J.T. Colby & Company, Inc. et al v. Apple, Inc.

Filing 115

MEMORANDUM OF LAW in Support re: 114 MOTION in Limine to Exclude any Testimony, Argument or Evidence Regarding the Expert Reports and Opinions of Mike Shatzkin. REDACTED. Document filed by Apple Inc.. (Cendali, Dale)

Dale M. Cendali
Claudia Ray
Bonnie L. Jarrett
KIRKLAND & ELLIS LLP
601 Lexington Avenue
New York, New York 10022

Perry J. Viscounty
LATHAM & WATKINS LLP
140 Scott Drive
Menlo Park, CA 94025
Jennifer L. Barry
LATHAM & WATKINS LLP
600 West Broadway, Suite 1800
San Diego, CA 92101-3375

Attorneys for Defendant
APPLE INC.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
J.T. COLBY & COMPANY, INC. d/b/a BRICK
TOWER PRESS, J. BOYLSTON & COMPANY,
PUBLISHERS LLC and IPICTUREBOOKS LLC,
Plaintiffs,

Case No. 11-CIV-4060 (DLC)
ECF Case

- against APPLE INC.,

REDACTED
Defendant.

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S MOTION
TO EXCLUDE ANY TESTIMONY, ARGUMENT OR EVIDENCE
REGARDING THE EXPERT REPORT AND OPINIONS OF MIKE SHATZKIN

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ....................................................................................................... ii
PRELIMINARY STATEMENT ..................................................................................................1
ARGUMENT ..................................................................................................................................5
I.

LEGAL STANDARD. .......................................................................................................5

II.

MR. SHATZKIN’S OPINIONS REGARDING RECOGNITION OF THE
“IBOOKS” IMPRINT ARE NOT BASED ON SUFFICIENT FACTS OR
DATA AND AMOUNT TO NOTHING MORE THAN CONCLUSORY
SPECULATION AND HIS SELF-SERVING OPINION. .............................................6
A.

Mr. Shatzkin’s Opinions Are Not Based on Sufficient Facts or Data. ....................7
1.
Mr. Shatzkin Unreasonably Relied on Sales Data from an
Unknown Time Period. ................................................................................8
a.
The Sales Data On Which Mr. Shatzkin Relied Are
Incomplete And Unreliable. .............................................................8
b.
The Spreadsheet Is Inadmissible Hearsay......................................10
2.
Mr. Shatzkin Did Not Conduct Any Investigation Regarding Use
of the “ibooks” Imprint. .............................................................................11

III.

MR. SHATZKIN FAILED TO ADDRESS THE RELEVANT ISSUE
ADDRESSED BY DR. CARPENTER—WHETHER PLAINTIFFS’
ALLEGED MARK EVER ACQUIRED SECONDARY MEANING. .......................13

IV.

MR. SHATZKIN’S OPINION THAT “IBOOKS” IS A NICHE PUBLISHER
IS BELIED BY THE EVIDENCE, AND IS IRRELEVANT. .....................................15
A.
B.
C.

V.

Neither Mr. Preiss, Plaintiffs Nor Third Parties Consider “ibooks” To Be
A Science Fiction Imprint. .....................................................................................16
Mr. Shatzkin’s Calculations Regarding Science Fiction “ibooks” Are
Flawed. ...................................................................................................................16
Mr. Shatzkin’s Opinion That Consumers Purchased Multiple Science
Fiction “ibooks” Books Is A Mere Assumption. ...................................................20

MR. SHATZKIN ADMITTED THAT PLAINTIFFS DID NOT ENGAGE IN
ANY BRAND-BUILDING ACTIVITIES......................................................................20

CONCLUSION ............................................................................................................................21

i

TABLE OF AUTHORITIES
Page
Cases
Alexander Binzel Corp. v. Nu-Tecsys Corp.,
No. 91 C 2092, 1999 WL 166972 (N.D. Ill. Marc. 23, 1999) ................................................ 11
Berk v. St. Vincent’s Hosp. & Med. Ctr.,
380 F. Supp. 2d 334 (S.D.N.Y. 2005)....................................................................................... 9
Black & Decker Corp. v. Dunsford,
944 F. Supp. 220 (S.D.N.Y. 1996).......................................................................................... 15
Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc.,
973 F.2d 1033 (2d Cir. 1992).................................................................................................... 7
Daubert v. Merrell Dow Pharmaceuticals, Inc.,
509 U.S. 579 (1993) .............................................................................................................. 5, 6
First Nat’l Bank of Omaha, Inc. v. Mastercard Int’l Inc.,
03 CIV. 707 (DLC), 2004 WL 1575396 (S.D.N.Y. July 15, 2004).......................................... 7
In re Rezulin Prods. Liab. Litig.,
309 F. Supp. 2d 531 (S.D.N.Y. 2004)............................................................................... 11, 20
Kargo Global, Inc. v. Advance Magazine Publishers, Inc.,
No. 06 Civ. 550 (JFK), 2007 WL 2258688 (S.D.N.Y. Aug. 6, 2007) ...................................... 6
Lippe v. Bairnco Corp.,
288 B.R. 678 (S.D.N.Y. 2003)......................................................................................... passim
Maker’s Mark Distillery, Inc. v. Diageo N. Am., Inc.,
703 F. Supp. 2d 671 (W.D. Ky. 2010) .................................................................................... 11
Malletier v. Dooney & Bourke, Inc.,
525 F. Supp. 2d 558 (S.D.N.Y. 2007)............................................................................... 10, 11
Oxford Indus., Inc. v. JBJ Fabrics, Inc.,
6 U.S.P.Q.2d 1756 (S.D.N.Y. 1988) ....................................................................................... 15
PaperCutter, Inc. v. Fay’s Drug Co.,
900 F.2d 558 (2d Cir. 1990)............................................................................................. passim
Sports Traveler, Inc. v. Advance Magazine Publishers, Inc.,
25 F. Supp. 2d 154 (S.D.N.Y. 1998)......................................................................................... 7

