Qualcomm Inc. v Apple Inc. (Order, January 18, 2019)

In his 11 page order, Southern District of California Judge Sabraw addressed cross Daubert motions on Apple’s experts and Qualcomm’s experts, which in turn provide some general insight for damages experts.

For its part, Apple requested the court exclude Qualcomm’s damages expert (Dr. Kennedy*) and its survey expert (Dr. Prince). Judge Sabraw had provided an opinion a month earlier concerning surveys by Dr. Prince in a different matter, Wi-Lan v. Apple. Judge Sabraw drew analytic contrast between the two cases, however, noting that the survey analysis proffered in Qualcomm addressed fatal limitations advanced in the earlier Wi-Lan expert analysis.

Thus, while Apple took issue with specific formulation of the survey, Judge Sabraw concluded that the formulation spoke more to the survey’s “weight, not admissibility.”

These divergent outcomes concerning surveys from the same expert reveal the essential need for such experts to work closely with technical experts. The obvious precondition for a successful survey is to tie questions to relevant claims; but where those ties are reasonably established, Judge Sabraw’s formulation appears to acknowledge that some “hypothetical ideal survey” must not condemn a “real-world survey” that can otherwise afford some insight into the matter at hand. Rather, limitations of relevant “real-world surveys” can be heard, challenged & defended.

Turning next to Dr. Kennedy’s damages opinion, Apple argued that his “50-50” split was “untethered to the facts of the case.” Judge Sabraw, however, found otherwise:

We can imagine a circumstance where a different expert from an earlier era might advance a “50-50” split based solely on superficial invocation of the Nash Bargaining Solution. But what might otherwise appear as numerical recourse to a rule of thumb can, in fact, be an argued outcome grounded in the facts of the case. So, too, might a “25%” outcome… even if Goldscheider’s formulation no longer enjoys merit after Uniloc. That is to say, round numbers themselves need not be thrown out along with rules of thumb.

Dr. Kennedy’s opinion based upon the Prince survey results was deemed admissible. Dr. Kennedy’s controversial 50/50 profit split was grounded in enough facts of the matter to be allowed as well.

For its part, Qualcomm requested that the court exclude Apple’s damages expert, Dr. Prowse, for failure to establish the economic comparability of relied-upon licenses. A related question concerned whether Apple’s technical experts had done the minimum necessary to establish that the patents-in-suit were technically comparable to others the subject of Apple license agreements. Judge Sabraw agreed with Qualcomm that those technical experts’ opinions “are conclusory and do not meet the standard for technological comparability.”

Given failure to establish technological comparability, related damages opinions, too, must fail. Judge Sabraw offered, however, that Dr. Prowse did establish the necessary economic comparability between the relevant license agreements and a hypothetical license agreement.

Since Uniloc, and the abandonment of rules-of-thumb, the rigor demanded of damages analysis has increased. In response, and with the goal of grounding analysis in the facts of a case, damages experts must make increasing recourse to the analytic foundations established by technical experts and/or survey experts. This pair of cases (i.e., Qualcomm v. Apple and Wi-LAN v. Apple) reveals the multiplicity – and vulnerabilities – of such dependence.

(*These two cases involve experts with identical surnames: Dr. Patrick Kennedy is Qualcomm’s damages expert, while Mr. David Kennedy is Wi-Lan’s damages expert.)

Mark A. Barry v. Medtronic, Inc. (CAFC Decided January 24, 2019)

Medtronic appealed this patent infringement matter in which a jury in the Eastern District of Texas decided that Medtronic induced infringement of two patents owned by Dr. Mark Barry. The Federal Circuit affirmed the jury’s findings and preserved the damages award.

The damages award was based on a survey, the so-called “Neal Survey.” Medtronic argued that the Neal Survey failed to measure infringement by physicians; Plaintiff Barry represented that it did. Notably, the Federal Circuit provided some guidance for what Defendant Medtronic needed to show (but didn’t) to invalidate the Neal Survey:

Because Medtronic failed to show the errors in the survey results, the jury’s award was allowed to stand.

Surveys are a powerful empirical tool that can serve a wide variety of purposes, including damages analysis. At the same time, surveys must be properly formulated and executed, which are no easy tasks. As a result, an uneasy tension exists between the statisticians who are usually called upon to perform a survey, and the economists/accountants/financial analysts who must employ those results for damages analysis, without running afoul of Daubert.

We welcome any and all guidance from courts, like that highlighted above, specifying where the survey guardrails exist. We further expect surveys to prove an increasingly important area of judicial development for damages over the next decade.

Ericsson Inc., et al. v. TCL Communication Technology Holdings, LTD., et al. – Part 3 (Jury Verdict Reinstated May 10, 2018)

Yesterday, this blog witnessed a sudden surge in search-engine referrals for Ericsson v. TCL. Our earlier posts on this matter are located here and here. A summary of the damages issues is newly-provided by the court:

In an unexpected turn of events, Judge Payne has reconsidered his decision to vacate the jury verdict and has reinstated the previous award.

The crux of Judge Payne’s reversal hinges on his reconsideration of whether “the Daubert filter” was called for in this matter. Previously, he had concluded that it was; in his reversal, however, he decides instead that trial afforded sufficient opportunity to defendant to address issues of evidentiary weight.

With regard to the prior conclusion that future products – neither existing nor practicing – were improperly “accused” and thereby improperly made subject to damages, the indeterminate nature of a jury’s decision making now affords the plaintiff its award:

Judge Payne not only affirmed the jury’s verdict of $75 million, but he made the award subject to a $25 million enhancement.

His lengthy discussion of “willfullness” provides useful background to the topic and includes the pithy observation that, “One juror’s ‘malicious’ conduct might be another’s benign competitive business activity.” Finally, Judge Payne concludes:

We admit that we did not foresee Judge Payne’s reconsideration; we suspect TCL is even more surprised. Yesterday’s developments make a “Part 4” seemingly inevitable.