United States District Court, D. Oregon
J. Edmonds, Stephen F. Schlather, Shea N. Palavan, and
Brandon G. Moore, COLLINS, EDMONDS, SCHLATHER & TOWER,
PLLC, John Mansfield, HARRIS BRICKEN, Of Attorneys for
T. Oliver, AMIN, TUROCY & WATSON, LLP, Jacob S. Gill,
STOLL STOLL BERNE LOKTING & SHLACHTER, PC, Jenny W. Chen,
CHEN IP LAW GROUP, 7F, N0. 1, Alley 30, Lane 358, Taiwan
(R.O.C.). Of Attorneys for Defendant.
OPINION AND ORDER
Michael H. Simon, United States District Judge.
the Court is a request for an ongoing post-verdict royalty by
Plaintiff, Mass. Engineered Design, Inc.
(“Mass”), and a motion to strike an expert
declaration filed in support of that request filed by
Defendant, Planar Systems, Inc. (“Planar”). For
the reasons that follow, the Court denies Planar's motion
to strike and sets the post-verdict royalty at 3.5 percent of
sales of infringing products.
Motion to Strike
moves to strike the expert declaration of Walter Bratic filed
on September 28, 2018. Planar argues that: (1) Mr.
Bratic's declaration is untimely because it contains
opinions not disclosed in his expert reports produced during
expert discovery or discussed at trial; (2) Mr. Bratic's
opinions are unreliable and otherwise problematic under Rule
702 of the Federal Rules of Evidence and Daubert v.
Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 595
(1993); and (3) Mr. Bratic's opinions should be stricken
because he failed to apportion damages as required under
2014, Mass. disclosed in its damages disclosure that it was
going to request a post-judgment royalty. Mass. also stated
in its trial brief filed July 2017 that it may be owed a
post-verdict royalty. Planar argues that these disclosures
obligated Mass. to submit with its expert opinions relating
to damages sought at trial any expert opinion supporting a
post-verdict royalty, and that Mass. should have presented
the post-verdict royalty evidence to the jury. Planar also
argues that it should have been permitted the opportunity to
cross-examine Mass's expert at trial on his post-verdict
royalty opinions. Planar is essentially arguing that Mass.
should have had the jury determine Mass's post-verdict
royalty. That, however, is not what occurred at trial and
Mass. was not required to have the jury make such a
determination, nor is there a Seventh Amendment right to a
jury trial on post-verdict royalties. See Paice LLC v.
Toyota Motor Corp., 504 F.3d 1293, 1316 (Fed. Cir. 2007)
(“As such, the fact that monetary relief is at issue in
this case does not, standing alone, warrant a jury trial.
Accordingly, Paice's argument falls far short of
demonstrating that there was any Seventh Amendment violation
in the proceedings below.”).
Court has already noted, post-verdict royalties can be an
equitable determination made by the Court after a jury
verdict, in lieu of an injunction under § 283. See,
e.g., ECF 413 at 11 (quoting Paice, 504 F.3d at
1314); see also XY, LLC v. Trans Ova Genetics, 890
F.3d 1282, 1289 (Fed. Cir. 2018) (noting that the
post-verdict royalty was awarded by the district court
“as an equitable remedy for Trans Ova's future
infringement”); Whitserve, LLC v. Comput. Packages,
Inc., 694 F.3d 10, 35 (Fed. Cir. 2012) (“There are
several types of relief for ongoing infringement that a court
can consider: (1) it can grant an injunction; (2) it can
order the parties to attempt to negotiate terms for future
use of the invention; (3) it can grant an ongoing royalty; or
(4) it can exercise its discretion to conclude that no
forward-looking relief is appropriate in the
circumstances.”). The Court declined to enter an
injunction and held that Mass. was entitled to an ongoing
royalty. Thus, Mass. was not required to have its expert
testify regarding post-verdict royalty at trial. Indeed, it
would have confused the jury had Mr. Bratic done so because
the jury was not making any determination relating to a
post-verdict royalty. It is an equitable remedy that Mass. is
seeking from the Court.
the Court determined that Mass. was entitled to a
post-verdict royalty, the Court requested that the parties
submit briefs on the amount of a reasonable ongoing royalty.
Mass. filed an expert declaration in support of its brief
relating to the post-verdict royalty. This is not uncommon in
issues handled by a court post-verdict, including motions for
attorney's fees, which are generally accompanied by
expert declarations supporting the motion from experts not
disclosed during pretrial expert discovery. Additionally, in
determining a post-verdict royalty rate, the Court must focus
on the changed circumstances post-verdict. See XY,
LLC, 890 F.3d at 1297. Planar offers no compelling
argument why expert testimony regarding the
Georgia-Pacific factors cannot be supplemented
post-trial to discuss changed circumstances. Requiring this
expert disclosure during pretrial expert discovery or even at
trial would contradict the Federal Circuit's requirement
to consider the Georgia-Pacific factors in light of
the post-verdict changed circumstances. Moreover, the Federal
Circuit has expressly noted that the process of calculating
the post-verdict royalty will include the court taking
evidence, and there is no reason why expert evidence would
not be part of this process. See, e.g.,
ActiveVideo Networks, Inc. v. Verizon Commc'ns,
Inc., 694 F.3d 1312, 1343 (Fed. Cir. 2012) (“The
district court, on remand, should determine an appropriate
ongoing royalty, an inquiry that is much the same as its
sunset royalty analysis. The district court may wish to
consider on remand additional evidence of changes in
the parties' bargaining positions and other economic
circumstances that may be of value in determining an
appropriate ongoing royalty.” (emphasis added));
Paice, 504 F.3d at 1315 n.15 (“This process
will also, presumably, allow the parties the opportunity to
present evidence regarding an appropriate royalty rate to
compensate Paice and the opportunity to negotiate their own
rate prior to the imposition of one by the court . . .
also argues that Mass. could have supplemented its expert
testimony during the four months between the jury verdict in
May 2018 and the filing of Mass's opening brief relating
to the ongoing royalty, to give Planar more time to counter
Mr. Bratic's declaration. This argument is unpersuasive.
