297 F. Supp. 3d 501
D. Del.2017Background
- Sonos sued D & M for allegedly infringing multiple Sonos patents covering synchronized playback, group volume control, pairing, speaker orientation, and autoplay features in networked wireless speakers; a bellwether trial was set for December 2017.
- Three motions to exclude expert testimony were filed: Sonos moved to exclude D & M's invalidity expert Dr. Jay Kesan; D & M moved to strike portions of Sonos's experts: damages expert Michael Tate, infringement expert Dr. Kevin Almeroth, and invalidity expert Dr. Andrew Wolfe.
- Central technical dispute: whether proposed experts are qualified in the pertinent art (broadly defined to include electrical engineering, networking, and consumer audio) and whether their opinions are reliable under Fed. R. Evid. 702/Daubert/Kumho.
- Key damages disputes: Tate’s reasonable-royalty opinion used total HEOS device revenue (entire market value) as the royalty base without apportioning to patented features; his lost-profits opinion used a market-share approach and relied on Almeroth for non-infringing-alternative analysis.
- Key evidentiary disputes: Kesan’s report contained asserted legal conclusions and unsupported secondary-considerations (commercial success and copying); Sonos’s experts offered opinions about D & M “copying”; timing/disclosure of Sonos’s asserted priority date for the ’556 patent was challenged.
- Court disposition in brief: Sonos’s motion to exclude Kesan granted in part/denied in part; D & M’s motions granted in part/denied in part — Tate’s reasonable-royalty theory excluded; lost-profits and other expert opinions largely preserved with specific exclusions (e.g., expert copying opinions).
Issues
| Issue | Plaintiff's Argument (Sonos) | Defendant's Argument (D & M) | Held |
|---|---|---|---|
| Qualification of D & M’s invalidity expert (Dr. Kesan) | Kesan lacks relevant technical work experience in consumer networked audio; not a person of ordinary skill in the art | Kesan has EE degrees, RF/wireless experience, patents and consulting in communications — sufficient qualifications | Qualified: Kesan may testify; his technical background is sufficiently related to the pertinent art (exclusion for lack of qualification denied) |
| Kesan’s legal conclusions & secondary considerations (commercial success, copying) | Kesan offers improper legal opinions and unsupported conclusions on commercial success and copying | D & M: opinions are technical or within Kesan’s PTO/practice knowledge | Partial exclusion: Kesan’s unsupported assertions on UPnP-driven commercial success and bare copying conclusions excluded; other enablement/indefiniteness opinions allowed |
| Tate’s reasonable royalty (use of entire market value) | Tate’s use of total HEOS revenue as royalty base properly captures value; industry benchmarks support rate | D & M: fails apportionment; infringed features don’t drive full-product demand; many customers own single units | Excluded: Tate’s reasonable-royalty opinion using the entire market value as royalty base is methodologically unsound and barred |
| Tate’s lost profits (Panduit second prong — non-infringing alternatives) | Lost profits appropriate; Almeroth shows D & M lacked acceptable non-infringing alternatives | D & M: Mr. Tate failed to show absence of acceptable non-infringing alternatives and failed customer-by-customer analysis | Admitted: Tate’s lost-profits analysis using market-share approach allowed; market-share substitutes for absence-of-alternatives; opinion survives challenge |
| Sonos experts’ testimony on copying | Sonos: expert analysis helps show awareness, design choices, and willfulness | D & M: copying opinions are lay-fact inferences, not expert technical matters, and may improperly influence jury | Excluded: Expert testimony that simply repeats evidence and concludes copying is inadmissible; jury may evaluate copying without expert imprimatur |
| Priority date for the ’556 patent | Sonos amended to assert Aug. 31, 2010 priority based on expert rebuttal; timely under scheduling stipulation | D & M: change is untimely and prejudicial | Denied: Wolfe’s opinion that ’556 is at least as early as Aug. 31, 2010 admissible; disclosure allowed under parties’ scheduling agreement |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (trial courts act as gatekeepers to ensure expert testimony is relevant and reliable)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (Daubert gatekeeping applies to all expert testimony, not just scientific)
- Sundance, Inc. v. DeMonte Fabricating Ltd., 550 F.3d 1356 (2008) (expert must be qualified in the pertinent art for invalidity/noninfringement opinions)
- Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (2011) (patent damages must be apportioned to the patented feature; entire-market-value rule limits use of full product value)
- LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (2012) (entire-market-value rule cannot be evaded by asserting a low royalty rate)
- VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308 (2014) (to use entire market value, patentee must show patented feature drives demand for entire product)
- Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201 (2014) (royalty base and rate must reflect incremental value added by patent; economists may adjust base or rate)
- Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275 (2017) (Panduit factors guide lost-profits; market-share approach may substitute for showing absence of noninfringing alternatives)
- Panduit Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152 (6th Cir. 1978) (framework for proving lost profits: demand, absence of acceptable alternatives, capacity, and profit calculation)