ANDREA M. SIMONTON, Chief Magistrate Judge.
This matter came before the Court upon Plaintiff's Motion to Exclude the Expert Opinion Testimony and Report of Christopher A. Martinez, (sealed), ECF. No. [44]. The Defendant has filed a Response to the Motion, ECF No. [54] (sealed), and the Plaintiff has filed a Reply, (sealed) ECF No. [64]. The Honorable Kathleen M. Williams, United States District Judge, has referred the Motion to the undersigned Magistrate Judge, ECF No. [115]. For the following reasons, the Motion to Exclude is Denied.
This trademark infringement action was initiated when Plaintiff Hard Candy, LLC, "Hard Candy" filed a four-count Complaint against Defendant Anastasia Beverly Hills, Inc., ("Anastasia") alleging that Anastasia attempted to confuse purchasers of beauty cosmetics by using, without permission, Plaintiff's registered trademark for "Hard Candy" to describe one of the Defendant's cosmetic products, ECF No [1] at 1-3. Specifically, Plaintiff contends that the Defendant has sold a product entitled "Glow Kit" which bears the mark "Hard Candy" throughout the United States, as well as, on the internet.
In the Motion to Exclude, the Plaintiff seeks to exclude the testimony of Christopher Martinez, the Defendant's damages expert. The Plaintiff contends that Mr. Martinez, a CPA, who Defendant intends to call as a damages expert at trial, should be excluded from testifying because: 1) his opinions are directly inconsistent with Plaintiff's legal entitlement to Defendant's profits in a trademark infringement action, and 2) Mr. Martinez seeks to offer testimony that is beyond his expertise, is conclusory and unsupported by research or investigation, and is based on improper methodologies, ECF No. [44] at 2.
In Response to the Motion to Exclude, Defendant Anastasia contends that if the Plaintiff proves liability at trial, it apparently seeks to obtain every dollar of profits that Anastasia earned on the "Gleam Glow Kit". ECF No. [54] at 5. Defendant contends that its expert, Christopher Martinez, evaluated and quantified the economic remedies due to Plaintiff by calculating: 1) Anastasia's costs on the Gleam Glow Kit; 2) whether it makes economic sense to award any of the profits Anastasia earned by determining whether those profits were attributable to the use of the name "Hard Candy"; and 3) the "maximum" profits potentially attributable to Anastasia's use of the shade name "Hard Candy." The Defendant thus argues that Mr. Martinez's opinions were not in conflict with the law and properly provided a reliable profit analysis, including considering apportionment and the economic equities of the case, for purposes of assessing Plaintiff's damages under the Lanham Act.
In Reply, the Plaintiff contends that Mr. Martinez admitted that he was not testifying about equities of an award of Defendant's profits to the Plaintiff and further contends that such a determination should be made by the Court and not an expert, in any event, ECF No. [64] at 1. The Plaintiff further reasserts that Mr. Martinez's opinion on attribution of profits is unreliable for the same reasons that the Plaintiff advanced in its Motion to Exclude.
Federal Evidence Rule 702 governs the admission of expert testimony in federal court, and provides:
District courts have a duty under Rule 702 to "ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable." Wilson v. Taser Int'l, Inc., 303 F. App'x 708, 714 (11th Cir. 2008) (citing Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)). Thus, a Court performs a "gatekeeping role" regarding admissibility of expert testimony, Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)).
The Eleventh Circuit has set out three requirements that an expert must meet before his or her opinions may be admitted. Hughes v. Kia Motors Corp., 766 F.3d 1317, 1328 (11th Cir. 2014). First, the expert must be qualified on the matter about which he or she intends to testify. Id., citing City of Tuscaloosa v. Harcros Chemicals, Inc., 158 F.3d 548, 562 (11th Cir. 1998). Second, the expert must employ reliable methodology. Id.
