JOSEPH C. SPERO, United States Magistrate Judge.
Before the Court are Motions in Limine re Daubert filed by Plaintiff TV Interactive Data Corporation ("TVI"), and Defendants Sony Corporation, Sony Corporation of America, Sony Electronics, Inc., Sony Computer Entertainment, Inc., and Sony Computer Entertainment America LLC (collectively "Sony"). TVI and Sony both contend that certain testimony from the opposing party's experts must be excluded
Rule 702 of the Federal Rules of Evidence permits expert testimony if it "will help the trier of fact to understand the evidence or to determine a fact in issue." Fed.R.Evid. 702. The expert may provide testimony if "(1) the testimony is based on sufficient facts or data; (2) the testimony is the product of reliable principles and methods; and (3) the expert has reliably applied the principles and methods to the facts of the case." Id. In Daubert v. Merrell Dow Pharmaceuticals, the Supreme Court held that the Rule 702 analysis "entails a preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology can be applied to the facts in issue." 509 U.S. 579, 593-94, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). Thus, district courts "are charged with a `gatekeeping role,' the objective of which is to ensure that expert testimony admitted into evidence is both reliable and relevant." Sundance, Inc. v. DeMonte Fabricating Ltd., 550 F.3d 1356, 1360 (Fed.Cir.2008).
In Daubert, the Court suggested four non-exhaustive guiding factors to make this determination: (1) whether the expert's methodology has been tested or is capable of being tested; (2) whether the technique has been subjected to peer review and publication; (3) the known and potential error rate of the methodology; and (4) whether the technique has been generally accepted in the proper scientific community. Daubert, 509 U.S. at 593-95, 113 S.Ct. 2786. The Court also emphasized that the focus of this inquiry, "of course, must be solely on principles and methodology, not on the conclusions that they generate." Id. at 595, 113 S.Ct. 2786. When an expert's principles and methodology are sound, and the evidence relied upon sufficiently related to the case at hand, disputes about the degree of relevancy or accuracy may go to the testimony's weight, not its admissibility. Primiano v. Cook, 598 F.3d 558, 564-65 (9th Cir.2010).
TVI contends the Court should exclude the opinion of Sony expert Mr. John Byrd, who has proposed what Sony considers to be the next-best noninfringing alternatives to TVI's patented technology. See Declaration of Patrick M. Arenz in Support of TVI's Partial Daubert Motion ("Arenz Decl."), Ex. 1 (Responsive Expert Report of John Byrd on Noninfringement). In the event TVI prevails on its infringement claims at trial, Mr. Byrd's proposed alternatives will be relevant to the assessment of a reasonably royalty. See Grain Processing Corp. v. American Maize-Products Co., 185 F.3d 1341 (Fed.Cir.1999). TVI argues, however, that both Mr. Byrd's noninfringing alternatives must be excluded because they are based on speculation and are thus unreliable. TVI also contends that one of Mr. Byrd's noninfringing alternatives — the "press any button" alternative — must also be excluded because it still infringes TVI's patents.
Mr. Byrd explains the "press any button" alternative in his expert report:
Arenz Decl. Ex. 1 ¶ 167.
TVI contends the "press any button" alternative infringes TVI's patents because it is contrary to the established claim construction of the term "automatically." TVI notes that Judge White construed this claim in TVI's previous case against Microsoft — which involved the same patents as in this case — when he wrote that the term `automatically':
Arenz Decl. Ex. 7 at 21 (Judge White's Claim Construction Order) (emphasis in original). TVI also notes that in this case, Sony stipulated to Judge White's construction of this term in a joint submission before Judge Fogel. See Arenz Decl. Ex. 8 at 2-3 (On November 9, 2010, the parties stipulated that the construction of the term "automatically" was "without user input of a file name"). Additionally, TVI contends this construction became part of the prosecution history of the patents when Microsoft represented to the United States Patent and Trademark Office — when seeking re-examination of the patents after Judge White's construction — that "[u]nder the Court's construction, a substantial new question of patentability is created[.]" Declaration of Sarah E. Huddleston in Support of TVI's Reply Memorandum in Support of Its Partial Daubert Motion, Ex. A (applying Judge White's construction that "`automatically' means `without user input of a file name'").
