Manufacturing Resources International, Inc. v. Civiq Smartscapes, LLC

District Court, D. Delaware·Decided September 4, 2019·No. 1:17-cv-00269·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

MANUFACTURING RESOURCES INTERNATIONAL, INC., Plaintiff; V. Civil Action No. 17-269-RGA CIVIQ SMARTSCAPES, LLC, et al., Defendants.

MEMORANDUM OPINION Arthur G. Connolly IH, Ryan P. Newell, and Kyle Evans Gay, CONNOLLY GALLAGHER LLP, Wilmington, DE; Jeffrey S. Standley, James Lee Kwak (argued), and F. Michael Speed, Jr. (argued), STANDLEY LAW GROUP LLP, Dublin, OH, attorneys for Plaintiff. John W. Shaw (argued), Karen E. Keller, David M. Fry, and Nathan R. Hoeschen, SHAW KELLER LLP, Wilmington, DE; Douglas J. Kline (argued), Srikanth K. Reddy (argued), and Molly R. Grammel, GOODWIN PROCTER LLP, Boston, MA; Naomi L. Birbach, GOODWIN PROCTER LLP, New York, NY; Yuval H. Marcus, Cameron S. Reuber, Matthew L. Kaufman, and Lori L. Cooper, LEASON ELLIS LLP, White Plains, NY, attorneys for Defendants.

September 4 , 2019

Currently pending before the Court are Plaintiff's Daubert Motion (D.I. 207) and Defendants’ Daubert Motion. (D.I. 202). The parties have fully briefed the issues. (D.I. 203, 212, 239, 240, 247, 252). I heard helpful oral argument on August 22, 2019. (Hr’g Tr.). 1. BACKGROUND Plaintiff Manufacturing Resources International, Inc. filed suit against Defendants Civiq Holdings, Civiq Smartscapes, Comark Holdings, and Comark on March 14, 2017 alleging infringement of seventeen patents.'! (D.I. 1 □ 144). Defendants counterclaimed. (D.I. 18). Both parties have amended their claims. (D.I. 84, 101). The parties completed fact discovery on November 30, 2018 and expert discovery on April 5, 2019. (D.I. 163). Trial is scheduled to begin on September 9, 2019. (D.I. 26). The disputed patent claims remaining in the case are claim 1 of U.S. Patent No. 8,854,595 (“the ‘595 Patent”), claims 8, 11, and 14-15 of U.S Patent No. 8,854,572 (“the ‘572 Patent’), claims 2 and 6 of U.S. Patent No. 8,773,633 (“the ’633 patent”), claim 18 of U.S. Patent No. 9,629,287 (“the ’287 patent”). (D.I. 212 at 3; D.I. 264). I have granted summary judgment of infringement as to claims 1 and 2 of the U.S. Patent No. 9,173,325 (“the patent”). (D.I. 282 at 9; D.I. 283). Plaintiff moves to exclude the opinions of Mr. Eichmann, Defendants’ damages expert, relating to forward citation analysis and reasonable royalty calculations. (D.I. 212 at 3). Defendants move to exclude (1) all damages opinions from Plaintiff's damages expert, Ms. Bennis; (2) both Dr. Silzars’ and Ms. Bennis’ opinions regarding non-infringing alternatives; and (3) Dr.

' Patent Nos. 8,854,595, 9,173,322, 8,767,165, 8,274,622, 8,482,695, 8,854,572, 9,089,079, 8,373,841, eiad). 9,030,129, 9,167,655, 8,125,163, 8,829,815, 9,313,917, 8,497,972, 8,016,452, and 9,448,569. (D.I. 1

Silzars’ testimony regarding secondary considerations and infringement by Hyundai products. (D.I. 203 at 1-2). Il. LEGAL STANDARD Federal Rule of Evidence 702 sets out the requirements for expert witness testimony and states: A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise 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. The Third Circuit has explained: Rule 702 embodies a trilogy of restrictions on expert testimony: qualification, reliability and fit. Qualification refers to the requirement that the witness possess specialized expertise. We have interpreted this requirement liberally, holding that a broad range of knowledge, skills, and training qualify an expert. Secondly, the testimony must be reliable; it must be based on the “methods and procedures of science” rather than on “subjective belief or unsupported speculation”; the expert must have “good grounds” for his or her belief. In sum, Daubert holds that an inquiry into the reliability of scientific evidence under Rule 702 requires a determination as to its scientific validity. Finally, Rule 702 requires that the expert testimony must fit the issues in the case. In other words, the expert’s testimony must be relevant for the purposes of the case and must assist the trier of fact. The Supreme Court explained in Daubert that Rule 702’s ‘helpfulness’ standard requires a valid scientific connection to the pertinent inquiry as a precondition to admissibility. By means of a so-called “Daubert hearing,” the district court acts as a gatekeeper, preventing opinion testimony that does not meet the requirements of qualification, reliability and fit from reaching the jury. See Daubert (“Faced with a proffer of expert scientific testimony, then, the trial judge must determine at the outset, pursuant to Rule 104(a) of the Federal Rules of Evidence whether the expert is proposing to testify to (1) scientific knowledge that (2)

will assist the trier of fact to understand or determine a fact in issue.””). Schneider ex rel. Estate of Schneider v. Fried, 320 F.3d 396, 404-05 (3d Cir. 2003) (cleaned up).! Ill. DISCUSSION A. Mr. Eichmann’s Forward Citation Analysis Plaintiff moves to exclude the portion of Mr. Eichmann’s opinions relating to the calculation of a reasonable royalty due to Mr. Eichmann’s reliance on a forward citation analysis. (D.I. 212 at 36). Plaintiff argues that Mr. Eichmann’s forward citation analysis is not a reliable principle or method. (/d.). Defendants argue that forward citation analysis has been accepted as a reliable method by multiple courts and Plaintiff's objections go to weight and credibility, not admissibility. (D.I. 239 at 34-40). Forward citation analysis is a method of estimating the value of a particular patent based on the number of times the patent is cited by later patents. (D.I. 212 at 36). Mr. Eichmann’s forward citation analysis begins with a license agreement between Plaintiff and OnDIGItech in 2009, which licensed the 064 application (the parent provisional of all asserted patents in this case), as well as another provisional application, for a lump sum of $500,000 and a royalty of 6% on gross sales of licensed products. (Jd. at 37). Mr. Eichmann’s opinion uses a forward citation analysis to calculate the relative value of the asserted patents, using the 6% royalty in the OnDIGItech license as the value for all granted patents originating from the two applications. □□□□□□ 210, Ex. 32 4F 133-38).

' The Court of Appeals wrote under an earlier version of Rule 702, but the recent amendments to it were not intended to make any substantive change.

“(Damages models are fact-dependent.” Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc., 809 F.3d 1295, 1301 (Fed. Cir. 2015). To that end, “there may be more than one reliable method for estimating a reasonable royalty.” See Apple v. Motorola, Inc., 757 F.3d 1286, 1315 (Fed. Cir. 2014), overruled on other grounds by Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015). Multiple courts have found forward citation analyses to be reliable.

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Manufacturing Resources International, Inc. v. Civiq Smartscapes, LLC, (D. Del. 2019).

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