The parties disputed whether a post-verdict ongoing royalty
was appropriate in this case. The Court did not decide the
issue until September 11, 2018. Mass. filed its opening brief
attaching Mr. Bratic's declaration on September 28, 2018,
the deadline set by the Court. It would be unreasonable to
require Mass. to incur the expense of expert fees to opine on
the reasonable amount of a post-verdict ongoing royalty
before the issue of whether a post-verdict royalty would be
allowed had been determined. If Planar wanted additional time
to respond to Mr. Bratic's declaration, or wanted to
depose Mr. Bratic relating to his declaration, Planar could
have sought leave from the Court. The Court has been generous
with the parties in allowing such discovery. Planar did not
make any such request, nor did Planar file any rebuttal
expert declaration of its own.
Exclusion under Daubert
Bratic's challenged opinions are submitted to the Court
for its consideration in determining a post-verdict royalty.
The challenged opinions are not going to a jury.
“‘Daubert is meant to protect
juries from being swayed by dubious scientific
testimony. When the district court sits as the finder of
fact, there is less need for the gatekeeper to keep the gate
when the gatekeeper is keeping the gate only for
himself.'” United States v. Flores, 901
F.3d 1150, 1165 (9th Cir. 2018) (quoting David E. Watson,
P.C. v. United States, 668 F.3d 1008, 1015 (8th Cir.
2012) (emphasis in original); see also Deal v. Hamilton
Cty. Bd. of Educ., 392 F.3d 840, 852 (6th Cir. 2004)
(“The ‘gatekeeper' doctrine was designed to
protect juries and is largely irrelevant in the context of a
bench trial.”). “Thus, where the factfinder and
the gatekeeper are the same, the court does not err in
admitting the evidence subject to the ability later to
exclude it or disregard it if it turns out not to meet the
standard of reliability established by Rule 702.”
Flores, 901 F.3d at 1165.
Court acknowledges that some of Mr. Bratic's statements
purport to set out what the law holds, and that is improper
expert testimony. The Court, however, will not go
line-by-line through Mr. Bratic's declaration and strike
portions of it that are inappropriate. The Court will
disregard the inappropriate statements and only consider
proper and reliable expert testimony.
Apportionment of Damages
asserts that Mr. Bratic did not apportion damages to account
for the fact that the '331 Patent only contains some
unique features, while the '978 Patent contained many
features but has now expired. Mass. responds by pointing out
how Mr. Bratic expressly apportioned damages to account for
this fact, which is why the '331 Patent royalty is 3.5
percent and the '978 Patent royalty is 5.9 percent.
Moreover, when Planar questions why sales after April 2016
(when the '978 Patent expired) are not properly
apportioned and accounted-for in Mr. Bratic's expert
report, Mass. responds that on the next page of the report
from the section quoted by Planar, Mr. Bratic specifically
accounts for the post-April 2016 sales and the '331
Patent-only damages. Planar did not respond to any of
Mass's arguments relating to apportionment in
Planar's reply brief.
Court agrees with Mass. that Mr. Bratic did not use the
“entire market value rule.” He states as much in
his report. Further, Mr. Bratic, relying on the expert
testimony of John Akin, did apportion the damages. Mr. Bratic
used the relative technical values of the '978 Patent
(technical value of 10) and the '331 Patent (technical
value of 6) to apportion the damages and conclude that the
'331 Patent is 6/10 the value of the ‘978 Patent.
This resulted in the royalty rate of 3.5 percent for the
'331 Patent, which is 6/10 of the value of the 5.9
percent royalty rate of the '978 Patent. Indeed,
Planar's damages expert Mr. Reed noted that “Mr.
Bratic uses these technical weighing factors to then
apportion his determined 5.9% royalty rate for the
'978 patent to the '331 patent at 6/10 resulting in a
3.5% royalty rate.” ECF 417-3 at 34 (emphasis added).
Mr. Bratic's expert report does not violate any
requirement to apportion damages.
argues that the post-verdict ongoing royalty should be
enhanced to three-times the reasonably royalty rate of 3.5
percent, or 10.5 percent, for the changed circumstance of
Planar's purported willful infringement after the
jury's verdict. In the alternative, Mass. argues that a
reasonable interpretation of the jury's verdict is that
it awarded 2.88 percent royalty for the '331 Patent, and
the ongoing royalty should be 8.64 percent. Planar argues
that the appropriate ongoing royalty is a small fraction of
0.5 percent for all products except triple monitors, for
which a small fraction of 1.5 percent is an appropriate
royalty. Planar relies primarily on the argument ...