ii

TABLE OF AUTHORITIES (CONT’D)
Page
Weiner v. Snapple Beverage Corp.,
No. 07 Civ. 8742 (DLC), 2010 WL 3119452 (Aug. 5, 2010) ........................................ 7, 9, 12
Rules
Fed. R. Evid. 403 .......................................................................................................... 6, 13, 15, 21
Fed. R. Evid. 702 ................................................................................................................... passim
Fed. R. Evid. 702(b) .............................................................................................................. 7, 8, 15
Fed. R. Evid. 703 ............................................................................................................ 2, 8, 10, 21
Fed. R. Evid. 803(6) ...................................................................................................................... 10

iii

Defendant Apple Inc. (“Apple”) respectfully submits this memorandum of law in support
of its motion to exclude all testimony, argument or evidence relating to the opinions and report
of Mike Shatzkin, which may be offered by Plaintiffs J.T. Colby & Co., Inc. d/b/a Brick Tower
Press, J. Boylston & Co., Publishers LLC, and ipicturebooks LLC (collectively, “Plaintiffs”).
PRELIMINARY STATEMENT
The testimony, report and opinions of Plaintiffs’ expert Mike Shatzkin should be
excluded because they wholly lack any factual basis and fail to bear on any probative issue in
this case.
Apple’s marketing expert, Dr. Gregory Carpenter, the James Farley/Booz Allen Hamilton
Professor of Marketing Strategy and Director of the Center for Market Leadership at the Kellogg
School of Management at Northwestern University, submitted a 43-page, comprehensive
marketing analysis, supported by 78 exhibits, in which he investigated the nature and extent of
the limited sales, advertising, marketing and promotional expenditures and activities, internet
presence, signage, and trade directory presence for the “ibooks” imprint. Dr. Carpenter analyzed
two time periods: 1999 to 2006, when the alleged mark was owned by its founder, Byron Preiss,
and 2007 to the present, when Plaintiffs owned the business after acquiring the “ibooks” assets
from Mr. Preiss’s bankrupt company, Ibooks, Inc. Based on that analysis, Dr. Carpenter
concluded, from a marketing perspective, that Plaintiffs’ “ibooks” imprint is not recognized as a
brand by consumers.1
In response, Plaintiffs submitted the nine-page rebuttal report of Mr. Shatzkin, supported
by four blog posts written by Mr. Shatzkin, in which he purports to “evaluate the relevance” of
1

In their Amended and Supplemental Complaint, Plaintiffs also allege to own rights in the purported mark
“ipicturebooks.” (Am. Compl. ¶ 1.) Because Mr. Shatzkin did not even attempt to rebut Dr. Carpenter’s opinion
that “ipicturebooks” is not recognized by consumers (see, e.g., Shatzkin Dep., 72:22-73:4), that alleged mark is not
addressed here.

Dr. Carpenter’s opinions “for the publishing world.” (Declaration of Claudia Ray in Support of
Motion to Exclude Any Testimony, Argument or Evidence Regarding the Expert Report and
Opinions of Mike Shatzkin, submitted contemporaneously herewith (“Ray Dec.”), Ex. 1 (the
“Shatzkin Report” or the “Report”), 1.) As Mr. Shatzkin repeatedly testified and as his Report
makes clear, the sole factual basis for Mr. Shatzkin’s opinions is a single spreadsheet that he
believes reflects sales by Ibooks, Inc. during an unspecified time in the early to mid-2000s.
(Shatzkin Rep., 2; Ray Dec., Ex. 2 (“Shatzkin Dep.”), 71:9-18.) The sales reflected in that
spreadsheet are drastically different from other sales figures produced by Plaintiffs—to the tune
of $17 million. But Mr. Shatzkin never reviewed those other sales figures. In any case, all of the
sales data that Plaintiffs produced for the period from 1999 to 2006 are inadmissible because,
among other things, Plaintiffs have no personal knowledge of sales from that period and cannot
corroborate the sales data. Thus, the sales data upon which Mr. Shatzkin relied are so unreliable
that it was unreasonable for him to use them to form his opinions. See Fed. R. Evid. 703.
To make matters worse, other than reviewing a single inadmissible spreadsheet, Mr.
Shatzkin did nothing to investigate consumer awareness of the alleged “ibooks” mark, despite
the voluminous discovery materials that were available (and upon which Dr. Carpenter relied).
As Mr. Shatzkin admits, in formulating his opinions, he failed to review any documents
produced in discovery relating to Plaintiffs’ advertising, marketing and promotional activities;
failed to run any Google or other internet searches; and in fact failed to undertake any
independent investigations or conduct any research at all. (Shatzkin Dep., 72:4-75:1; 162:1923; 174:12-176:23.) Tellingly, nowhere in his Report does Mr. Shatzkin take issue with the
detailed marketing analysis and facts presented by Dr. Carpenter regarding the de minimus sales,

2

lack of advertising, marketing and promotional activities, and absence of any internet presence
related to the “ibooks” imprint.
Significantly, Mr. Shatzkin never opines that Plaintiffs actually had a brand that was
recognized by consumers as of January 2010 when Apple announced the launch of its “iBooks”
e-reader software app—which is the central issue here—and by his own admission he has no
evidence that such was the case. (Shatzkin Dep., 190:18-191:14; 217:4-20.) Indeed, despite
professing to have been involved in the publishing industry for 50 years, Mr. Shatzkin admits
that he was only aware of the “ibooks” imprint in the “[l]ate 1990s,” “when it was new.” (Id.,
25:21-26:6.) Mr. Shatzkin had no knowledge of the “ibooks” imprint in the ensuing 12 years,
and in fact, had never heard of Plaintiffs or their owner, John Colby, prior to this litigation. (Id.,
24:23-26:17.) Mr. Shatzkin has never mentioned Mr. Preiss, “ibooks” or Plaintiffs in any of the
hundreds of blog posts that he has written about the publishing industry since February 2009.
(Shatzkin Dep., 214:15-215:3.) And Mr. Shatzkin admits, consistent with the views of Dr.
Carpenter and Dr. Jack Jacoby, another of Plaintiffs’ experts, that publishing brands do not
matter to end consumers. (Shatzkin Rep., 1, 3, 4, 6; Shatzkin Dep., 91:7-13.)
As for Mr. Shatzkin’s theory that Plaintiffs might have developed consumer recognition
of the “ibooks” imprint as a niche science fiction imprint in the early to mid-2000s, that theory is
fatally flawed for several reasons.
First, Mr. Shatzkin wholly ignored the characterization of the “ibooks” imprint by its
founder, Mr. Preiss, who described it not as a science fiction imprint but rather as a “general
trade imprint.” (Ray Dec., ¶¶ 37-41, Exs. 7-9.) He also ignored Plaintiffs’ own characterization
of the “ibooks” imprint. For example, in their Complaint, Plaintiffs repeatedly allege that
“ibooks” publishes multiple genres, including history and fiction. (See Am. Compl., ¶¶ 15-16;