At the outset, the Court notes that it is "the exclusive province of the judge in non jury trials to assess the credibility of witnesses and to assign weight to their testimony", Axiom Worldwide, Inc., v. Excite Medical at 777, citing Childrey v. Bennett, 997 F.2d 830, 834 (11th Cir. 1993), and "[t]here is less need for the gatekeeper to keep the gate when the gatekeeper is keeping the gate only for himself." United States v. Brown, 415 F.3d 1257, 1269 (11th Cir. 2005). Accord Bristol-Myers Squibb Co. v. Andrx Pharms., Inc., 343 F.Supp.2d 1124, 1131 (S.D. Fla. 2004) ("The Court agrees that the question of reliability and relevance in this case is merely one of degree. . . .This is especially true since this is a bench trial, where the Court must evaluate the evidence regardless of whether it ultimately decides to exclude it. . . .Thus, some courts have held that, in cases where the judge is the factfinder, the criteria for finding evidence admissible can be applied less strictly.") (internal citations omitted). Other circuits also recognize that there is a more relaxed standard of admissibility in a bench trial. Loeffel Steel Products, Inc., v. Delta Brands, Inc., 372 F.Supp.2d 1104 1122-23 (N.D. Ill. 2005) (stating "Where, as here, the case is tried to the court, the Daubert concerns are of lesser importance"). Seaboard Lumber Co. v. United States, 308 F.3d 1283, 1301-02 (Fed. Cir. 2002) ("gatekeeping" concerns not as significant in bench trial, but Daubert standards of relevance and reliability must nevertheless be met); Gibbs v. Gibbs, 210 F.3d 491, 500 (5th Cir.2000) ("Most of the safeguards provided for in Daubert are not as essential in a case such as this where a district judge sits as the trier of fact in place of a jury."); Taubensee Steel & Wire Co. v. Macsteel Int'l USA Corp., No. 9 C 1505, 2011 WL 1651239, at *4 (N.D. Ill. May 2, 2011) ("The Court notes that while the Daubert standards apply in a bench trial, concerns about the trier of fact being fooled by evidence of dubious merit are lessened when the judge is acting in that role. The Court is capable of evaluating this evidence and giving it the weight that it deserves.") (internal citations omitted).
The damages available under the Lanham Act, 15 U.S.C. § 1117, are set forth in the Section of that Act entitled "Recovery for violation of rights," and provides,
(a) Profits; damages and costs; attorney fees
Thus, the Lanham Act provides that a plaintiff who prevails in a trademark infringement action "shall be entitled, subject to the provisions of [15 U.S.C. §§ 1111 and 1114], and subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action." 15 U.S.C. § 1117(a).
The Eleventh Circuit has made clear that in assessing damages under the Act the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. Further, if the court finds that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for the sum the court finds to be just, according to the circumstances of the case. Slep-Tone Entertainment Corp., v. Johnson, 518 F. App'x 815, 819 (11th Cir. 2013) (citing 15 U.S.C. 1117(a)). Thus, a district court has considerable discretion to award damages that are appropriate to the unique facts of the case and when the court concludes that an award of profits is "excessive," the Act expressly provides that it may award an amount of damages as it shall find to be just. Id. Finally, in Burger King v. Mason, 855 F.2d 779 (11th Cir. 1988), the Eleventh Circuit stated, ". . . all monetary awards under Section 1117 are `subject to the principles of equity,' [and] . . . no hard and fast rules dictate the form or quantum of relief." Id. at 783. (citation omitted).
Plaintiff contends that Mr. Martinez's opinions related to the disgorgement of the Defendant's profits, which is the only remedy that the Plaintiff seeks in this action, should be excluded because they are contrary to the law, ECF No. [44] at 5. Specifically, Plaintiff contends that through his opinions as stated in his Report, Mr. Martinez seeks to: 1) improperly require a showing of lost sales or profits by Plaintiff Hard Candy as a prerequisite to an award of damages to Hard Candy; and 2) improperly require a showing of an incremental financial benefit to Defendant Anastasia as prerequisite to an award of damages to Hard Candy.
