Kaufman v. Microsoft Corporation
Filing
156
ORDER DENYING MOTION TO EXCLUDE EXPERT TESTIMONY denying 118 Motion in Limine. Defendant's motion to exclude expert testimony is denied. The Clerk is directed to terminate the open motion (ECF No. 118). SO ORDERED. (Signed by Judge Alvin K. Hellerstein on 1/14/20) (yv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------ --------------------------------------------- X
MICHAEL PHILIP KAUFMAN,
Plaintiff,
ORDER DENYING MOTION
TO EXCLUDE EXPERT
TESTIMONY
16 Civ. 2880 (AKH)
-againstMICROSOFT CORPORATION
Defendant.
------------------------------------------------------------- -- X
ALVIN K. HELLERSTEIN, U.S.D.J.:
USDC SONY
DOCl.\ fENT
ELECTRONICALLY FILED
DOC#: - - -.-t-.:---1?'..----DATE FILED: l
XJ
- +---++------
Plaintiff in this patent infringement action moves to exclude certain testimony of
Defendant's expert, Dr. Jeffrey Stec. For the reasons that follow, Plaintiffs motion is denied.
BACKGROUND
Plaintiff Michael Kaufman is the holder of U.S. Patent No. 7,885,981 (the "'981
Patent"), which concerns an invention for interacting with relational databases. Kaufman
brought the present action against Defendant Microsoft Corporation ("Defendant" or
"Microsoft") for direct infringement, inducing infringement, contributory infringement, and
willful infringement in connection with the '981 Patent.
"Upon finding for the claimant [in a patent infringement action] the court shall
award the claimant damages adequate to compensate for the infringement, but in no event less
than a reasonable royalty for the use made of the invention by the infringer, together with interest
and costs as fixed by the court." 35 U.S.C. ยง 284. Here, both parties have retained experts to
address this "reasonable royalty" calculation. In response to the opinions of Plaintiffs damages
expert, Microsoft submitted the Rebuttal Expert Report of Jeffery A. Stec, Ph.D. (the "Stec
Report"). Dr. Stec opines, among other things, that Microsoft would have made a lump sum
royalty payment to Kaufman of at most $230,000 if the parties had engaged in a hypothetical
negotiation of a license (the "Hypothetical License") at the time the '981 Patent issued. 1 Dr.
Stec's opinion relies in part on a settlement agreement (the "ADI Settlement") in a lawsuit (the
"ADI Litigation") filed against Microsoft by Advanced Dynamic Interfaces, LLC ("ADI"). In
the ADI Litigation, ADI alleged that Microsoft infringed patents for technology that Dr. Stec
finds is similar to the technology at issue in the present case. Under the ADI Settlement,
Microsoft paid $230,000 to be released from liability and to gain a license (the "ADI License")
to use ADI intellectual property.
Dr. Stec specifically considers the ADI Settlement in connection with Factors 2
and 15 of the 15-factor analysis announced in Georgia-Pacific Corp. v. US Plywood Corp., 318
F. Supp. 1116 (S.D.N.Y. 1970), mod. and aff'd, 446 F.2d 295 (2d Cir. 1971 ). Georgia-Pacific
provides a list of factors that may be considered in determining the reasonable royalty for a
patent license. 318 F. Supp. 1116 at 1120. Factor 2 is "[t]he rates paid by the licensee for the
use of other patents comparable to the patent in suit," and Factor 15 is "[t]he amount that a
licensor (such as the patentee) and a licensee (such as the infringer) would have agreed upon (at
the time the infringement began) if both had been reasonably and voluntarily trying to reach an
agreement." Georgia-Pacific, 318 F. Supp. at 1120.
Plaintiff moves to exclude Dr. Stec's testimony to the extent it relies on the ADI
Settlement. Plaintiff argues that Dr. Stec failed to take into account the particular posture of the
ADI Litigation and how that might have affected the ADI License's comparability to the
1
In this motion, Plaintiff does not challenge the admissibility of Dr. Stec's alternative analyses in which he arrives
at different royalty ranges by different methods.
2
Hypothetical License. Thus, Plaintiff says, it is inappropriate for Dr. Stec to use the value of the
ADI License as essentially a cap on the value of the Hypothetical License.
DISCUSSION
Thought Dr. Stec explicitly considered why technological similarities and certain
"economic and business considerations" make the ADI License and Hypothetical License
comparable, he does not comment directly on how the posture of the ADI Litigation affected the
settlement amount or how that might affect comparability to the Hypothetical License. See Stec
Rpt. at 47-49. Courts have excluded expert testimony that made similar omissions. See M2M
Solutions LLC v. Enfora, Inc., 167 F. Supp. 3d 665, 677-78 (D. Del. 2016) (excluding expert' s
testimony because, "most importantly," the analysis "virtually ignores the fact that . .. licenses
resulted from litigation settlements, providing a drastically different backdrop than the
hypothetical negotiation involving two willing licensors"); Spring Comms. Co. L.P. v. Comcast
IP Holdings, LLC, No. 12-cv-1013, 2015 WL 456154, at *2 (D. Del. Jan. 30, 2015) (excluding
expert's testimony where expert "provides no information regarding the nature of the litigation
or the context of the settlements, and thus there is no reason to believe that the settlements in
question are comparable").
However, the experts' opinions in those cases suffered from numerous other
infirmities, such as experts' disregard of more comparable licenses or failure to assess
technological comparability. Here, Dr. Stec sufficiently explained why "the most reliable license
in this record arose out of litigation" and is a permissible point of comparison. ResQNet. com,
Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010). Plaintiffs challenges to the comparability of
the ADI License and Hypothetical Licensed can be raised more appropriately on crossexamination. See Open Text SA. v. Box, Inc., No. 13-cv-04910, 2015 WL 393858, at *5-6 (N.D.
3
Cal. Jan. 29, 2015) (declining to exclude expert's testimony about licenses arising from
settlement agreements where opponent "point[ ed] to no evidence suggesting that the royalties
associated with the settlement agreements were depressed because they were entered into in the
context of litigation," "point[ ed] to no other licenses that it claims are more comparable," and
would be "free to grill [expert] at trial about these issues").
CONCLUSION
For the foregoing reasons, Defendant's motion to exclude expert testimony is denied.
The Clerk is directed to terminate the open motion (ECF No. 118).
SO ORDERED.
Dated:
New Yor~ ~ York
020
January
-1--f . .
4
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?