3

18.) Indeed, it is notable that nowhere in the Complaint do Plaintiffs allege that the “ibooks”
imprint is a niche science fiction imprint. It seems obvious that, faced with Dr. Carpenter’s
detailed analysis of the “ibooks” imprint showing that the imprint has never achieved any
recognition among consumers, Plaintiffs concocted this argument about a niche science fiction
imprint in a desperate attempt to save their claims.
Second, Mr. Shatzkin’s theory also is flawed because it is based on his assistant’s
“massag[ing]” of the data in the sales spreadsheet to conclude that (1)
total of

units out of the

units sold during whatever period is covered by the spreadsheet were science

fiction “ibooks” and (2) during that same period, there were 665 science fiction titles published
under the “ibooks” imprint. (Shatzkin Rep., 5; Shatzkin Dep., 147:18-148:6; 168:20-169:2.)
Using those figures, Mr. Shatzkin opines that at some time in the early 2000s, “the owners of
iBooks would have found themselves with a strong foundation on which to promote iBooks
directly to consumers as a science-fiction brand.” (Shatzkin Rep., 8.) But Mr. Shatzkin
repeatedly testified that nothing was ever done to build on that supposed “foundation.”
(Shatzkin Dep., 190:18-192:4; 223-24.) In any event, Mr. Shatzkin’s calculations are not
supported by any admissible evidence and, in any event, they are grossly inflated, as his assistant
failed to account for (1) numerous duplicate titles, (2) significant returns by distributors in the
mid-2000s of books that failed to sell through to consumers, and (3) Plaintiffs’ destruction of
books that their distributor did not “want to sell any more.” (Shatzkin Dep., 156:19-157:21;
161:6-162:2; 180:7-20; see also Ray Dec., ¶¶ 27-30.)
Third, even if Plaintiffs or Mr. Preiss had actually sold all of the science fiction books
that Mr. Shatzkin claims they did, his theory would still rest on the unproven assertion that some
unknown number of consumers each bought two or more “ibooks” science fiction books and

4

came to recognize “ibooks” as a niche imprint for such books. But as Mr. Shatzkin admits, he
has absolutely no evidence that this ever actually happened. (Shatzkin Dep., 149:15-22; 152:1823.)
Finally, Mr. Shatzkin’s opinions about branding also are inadmissible because they are
internally inconsistent. In his Report, he argues that “in publishing[,] almost no money is
spent—or has been spent—on creating consumer awareness and recognition of brands,” and that
the brand-building activities discussed in Dr. Carpenter’s report therefore have no applicability
to the publishing industry. (Shatzkin Rep., 6.) Directly contrary to that assertion, Mr. Shatzkin
admits that well-known niche brands such as Harlequin (romance novels), and Tor and Baen
(science fiction), have engaged in exactly the types of activities discussed by Dr. Carpenter.
(See, e.g., Shatzkin Dep., 100:7-103:21; 109:20-110:19; 115:9-121:25.) Further, Mr. Shatzkin
admits that Plaintiffs have not engaged in any consumer-directed activities that could have
served to build a brand. (Id., 172:17-173:3; see also id., 191:8-192:4; 212:6-19; 224:10-16.)
Thus, he actually agrees with Dr. Carpenter on this point.
In sum, Mr. Shatzkin did not base his opinions on sufficient facts, did not use reliable
principles and methods to reach his conclusions, and did not address the relevant issue. All of
his opinions, as well as any testimony, argument or evidence relating thereto, should thus be
excluded. See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 595 (1993).
ARGUMENT
I.

LEGAL STANDARD.
Under Federal Rule of Evidence 702, expert testimony is admissible only if “(a) the

expert’s scientific, technical, or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b) the testimony is based upon sufficient
facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the
5

expert has reliably applied the principles and methods to the facts of the case.” Fed. R. Evid.
702. Expert testimony must also meet the requirements of Federal Rule of Evidence 403, which
provides that “[t]he court may exclude relevant evidence if its probative value is substantially
outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues,
misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.”
Fed. R. Evid. 403; see also Daubert, 509 U.S. at 589 (holding that to be admissible, expert
testimony must be “not only relevant, but reliable”).
Courts serve as the “gatekeepers” of expert evidence. See Lippe v. Bairnco Corp., 288
B.R. 678, 685 (S.D.N.Y. 2003) (excluding unreliable expert testimony). Because expert
testimony has the potential to be particularly misleading, courts must exercise greater control
over experts than over lay witnesses. See Daubert, 509 U.S. at 595. Stricter scrutiny is also
warranted where, as here, a jury trial rather than a bench trial is contemplated. See Kargo
Global, Inc. v. Advance Magazine Publishers, Inc., No. 06 Civ. 550 (JFK), 2007 WL 2258688,
*6 (S.D.N.Y. Aug. 6, 2007). As discussed below, Mr. Shatzkin’s opinions are based on nothing
more than his say-so, as his only factual basis is unreliable and unfounded. Furthermore, Mr.
Shatzkin fails to address the operative issue. Therefore, Mr. Shatzkin’s opinions and testimony
should be excluded because they are wholly unreliable and prejudicial, will confuse the issues
and will mislead the jury.
II.

