Correct Transmission, LLC v. Nokia Corporation et al

Filing 247

MEMORANDUM ORDER - granting in part and denies in part 117 . Signed by Magistrate Judge Roy S. Payne on 3/26/2024. (CH)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
CORRECT TRANSMISSION, LLC
Plaintiff,

v.

NOKIA OF AMERICA CORP.,
Defendant.

§
§
§
§
§
§
§
§

CIVIL ACTION NO. 2:22-cv-0343-JRG-RSP

MEMORANDUM ORDER
Before the Court is Plaintiff Correct Transmission, LLC’s Motion to Strike Certain
Opinions of Expert Melissa A. Bennis. (Dkt. No. 117.) After consideration, the Court GRANTSIN-PART and DENIES-IN-PART the motion as provided below.
I.

BACKGROUND
This case addresses the infringement and validity of five patents: U.S. Patent No.

6,876,669, U.S. Patent No. 7,127,523, U. S. Patent No. 7,283,465, U.S. Patent no. 7,768,928; and
U.S. Patent No. 7,983,150. (Dkt. No. 1.) Ms. Bennis provides damages opinions on behalf of
Nokia.
II.

APPLICABLE LAW
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.
Rule 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

1

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 the Fifth Circuit and other courts have identified
various factors that the district court may consider in determining whether an expert’s testimony
should be admitted, the nature of the factors that are appropriate for the court to consider is dictated
by the ultimate inquiry—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) (“‘[t]he trial court’s role as gatekeeper [under
Daubert] is not intended to serve as a replacement for the adversary system.’ . . . Thus, while
exercising its role as a gate-keeper, a trial court must take care not to transform a Daubert hearing
into a trial on the merits,” quoting Fed. R. Evid. 702 advisory committee note). As the Supreme
Court explained in Daubert, 509 U.S. at 596, “Vigorous cross-examination, presentation of
contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate

2

means of attacking shaky but admissible evidence.” See Mathis v. Exxon Corp., 302 F.3d 448, 461
(5th Cir. 2002).
III.

ANALYSIS
A. THE NETWORKS3 LICENSE
CT first complains of ¶¶74-75, 79, 91, 155, 233 (first and second bullet) as inappropriately

relying on “a proposed purchase transaction in which Orckit proposed to sell its patent portfolio to
Networks3” to limit damages. (Mot. at 2.) CT complains it is improper to use an unconsummated
patent sale to limit a reasonable royalty in this way and the proposed sale was not economically
comparable to the hypothetical negotiation in this case. (Id. at 2-4.)
Nokia counters that Ms. Bennis did not advocate for a universal ceiling but rather
advocated that in this case, in light of the particulars of this case, the transaction suggests a limit
on damages. (Opp. at 3.) Nokia points to Ms. Bennis’s explanation that “[t]he hypothetical
negotiators would consider that Orckit was willing to sell its entire patent portfolio around the time
of the hypothetical negotiation for $5 million to $8 million.” (Id.) Nokia further counters that case
law supports the admission of patent sales transactions as admissible and relevant. (Id. at 4-5.)
CT replies that Ms. Bennis’s report does not demonstrate that the evidence has any actual
relevance. (Reply at 1-2.) CT contends that at her deposition Ms. Bennis was unable to provide
any criteria that she would consider in deciding when and whether a patent purchase price
establishes a ceiling on a reasonable royalty. (Id. at 3 (citing Bennis Dep. at 154:1-12; 155:18157:9; 157:23-160:17; 161:8-162:17).) Ultimately, Ms. Bennis provides “I’ve tried to read
Paragraph 180 to put into the context the language. It’s really not that more involved than
suggesting that this is a benchmark worthy of consideration. That’s my opinion.” (Bennis Dep. at
166:16-24.) CT contends that in light of this, Ms. Bennis offers no reliable analysis or explanation
for her opinions. (Reply at 2.)
3

The Court finds the Networks3 negotiation is not relevant to a hypothetical negotiation.
While an offer to sell a patent may be relevant, Ms. Bennis has presented insufficient grounds to
demonstrate the Networks3 transaction—an unconsummated offer to purchase--is relevant here.
Ms. Bennis’s blanket assertion that it “is a benchmark worthy of consideration” and discussion of
a third party’s finding that the transaction would not be profitable is insufficient here. In effect,
Ms. Bennis is acting as a conduit for the opinion of a third party in a manner that significantly
limits CT’s ability to cross-examine that opinion. Further, the Networks3 negotiation is acutely
problematic where the offer was made by and to third parties, not the plaintiff, especially in a
foreign country where claims were being asserted against any proposed proceeds.
CT’s motion to strike ¶¶74-75, 79, 91, 155, 233 (first and second bullet) of Bennis’s report
is GRANTED.
B. RECITATION OF TECHNICAL EXPERTS
CT argues that ¶¶109-121 should be stricken as a repetition of the conclusions of Nokia’s
technical experts that “not all of the Accused Products have the accused features, and that not all
purchasers of the Accused Products practice the method and system claims asserted by CT (¶¶109121).” (Mot. at 5.) CT complains that Ms. Bennis cannot in this way act as the mouthpiece of
another witness and that the underlying opinions of Nokia’s technical experts are counter to the
evidence in this case. (Id. at 5-7.)
Nokia responds it is proper for Ms. Bennis to rely on the opinions of Nokia’s technical
experts. (Opp. at 6.) Nokia contends Ms. Bennis “uses these facts in her analysis of the damages
base and criticizes Mr. Dell’s failure to adjust his damages base to account for the extent of use of
the accused features.” (Id. at 7.) Nokia argues CT’s position amounts to a dispute on the reliability
of the evidence underlying Ms. Bennis’s opinion, which should be explored on cross-examination
not stricken. (Id.)
4

