MOBILE EQUITY CORP. v. WALMART INC.
MEMORANDUM ORDER re 201 Opposed SEALED MOTION DAUBERT MOTION TO STRIKE OPINIONS OFFERED BY DR. STEPHEN BECKER filed by WALMART INC... Signed by Magistrate Judge Roy S. Payne on 9/27/2022. (nkl, )
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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MOBILE EQUITY CORP.,
Case No. 2:21-cv-00126-JRG-RSP
Before the Court is the Motion to Strike Opinions Offered by Dr. Stephen Becker filed by
Defendant Walmart Inc. Dkt. No. 201.
On April 7, 2021, Plaintiff Mobile Equity Corp. filed the present suit alleging Walmart
infringes U.S. Pat. Nos. 8,589,236 (the “’236 Patent”) and 10,535,058 (the “’058 Patent”). Mobile
Equity served the expert report of Dr. Becker concerning damages. Dkt. No. 201-2. Walmart seeks
to exclude Dr. Becker’s damages opinions in their entirety for certain alleged deficiencies that
render Dr. Becker’s opinions unreliable under Fed. R. Evid. 702.
An expert witness may provide opinion testimony 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 on sufficient facts or data; (c) the testimony is the product
of reliable principles and methods; and (d) the expert has reliably applied the principles and
methods to the facts of the case.” Fed. R. Evid. 702.
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Federal Rule of Evidence 702 requires a district court to make a preliminary determination,
when requested, as to whether the requirements of the rule are satisfied with regard to a particular
expert’s proposed testimony. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149 (1999);
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 592–93 (1993). District courts are accorded
broad discretion in making Rule 702 determinations of admissibility. Kumho Tire, 526 U.S. at 152
(“the trial judge must have considerable leeway in deciding in a particular case how to go about
determining whether particular expert testimony is reliable”). Although there are various factors
that the district court may consider in determining admissibility the ultimate inquiry is whether the
expert’s testimony is sufficiently reliable and relevant to be helpful to the finder of fact and thus
to warrant admission at trial. United States v. Valencia, 600 F.3d 389, 424 (5th Cir. 2010).
Importantly, in a jury trial setting, the Court’s role under Daubert is not to weigh the expert
testimony to the point of supplanting the jury’s fact-finding role; instead, the Court’s role is limited
to that of a gatekeeper, ensuring that the evidence in dispute is at least sufficiently reliable and
relevant to the issue before the jury that it is appropriate for the jury’s consideration. See Micro
Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1391–92 (Fed. Cir. 2003) (applying Fifth Circuit law)
(“When, as here, the parties’ experts rely on conflicting sets of facts, it is not the role of the trial
court to evaluate the correctness of facts underlying one expert’s testimony.”); Pipitone v.
Biomatrix, Inc., 288 F.3d 239, 249–50 (5th Cir. 2002). “Vigorous cross-examination, presentation
of contrary evidence, and careful instruction on the burden of proof are the traditional and
appropriate means of attacking shaky but admissible evidence.” Daubert, 509 U.S. at 596.
Walmart makes two arguments as to why Dr. Becker’s opinions should be excluded under
Rule 702: (1) Dr. Becker fails to separately opine about the reasonable royalty in the event only
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the ’058 Patent is found infringed and valid, and (2) Dr. Becker fails to apportion out the unclaimed
or conventional features found in the accused product from his reasonable royalty analysis. The
Court ultimately finds both arguments unpersuasive.
a. Dr. Becker’s alleged failure to account for the ’058 Patent
Walmart argues that Dr. Becker’s opinions are not helpful to the jury if only the ’058 Patent
is found valid and infringed and therefore should be excluded. Dkt. No. 201 at 5-8. In his report,
Dr. Becker opines that Mobile Equity is entitled to “a one-time lump-sum reasonable royalty of
$50 million for a fully paid-up license” to both of the asserted patents. Dkt. No. 201-2 at ¶ 13. Dr.
Becker does not provide damages opinions addressing the scenario where only the ’058 Patent is
found infringed and valid.
Because Dr. Becker does not provide an analysis specific to the ’058 Patent, Walmart
argues Dr. Becker’s opinions do “not conform to Federal Circuit authority” and should be
excluded. Dkt. No. 202 at 5 (citing Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295,
1310 (Fed. Cir. 2007)). Additionally, Walmart argues that Dr. Becker’s opinions would be
“useless” to the jury in the event only the ’058 Patent is found infringed because the hypothetical
negotiation in 2020 for a license to the ’058 Patent alone would be materially different than the
hypothetical negotiation in 2015 for a license to both asserted patents. Id. at 5-7. Thus, Dr. Becker’s
failure to account for infringement of only the ’058 Patent renders his opinions “fatally flawed”
and unhelpful to the jury. Id. at 5 (citing Cassidian Commc’ns, Inc. v. Microdata GIS, Inc., No.
2:12-cv-00162-JRG, 2013 11322510, at *2 (E.D. Tex. Dec. 3, 2013)).
Mobile Equity’s primary argument in response is that Walmart misapplies the law it cites
and has failed to offer case law or evidence attacking Dr. Becker’s methodology. Dkt. No. 233 at
6-8. Furthermore, Mobile Equity argues that Dr. Becker’s alleged failure to address a specific
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scenario—here, if only the ’058 Patent is infringed—does not render the rest of his opinions
inadmissible. Dkt. No. 292 at 2-3.
