude that Ford’s study
of the outputs of the Versata Software did violate Section 1.7 and did exceed the
scope of Ford’s license under the MSSA. Thus, Ford is not entitled to summary
judgment on Versata’s copyright infringement claim on the ground that Ford’s use
of the Versata Software fell entirely within the scope of Ford’s license (and permitted
uses) under the MSSA.
Second, Ford argued that it did not infringe Versata’s copyrights by using or
possessing Versata’s copyrighted software files after Ford’s right to use or possess
those files expired. (See id. at Pg. ID 18664.) But there is a material factual dispute
with respect to whether Ford had Versata’s copyrighted software files in the PDO
environment after the term of Ford’s license to use those files ended. Indeed, Versata
has identified evidence that, if credited by a jury, could establish that Ford did have
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Versata’s copyrighted files in its possession after Ford’s license to use the files
terminated. (See Supplemental Declaration of Seth Krauss at ¶¶ 2-8, ECF #201 at
Pg. ID 9631-34.) Ford is therefore not entitled to judgment as a matter of law on the
basis that it did not use or possess Versata’s copyrighted software files after the term
of its license expired.
Accordingly, the Court DENIES Ford summary judgment with respect to
Count 1 of its Complaint in Case No. 15-cv-11264 and Count 14 of Versata’s Second
Amended Counterclaims.
VI
(Versata’s Motion for Summary Judgment of Count 8 of Ford’s Second
Amended Complaint – Ford’s Allegation that Versata Breached the MSSA by
Improperly Terminating the Agreement)
In Count 8 of Ford’s Second Amended Complaint, Ford alleges that Versata
improperly terminated the MSSA and “prohibited Ford from exercising its option to
continue use of [the Versata] [S]oftware through December 31, 2015.” (Sec. Am.
Compl. at ¶106, ECF #226 at Pg. ID 11734.) In Versata’s summary judgment
motion, it argued that it is entitled to summary judgment on this claim for two
reasons. The Court concludes that neither ground supports judgment as a matter of
law in Versata’s favor.
First, Versata argued that it did not breach the MSSA when it terminated that
agreement. According to Versata, the termination provision of the MSSA allowed
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it to terminate the agreement “by providing written notice sixty days prior” to what
the MSSA defined as the “Annual Renewal Period.” (Versata Mot., ECF #379 at Pg.
ID 22785.) Versata said that the last relevant “Annual Renewal Period” began on
January 15, 2014, and ended on January 14, 2015. (See id. at 22785-86.) Versata
therefore insisted that it fully complied with the MSSA’s termination provision when
it provided Ford termination notices on October 7, 2014, and November 13, 2014,
and then terminated Ford’s access to the Versata Software on January 15, 2014.
However, as the Court indicated in its questions to the parties on the record
during the motion hearing, an addendum to the MSSA creates an ambiguity
concerning when Versata could start the termination process. (See 7/24/18 Hearing
Tr., ECF #519 at Pg. ID 40601-08.) A jury could reasonably conclude that under
the addendum, Versata was not permitted to start the termination process by sending
notices of termination until January 15, 2015. Thus, a jury could reasonably
conclude that Versata breached the MSSA when it sent termination notices to Ford
in October and November of 2014. Moreover, there are material factual disputes
concerning when the last Annual Renewal Period started and ended. For these
reasons, the Court cannot conclude as a matter of law that Versata properly
terminated the MSSA.
Second, Versata argued in its summary judgment motion that even if it
breached the termination provision of the MSSA, Ford did not suffer any damages
13

