Expert’s Reasonable Royalty Analysis May Not Include “Price Effect”

The court granted defendant's motion to exclude the opinions of plaintiff's compensatory damages expert regarding the "price effect" on a reasonable royalty. "[Plaintiff's expert] attributes more than half of his reasonable royalty rate, $71, to what he calls the 'price effect.' As [he] describes it, 'the pricing effect is based on [plaintiff's] initial and subsequent pricing being lower than its intended pricing. In the event [plaintiff] could have sold its valves at the intended higher prices, and [it] expected higher prices without [defendant] in the market, these otherwise higher prices are additional profits [plaintiff] would have been licensing out and are attributable to the Accused Products.'. . . [Plaintiff's expert] does not have the proper foundation to conclude that [plaintiff] would have made every sale that [defendant] did at its intended higher price. . . . [T]he 'price effect' is twice as large as the value that [he] attributes to the patented product. [Plaintiff's expert] is attempting to use the label 'price effect' to cover what appears to be lost profits. . . . For these reasons, [the expert] cannot include the 'price effect' in his reasonable royalty analysis."

Sloan Valve Company v. Zurn Industries, Inc., et al, 1-10-cv-00204 (ILND March 26, 2014, Order) (St. Eve, J.)

No Reference to IPR During Trial

The court granted plaintiff's motion in limine to preclude reference to a pending inter partes review proceeding. "Plaintiff moves the Court to preclude Defendants from making any reference to the pending inter partes review proceeding on the [patent-in-suit], arguing that reference to incomplete inter partes review is purely speculative and would be highly prejudicial to Plaintiff. Defendants argue that this evidence is probative of Defendants’ defenses, and, any prejudicial effect could be alleviated by jury instructions. The Court finds that the evidence would be highly prejudicial to Plaintiff and confusing to the jury, and Defendants are thus precluded from offering evidence of the pending inter partes review process."

NXP BV v. Research In Motion Ltd., et al, 6-12-cv-00498 (FLMD March 25, 2014, Order) (Kane, J.)

Loss of Sale in Competitive Bid May Establish Lost Profits Causation Without Apportionment

The court denied defendant's motion for summary judgment that the entire market value rule did not apply and that plaintiff was required to apportion damages. "[T]rying to prove but-for lost profits in a case involving devices that may include dozens of distinct and possibly separately patented products can . . . be 'an exceedingly difficult' task, fraught with the risk of total failure. And a failure to apportion between asserted patents bears its own risks in those circumstances. Defendant . . . argues that . . . Plaintiff will fail. Plaintiff responds that the bid requirements of the major customers for whose business the parties compete, and Defendant’s marketing during that competition, show that the infringement was the but-for cause of the lost sales. . . . Defendant’s argument that Plaintiff inappropriately applies the entire market value is therefore not a search for a smaller physical unit or a request to exclude a follow-on sale, but a demand that Plaintiff show how much of its profit results from the patented features. Plaintiff has elected not to make that general showing, but instead seeks to convince the jury that in this particular commercial context, it would have made the sale but for the infringement. While the jury might not agree, Plaintiff has provided enough evidence in support of that theory to avoid summary judgment."

Universal Electronics Inc. v. Universal Remote Control Inc., 8-12-cv-00329 (CACD March 24, 2014, Order) (Guilford, J.)

Judge Robinson Adopts New Procedure for Patent Cases Based on Feedback from Patent Study Group

In response to feedback from the Court’s Patent Study Group, the district judge advised the parties that it would "change the way [the court] process[es] patent cases." "Any non-ANDA patent case that has had a scheduling order entered in the past six months will presumptively be switching to the new process, keeping to the extent possible the pretrial and trial dates, but probably having to add and/or change other status and hearing dates. I ask that you confer verbally with opposing counsel consistent with my new orders, which expand upon your responsibilities under Fed. R. Civ. P. 26(f) and 16, in order to conform your current order into the new format prior to meeting with me. . . . Clearly . . . the very nature of patent litigation has changed, and the message sent by virtually all participants in the PSG was that my process could better adjust to those changes."