Here, the Court agrees with Mobile Equity. First, the Federal Circuit in the portion of
Verizon cited by Walmart does not address the reliability of an expert’s opinions at all, let alone
whether to exclude an expert’s opinions as unhelpful for failure to assign damages per patent in
suit. See Verizon, 503 F.3d at 1309-10. Second, this Court in Cassidian excluded the expert’s
opinions because all of the expert’s opinions were based on an incorrect hypothetical negotiation
date. Cassidian, 2013 WL 11322510, at *2. Here, Walmart does not contest that, for a license to
both of the asserted patents, Dr. Becker correctly identified that the hypothetical negotiation would
occur in December 2015. Thus, Dr. Becker’s opinions are not unreliable.
Turning to Walmart’s other argument, Dr. Becker’s failure to provide opinions addressing
the scenario where only the ’058 Patent is found infringed does not render the rest of his opinions
inadmissible. Finjan, Inc. v. Sophos, Inc., No. 14-cv-01197-WHO, 2016 WL 4560071, at *4 (N.D.
Cal. Aug. 22, 2016) (“An expert's testimony is not made unreliable simply because it does not
address certain issues or offer an opinion on every potential topic.”); see also Tri Investments, Inc.
v. United Fire & Casualty Co., No. 5:18-cv-116, 2019 WL 13114345, at *4 (S.D. Tex. Nov. 15,
2019) (“Whether or not [an expert] fails to provide an opinion on causation does not make his
opinions . . . inadmissible. It may simply mean that [plaintiff] will not be able to establish causation
through [the expert’s] testimony.”); see also Sting Soccer Operations Grp. LP v. JP Morgan Chase
Bank, N.A., No. 4:15-cv-00127-ALM, 2016 WL 4094980, at *5 (E.D. Tex. Aug. 2, 2016) (“The
Court finds that [the expert’s] failure to consider Plaintiff's criminal conviction does not render his
opinion as to causation inadmissible under the circumstances.”). Therefore, the Court does not
exclude Dr. Becker’s opinions for a failure to provide opinions specific to the ’058 Patent alone.
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b. Dr. Becker’s failure to properly apportion his royalty analysis
Next, Walmart argues that Dr. Becker fails to apportion out the conventional or unclaimed
features of the accused product, Walmart Pay, and therefore his opinion should be excluded. Dkt.
No. 201 at 8-12. According to Walmart, Dr. Becker not only fails to exclude these conventional
features but affirmatively relies on them. Id. at 9-10 (listing examples of features Walmart asserts
were improperly included in Dr. Becker’s damages analysis). Furthermore, Walmart argues that
Dr. Becker’s failure to apportion renders his other opinions related to non-infringing alternatives
(NIAs) unreliable. Id. at 11-12.
In response to Walmart’s arguments, Mobile Equity focuses on the methods Dr. Becker
applied in his report. Dkt. No. 233 at 1-3, 8-9. In general, Mobile Equity explains that Dr. Becker
utilizes an “opportunity-cost model,” which bases the reasonable royalty on “the cost differential
to Walmart between using the accused product and using, an effectively similar, non-infringing
alternative.” Id. at 1-2. Based on the model Dr. Becker used, Mobile Equity asserts that Dr.
Becker’s opinions apportioned out the conventional or unclaimed features. Id. at 9.
The Court finds that Dr. Becker applied a reliable method of determining the reasonable
royalty. In Prism Technologies LLC v. Sprint Spectrum L.P., 849 F.3d 1360 (Fed. Cir. 2017), the
Federal Circuit stated that a patentee is required to tie the proof of damages to the “footprint” of
the claimed invention. Id. at 1376. The Federal Circuit went on to state that this requirement may
be “met if the patentee adequately shows that the defendant’s infringement allowed it to avoid
taking a different, more costly course of action. A price for a hypothetical license may
appropriately be based on consideration of the ‘costs and availability of non-infringing
alternatives’ and the potential infringer’s ‘cost savings.’” Id. (quoting Aqua Shield v. Inter Pool
Cover Team, 774 F.3d 766, 771-72 (Fed. Cir. 2014)).
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Here, Dr. Becker states that his reasonable royalty opinions apportion out unclaimed or
conventional features by focusing on the cost to Walmart of implementing NIAs:
the primary driver of the outcome of the hypothetical negotiation is the
consideration of non-infringing alternatives. . . . By focusing on the differences
between the accused infringing version of Walmart Pay and the alternatives
considered by Walmart at the time, my analysis isolates the incremental benefits to
Walmart provided by the Patents-in-Suit. As such, the resulting royalty is
apportioned to the ‘footprint’ of the invention.
Dkt. No. 201-2 at ¶ 182.
Thus, after reviewing his report, the Court finds that Dr. Becker applied a reliable method
of determining a reasonable royalty as described in Prism. Therefore, Dr. Becker’s opinions are at
least sufficiently reliable and relevant to the issue of damages for the jury to consider. Finally,
Walmart’s remaining issues with Dr. Becker’s opinions are with his conclusions, not his
methodology. These issues are best addressed by “[v]igorous cross-examination, presentation of
contrary evidence, and careful instruction on the burden of proof.” Daubert, 509 U.S. at 596.
Therefore, the Court does not exclude Dr. Becker’s opinions.
For the reasons stated above, the Court DENIES the motion.
SIGNED this 3rd day of January, 2012.
SIGNED this 27th day of September, 2022.
ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE
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