MR. SHATZKIN’S OPINIONS REGARDING RECOGNITION OF THE
“IBOOKS” IMPRINT ARE NOT BASED ON SUFFICIENT FACTS OR DATA
AND AMOUNT TO NOTHING MORE THAN CONCLUSORY SPECULATION
AND HIS SELF-SERVING OPINION.
Plaintiffs have offered Mr. Shatzkin as an expert on branding in the publishing industry

to rebut the opinion of Dr. Carpenter that neither Plaintiffs nor their predecessor ever developed
a recognizable brand in the “ibooks” imprint. (Shatzkin Rep., 1.) If Plaintiffs do not own a
6

protectable mark in “ibooks,” they cannot sustain their claim that Apple’s use of its iBooks mark
is likely to cause reverse confusion with Plaintiffs’ alleged “ibooks” mark. See PaperCutter, Inc.
v. Fay’s Drug Co., 900 F.2d 558, 564 (2d Cir. 1990) (holding that to be protectable, plaintiff’s
descriptive mark must have acquired secondary meaning before the defendant adopted its mark);
see also Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1040 (2d Cir. 1992);
First Nat’l Bank of Omaha, Inc. v. Mastercard Int’l Inc., 03 CIV. 707 (DLC), 2004 WL
1575396, *7 (S.D.N.Y. July 15, 2004). Proof that a mark is protectable because it has acquired
secondary meaning “entails vigorous evidentiary requirements,” and the burden of proof lies
with Plaintiffs. See Bristol-Myers Squibb, 973 F.2d at 1041. There simply was nothing vigorous
about Mr. Shatzkin’s analysis here, however.
A.

Mr. Shatzkin’s Opinions Are Not Based On Sufficient Facts or Data.

Rule 702 requires that expert testimony be “based on sufficient facts or data.” Fed. R.
Evid. 702(b). Here, the facts and data that Mr. Shatzkin should have relied upon are those
factors courts consider in determining whether there is secondary meaning, i.e., (1) consumer
surveys; (2) “sales success;” (3) advertising expenditures; (4) unsolicited media coverage; (5)
third party attempts to plagiarize the mark; and (6) the length and exclusivity of the use. See
Sports Traveler, Inc. v. Advance Magazine Publishers, Inc., 25 F. Supp. 2d 154, 164 (S.D.N.Y.
1998). Mr. Shatzkin ignored nearly all of those factors, however, instead relying solely on a
single inadmissible spreadsheet that he believes shows sales from some time in the early to mid2000s. (Shatzkin Rep., 2; Shatzkin Dep., 71:9-21.) Because Mr. Shatzkin did not even conduct
“a cursory review of the underlying record in this action,” his testimony is unreliable, and his
Report and opinions should be excluded. See Weiner v. Snapple Beverage Corp., No. 07 Civ.
8742 (DLC), 2010 WL 3119452, at *8 (Aug. 5, 2010) (excluding expert testimony where
purported expert reviewed only two of more than 200 documents produced by the defendant, but
7

no other documents that “would have provided critical context”); see also Fed. R. 702(b); Fed.
R. Evid. 703.
1.

Mr. Shatzkin Unreasonably Relied On Sales Data From An Unknown
Time Period.

First, Mr. Shatzkin admits that the sole evidentiary basis for his opinions is “a
spreadsheet that [he] believe[s] was the sales reporting or compilation of the sales reporting by
Simon & Schuster for the several-year period that they distributed iBooks” (the “Shatzkin
Spreadsheet”). (Shatzkin Dep., 71:9-15.) The Shatzkin Spreadsheet is inherently unreliable,
however, and thus it was not reasonable for Mr. Shatzkin to rely on it. See Fed. R. Evid. 703.
a.

The Sales Data On Which Mr. Shatzkin Relied Are Incomplete
And Unreliable.

Mr. Shatzkin’s testimony and opinions are unreliable because his analysis did not include
all of the sales spreadsheets that Plaintiffs produced. He believes the Shatzkin Spreadsheet,
which was produced by Plaintiffs in this litigation, covers sales of “ibooks” books from “around
2000 to 2004.” (Shatzkin Dep., 71:9-18.) Plaintiffs also produced another spreadsheet in August
2012 (the “August Spreadsheet”), however, that purports to show sales of “ibooks” books from
1999 through April 2012. (Ray Dec., ¶ 11; Ex. 5.) Notably, the Shatzkin Spreadsheet purports
to show net sales of “ibooks” books of

that, according to Mr. Shatzkin, occurred

from approximately 2000 to 2004. (See Ray Dec., ¶ 21.) By contrast, the August Spreadsheets
purport to show net sales of “ibooks” of
The nearly

for 2000 to 2004. (Ray Dec., ¶ 22.)

difference in 10-year-old sales data shows that Plaintiffs’ sales data are

not reliable.
In any event, Mr. Shatzkin apparently never even saw the August Spreadsheets, let alone
considered them in forming his opinions, even though the critical question is whether the alleged
“ibooks” mark was recognized by consumers when Apple adopted its iBooks mark in January
8

2010. See PaperCutter, 900 F.2d at 564. Because Mr. Shatzkin ignored all evidence of
activities relates to the “ibooks” imprint that occurred after approximately 2004, at best, his
opinions are based on incomplete information. Mr. Shatzkin’s opinions should be excluded for
that reason alone. See Fed. R. Evid. 702 (expert testimony may be excluded where it is not based
on sufficient facts or data); Weiner, 2010 WL 3119452, *8 (excluding expert testimony where
purported expert conducted only a “cursory” review of just two documents).
In addition, the Shatzkin Spreadsheet is undated, and Mr. Shatzkin was unable to say
whether it identifies when any particular sales occurred, although he believes that it covers
“approximately” 2000 to 2004, when Simon & Schuster distributed “ibooks.” (Shatzkin Dep.,
159:25-160:4; Ray Dec., ¶ 17.) Mr. Shatzkin’s belief is contradicted by Plaintiffs’ Complaint,
which alleges that the period during which Simon & Schuster distributed “ibooks” books was
1999 to 2006. (See Am. Compl. ¶ 13.) Moreover, the Shatzkin Spreadsheet includes not only
titles published by Ibooks, Inc., but also by Plaintiffs’ other imprints, including Brick Tower
Press, which suggests that the spreadsheet covers sales that occurred after Plaintiffs acquired the
“ibooks” imprint. (Ray Dec., ¶ 19.) The Shatzkin Spreadsheet also includes many titles that do
not have publication dates, as well as five science fiction titles that must have been published
after 2006.2 (Ray Dec., ¶ 33.) Thus, there is no reason to believe that the Shatzkin Spreadsheet
covers the time period that Mr. Shatzkin claimed, and there is no way to know what period
actually is included. See Berk v. St. Vincent’s Hosp. & Med. Ctr., 380 F. Supp. 2d 334, 352-56
(S.D.N.Y. 2005) (holding that expert testimony was inadmissible on summary judgment where
the expert based his opinion in a medical malpractice case on several errors including mistakes
regarding symptoms, dates on which the symptoms appeared, and dates on which the plaintiff
2