from that breach. (See Versata Mot., ECF #379 at Pg. ID 22784-22787.) But Ford
has presented evidence from which a jury could reasonably conclude that it did suffer
damages from Versata’s termination of the MSSA. For example, Ford’s manager of
software development, Mike Sullivan, said in a sworn declaration that Versata’s
improper termination of the MSSA caused “Ford [to] incur[] more than $50,000 in
unexpected overtime costs due to the accelerated deployment of [PDO] and
decommissioning of [the Versata Software].” (Sullivan Declaration at ¶6, ECF
#427-18 at Pg. ID 28931.) In addition, even if Ford did not suffer actual damages
from Versata’s improper termination, it still is entitled to seek “nominal damages”
for breach of contract under Michigan law. See McElwee v. Wharton, 7 F. App’x
437, 438 (6th Cir. 2001) (affirming award of $1 in nominal damages in breach of
contract action under Michigan law). For all of these reasons, Versata is not entitled
to summary judgment on the basis Ford did not suffer damages from Versata’s
alleged breach of the MSSA.
Accordingly, the Court DENIES Versata’s motion for summary judgment
with respect to Count 8 of Ford’s Second Amended Complaint.
VII
(Versata’s Request to Serve Supplemental Expert Reports)
On July 9, 2018, the Court issued an Opinion and Order on several motions
that the parties had filed to exclude expert witnesses. (See ECF #507.) Among other
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things, the Court granted Ford’s motions to exclude the testimony of Versata
damages experts Christopher Bokhart and Craig Elson as to the damages that Versata
allegedly suffered as a result of Ford’s implementation of the PDO software. (See
id.) The Court concluded that Bokhart’s damages model was flawed because, among
other things, he did not “apportion” damages between the patented and unpatented
features of the Versata Software. (Id. at Pg. ID 40210-14.) And the Court held that
Elson’s damages model was insufficient because he did not use a “reasonable
royalty” model and did not take into consideration the parties’ licensing history when
he calculated Versata’s claimed damages. (Id. at Pg. ID 40219-26.) The Court also
determined that Elson did not properly apportion Versata’s alleged damages. (See
id. at Pg. ID 40227-34.)
On July 16, 2018, Versata requested that the Court “give Versata an
opportunity to revise its damages model in light of the Court’s July 9, 2018,”
Opinion and Order. (ECF #514 at Pg. ID 40348.) Specifically, Versata asked for
leave to “supplement the reports of [] Bokhart and [] Elson to provide reasonably
royalty calculations for patent damages and trade secrets damages based on the
parties’ past business relationship, as well as [to] address the Court’s guidance
regarding apportionment [of damages].” (Id. at Pg. ID 40352.) Ford opposed
Versata’s request. (See ECF #513.)

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Ford and Versata have each acknowledged that whether to allow a party to
serve supplemental expert reports to address defects identified in a Daubert ruling
is left to a court’s discretion. (See ECF #513 at Pg. ID 40344; ECF #514 at Pg. ID
40350.) District courts have exercised that discretion to allow a party to supplement
expert reports after an expert is excluded in a Daubert ruling. See, e.g., Digital Reg
of Texas, LLC v. Adobe Systems, Inc., 2014 WL 4090550, at *4 (N.D. Cal. Aug. 19,
2014) (excluding expert report but allowing expert “to submit a revised damages
report curing [] the problems identified in [the court’s] order”); Golden Bridge
Technology v. Apple, Inc., 2014 WL 2194501, at *14 (N.D. Cal. May 18, 2014)
(refusing to admit expert opinions “in their current form” but allowing expert
“another shot” to “tender a new damages report in accordance with the [court’s]
guidance”); Prism Technologies, LLC v. Sprint Spectrum L.P., 2015 WL 350503, at
** 2-3 (D. Neb. Jan. 23, 2015) (granting motion to supplement expert reports
following entry of order resolving Daubert motions).6