The Court agrees with Nokia. An expert is permitted to rely upon the testimony of other
witnesses in developing their opinions, including the testimony of other experts. That is what Ms.
Bennis has done here. Likewise, CT’s contention that the underlying opinions are counter to the
evidence is best addressed on cross-examination, not under Daubert.
C. LACK OF MARKING
CT next contends ¶129 should be stricken. (Mot. at 7.) CT argues Ms. Bennis should not
be permitted to opine that damages must be reduced in this case for lack of marking. (Id.) CT
contends Ms. Bennis’ opinions are based on the unsupported opinions of Nokia’s technical expert
witnesses and amount to impermissible legal instruction. (Id.)
Nokia counters that experts are permitted to rely on each other and “Ms. Bennis responds
to Mr. Dell’s opinions setting forth an alternative running royalty assuming damages begin from
the date of the complaint, in the event that Nokia’s marking defense is accepted.” (Opp. at 11.)
Nokia argues Ms. Bennis identifies the basis of her marking opinion and then applies the result of
that opinion to the damages theory. (Id.)
The Court agrees with Nokia. First, the Court has found Nokia met its initial burden of
production as to marking thus requiring CT to demonstrate that §287 is satisfied. Dkt. No. 235. As
such, Ms. Bennis may premise her opinion with “should marking not be found.”
D. “INADEQUATE” RECORDKEEPING
CT takes issue with Ms. Bennis’s contention that “Nokia’s accounting system does not
allow for revenue to be tied to certain specific models of the products at issue, Dell’s running
royalty analysis is inflated, and he should have used a lump-sum royalty instead” while at the same
time arguing “Nokia’s inadequate data production” supports Ms. Bennis’s lump-sum royalty
theory. (Mot. at 8.) CT contends this argument amounts to a position that Nokia’s inadequate
record-keeping can be used to limit CT’s compensation for Nokia’s infringement, that Nokia can
5

benefit from its own shortcomings. (Id.) CT argues that because a hypothetical negotiation analysis
necessarily involves uncertainty and that this Court has held a damages expert may include all
potential uses in a royalty base when defendants failed to produce data allowing for apportionment,
its expert is permitted to use Nokia’s produced data without criticism. (Id.)
CT further argues Nokia could have produced more granular sales data but did not. (Id. at
9, n3.) In this light, CT contends Nokia has no grounds to criticize Mr. Dell. (Id.)
Nokia responds that Ms. Bennis’s criticism is directed not to mandating a lump-sum royalty
but rather that Mr. Dell should have adjusted his royalty base as the sales data it is based on
includes non-accused models. (Opp. at 8.) Nokia contends such a failure is not permissible under
Federal Circuit case law. (Id.) Nokia also argues that CT’s arguments based on alleged discovery
misconduct are misleading. (Id.) Nokia contends its witnesses never represented that there is more
granular data that could have been used. (Id. at 9.)
The Court agrees with Nokia. First, Daubert is not the appropriate vehicle for addressing
discovery disputes. As such the Court does not find that Nokia is benefiting from any discovery
misconduct. Second, Ms. Bennis’s opinions that Mr. Dell should have discounted certain figures
to account for included, but unaccused, products is consistent with the case law. See Cyntec Co.,
Ltd. v. Chilisin Elecs. Corp., 84 F.4th 979, 989 (Fed. Cir. 2023) (finding the Court should have
stricken expert testimony relying on 10-K sales data that failed to account for “included sales of
irrelevant products and services.”).
E. FUNDING AND PATENT ACQUISITION AGREEMENT
CT also requests the Court strike ¶¶165-66 as discussing a funding agreement related to
CT’s acquisition of the Asserted Patents. (Mot. at 9.) CT contends this would be inconsistent with
the Court’s standing order on motions in limine precluding discussion of litigation funding or
attorney-fee compensation or structure. (Id.)
6