The records for those titles list a publication date that is after 2006 and/or identify John Colby, who was not
involved with the “ibooks” imprint until after 2006, as their editor. (Ray Dec., ¶ 19.)

9

contacted the doctor); Lippe, 288 B.R. at 701 (excluding expert testimony regarding business
valuation where, among other things, the expert did not “account for major variables” and failed
to rely on relevant data that was available to him).
b.

The Spreadsheet Is Inadmissible Hearsay.

The Shatzkin Spreadsheet also is unreliable and inadmissible. As explained above, Mr.
Shatzkin did not know precisely what time period is covered by the Shatzkin Spreadsheet.
(Shatzkin Dep., 71:9-15; 159:25-160:4.) There is no witness who can corroborate that
spreadsheet, or indeed any of the sales data produced by Plaintiffs for the period prior to 2007
because Plaintiffs do not have personal knowledge of sales during that time, nor do they have
any ordinary course of business documents that reflect sales information from that time. (See
Colby 30(b)(6) Dep., 134:9-22.) Instead, Plaintiffs’ knowledge is based solely on documents
that Plaintiffs acquired in late 2006 when they purchased the assets of Ibooks, Inc. out of
bankruptcy. (See, e.g., Colby 30(b)(6) Dep., 133:17-134:8.) Thus, all of the pre-2007 sales data
produced by Plaintiffs in this case—including the Shatzkin Spreadsheet —is quintessential
hearsay to which the business records exception does not apply because there is no qualified
witness who can testify that the Shatzkin Spreadsheet was made in the regular course of business
at the time the alleged sales occurred. See Fed. R. Evid. 803(6); see also Malletier v. Dooney &
Bourke, Inc., 525 F. Supp. 2d 558, 666 (S.D.N.Y. 2007) (adopting Special Masters’
recommendation, which noted that “a party cannot call an expert simply as a conduit for
introducing hearsay” and excluding expert testimony).
Rule 703 makes clear that an expert witness may only rely on hearsay to support his
opinions if it is reasonable to do so. See Fed. R. Evid. 703 (“If experts in the particular field
would reasonably rely on those kinds of facts or data in forming an opinion on the subject, they
need not be admissible for the opinion to be admitted.”). Here, because the Shatzkin Spreadsheet
10

is inherently unreliable and cannot be corroborated by anyone with personal knowledge, his
testimony based on that spreadsheet also is unreliable and should be excluded for that reason as
well. See Malletier, 525 F. Supp. 2d 558 (excluding testimony of expert who relied on unreliable
regression analysis conducted by colleague).
*

*

*

In sum, Mr. Shatzkin failed to consider all of the sales data that Plaintiffs produced and
was unsure what time period is covered by the data he did consider. Even under the most
generous reading of his opinions, Mr. Shatzkin “proposes to give an expert opinion based on a
guess, not facts,” and thus his testimony should be excluded. See In re Rezulin Prods. Liab.
Litig., 309 F. Supp. 2d 531, 566 (S.D.N.Y. 2004); see also Fed. R. Evid. 702; Lippe, 288 B.R. at
689 (excluding testimony that did not “rest[] on a reliable foundation”); Maker’s Mark Distillery,
Inc. v. Diageo N. Am., Inc., 703 F. Supp. 2d 671, 698 (W.D. Ky. 2010) (in dilution case, noting
that “[f]ame in the trademark context must be based upon evidence and case law, not upon the
personal opinion of industry commentators”); Alexander Binzel Corp. v. Nu-Tecsys Corp., No.
91 C 2092, 1999 WL 166972, *8 (N.D. Ill. Marc. 23, 1999) (describing the magistrate judge’s
ruling excluding an expert opinion regarding secondary meaning that was “based solely on
interaction with customers in an unspecified number of situations” because it lacked
foundation).3
2.

Mr. Shatzkin Did Not Conduct Any Investigation Regarding Use of
the “ibooks” Imprint.

Second, Mr. Shatzkin’s opinions are also unreliable because he made no effort to educate
himself about the use of the “ibooks” imprint by either Plaintiffs or Ibooks, Inc. Specifically,
3

Mr. Shatzkin’s opinion that “Apple had created . . . a strong (and overshadowing) alternative identity for the word
iBooks” (Shatzkin Rep., 8) should be excluded for the same reasons that his opinions regarding consumer
recognition of Plaintiffs’ “ibooks” imprint should be excluded.

11

Mr. Shatzkin did not review (1) Plaintiffs’ website; (2) any marketing, advertising or publicity
materials; (3) any media coverage of “ibooks”; (4) any mentions of “ibooks” on Amazon,
Wikipedia or any other website; or (5) any of the documents produced in this case, save for the
Shatzkin Spreadsheet. (Shatzkin Dep., 72:4-75:1; 162:19-23; 174:12-176:23; see also Shatzkin
Rep., 2.) Mr. Shatzkin also did not conduct any internet searches with respect to “ibooks” or
“ipicturebooks.” (Shatzkin Dep., 74:18-21.) It is thus not surprising that Mr. Shatzkin did not
know:
•

How many “ibooks” books are published each year (see id., 141:4-16);

•

The current number of “ibooks” books by genre (see id., 144:12-145:5);

•

Whether Plaintiffs have ever published any works under the “ibooks” imprint that could
not also be obtained from other publishers (see id., 140:22-141:3; 184:8-21);