Plaintiff first argues that Mr. Martinez's Report improperly suggests that the law requires a showing of lost sales and/or profits by Plaintiff Hard Candy as a prerequisite to an award of damages for Defendant's infringing conduct. In support of this contention, Plaintiff cites six paragraphs in Mr. Martinez's report (¶¶ 30-36) under the heading "Lost Profits of Plaintiff" as improperly suggesting that Hard Candy must show lost sales or lost profits as a prerequisite of an award of Defendant Anastasia's profits, ECF No. [44] at 11. Plaintiff states that Mr. Martinez's opinion in this regard is flatly inconsistent with the holding in Burger King v. Mason, 885 F, 2d 779, (11th Cir. 1988), that a plaintiff need not demonstrate actual damage to obtain an award reflecting an infringer's profits. The Plaintiff then goes on to explain that the source of Mr. Martinez's error stems from his reliance on Tamko Roofing Prods., Inc. v. Ideal Roofing Co., Ltd., 282 F.3d 23, 35 (1st Cir. 2002), a First Circuit case, which sets forth the bases to justify an accounting of the defendant's profits for trademark infringement. Plaintiff contends that because the justifications identified in Tamko vary from those required by the Eleventh Circuit for purposes of awarding an accounting of an infringer's profits, Mr. Martinez's citations to that framework and those justifications and reliance upon them in arriving at his opinions are contrary to the law and inadmissible.
Plaintiff makes a similar argument regarding Mr. Martinez's discussion of the Plaintiff's lack of actual damages. In this regard, the Plaintiff correctly notes that the Eleventh Circuit has made clear that a plaintiff need not demonstrate actual damage to obtain an award reflecting an infringer's profits under § 35 of the Lanham Act. Burger King v. Mason, 855 F.2d 779, 781 (11th Cir. 1988). The Eleventh Circuit has further held an award of profits based on either unjust enrichment or deterrence are not dependent upon a higher showing of culpability on the part of defendant who is purposely using the trademark. Id. Thus, Plaintiff contends that because Mr. Martinez observes that the Plaintiff has not incurred any monetary damages and such an analysis is irrelevant for purposes of an award of an accounting of the Defendant's profits, that his report and his opinions contained therein are in contravention to the law, and not admissible.
In its response, the Defendant does not dispute that expert opinions that are in contravention to the law are excludable, and this Court agrees with that premise. However, notwithstanding the fact the Mr. Martinez cited a First Circuit case rather than an Eleventh Circuit case in stating the circumstances under which an accounting of defendant's profits may be awarded in a trademark infringement case, a careful reading of Mr. Martinez's report yields the conclusion that Mr. Martinez does not opine that the Plaintiff must establish that it has incurred lost sales or profits or that it has suffered other damages prior to the Court awarding an accounting of the Defendant's profits to the Plaintiff.
In his Report, Mr. Martinez does not contend that the Plaintiff must show a loss of sales or profits in order to warrant an accounting of the defendant's profits, rather Mr. Martinez opines that circuit courts have found held that one of the bases for awarding a plaintiff an accounting of a defendant's profits is "as a rough measure of the harm to the plaintiff." ECF No. [44] at 8. Thus, Mr. Martinez does not opine that in order for the Plaintiff to obtain an accounting of the Defendant's profits that the Plaintiff must demonstrate its own losses or damages but rather states that such a showing is one of the justifications in the First and Ninth Circuit for an accounting.
Finally, the Plaintiff contends that because the Plaintiff is not seeking actual damages or lost profits that any opinion by Mr. Martinez related to those issues is only designed to confuse or mislead, ECF No. [44] at 11-12. However, as set forth above, again because this is a non-jury trial, "There is less need for the gatekeeper to keep the gate when the gatekeeper is keeping the gate only for himself." United States v. Brown, 415 F.3d 1257, 1269 (11th Cir. 2005).
The Plaintiff has failed to cite to any case akin to the one at bar where an expert was excluded from testifying in a bench trial for arguably misstating the legal framework necessary to justify an evaluation of profits. Rather, it is "the exclusive province of the judge in non-jury trials to assess the credibility of witnesses and to assign weight to their testimony." Axiom Worldwide, Inc., v. Excite Medical at 777, citing Childrey v. Bennett, 997 F.2d 830, 834 (11th Cir. 1993).
For similar reasons, the Plaintiff's contention that Mr. Martinez's opinions should be excluded because an incremental financial benefit to Anastasia is not a prerequisite for Hard Candy to recover damages, also fails. Relevant to this issue, Plaintiff contends that Mr. Martinez's opinion in paragraph 14 of his Report seeks to impose a requirement on Plaintiff to prove that Anastasia's infringement resulted in an incremental financial benefit to Anastasia, ECF No. [44] at 12. Plaintiff contends that such a requirement is a misallocation of the burdens of proof and is contrary to law.