Nokia does not specifically respond to this argument. (See Opp.) Thus the Court grants
CT’s request to strike ¶¶165-66 as unopposed.
F. NON-INFRINGING ALTERNATIVES
CT argues ¶¶186-90 should be stricken since Ms. Bennis provides no independent analysis
and merely parrots opinions of other experts. (Mot. at 9.) CT contends the underlying opinions are
improper as not timely disclosed. (Id.) CT also contends Ms. Bennis performs no economic
analysis with the non-infringing alternatives that would justify her reliance on Nokia’s technical
experts. (Id. at 10.)
Nokia responds it is appropriate for Ms. Bennis to rely on Nokia’s technical experts and
that “Ms. Bennis opines that the hypothetical negotiators would have considered the existence of
NIA’s in determining an appropriate royalty.” (Opp. at 12.)
The Court strikes ¶¶186-90 of Ms. Bennis’s report. While, as discussed above, an expert is
permitted to rely on other experts in preparing her own opinion, that is not what Ms. Bennis has
done here. Rather, Ms. Bennis recognizes that other experts have opined that non-infringing
alternatives exist and then notes that this should be considered. (See Dkt. No. 117-1 at ¶233.) Ms.
Bennis offers no opinions regarding how the non-infringing alternatives should factor into the
hypothetical negotiation. (See id.) Without providing any expert analysis, Ms. Bennis will not be
permitted to testify regarding non-infringing alternatives. Robroy Indus.-Texas, LLC v. Thomas &
Betts Corp., No. 2:15-CV-512-WCB, 2017 WL 1319553, at *3 (E.D. Tex. Apr. 10, 2017).
G. MEANING OF LICENSES
CT contends in ¶¶194 and 233 (eighth bullet) Ms. Bennis interprets an agreement “by
purporting to tie its terms with activities such as ‘use,’ distribution,’ and ‘documentation’” to
conclude the agreement is a supplier distributor agreement and thus not comparable for a
hypothetical negotiation. (Mot. at 10-11.) CT argues these issues are a matter of contract
7

interpretation reserved for the Court to decide and as Ms. Bennis is not a lawyer she has no
expertise to offer here. (Id. at 11) CT further argues that Ms. Bennis does not offer opinions
explaining an industry term or interpreting the license based on trade or usage that an expert may
be permitted to offer. (Id.) Finally, CT contends it would be confusing to permit Ms. Bennis to
opine that “Orckit has previously entered into licenses with ALU and Nokia that covered certain
of its patented technology.” (Id.) CT argues this would lead the jury to believe that Nokia is already
licensed. (Id.)
Nokia responds that Ms. Bennis does not offer opinions interpreting the agreement “in a
legal manner.” (Opp. at 10.) Rather, Nokia contends Ms. Bennis merely quotes and summarizes
the agreement. (Id.) Nokia points to Ms. Bennis’s deposition to support that Ms. Bennis only
commented to “distinguish [the agreement] because it was a supplier-distributor agreement” and
had no intention of offering legal opinions at trial. (Id. at 11.)
The Court agrees with Nokia. Ms. Bennis’s report largely simply quotes from the
agreement and offers no legal opinions. The only arguably “legal opinion” Ms. Bennis offers is
that the agreement offers a license to the asserted patents because the agreement relates to a product
Nokia contends practiced the asserted patents. (Dkt. No. 117-1 at ¶194.) Ms. Bennis offers this
opinion to provide context to her opinion that “in the context of the larger supplier/distributor
relationship precipitated by the agreement” such a license is not relevant to the hypothetical
negotiation. (Id.) Because the only arguably legal opinion is not Ms. Bennis’s ultimate opinion and
she could have just simply have argued “to the extent this agreement covers the patents in suit it
is not relevant as part of a larger supplier/distributor relationship,” it does not support striking the
testimony.
Further, Ms. Bennis’s testimony that “Orckit has previously entered into licenses with ALU

8

and Nokia that covered certain of its patented technology,” (Id. at ¶233), is not a legal opinion.
Rather it simply summarizes the intellectual property portion of the agreement at issue. While the
wording may be somewhat confusing, that is not sufficient grounds to strike the testimony here.
H. MR. PITCOCK’S EMPLOYMENT HISTORY
CT argues Ms. Bennis should not be permitted to comment on Mr. Pitcock’s prior

.

employment, in particular a dispute with prior law firms. (Mot. at 11-12.) Nokia argues this is
relevant information to the hypothetical negotiation as information the parties would know about
each other when entering the hypothetical negotiation. (Opp. at 12-13.)
The Court finds that such testimony has no relevance to the issues of this case and strikes
such testimony from Ms. Bennis’s report, in particular ¶20. 1
IV.

CONCLUSION
The Court GRANTS IN PART and DENIES IN PART CT’s motion to strike Ms. Bennis’

report as provided above.
SIGNED this 3rd day of January, 2012.
SIGNED this 26th day of March, 2024.

____________________________________
ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE

The Court likewise GRANTS CT’s motion for protective order (Dkt. No. 87) on this same point. Mr. Pitcock’s
employment history is not relevant in this case and Nokia’s exploration into such would be harassing.

1

9