National Oilwell DHT, LP v. Amega West Services, LLC

Filing 95

ORDER denying 82 Sealed Motion. Signed by Judge Nancy F Atlas on 4/7/2020. (Atlas, Nancy)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION

NATIONAL OILWELL DHT, L.P.,
Plaintiff,
v.
AMEGA WEST SERVICES, LLC,
Defendant.

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CIVIL ACTION NO. 2-14-1020

MEMORANDUM AND ORDER
This patent case is before the Court on the Motion to Exclude Testimony of
Brett Reed (“Motion”) [Doc. # 82] filed by Defendant Amega West Services, LLC
(“Amega”), seeking to exclude Reed’s opinions on damages as unsupported by
sufficient facts or data. Plaintiff National Oilwell DHT, L.P. (“NOV”) filed a
Response [Doc. # 91], and Amega filed a Reply [Doc. # 94]. Having reviewed the full
record and applicable legal authorities, the Court denies the Motion.
I.

BACKGROUND
NOV is the owner of the Patents-in-Suit, which are directed to vibration tools

for use in drilling operations. NOV filed this lawsuit, alleging that Amega is
infringing the Patents-in-Suit through its AmegaVIBE friction reduction drilling tools.
Reed, NOV’s damages expert, issued a Report dated December 9, 2019. In the
Report, Reed provides two alternative damages calculations. See Expert Report of
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Brett L. Reed, Exh. A to Motion. He calculates NOV’s alleged damages based on a
reasonable royalty. Alternatively, he calculates NOV’s damages based on NOV
having approximately 80% of the market share for the relevant friction reduction
technology over the five-year damages period. Under this method of calculating
damages, Reed opines that NOV is entitled to recover as lost profits 80% of Amega’s
income from the accused devices, plus a reasonable royalty for the remaining 20%.
Amega challenges Reed’s lost profits opinion, arguing that there is no reasonable
factual basis for the conclusion that NOV has consistently held 80% of the market
share.
Amega filed its Motion seeking to exclude Reed’s damages calculations based
on NOV’s alleged lost profits. The Motion has been fully briefed and is now ripe for
decision.
II.

LEGAL STANDARDS FOR EXPERT TESTIMONY
The admissibility of expert testimony in a patent case is a procedural issue

governed by the law of the regional circuit in which the district court resides. See
Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1390-91 (Fed. Cir. 2003). There
is “no basis for carving out a special rule as to experts in patent cases.” Sundance,
Inc. v. DeMonte Fabricating Ltd., 550 F.3d 1356, 1360 (Fed. Cir. 2008).

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A qualified witness may offer opinion testify if, inter alia, the testimony is
based on sufficient facts or data.1 See FED. R. EVID. 702; Weiser-Brown Operating
Co. v. St. Paul Surplus Lines Ins. Co., 801 F.3d 512, 528 (5th Cir. 2015). Although
the district court must ensure that an expert uses reliable methods to reach his
opinions, the district court “does not judge the expert conclusions themselves.” See
Williams v. Manitowoc Cranes, L.L.C., 898 F.3d 607, 623 (5th Cir. 2018).
An expert may base his opinion on facts or data that he has been provided. See
FED. R. EVID. 703. “If experts in the particular filed 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.” Id. Corporate records, and summaries of
corporate records, are generally data on which a damages expert may rely. See In re
Promedco of Las Cruces, Inc., 2003 WL 21962443, *6 (N.D. Tex. Aug. 12, 2003)
(citing Simpson v. James, 903 F.2d 372, 378 n.20 (5th Cir. 1990)).
III.

ANALYSIS
Amega argues that Reed’s lost profits opinion should be excluded because it is

based exclusively on a two-page NOV document regarding North America market
share of various companies’ drilling vibration tools. See NOV Document, Exh. B to
Motion. Amega challenges the accuracy of the NOV document, including NOV’s
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Amega does not challenge Reed’s qualifications as an expert witness on damages in
this case, and does not argue that his lost profits methodology is unreliable.

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inability to identify the document’s author. As noted above, however, a damages
expert is entitled to rely on corporate records and summaries when forming his
opinions. At trial, Amega will have an opportunity to challenge the document’s
accuracy, through cross-examination of Reed and other NOV witnesses. Amega’s
concerns about the document’s accuracy is not a basis for excluding Reed’s testimony
at trial. It is not this district court’s role to “judge the expert conclusions themselves.”
See Williams, 898 F.3d at 623.
Additionally, NOV states in its reply that Reed did not base his lost profits
opinions on the NOV document alone.

Instead, Reed based his opinions on

conversations with NOV employees and an analysis of revenue data from NOV and
Amega to estimate market share. Reed states that he also analyzed Amega’s quotes
to prospective clients, noting that approximately 80% of customers receiving quotes
from Amega between 2014 and 2018 were NOV customers.
Amega argues also that Reed’s lost profits opinions should be excluded because
they involve a “multi-million dollar damages figure” that would unfairly “skew the
damages horizon for the jury.” See Motion, p. 9. Amega complains also that Reed’s
market share analysis will be the only one presented at trial because its own damages
expert did not conduct a market share calculation. Neither of these arguments present
a legal basis for excluding otherwise admissible expert testimony on damages.

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IV.

CONCLUSION
Reed’s damages opinions regarding NOV’s market share and lost profits are

based on sufficient facts and data under Rules of Evidence 702 and 703. Therefore,
it is hereby
ORDERED that Amega’s Motion to Exclude Testimony of Brett Reed [Doc.
# 82] is DENIED.
SIGNED at Houston, Texas, this 7th day of April, 2020.

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE

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