The Plaintiff's contention on this issue demonstrates that the Plaintiff misapprehends the parties' respective burdens under the Lanham Act related to damages. The Plaintiff is correct that pursuant to the express language of the Lanham Act, the Plaintiff need only show defendants' gross sales of infringing goods when seeking an accounting of the Defendant's profits. Critical to understanding the import of Mr. Martinez's opinion, however, is that the burden of proof under the Act then shifts to the Defendant to demonstrate its costs or deductions claimed. Maltina Corp. v. Cawy Bottling Co., Inc., supra, 613 F.2d at 586. As the Supreme Court has stated,
In Slep-Tone Entm't Corp. v. Johnson, 518 F. App'x 815 (11th Cir. 2013), for example, the Eleventh Circuit evaluated the plaintiff's contention that the district court should have awarded it damages in the form of the defendant's profits earned from their alcohol sales during the times that karaoke shows using the infringing trademark were performed in their bars. Id. at 819. The trial court had concluded that awarding profits was not appropriate in the case because although the plaintiff "may have proven defendants' bar sales by a preponderance of the evidence," it did not "trace[ ] those sales in a reliable way to karaoke performances." Id. On appeal, the plaintiff argued that the district court should have awarded it profits because it proved that the defendants' conduct was willful and deliberate, and further contended that it was the defendants' burden to prove which portion of the bars' profits was not attributable to the infringement of the plaintiff's trademark. In affirming the trial court's determination regarding damages, after noting that the Lanham Act granted considerable discretion to the trial court to award damages that are appropriate to the unique facts of the case, the reviewing court concluded,
Id. at 819-20. (emphasis added). Thus, the reviewing Court found no error in the trial court considering whether the defendant directly profited from the use of the trademark in determining whether an accounting was appropriate.
In assessing whether defendants have met their burdens on this issue, Courts in this Circuit have considered arguments by defendants related to the defendant's profits in assessing whether a reduction in an award of a defendant's profits is warranted. See, e.g., Jackson v. Grupo Indus. Hotelero, S.A., No. 07-22046-Civ, 2009 WL 8634834, at *15 (S.D. Fla. Apr. 29, 2009) (noting that use of plaintiff's trademark had minimal effect on generating profits at defendant's business); Tommy Hilfiger Licensing, Inc. v. Goody's Family Clothing, Inc., No. 1:00-cv-1934-BBM, 2003 WL 22331254, at *23, *41 (N.D. Ga. May 9, 2003) (considering defendant's argument that deductions from defendant's profits appropriate based upon evidence demonstrating that some of the profits were not from sale of infringing product, as well as, low-margin nature of jeans sales).
Consistent with the Defendant's burden to establish that its profits were not entirely due to sales associated with the purported infringing trademark, Paragraph 14 of Mr. Martinez's Report summarizes Mr. Martinez's opinion that a reduction in the calculation of the Defendant's profits is equitable in this case by stating, "from an economic perspective, a remedy based upon the disgorgement of Anastasia's profits would be unrelated to, and significantly in excess of, the potential value (if any) contributed to Anastasia (or lost by Hard Candy) in connection with the alleged use of the Trademarks-in-Suit." ECF No. [44-3] at 8. That paragraph thus says nothing about a prerequisite that Anastasia suffer an incremental financial benefit before the Court may consider an accounting of the Defendant's profits.