HBAC MatchMaker Media Inc. v. CBS Interactive Inc., 1-13-cv-00428 (DED March 24, 2014, Order) (Robinson, J.)

No Heightened Pleading Standard for System Claims

The court denied defendant's motion to dismiss plaintiff's direct infringement claim for failure to state a claim. "[Defendant] asserts that [plaintiff's] complaint lacks factual allegations that [defendant] 'controls' or 'uses' all portions of the claimed invention or that [defendant] combines all claimed elements necessary to 'make' the system. [Defendant] further argues that while Form 18 is adequate in complaints of direct infringement of method patent claims, it does not satisfy the pleading standard for system patent claims. The sole case [defendant] cites to support a heightened pleading standard for systems claims is Centillion Data Systems, LLC v. Qwest Communications Int’l, Inc., 631 F.3d 1279 (Fed. Cir. 2011). However, in Centillion, the Federal Circuit was considering an appeal of summary judgment, not a motion to dismiss. Further, while Centillion did define the standard for what constitutes 'use' of a system claim, there is nothing therein to suggest the Federal Circuit intended to raise the pleading standard for system claims. Accordingly, this Court will not adopt the higher standards [defendant] advocates."

Uniloc USA, Inc. et al v. Activision Blizzard, Inc., 6-13-cv-00256 (TXED March 21, 2014, Order) (Davis, J.)

Daubert Objection Procedure: Loser Pays With Trial Time

The court denied without prejudice the parties' various motions to strike expert reports and exclude expert testimony. "The approximate 500 pages of paper constituting these motions, responses, sur-responses, and sur-sur-responses is an indication that the parties wish to pre-try this case by lengthy and complicated motions, necessitating the reading of depositions by the judge not familiar with the factual allegations and issues to be determined at trial. Unfortunately, this is not a docket where it is possible. In addition, it is improbable to accurately make admissibility determinations abstractly without the benefit of hearing the testimony in the trial. Each side (yes, 'side') will receive eighteen hours in which to present their cases to the jury beginning with opening statement and ending with the closing of the evidence. . . . If a party wishes to make a Daubert objection, the Court will accommodate that party, listen to the testimony of the witness and the argument of counsel, and make a determination as to admissibility of the witness's testimony, in whole or in part. If the objection is overruled, the time taken for that process outside the presence of the jury will be subtracted from the eighteen hours of time of the objector(s). If the objection is sustained, the time taken will be subtracted from the presenter of the witness's eighteen hours of presentation. If the parties want to simply cross-examine expert witnesses for the consumption of their eighteen hours, that is their business."

The Quantum World Corporation v. Dell Inc. et al, 1-11-cv-00688 (TXWD March 20, 2014, Order) (Sparks, J.)

Knowledge That Products Will be Sold in Texas Insufficient to Confer Personal Jurisdiction

The court granted defendant's renewed motion to dismiss plaintiff's infringement action for lack of personal jurisdiction. "[Defendant] knows, with reasonable certainty, that its chips will end up in the United States marketplace, including, by inference, in Texas. . . . [N]o evidence demonstrates that any of [defendant's] conduct or activity is any more specifically directed at this state than it is at the North American market as a whole. Critically, none of the deposition testimony presented by [plaintiff] shows any evidence to suggest that [defendant] purposefully targets its business conduct specifically at Texas or that the substantial Texas market for televisions is of any particular focus. A rational belief that a component or product will eventually end up in a particular state -- even if that belief amounts to a substantial certainty -- does not, by itself, amount to purposeful conduct nor 'manifest an intention to submit to the power of a sovereign.' . . . Although . . . [defendant] knowingly supplies parts for televisions ultimately destined for the United States, the court finds no direct conduct, connection, or purposeful availment of Texas's laws that justifies the exercise of personal jurisdiction in Texas, as opposed to any other state in the union. After careful search for any evidence showing an articulable connection to this state, the facts of this case simply do not suffice to establish the minimum contacts required to exercise jurisdiction over [defendant] in Texas under any current theory of specific personal jurisdiction."

Freescale Semiconductor, Inc. v. Amtran Technology Co., Ltd., et al, 1-12-cv-00644 (TXWD March 19, 2014, Order) (Yeakel, J.)