•

How many “ibooks” books have been sold on the internet, how many are sold in hard
copy versus electronic form, or how many are sold online versus in bricks-and-mortar
stores (see id., 147:7-17; 166:2-9);

•

Whether Plaintiffs have an active website (see id., 173:22-174:6);

•

Who owns the www.ibooksinc.com domain name (which is owned by Plaintiffs, but was
not active until just a few months ago) (see id., 177:9-14);

•

The volume of traffic to Plaintiffs’ website (see id., 175); and

•

Whether Plaintiffs engage in any marketing or advertising activities—such as using email lists, using Facebook, Twitter or other social media, or hosting in-person events—or
otherwise have made any efforts to develop direct contacts with their end consumers
(which he views as essential given the publishing industry’s overall shift from a brickand-mortar bookstore model to an online, digital model) (see id., 171:18-176:23).
Mr. Shatzkin’s failure to consider whether, as a factual matter, Plaintiffs ever use the

“ibooks” imprint in any meaningful way only highlights the unreliability of his opinions. See
Weiner, 2010 WL 3119452, *9 (excluding expert testimony where expert did not “invest[]
sufficient time and effort to develop a reliable methodology to support an expert opinion”);

12

Lippe, 288 B.R. at 689 (excluding testimony that did not “rest[] on a reliable foundation” and
was based on “speculative and conjectural conclusions”) (citation omitted).
III.

MR. SHATZKIN FAILED TO ADDRESS THE RELEVANT ISSUE ADDRESSED
BY DR. CARPENTER—WHETHER PLAINTIFFS’ ALLEGED MARK EVER
ACQUIRED SECONDARY MEANING.
Even if Mr. Shatzkin’s testimony meets the requirements of Rule 702 (and it does not),

his testimony still should be excluded under Rule 403 because it is unfairly prejudicial, confuses
the issues, and will mislead the jury. See Fed. R. Evid. 403.
As explained above, supra at 6-7, Plaintiffs must establish that their alleged “ibooks”
mark acquired secondary meaning before Apple adopted the IBOOKS mark in January 2010.
See PaperCutter, 900 F.2d at 564. Mr. Shatzkin utterly failed to address that central question,
however, admitting that he was unable to determine whether any consumers ever recognized the
“ibooks” imprint as a brand, and in fact was “not comfortable” answering that question:
Q.
You talked about crossing the line to having a brand. Is it your opinion
that iBooks at any point crossed that line?
MR. RASKOPF: Objection to the form.
A.
You’re asking me to generate a characterization. I’m just simply not
comfortable saying when the lines got drawn. I go back to what I said, which is
that they have a foundation of knowledgeable people in what strikes me as a
sufficient number to make a real play for a science fiction brand. . . .
Q.
Is it your opinion that iBooks has made a play to capitalize on those
people who have bought books in the past?
MR. RASKOPF: Objection to the form of the question.
A.

I have not seen the evidence of it.

(Shatzkin Dep., 223:7-224:16 (emphasis added).)
Mr. Shatzkin testified that he was “very focused” on only the 2000 to 2004 time period
(see Shatzkin Dep., 217:4-20), and it clearly is Mr. Shatzkin’s opinion that the “ibooks” imprint
13

has not been recognized since Plaintiffs acquired the business in 2006—and certainly was not
recognized in January 2010, when Apple introduced its iBooks software app:
Q.

Is it your opinion that iBooks is a business to consumer brand?

MR. RASKOPF: Objection to the form of the question.
A.
. . . It is my opinion that iBooks was recognized as a legitimate science
fiction publisher by a substantial number of science fiction book consumers, and
that that created a foundation on which can be built upon [sic].
Q.
That again is based on the sales numbers [from approximately 2000 to
2004]?
A.

Yes.

Q.
In paragraph three [of the Shatzkin Report], where you say how the
iBooks brand could have capitalized on its legacy, do you see that, to build a
valuable consumer franchise? Is it your opinion that it ever did capitalize on that
legacy?
MR. RASKOPF: Objection to the form of the question.
A.
I’m not aware of any specific steps that were taken to capitalize on that
legacy in the manner which say I would have done it.
(Shatzkin Dep., 190:18-192:4 (emphasis added); see also id., 212:17-19 (Mr. Shatzkin has seen
“no evidence” that the publishers of “ibooks” ever turned their attention to consumer branding).
In short, at no time in his Report or in his deposition did Mr. Shatzkin opine that “ibooks” was a
brand that actually was recognized by consumers as of January 2010.
In fact, Mr. Shatzkin testified that he was not aware of Plaintiffs before he was asked to
serve as an expert in this case, and was only aware of the “ibooks” and “ipicturebooks” imprints
in the late 1990s, “when they were new.” (Shatzkin Dep., 24:23-26:6.) Furthermore, when
asked to name the “significant” science fiction imprints that are known to consumers, Mr.
Shatzkin made no mention of “ibooks.” (Id., 115:15-117:23.) Given that Mr. Shatzkin claims to
have “interacted on a professional basis with most of the significant publishers in the English
14

speaking world,” the fact that he had not heard of Plaintiffs and does not consider “ibooks” to be
worthy of mention among the significant science fiction publishing imprints is telling. (Shatzkin
Dep., 47:11-22; see also id., 24:23-26:6.)4 See Oxford Indus., Inc. v. JBJ Fabrics, Inc., 6
U.S.P.Q.2d 1756, 1760 (S.D.N.Y. 1988) (finding registered mark was “extremely weak” where
an expert who had been employed in the relevant field for 40 years was unaware of the mark).
Because Mr. Shatzkin did not address the relevant question—namely, whether the
“ibooks” imprint was recognized by consumers before January 2010—his testimony and
opinions are unfairly prejudicial and will serve only to confuse and mislead the jury, and thus
should be excluded. See Fed. R. Evid. 403; PaperCutter, 900 F.2d at 564 (holding that a
plaintiff must show its mark had acquired secondary meaning before the defendant adopted its
mark).
IV.