Thus, contrary to Plaintiff's contention that through Mr. Martinez's report the Defendant attempts to allocate this burden to the Plaintiff, Mr. Martinez's report attempts to meet the very burden that Plaintiff correctly contends falls to the Defendant. Indeed, the gist of Mr. Martinez's report on this issue appears to be that there are other factors, other than the use of the purported infringing mark, that contributed to the commercial success of the products at issue, ECF No. [44-3] at 15. The Report concludes that an award based on disgorgement of profits would provide Hard Candy with a significant windfall counter to the principles of equity because those profits do not serve as a rough measure of harm to the Plaintiff and don't bear any relationship to any unjust enrichment to the Defendant, ECF No. [44-3] at 20-21. Thus, although the Plaintiff may contend that Mr. Martinez's opinion fails to cite the standard in the Eleventh Circuit, it is difficult to comprehend how the Report fails to adequately place the burden of demonstrating a reduced profit or apportionment on the Defendant as required in this Circuit. Indeed, this is the very type of evidence that various courts in this circuit have found to be probative when introduced by an infringing defendant. See Dering v. Serv. Experts Alliance LLC, Nos. 1:06-CV-00357-RWS, 1:06-CV-00358-RWS, 2009 WL 1748067, at *3 (N.D. Ga. June 18, 2009) ("Therefore in a Lanham Act case, once a Plaintiff establishes revenues relating to infringement, the burden is on the infringer to show what portions of the revenues are not attributable to infringement."), judgment vacated on other grounds, 2009 WL 2032001 (N.D. Ga. July 2, 2009); Jackson v. Grupo Indus. Hotelero, S.A., No. 07-22046-Civ, 2009 WL 8634834, *13 (S.D. Fla. Apr. 29, 2009) (explaining that "a court may award all profits made during the infringing period, unless the infringer can prove that at least some of these profits flow from his own merit rather than from infringement of the plaintiff's mark"); Am. Farm Bureau Fed'n v. Ala. Farmers Fed'n, 935 F.Supp. 1533, 1552 (M.D. Ala. 1996) ("[A] court may award all profits made during the infringing period, unless the infringer can prove that at least some of these profits flow from his own merit rather than from infringement of the registrant's mark.").
Plaintiff additionally argues that any incremental financial benefit to Anastasia is irrelevant to a calculation of Plaintiff's actual damages in the form of Defendant's profits, ECF No. [44] at 13. Plaintiff further contends that because Anastasia's infringement was willful and deliberate that disgorgement of the defendant's profits is appropriate notwithstanding whether the defendant received only an incremental benefit. The Plaintiff further argues that an assessment of whether the Defendant obtained an incremental financial benefit is irrelevant to the determination of whether the Defendant was unjustly enriched. Finally, Plaintiff asserts that Mr. Martinez declined to offer any opinion on the justification of an award of defendant's profits based on deterrence to similar activity in the future and contends that an analysis of incremental financial benefit would be irrelevant to that analysis in any event. Thus, Plaintiff contends that whether Defendant received an incremental financial benefit is wholly irrelevant to an accounting of Defendant's profits, and should be excluded on this basis.
Based upon the above discussion of the Parties' relative burdens, it is clear that any assessment of an incremental financial benefit to the Defendant from the use or sale of the product with the alleged infringing trademark may, in fact, be highly relevant to the Court's determination of an appropriate award of Defendant's profits, subject to the principles of equity. Thus, Plaintiff's arguments that Mr. Martinez's evaluation of any financial benefit to the Defendants is irrelevant, is without merit.
The Plaintiff's citation to Ameritox, Ltd., v. Millennium Laboratories, Inc., No. 8:11-cv-775-T-24-TBM, 2014 WL 1456347 *1 (M.D. Fla. April 14, 2014) does not change this analysis and the holding in Ameritox does not support a finding that Mr. Martinez's opinions should be excluded on this basis. First, the trial court in Ameritox noted that the Eleventh Circuit has not spoken on the method for proving profits for false advertising claims. Id. at 9.
Accordingly, the Plaintiff's contention that Mr. Martinez's opinion should be excluded because he improperly considered whether a Defendant received a financial benefit from the use of the Plaintiff's trademark is without merit when, as discussed above, it is clear that courts in this Circuit as well as other Circuits, have considered such evidence in arriving at an appropriate equitable award.
The Plaintiff contends that Mr. Martinez's opinions on the cosmetics industry are unreliable and should be excluded. Specifically, Plaintiff contends that Mr. Martinez has no industry expertise or background in the cosmetics industry and has conducted no research sufficient to permit him to offer opinions on customer confusion, who Plaintiff's competitors are in the cosmetic industry, and the factors that drive consumer purchases in the cosmetics industry, ECF No. [44] at 16-17.