6

Ford relies on two cases from the United States Court of Appeals for the Sixth
Circuit for the proposition that the Court should not grant Versata leave to
supplement its expert reports: Nelson v. Tenn. Gas Pipeline Co., 243 F.3d 244, 250
(6th Cir. 2001), and Pride v. BIC Corp., 218 F.3d 566, 579 (6th Cir. 2000). In both
Nelson and Pride, the Sixth Circuit recognized that district courts have discretion to
allow a party to supplement an expert report and held that the trial courts did not
abuse that discretion where the trial courts denied leave to supplement. But those
holdings do not prohibit a district court from exercising its discretion to allow a party
to file supplemental reports.
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The Court concludes that allowing Versata to serve supplemental expert
reports, under the strict conditions described in this order, is appropriate for two
reasons. First, allowing Versata to supplement its expert reports will not cause a
material disruption in the schedule in this action. There is no currently-scheduled
trial date, and there is a substantial amount of work left to be done before this case
could conceivably go to trial. That additional pre-trial work includes, at a minimum:
(1) the Special Master must issue a Report and Recommendation on the patent
portions of the summary judgment motions, (2) the Court must review that
recommendation and rule on any objections the parties may raise to it, (3) the parties
must fully brief, and the Court must rule on, Ford’s recently-filed summary judgment
motion with respect to Versata’s claims that Ford infringed Versata’s copyrights (see
ECF ## 526, 532), (4) the parties must complete discovery with respect to Ford
computer software commonly referred to as “PDOR2” and resolve any potential
disputes related to that discovery, (5) the parties must file Daubert and summary
judgment motions with respect to the issues related to PDOR2, and (6) the Court
must rule on those motions. In short, the Court does not believe that the schedule
will be significantly affected if Versata is allowed to serve supplemental expert
reports.
Second, precluding Versata from supplementing its expert reports and
presenting its proposed expert testimony would create a risk of jury confusion. At
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trial, Versata will be seeking trade secret and patent infringement damages based
upon Ford’s use and development of both the PDO software and the PDOR2
software.

Versata’s damages experts completed their analysis and reports

concerning damages related to PDOR2 after the Court issued its ruling on their PDO
damages reports, and thus the experts presumably modified their PDOR2 reports and
analysis to conform to the Court’s requirements. Thus, as things currently stand,
even though the jury will be asked to award damages related to PDO and PDOR2,
Versata will only be permitted to present expert testimony as to how to determine
those damages with respect to PDOR2 alone. The Court is concerned that this
dichotomy may confuse the jury and that the jury would be left to speculate as to
how to reconcile the lack of expert testimony on PDO damages with the presence of
such testimony on PDOR2 damages. The Court believes that permitting Versata to
present expert damages testimony with respect to claimed damages from both PDO
and PDOR2 will enhance the reliability of the jury’s analysis and conclusions.7
The Court recognizes that there are important policy considerations that weigh
against allowing Versata to supplement its expert reports.

The parties spent

7

The Court does not mean to suggest that it has already decided to admit Versata’s
expert damages testimony on PDOR2 or that the Court will necessarily admit the
revised analysis of Bokhart and Elson concerning PDO damages. If Ford challenges
the admissibility of such testimony, the Court will evaluate the admissibility of the
testimony at that time. At this time, the Court is simply ruling that Versata should
have the opportunity to present supplemental reports from its experts.
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substantial time and money preparing the first round of expert reports and Daubert
motions, and the Court is loath to allow a party to submit an expert report, have the
Court explain why that expert report is insufficient, and then get a “second bite of
the apple.” But under the circumstances of this action, and given the posture of these
proceedings, the Court concludes that allowing Versata to serve supplemental expert
reports is appropriate. However, the Court will place strict conditions on these
reports. Versata must serve the supplemental reports on Ford within 30 days of this
order, and Versata must make Bokhart and Elson available for deposition within 30
days after serving their supplemental expert reports. Ford will not be required to
serve rebuttal reports in response to the supplemental reports, nor will Ford be
required to make its own damages experts available for another deposition with
respect to the issues addressed in the supplemental reports.
VIII
For all of the reasons stated above, and the reasons stated at the hearing on the
parties’ cross-motions for summary judgment, IT IS HEREBY ORDERED that:
 Ford’s motion for summary judgment (ECF ## 354, 358) is DENIED with
respect to Counts 4 and 6 of its Second Amended Complaint (ECF #226),
Count #1 of its Complaint in Case No. 15-cv-11264, and Counts 9, 13, and 14
of Versata’s Second Amended Counterclaims (ECF #244);

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 Versata’s motion for summary judgment (ECF ## 379, 380) is GRANTED
with respect to Counts 4 and 5 of Ford’s Second Amended Complaint and
DENIED with respect to Count 8 of Ford’s Second Amended Complaint and
Counts 11 and 14 of its Second Amended Counterclaims; and
 Versata’s experts Christopher Bokhart and Craig Elson may file supplemental
expert reports under the conditions described in this order.

Dated: September 7, 2018

s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE

I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on September 7, 2018, by electronic means and/or
ordinary mail.
s/Holly A. Monda
Case Manager
[phone]

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