Prism Technologies v. T-Mobile USA, Inc.

Filing 306

ORDER - In Case Number 8:12CV123, the defendant's motion (Filing No. 336) to exclude the testimony of Mr. Malackowski is denied. In Case Number 8:12CV124, the defendant's motion (Filing No. 290 ) to exclude the testimony of Mr. Malackowski is denied. In Case Number 8:12CV125, the defendant's motion (Filing No. 279) to exclude the testimony of Mr. Malackowski isdenied. In Case Number 8:12CV126, the defendant's motion(Filing No. 261) to exclude the testimony of Mr. Malackowski is denied. Ordered by Senior Judge Lyle E. Strom. (GJG, )

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
PRISM TECHNOLOGIES LLC,

)
)
Plaintiff,
)
)
v.
)
)
SPRINT SPECTRUM L.P.,
)
d/b/a SPRINT PCS,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES LLC,
)
)
Plaintiff,
)
)
v.
)
)
T-MOBILE USA, INC.,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES LLC,
)
)
Plaintiff,
)
)
v.
)
)
UNITED STATES CELLULAR
)
CORPORATION, d/b/a U.S.
)
CELLULAR,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES LLC,
)
)
Plaintiff,
)
)
v.
)
)
CELLCO PARTNERSHIP d/b/a
)
VERIZON WIRELESS,
)
)
Defendant.
)
______________________________)

8:12CV123

8:12CV124

8:12CV125

8:12CV126

ORDER

This matter comes before the Court on common Daubert
motions filed by defendants Sprint Spectrum (“Sprint”), T-Mobile
U.S.A. (“T-Mobile”), United States Cellular Corp. (“U.S.
Cellular”), and Cellco Partnership (“Cellco”) (collectively, the
“Carrier Defendants”) in four related cases.

In their motions

(Filing No. 336 in 8:12CV123; Filing No. 290 in 8:12CV124; Filing
No. 279 in 8:12CV125; and Filing No. 261 in 8:12CV126),
defendants seek to exclude the expert opinion and testimony of
Mr. Malackowski.1

The Court granted the Carrier Defendants’

request for oral arguments and arguments were held May 20, 2015.
I.

BACKGROUND
Prism accuses the Carrier Defendants of infringing upon

its patents, 8,127,345 (“the ‘345 Patent”) and 8,287,155 (“the
‘155 Patent”).

Though Prism filed different actions against each

Carrier Defendant, the parties agreed to common resolution of
certain issues which affected all the cases.

For example, Prism,

AT&T Mobility, and the remaining Carrier Defendants agreed to
resolve “common” issues in summary judgment and Daubert motions
in addition to case specific issues.

Filing No. 214.

The Court

adopted this policy and resolved the common issues pertaining to

1

The briefs of the parties are substantially identical in
the four cases and the Court will cite to docket number 8:12CV123
throughout the remainder of this opinion.
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Prism’s expert witnesses and various legal issues.

The Court

made a determination in the matter of Prism Technologies LLC v.
AT&T Mobility, LLC (Docket No. 8:12CV122) (the “AT&T Matter”)
which plays into the Carrier Defendants’ current motions.

The

Court granted the Carrier Defendants’ motions to exclude the
expert report and opinions of Mr. Malackowski, Prism’s damages
expert, due to the method of his damages calculations.
No. 246.

Filing

Following the AT&T Matter, the Court granted Prism

leave to amend the reports of its damages and validity experts
based on agreements executed by Prism and AT&T Mobility, L.L.C.
(“AT&T”) that resolved the AT&T Matter.2
Mr. Malackowski has offered three damages theories.
The first was excluded.

The second and third theories were

introduced in his amended report.