Federal Rule 703. Bases of an Expert's Opinion Testimony
Fed. R. Civ. P. 703. At the beginning of his Report, Mr. Martinez states that in arriving at his opinions, he considered information from a variety of sources "including information produced in this litigation, information from independent research, and information from interviews with people with knowledge relevant to this case." ECF No. [44-3] at 7. He further states that he considered information from the trade press and interviews with Luca Carp, Vice President of Legal and Business Affairs at Anastasia; and Claudia Soare, President at Anastasia, ECF No. [44-3] at 7. The Plaintiff has not suggested that any of the sources relied upon by Mr. Martinez in crafting his opinions are improper or are not the types of facts or data that an expert in Mr. Martinez's field might not rely upon in a case of this nature.
Moreover, to the extent that Plaintiff's challenge on this basis is more appropriately viewed as an attack on the sufficiency of Mr. Martinez's qualifications, the challenge also fails. Under the Daubert analysis, as to qualifications, an expert needs to be minimally qualified and any objections to the level of his expertise typically go to the credibility and weight of his opinion, not the admissibility of it. Vision 1 Homeowners Ass'n Inc. v. Aspen Specialty Ins. Co., 674 F.Supp.2d 1321, 1325 (S.D. Fla. 2009); Clena Investments, Inc. v. XL Specialty Ins. Co., 280 F.R.D. 653, 661 (S.D. Fla. 2012). The test is "whether the subject matter of the witness's proposed testimony is sufficiently within the expert's expertise." In re Mentor Corp. ObTape Transobturator Sling Prods. Liab. Litig., 711 F.Supp.2d 1348, 1367 (M.D. Ga. 2010) (citing Maiz v. Virani, 253 F.3d 641, 665 (11th Cir. 2001)). Rule 702 recognizes five bases for qualification: "knowledge, skill, experience, training, or education." However, "[e]xpertise in one field does not qualify a witness to testify about others." Lebron v. Sec'y, Fla. Dep't of Children & Families, 772 F.3d 1352, 1369 (11th Cir. 2014).
The undersigned has carefully reviewed the materials submitted regarding Mr. Martinez's qualifications and concludes that Mr. Martinez is well qualified to render economic opinions on the Plaintiff's profits, the Defendant's profits and the value of the use of the alleged infringing product in the Defendant's product. In particular, Mr. Martinez's Curriculum Vitae (CV) states that he has more than twenty-five years of experience in intellectual property damages quantification, intellectual asset licensing and complex financial modeling, ECF No. [44-3] at 26. His CV reflects that he has an A.B. in economics from Stanford University, and an M.B.A. from UCLA. The CV further provides that Mr. Martinez has worked with clients across a range of industries and has extensive experience in quantifying economic damages. He is a Certified Public Accountant, and a Certified Patent Valuation Analyst and Certified Licensing Professional, ECF No. [44-3] at 26. Finally, the CV reflects that he has extensive experience in royalty assessments, and has performed market analyses wherein a patented product is sold, and has assessed lost profits stemming from alleged infringements, ECF No. [44-3] at 27.
At his deposition, Mr. Martinez testified that although he did not have experience in the cosmetic industry, he believed that he had the qualifications to address the remedies in a trademark infringement action akin to this one, ECF No. [44-4] at 9. He stated that he was not offering himself as an expert in the cosmetics industry but that he has addressed and assessed various industries from an economic perspective and felt comfortable opining on information that he viewed related to the industry. ECF No. [44-4] at 9.
The undersigned notes that on this issue, those sections of the report that discuss the cosmetics industry are limited to the specific products at issue in this case and cite and quote trade publications, other publications including forbes.com and abcnews.go.com, on-line social media research, marketing promotions and discovery documents for support of the facts set forth in the report. Given the nature of Mr. Martinez's expertise, it is not necessary, nor likely possible, for him to have an extensive background in each of the industries for which he provides market and profit analyses, or in order for him to determine customer trends or calculate profits for a particular industry. Thus, the undersigned concludes that Mr. Martinez's opinions that include references and assumptions related to the cosmetics industry are not unreliable.