MR. SHATZKIN’S OPINION THAT “IBOOKS” IS A NICHE PUBLISHER IS
BELIED BY THE EVIDENCE, AND IS IRRELEVANT.
Mr. Shatzkin opines that the “ibooks” imprint “specializ[es] in science-fiction” (Shatzkin

Rep., 5), but as discussed below, the evidence shows that the “ibooks” imprint is not, and never
has been, a niche science fiction-focused imprint. Because Mr. Shatzkin’s opinion is not
supported by the evidence, it should be excluded. See Fed. R. Evid. 702(b) (requiring expert
testimony be based on “sufficient facts or data”); see also Fed. R. Evid. 403 (requiring that
evidence not confuse the issues or mislead the jury). Furthermore, because books published
under the “ibooks” imprint are directed not only to science fiction readers, but to readers across a
wide variety of genres, Mr. Shatzkin’s opinions regarding science fiction readers are irrelevant
and thus should be excluded for this reason as well. See Black & Decker Corp. v. Dunsford, 944

4

Mr. Shatzkin has written 300-400 blog posts since February 2008, none of which have mentioned the “ibooks”
imprint, Plaintiffs or Preiss. (Shatzkin Dep., 214:12-215:3.)

15

F. Supp. 220, 226 n.8 (S.D.N.Y. 1996) (explaining that secondary meaning is “determined by
assessing the attitude of the consuming public,” and that the consuming public is the market “to
which the product is directed”).
A.

Neither Mr. Preiss, Plaintiffs Nor Third Parties Consider “ibooks” To Be A
Science Fiction Imprint.

In asserting that “ibooks” is a niche science fiction imprint, Mr. Shatzkin wholly ignores
the fact that “ibooks” has never been promoted as such, but instead has always been described as
a general trade publisher. (Ray Dec., ¶¶ 37-41.) For example, a May 24, 1999, Publishers
Weekly article about the launch of the “ibooks” imprint stated that the “ibooks” imprint “will
emphasize titles in science, history, science fiction and mystery.” (Ray Dec., ¶ 38, Ex. 7.)
Similarly, a May 17, 2000 memo from Mr. Preiss to investors described “ibooks” as a “general
trade imprint” that published media tie-ins, science, history, mystery, science fiction and literary
classics. (Ray Dec., ¶39, Ex. 8.)
More recently, Plaintiffs themselves assert in their Amended and Supplemental
Complaint that “many of [the books published under the “ibooks” imprint] focus on history;”
that the “imprint also features a number of well-known fictional works and annotated versions of
classical fictional works. . . ;” and that the “‘ibooks’ print books also include numerous graphic
novel versions of famous novels….” (Am. Compl., ¶¶ 15-16, 18.) Even at this late date, the
“About Us” page on Plaintiffs’ website describes the “ibooks” imprint as being “known for its
extensive backlist titles in trade fiction, science fiction, fantasy, graphic novels, history and
popular culture”—it does not even list science fiction first. (Ray Dec., ¶41, Ex. 9.)
B.

Mr. Shatzkin’s Calculations Regarding Science Fiction “ibooks” Are Flawed.

Mr. Shatzkin ignored the evidence that even Plaintiffs do not consider “ibooks” a niche
science fiction imprint, instead basing his conclusions on the single inadmissible spreadsheet
16

Dep., 104:5-10.) Furthermore, since acquiring the “ibooks” business in 2006, Plaintiffs
admittedly have destroyed “a lot” of books—including

worth of books in 2010 and

2011—because their “distributor didn’t want to sell them any more.” (Ray Dec., ¶¶ 27-29;
Colby 30(b)(6) Dep., 238:4-242:4; Mr. Colby Dep., 33:10-34:13.) Thus, the evidence shows that
those returns and destroyed inventory did “subtract” from the sales that Mr. Shatzkin believes
occurred in the mid-2000s because those books never made their way into the hands of
consumers—a fact Mr. Shatzkin wholly ignored. Mr. Shatzkin’s failure to account for the
massive returns that occurred after approximately 2004 further invalidates his conclusions. See
Lippe, 288 B.R. at 701 (excluding testimony where the expert did not “apply[] reliable principles
and methods in a fair and reliable way, and [made] no effort to account for major variables that
one would expect to have an impact on [his] conclusions”).
Mr. Shatzkin also significantly over-counted the number of individual science fiction
titles published under the “ibooks” imprint. Mr. Shatzkin opined that 665 science fiction titles
were published under the “ibooks” imprint (Shatzkin Rep., 5), based on his assistant’s
“massag[ing]” of the Shatzkin Spreadsheet. (Shatzkin Dep., 11:19-12:11.) By his own
admission, however, Mr. Shatzkin has no idea whether any effort was made to account for the
many duplicate title and ISBN number listings5 in the Shatzkin Spreadsheet. (Shatzkin Dep.,
156:19-157:21.) In fact, the Shatzkin Spreadsheet includes 449 duplicate science fiction titles,
none of which should have been counted as separate science fiction titles. (Ray Dec., ¶ 31.)
This flawed and unreliable methodology further undermines the conclusions in Mr. Shatzkin’s
Report.

5

As Mr. Shatzkin explained, an ISBN number is a unique identifier for a given book. (Shatzkin Dep., 154:18-23.)
Thus, duplicate ISBN numbers on the spreadsheet necessarily identify duplicate titles.

18

In addition, Mr. Shatzkin’s Report apparently counted as science fiction six titles,
including one about Britney Spears, that clearly are not within the science fiction genre. (Ray
Dec., ¶ 32.)6 That Mr. Shatzkin included them highlights the slap-dash nature of his analysis.
Mr. Shatzkin also included five titles that were published after 2006, as well as more than 300
titles for which there is no publication date at all. (Ray Dec., ¶ 33.) Thus, it appears that there
were at most 205 science fiction titles published under the “ibooks” imprint in the mid-2000s—
and likely far less than that, given the lack of information about when the listed titles were
published and sold. (Ray Dec., ¶ 34.) This is very far from the 665 science fiction titles that Mr.
Shatzkin claims were published under the “ibooks” imprint during the early to mid-2000s.
In any case, Mr. Shatzkin’s sole focus is on the period from 2000 to 2004 (Shatzkin Rep.,
5; Shatzkin Dep., 217:4-20.), even though the issue is whether the “ibooks” imprint was
recognized by consumers in January 2010, when Apple adopted its iBooks mark. See
PaperCutter, 900 F.2d at 564. He has no data whatsoever about sales of “ibooks” books from
2005 to the present, and thus has no basis to opine about what, if anything, happened with the
“ibooks” imprint after the Ibooks, Inc. bankruptcy in 2006. In particular, he cannot say how
many science fiction “ibooks” titles were sold after 2006, and what percentage of the overall
“ibooks” sales they represent. In fact, he simply cannot say whether the “ibooks” books are
currently marketed as a niche science fiction imprint, or whether any consumers currently
recognize the “ibooks” imprint as a brand. Thus, Mr. Shatzkin has no basis for offering any
opinion as to the imprint’s current status, which is the relevant question.

