Hayden v. 2K Games, Inc. et al

Filing 178

Opinion and Order: For reasons set forth in this order, Plaintiff's motion Exclude the Expert Testimony of James E. Malackowski is denied. Judge Christopher A. Boyko on 8/15/2022. (L,Ja)

Case: 1:17-cv-02635-CAB Doc #: 178 Filed: 08/15/22 1 of 7. PageID #: 14189

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

JAMES HAYDEN,
Plaintiff,
vs.
2K GAMES, INC., et al.,
Defendants.

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CASE NO. 1:17CV2635
SENIOR JUDGE
CHRISTOPHER A. BOYKO
OPINION AND ORDER

CHRISTOPHER A. BOYKO, SR. J.:
This matter comes before the Court upon the Motion (ECF DKT #98*SEALED &
ECF DKT #100*PUBLIC VERSION) of Plaintiff James Hayden to Exclude the Expert
Testimony of James E. Malackowski. For the following reasons, the Motion is denied.
I. BACKGROUND
Plaintiff James Hayden filed his original Complaint on December 18, 2017. His
Fourth Amended Complaint was filed on August 19, 2019, alleging copyright infringement by
Defendants 2K Games, Inc. and Take-Two Interactive Software, Inc. Defendant Take-Two is
a worldwide developer, publisher and marketer of interactive entertainment and video games.
Plaintiff alleges that he is the tattoo artist who inked the copyrighted Tattoos on NBA players
Danny Green, LeBron James and Tristan Thompson, individuals depicted in Take-Two’s
popular basketball simulation series NBA 2K.
James E. Malackowski is the Co-Founder and Chief Executive Officer of Ocean
Tomo, LLC, the Intellectual Capital Merchant Banc™ firm providing industry-leading