The Court finds the following

illustration instructive in distinguishing the major differences
between the theories:

2

Though a major issue in their briefs, the parties stated
at oral arguments that Prism will not use the confidential
figures from the AT&T Matter in the present and successive
Carrier Defendant Matters. Therefore, the Court considers the
matter withdrawn and moot.
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First
TheoryRevenue

Second Theory Cost-Savings (I)

Total Service
Revenues
(Voice + Data)

Alleged Cost Savings Alleged Cost
(Voice + Data)
Savings

Distinction
Between Voice
and Data
Services

Limited to Data
Revenues

No Limitation
(Voice + Data
Included)

Apportionment
Metric

12.1%
(87.9% Reduction)

-(No Reduction)

Royalty Base

X

Y

Z

Royalty Rate

3.5%

3.5%

3.5%

.035X

.035Y

.035Z

Starting Point

Royalty

Third Theory Cost-Savings
(II)

(Voice + Data)

Limit to Alleged
Data-Related Cost
Savings

-(No Reduction)

(See Carrier Defendants’ Slide No. 3 for Malackowski Daubert
Hearing).
II. LEGAL STANDARDS
The Court must determine whether Mr. Malackowski’s
specialized knowledge will assist the trier of fact to understand
evidence or to determine a fact at issue.

Fed. R. Evid. 702.

Under Rule 702, the Court must consider whether (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
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has applied the principles and methods reliably to the facts of
the case.
Royalty damage calculations are governed by case law:
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.” 35 U.S.C. § 284. A
“reasonable royalty” derives from a
hypothetical negotiation between
the patentee and the infringer when
the infringement began. See, e.g.,
Unisplay, S.A. v. Am. Elec. Sign
Co., 69 F.3d 512, 517 (Fed. Cir.
1995). A comprehensive (but
unprioritized and often
overlapping) list of relevant
factors for a reasonable royalty
calculation appears in Georgia–
Pacific Corp. v. United States
Plywood Corp., 318 F. Supp. 1116,
1120 (S.D.N.Y. 1970).
Thus, the trial court must
carefully tie proof of damages to
the claimed invention's footprint
in the market place. See, e.g.,
Grain Processing Corp. v. Am.
Maize–Prods. Co., 185 F.3d 1341,
1350 (Fed. Cir. 1999) (“To prevent
the hypothetical from lapsing into
pure speculation, this court
requires sound economic proof of
the nature of the market and likely
outcomes with infringement factored
out of the economic picture.”);
Riles v. Shell Exploration & Prod.
Co., 298 F.3d 1302, 1312 (Fed. Cir.
2002) (“[T]he market would pay [the
patentee] only for his product
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. . . . [The patentee's damages]
model [does not support the award
because it] does not associate
[the] proposed royalty with the
value of the patented method at
all, but with the unrelated cost of
the entire Spirit platform.”). Any
evidence unrelated to the claimed
invention does not support
compensation for infringement but
punishes beyond the reach of the
statute.
ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 868-69 (Fed. Cir.
2010).

“A damages theory must be based on ‘sound economic and

factual predicates.’”

LaserDynamics, Inc., 694 F.3d at 67

(citing Riles v. Shell Exploration & Pro. Co., 298 F.3d 1302,
1311 (Fed. Cir. 2002)).
The proponent of the expert testimony must prove its
admissibility by a preponderance of the evidence.
U.S. at 592-93, n.10.

Daubert, 509

“[T]estimony is inadmissible if it is

speculative, unsupported by sufficient facts, or contrary to the
facts of the case.”

Marmo v. Tyson Fresh Meats, Inc., 457 F.3d

748, 757 (8th Cir. 2006).

“When the analytical gap between the

data and proffered opinion is too great, the opinion must be
excluded.”

General Elec. Co. v. Joiner, 522 U.S. 136, 146

(1997).

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The Carrier Defendants object to the Second and Third
theories on various grounds.

After review of the filings, oral

arguments and relevant case law, the Court will deny the Carrier
Defendants’ motions.

Accordingly,

IT IS ORDERED:
1) In Case Number 8:12CV123, the defendant’s motion
(Filing No. 336) to exclude the testimony of Mr. Malackowski is
denied.
2) In Case Number 8:12CV124, the defendant’s motion
(Filing No. 290) to exclude the testimony of Mr. Malackowski is
denied.
3) In Case Number 8:12CV125, the defendant’s motion
(Filing No. 279) to exclude the testimony of Mr. Malackowski is
denied.
4) In Case Number 8:12CV126, the defendant’s motion
(Filing No. 261) to exclude the testimony of Mr. Malackowski is
denied.
DATED this 8th day of June, 2015.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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