6

Those titles are “1001 Playlists,” “Battle of Yorktown,” “Big Numbers,” “Britney Spears,” “Capital Offense,” and
Guns Drugs & Monsters.” (Ray Dec., ¶ 32.)

19

C.

Mr. Shatzkin’s Opinion That Consumers Purchased Multiple Science Fiction
“ibooks” Books Is A Mere Assumption.

Finally, Mr. Shatzkin “assume[d] that many thousands, perhaps tens of thousands, of
science-fiction readers purchased and read several iBooks titles” (Shatzkin Rep., 8), and claims
that if some number of consumers purchased two, three or more such books, they would have
become aware of the “ibooks” imprint as a result of seeing it repeatedly on the books they
purchased. (Shatzkin Dep., 148:7-149:14.) But as even he admits, there is absolutely no factual
basis for any of these assertions, and therefore this opinion should be excluded for this reason as
well. (Id., 149:19-22; see also id., 152:18-23.)
At his deposition, Mr. Shatzkin admitted he had no evidence—and there is none—that
any consumers ever bought more than one “ibooks” science fiction book. (Id., 149:19-22;
152:18-23.) “By assuming the existence of [such purchases, Mr. Shatzkin] was relying not on
facts or data but instead was engaging in rank speculation.” Lippe, 288 B.R. at 698 (emphasis in
original). Indeed, Mr. Shatzkin acknowledged that any books that were sold in the mid-2000s
“were sold to an unknown number of people.” (Shatzkin Dep., 151:21-152:14.) In light of this,
his opinions should be excluded as the inappropriate musings of an industry observer, and not the
rigorous analysis of an expert qualified under the Federal Rules of Evidence. See In re Rezulin
Prods., 309 F. Supp. 2d at 540 (excluding expert testimony and noting that a district court is not
required to “admit opinion evidence which is connected to existing data only by the ipse dixit of
the expert”); Lippe, 288 B.R. at 686 (excluding expert testimony that was speculative,
unrealistic, and based solely on the experts’ ipse dixit).
V.

MR. SHATZKIN ADMITTED THAT PLAINTIFFS DID NOT ENGAGE IN ANY
BRAND-BUILDING ACTIVITIES.
In his Report, Mr. Shatzkin provides opinions about “the evolution to direct consumer

marketing” in the publishing industry, in an effort to show that Dr. Carpenter was mistaken when
20

he opined that Plaintiffs failed to build a brand because they did not engage in any consumerdirected branding activities. (Shatzkin Rep., 2-5.) For example, Mr. Shatzkin argues, without
citing any authority for the proposition, that “in publishing[,] almost no money is spent—or has
been spent—on creating consumer awareness and recognition of brands.” (Id., 6.)
At his deposition, however, Mr. Shatzkin contradicted his own report when he admitted
that Harlequin—a publisher with a “strong brand identity” (Shatzkin Dep., 123:6-12) that he
believes consumers “know” (Shatzkin Rep., 5)—has marketed directly to consumers, including
by offering subscriptions and free online content and hosting events for its readers. (Shatzkin
Dep., 100:7-103:21; 121:22-25.) Similarly, Mr. Shatzkin admitted that Tor and Baen—two
“known” niche science fiction publishers referenced in his Report—“make very active efforts to
communicate directly with their audiences.” (Id., 115:15-116:11.) Tor and Baen “solicit people
to be in touch with them. They say register on our web site, get our newsletter,” and sell directly
to consumers. (Id., 117:24-118:15.)
In contrast to these consumer-directed activities, Mr. Shatzkin repeatedly testified that, as
Dr. Carpenter concluded, neither Plaintiffs nor Ibooks, Inc. ever engaged in the kinds of
activities that would create consumer awareness, even going so far as to volunteer that Mr. Colby
is an antiquated “bookstore guy” who is “behind the curve” when it comes to marketing. (Id.,
172:17-173:3; see also id., 191:18-192:14; 212:17-19; 224:10-16.) Indeed, Mr. Colby himself
admitted that he is “unsure how to effectively market a web strategy.” (Ray Dec., Ex. 3 (Colby
30(b)(6) Dep., 298:22-25.) Thus, if anything, Mr. Shatzkin’s testimony only serves to confirm
Dr. Carpenter’s conclusion that there is no consumer recognition of the “ibooks” imprint.
CONCLUSION
The purpose of Rule 702 and 403 is to exclude testimony that is neither reliable nor
helpful and, instead, is likely to mislead the jury. Because Mr. Shatzkin did not conduct any
21

meaningful research or investigation regarding consumer recognition of the “ibooks” imprint,
utterly failed to address the relevant issue, and based his opinions on a flawed analysis of a single
unreliable document, his Report and opinions, and testimony, evidence or argument relating
thereto, should be excluded.

Date: December 21, 2012

Respectfully submitted,
s/ Dale M. Cendali
Dale M. Cendali
Claudia Ray
Bonnie L. Jarrett
KIRKLAND & ELLIS LLP
601 Lexington Avenue
New York, New York 10022
Tel: [phone]
Fax: [phone]
Perry J. Viscounty
LATHAM & WATKINS LLP
140 Scott Drive
Menlo Park, CA 94025
Jennifer L. Barry
LATHAM & WATKINS LLP
600 West Broadway, Suite 1800
San Diego, CA 92101-3375
ATTORNEYS FOR DEFENDANTS

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