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financial products and services related to intellectual property, including financial expert
testimony, valuation, strategy consulting, patent analytics, investment management and
transaction brokerage.
On more than fifty occasions, Mr. Malackowski has served as an expert in U.S.
Federal Court, State Court, Court of Chancery, the Ontario Superior Court of Justice and
international arbitrations on questions relating to intellectual property economics, including
valuation, reasonable royalties, lost profits, price erosion and commercial success.
Mr. Malackowski is a graduate of the University of Notre Dame with majors in
Accountancy and Philosophy. He is certified/accredited in Financial Forensics, Business
Valuation and Blockchain Fundamentals. He is a Certified Licensing Professional and a
Registered Certified Public Accountant in the State of Illinois; and has been certified to
receive United States Sensitive Security Information (SSI) as governed by Title 49 Code of
Federal Regulations.
Ocean Tomo, LLC and Mr. Malackowski were retained by Defendants Take-Two
Interactive Software, Inc. and 2K Games, Inc. in August of 2019, to develop opinions
regarding the form and amount of compensation, if any, available to Plaintiff if Defendants
are found liable to him for Copyright Infringement.
In his Report (ECF DKT #98-1*SEALED) provided on May 27, 2021, Mr.
Malackowski summarizes his opinions in this way:
Plaintiff has not experienced any actual damages as a result of the alleged copyright
infringement by Defendants. Plaintiff has not marketed his copyrights for use in video games
and he is not a developer or marketer of video games. Plaintiff has identified no evidence of
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lost customers or lost licensing opportunities for the copyrighted Tattoos.
Based on the reports of Dr. Nina Jablonski and Dr. Ian Bogost, there is no market for
licensing tattoos on the athletes on whom the tattoos are inked in real life for depiction in
video games. Moreover, such a market is unlikely to develop.
Tattoos were not identified in Dr. E. Deborah Jay’s survey as an important reason for
purchasing the NBA 2K games. No sales are motivated by the inclusion of the Tattoos in
these video games.
Using Dr. Bogost’s calculations that each Tattoo represents one-tenth of the player’s
torso and arms, and Dr. Bogost’s comparison of the size of the Tattoos to the entire computer
program, Mr. Malackowski finds that the profits applicable to the number of the Tattoos
found to infringe Mr. Hayden’s copyrights, if all of the Tattoos are found to be infringed by
the Accused Video Games, amounts to at most between $15,444 and $15,626. (Id. at 42).
However, Mr. Malackowski further concludes that because Dr. Jay’s survey shows
that no sales can be attributed to the depiction in these video games of the Tattoos, there are
“no calculable damages to award to Mr. Hayden under this measure of copyright infringement
damages.” (Id. at 43).
In his Motion to Exclude, Plaintiff contends that Mr. Malackowski uses unreliable
methods and data to artificially suppress the amount of damages to which Plaintiff is entitled
in the form of Defendants’ profits. Mr. Malackowski improperly eliminates other categories
of monetary damages to which Plaintiff is legally entitled. Plaintiff complains that the Report
relies upon the faulty surveys and reports of other proposed Defendant experts. Plaintiff
asserts that his own damages expert, Michal A. Malkiewicz, holds the opinion that there
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should be an additional apportionment of Take-Two’s profits from its sales of virtual currency
(“VC”) within the video games to the copyrighted Tattoos.
In opposition, Defendants point out that Plaintiff has not challenged
Mr. Malackowski’s qualifications nor objected to his opinion on the lack of a viable market.
Plaintiff lacks a concrete objection to the amount of damages Mr. Malackowski estimates;
rather, Plaintiff is dissatisfied with the number.
In response to the virtual currency issue, Defendants contend that Mr. Malackowski
has analyzed the evidence and demonstrated why no such relationship between the use of the
Tattoos in the NBA 2K games and VC exists, because: (a) the Tattoos cannot be purchased
[with VC] from the NBA 2K tattoo store, (b) the tattoo shop and MyPlayer tattoo
customization feature in NBA 2K for which VC can be used do not include the Tattoos,
(c) the Neighborhood feature for which VC can be used does not include the Tattoos and (d)
none of the statements made by Take-Two concerning recurrent consumer spending (i.e., VC)
in NBA 2K references the Tattoos. (See Rebuttal Report, ECF DKT #98-2*SEALED,
summary at 18–19).
II. LAW AND ANALYSIS
Expert Testimony
Pursuant to Federal Rule of Evidence 702, an expert by virtue of knowledge, skill,
experience, training or education may provide testimony to assist the trier of fact to
understand the evidence or to determine a fact in issue if the expert testimony is based on
sufficient facts or data; the testimony is the product of reliable principles and methods; and
the expert has applied the principles and methods reliably to the facts of the case.
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The standard set in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579
(1993) requires “that an expert’s opinion be based on a foundation grounded in the actual
facts of the case, that the opinion is valid according to the discipline that furnished the base of
special knowledge, and that the expert appropriately “fits” the facts of the case into the
theories and methods he or she espouses.” Redmond v. United States, 194 F.Supp.3d 606,
615 (E.D. Mich. 2016) (citing Daubert, 509 U.S. at 591-93). “[E]xpert testimony is not
admissible unless it will be helpful to the factfinder.” Redmond, id. Expert testimony is not
helpful when it is unreliable or irrelevant or “when it merely deals with a proposition that is
not beyond the ken of common knowledge.” Id. “The proponent of expert testimony must
establish all the foundational elements of admissibility by a preponderance of proof.” Nelson
v. Tenn. Gas Pipeline Co., 243 F.3d 244, 251 (6th Cir. 2001) (citing Daubert, 509 U.S. at 592
n.10).
The objective of Daubert’s “gatekeeping” function is to ensure the reliability and
relevancy of expert testimony. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152
(1999). The Supreme Court has held this “gatekeeping” obligation applies not only to
scientific testimony, but to all expert testimony. Id. at 147. Courts are not required to hold a
formal hearing on Daubert challenges. See Greenwell v. Boatwright, 184 F.3d 492, 498 (6th
Cir.1999). “[N]o matter how good” experts' “credentials” may be, they are “not permitted to
speculate.” Tamraz v. Lincoln Elec. Co., 620 F.3d 665, 671 (6th Cir. 2010) quoting Goebel v.
Denver & Rio Grande W. R.R. Co., 215 F.3d 1083, 1088 (10th Cir. 2000).
To reiterate, an expert may testify in the form of an opinion if it will assist the trier of
fact and if the testimony is the product of reliable principles and methods. Federal Rule of
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Evidence 702; Redmond, 194 F.Supp.3d at 614-615.
Copyright Infringement and Damages
“Damages are awarded to compensate the copyright owner for losses from the
infringement, and profits are awarded to prevent the infringer from unfairly benefitting from a
wrongful act.” Cotter v. Christus Gardens, Inc., 238 F.3d 420 (6th Cir. 2000) (quoting
H.R.Rep. No. 94-1476, at 161 (1976), reprinted in 17 U.S.C.A. § 504, at 146 (West 1996)).
17 U.S.C. § 504(b):
(b) Actual Damages and Profits.--The copyright owner is entitled to recover the
actual damages suffered by him or her as a result of the infringement, and any
profits of the infringer that are attributable to the infringement and are not
taken into account in computing the actual damages. In establishing the
infringer's profits, the copyright owner is required to present proof only of the
infringer's gross revenue, and the infringer is required to prove his or her
deductible expenses and the elements of profit attributable to factors other than
the copyrighted work.
Upon review of Mr. Malackowski’s Report and the applicable law, the Court finds that
his opinions and testimony are relevant, reliable and helpful to the factfinder.
Plaintiff does not substantively object to Mr. Malackowski’s credentials nor to his
market opinion; but Plaintiff strenuously objects to the conclusion that he has suffered nearly
no calculable damages due to Defendants’ alleged infringement.
Plaintiff’s challenge that Mr. Malackowski depends upon unreliable surveys and faulty
data proposed by Defendants’ other experts is unpersuasive at this point in the litigation. The
Court has considered the opinions of Dr. Jablonski, Dr. Jay and Dr. Bogost and has ruled them
admissible to a substantial degree. Thus, Mr. Malackowski is entitled to look to their findings
(within the admissibility parameters set by the Court) as he would to other evidence provided

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in the case.
Plaintiff takes issue with Mr. Malackowski’s failure to apportion any of Defendants’
profits from virtual currency purchased within the NBA 2K games as attributable to
infringement of the Tattoos; and points to his own damages expert’s calculation of virtual
currency profits. A dispute between experts on the calculation of available damages is subject
to cross-examination. Furthermore, the jury will be instructed that they can choose to believe
all or part or none of any witness’s testimony.
III. CONCLUSION
The Court determines that Mr. Malackowski’s report and opinions are relevant and
reliable and will assist the trier of fact. Therefore, the Motion (ECF DKT #98*SEALED &
ECF DKT #100*PUBLIC VERSION) of Plaintiff James Hayden to Exclude the Expert
Testimony of James E. Malackowski is denied.

IT IS SO ORDERED.
DATE: August 15, 2022

s/Christopher A. Boyko
CHRISTOPHER A. BOYKO
Senior United States District Judge

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