52 F. Supp. 3d 949
N.D. Cal.2014Background
- Court considers Apple’s Daubert motions to exclude Emblaze damages expert Lawton and economics expert Teece; ruling on admissibility at trial.
- Lawton employed the income approach to calculate damages, using the hypothetical negotiation and Georgia‑Pacific factors to reach per‑unit royalties ($2 hardware, 1% software).
- Lawton began with a non‑apportioned gross margin baseline post‑HLS introduction and then anchored the hypothetical royalty rate; debate over whether the base or the rate is admissible.
- Lawton’s analysis incorporates licenses and demands she deems comparable; court limits reliance on certain licenses and publicly available SEP licenses for MP3/MPEG‑4/AVC/H.264 data.
- Teece offered high‑level general opinions on digital convergence and network effects; court allows general principle testimony but restricts case‑specific application.
- Damages framework discussed includes 15 Georgia‑Pacific factors; no lost profits claimed; focus remains on reasonable royalty via hypothetical negotiation and smallest salable patent‑practicing unit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Lawton’s damages methodology | Lawton’s income approach and Georgia‑Pacific factors are admissible nexus to hypothetical royalty. | Lawton relies on questionable bases and licenses; some data are incomparable. | Partially admitted; Lawton allowed with limits on bases and data reliance. |
| royalty base and unit base admissibility | Use of all infringing units is proper for per‑unit royalty. | Uninfringing or indirect infringement complicates base; concerns about indirect base. | Base acceptable for all infringing unit approach; direct vs indirect infringement distinction not required to limit base. |
| Use of publicly available SEP licenses (MP3/MPEG‑4/AVC/H.264) to inform rate | Public licenses provide relevant market data supporting reasonableness. | Public licenses may be imperfect or unreliable; risk of prejudice. | Admissible; data not substantially outweighed by prejudice; jury may weigh reliability. |
| Court’s treatment of Lawton’s argumentative rhetoric | Emblaze should be able to explain damages; rhetoric not dispositive. | Lawton’s comments amount to “Apple bashing” and are prejudicial. | Lawton barred from emotional rhetoric; standard admissibility otherwise preserved. |
| Admissibility of Teece’s high‑level general opinions | General principles help understand effects of digital convergence on licensing. | Te c e’s analysis is abstract and not case‑specific; may be unhelpful. | General principles testimony permitted; Teece may opine on digital convergence and network effects if reliable and fit. |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (Supreme Court 1993) (gatekeeping; admissibility depends on reliability and relevance)
- Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970) (non-exhaustive factors for determining reasonable royalty)
- Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) (comparable licenses; apportionment; relevance to royalties)
- i4i Ltd. Partnership v. Microsoft Corp., 598 F.3d 831 (Fed. Cir. 2010) (reliability of methodologies; case‑specific application; Daubert standard)
- Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011) (warns against improper reliance on entire market value and tariffing of patents)