Moreover, as stated above, it is for the trier of fact to determine the credibility and persuasiveness of Mr. Martinez's opinion at trial, and then to determine whether the Defendant has met its burden of proof for damages. Thus the defects alleged by the Plaintiff in this case affect the weight of Mr. Martinez's opinions rather than their admissibility. See Daubert, 509 U.S. at 596; Quiet, 326 F.3d at 1341.
Plaintiff next contends that Mr. Martinez's opinion testimony should be excluded because his application of a 75% factor to reduce profitability is unreliable, ECF No. [44] at 19. On this issue, the Plaintiff asserts that although Mr. Martinez opines that the allegedly infringing trademark only applies to one of the four colors in the make-up kit, and thus only accounts for 25% of the sales of that kit, his assumption is wrong because the testimony from Anastasia's representative confirms that the colors were never going to be sold as single items and there was never any consideration of a refill for the kit, ECF No. [44] at 19-20. The Plaintiff similarly contends that Mr. Martinez's application of a 10% reduction to the Defendant's profits based upon a royalty rate has no legitimate basis and reflects a flawed and unsupported methodology, which renders the calculation unreliable.
The methodology through which an expert reaches his opinion must be reliable. Rink v. Cheminova, Inc., 400 F.3d 1286, 1292 (11th Cir. 2005). The reliability requirement turns on several factors that vary depending on the opinions and testimony at issue, and include the following well-known Daubert factors:
United States v. Frazier, 387 F.3d 1244, 1262 (11th Cir. 2004).
Expert testimony that is not "the product of reliable principles and methods" is not admissible under Federal Rule of Evidence 702(c). To be "reliable," the methodology that informs an expert opinion must have a "rational foundation." United States v. 77,819.10 Acres of Land, 647 F.2d 104, 108 (10th Cir. 1981). "[A] court may properly scrutinize anomalous conclusions and reject expert opinion if the expert fails to identify and defend the reasons why his scientific methodologies yielded novel results." Allison v. McGhan Medical Corp., 184 F.3d 1300, 1316 (11th Cir. 1999) (citation omitted).
Significantly, when evaluating an expert's methodology, it is not for the court to determine the accuracy or correctness of the conclusions reached; instead, the court focuses solely on the propriety of the methods and principles the expert used in forming his conclusions. Rosenfield v. Oceania Cruises, Inc., 654 F.3d 1190, 1193 (11th Cir. 2011). Rather, cross-examination, presentation of contrary evidence, and instruction on the burden of proof, rather than exclusion, are the appropriate tools for challenging disputed expert evidence. Id. Indeed, "in most cases, objections to the inadequacies of a study are more appropriately considered an objection going to the weight of the evidence rather than its admissibility." Hemmings v. Tidyman's Inc., 285 F.3d 1174, 1188 (9th Cir. 2002). See also Quiet Tech., 326 F.3d at 1345 (observing that, "[n]ormally, failure to include variables will affect the analysis' probativeness, not its admissibility" (quoting Bazemore v. Friday, 478 U.S. 385, 400, (1986))).
As to the reliability of Mr. Martinez's 75% reduction based upon the configuration of the make-up kit, the Plaintiff's contention that the testimony demonstrated that the colors were never going to be sold separate does not undermine the validity of Mr. Martinez's methodology in applying such a reduction. This is so because in the Report, Mr. Martinez explains that his calculation on this issue was initially based upon the fact that only one of the four colors in the make-up kit was alleged to have been that of the infringing trademark. Thus, he assessed the total incremental profit of that particular color at 25% of the entire product, notwithstanding any testimony from any witness.
As to the application of the royalty rate, at his deposition, Mr. Martinez testified that he concluded that 10% was an excellent proxy for the value of the name "Hard Candy" because that is the royalty rate that Plaintiff Hard Candy negotiated with New World Corporation for licensing of the brand name and trademarks and logos, ECF No. [44-4] at 19. He further stated that it represented a perfect proxy for the value that's contributed by just the name alone. ECF No. [44-4] at 19.
Mr. Martinez acknowledged that he had not previously used or seen used a royalty rate applied to the apportionment of profits cases, but he believed that the facts of this case were such that the royalty rate by its nature demonstrated the value of the mark. ECF No. [44-4] at 19-20. He then stated, "I am doing a calculation of the contribution of the marks to the profits earned by the defendant." ECF No. [44-4] at 19. Mr. Martinez testified that the royalty rate was exactly on point for what he was looking for in terms of the contribution of the trademarks. ECF No. [44-4] at 22. He stated that he was trying to determine the "relative contribution of the Hard Candy marks to the products that are alleged to have infringed those marks, and in that agreement that the plaintiff entered into they-they indicated 10% was the relative contribution." ECF No. [44-4] at 22.
Thus, the Report makes clear that Mr. Martinez does not apply a royalty rate to the Defendant's profits for purposes of calculating what those profits total. Rather, Mr. Martinez uses the royalty rate that was used in a licensing agreement with a third party for the same trademark to argue that even the Plaintiff believes that a fair assessment of the worth and/or contribution of the use of the trademark at issue in other products is only 10% of sales by a third party, ECF No. [44-3] at 23. Such a calculation is relevant to any equitable considerations that the Court might apply to the award to the Plaintiff as well as to determine whether the recovery based on profits is excessive so that the Court may adjust the recovery accordingly as directed by the applicable statute. Similarly, to the extent that section 35(a) of the Lanham Act directs that the sum awarded to a plaintiff shall constitute compensation and not a penalty, Mr. Martinez's assessment of what a fair award is based upon the worth of the trademark at issue is relevant and admissible, even if his assessment considers what a reasonable royalty would be. Furthermore, simply because witnesses may disagree as to the most reliable method for calculating damages does not require the exclusion of Mr. Martinez's opinion. Such arguments go more to the weight of the evidence, than the admissibility of the evidence under Daubert. See Taylor, Bean & Whitaker Mortg. Corp., 2008 WL 3819752, at *4 (stating "The certainty and correctness of [the expert's] opinion will be tested through cross-examination and presentation of contrary evidence and not by a Daubert challenge.") The Court may choose to disregard, give less weight to, or adopt Mr. Martinez's suggestions and opinions regarding how to best determine an equitable award of the Defendant's profits. The Plaintiff has failed to establish that the method used by Mr. Martinez is unreliable, where the royalty rate relied upon is for the same trademark at issue, and again, is used merely to suggest the worth of the trademark in contributing to the Defendant's profits arising from the sale of make-up kit that contains the purportedly infringing name.
For these reasons, Mr. Martinez's testimony regarding the defendant's profits from the use of the trademark will not be excluded. His methods are reliable and his opinions are relevant to the issue of damages.
To the extent that the Plaintiff asserts that Mr. Martinez's opinion will not be helpful to the trier of fact in this case, based upon the nature of the case, the undersigned concludes that Mr. Martinez's opinions satisfy the helpfulness prong of the Daubert analysis. If infringement liability is established, the Court will have to determine the appropriate amount of damages. The economic calculations related to an accounting of the Defendant's profits, including whether a reduction for costs and/or other equitable deductions should be made and in what amount is complex. Accordingly, Mr. Martinez's testimony will be helpful to the Court in elucidating relevant aspects of these issues. If the Court concludes that the testimony is not helpful, since this is a bench trial, the Court can disregard those opinions.
Accordingly, it is
The Eleventh Circuit, on the other hand, has held that an accounting of a defendant's profits is appropriate where: (1) the defendant's conduct was willful and deliberate, (2) the defendant was unjustly enriched, or (3) it is necessary to deter future conduct. Optimum Technologies, Inc., v. Home Depot U.S.A., Inc., 217 F. App'x. 899, 902 (11th Cir. 2007) (citing Howard Johnson Co., Inc. v. Khimani, 892 F.2d 1512, 1521 (11th Cir. 1990)).
Ameritox, at *10. (quoting Aviva Sports, Inc. v. Fingerhut Direct Marketing, Inc., 829 F.Supp.2d 802, 819 (D. Minn. 2011). Thus, although the court in Ameritox states that the Act does not require the plaintiff to prove "sales due to false advertising" or "sales due to the violative conduct," the very opinions that the court cites properly allocate the initial burden to the plaintiff to "prove [the defendant's] sales of the allegedly falsely advertised products" and then places the burden on the defendant to then demonstrate an appropriate apportion of its profits. Id.