Sony does not dispute that it stipulated to Judge White's construction of the term "automatically." Nor does Sony dispute that the "press any button" alternative does not require the user to input a file name. See Arenz Decl. Ex. 2 (Deposition of Mr. Byrd) at 410 ("In my redesign the user would not be required to input a file name in this specific redesign").
Sony points to representations from TVI's counsel during the Markman hearing to show how TVI purportedly disclaimed Judge White's construction of the term "automatically" to mean "without user input of a file name." Excerpted in the proper context, TVI's counsel made the following representations while explaining the prior art:
Declaration of Fahd K. Majiduddin In Support of Defendant's Opposition to TVI's Partial Daubert Motion ("Majiduddin Decl."), Ex. 2 (Transcript of Markman Proceedings before Judge Fogel) at 13:6-18. TVI's counsel also explained that TVI's patents entailed the following improvements:
Id. at 22:14-22 (emphasis in Sony's Opposition). Sony also argues that TVI's Power-Point from the Markman hearing makes the disclaimer most clearly because Slide 11 states that the invention allows applications "to start up automatically without any additional user input." Majiduddin Decl. Ex. 3 at 4. Sony contends the foregoing representations show that TVI's counsel "clearly and unequivocally disclaimed coverage of a system with a button to activate the start of a disc." Sony Opp. at 7:1-2.
The Court disagrees. TVI's counsel did not make any disclaimer regarding the construction of the term "automatically," much less a "clear and unequivocal" disclaimer as Sony contends here. On November 9, 2010, the parties stipulated to use Judge White's construction of the term "automatically." See Arenz Decl. Ex. 8 at 2-3. On February 22, 2011, when TVI's counsel explained the prior art and patented technology before Judge Fogel during the Markman hearing, construction of the term "automatically" was simply not in dispute. Moreover, TVI's counsel did not say what Sony would like the Court to believe. While the excerpts above suggest the patented technology enables users to start up automatically without any additional user input, these statements do not say that the patented technology eliminates all user input such that pressing any button will avoid infringement. Such a construction was expressly rejected by Judge White. Arenz Decl. Ex. 7 at 21 (Judge White stated that the term `automatically' "does not eliminate all user input, it only eliminates user input of a file name."). In light of the parties' stipulation to Judge White's construction, there should be no further dispute on this matter. All testimony regarding the "press any button" alternative is therefore excluded.
TVI sets forth several other reasons why the Court should exclude Mr. Byrd's testimony regarding both proposed noninfringing alternatives. Because the Court will exclude the first alternative, the analysis in this section is limited to Mr. Byrd's second "operating system reload" alternative. See Arenz Decl. Ex. 1 ¶¶ 187-218. There is no dispute that Mr. Byrd's second proposed noninfringing alternative was not actually in existence at the relevant time period in 1997 — the period in which a hypothetical negotiation between TVI and Sony for a licensing agreement would have taken place. See Majiduddin Decl. Ex. 5 at 14. Thus, "the burden shifts to [Sony] to show that a substitute nonetheless was `available' during this period...." Conceptus, Inc. v. Hologic, Inc., 771 F.Supp.2d 1164, 1179 (N.D.Cal.2010) (citing DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1331 (Fed.Cir.2009)).
Whether a purported noninfringing alternative was "available" requires an assessment of whether Sony had the "necessary materials, equipment, know-how, and experience to make an alternative product during the relevant time frame." Conceptus, 771 F.Supp.2d at 1179 (citing Grain Processing, 185 F.3d at 1353). "Mere speculation or conclusory assertions will not suffice to overcome the inference" that the noninfringing alternative was not available at that time. Grain Processing, 185 F.3d at 1353. "Thus, the trial court must proceed with caution in assessing proof of the availability of substitutes not actually sold during the period of infringement." Id. "Acceptable substitutes that the infringer proves were available during the accounting period can preclude or limit lost profits; substitutes only theoretically possible will not." Id. (citing Minco Inc. v. Combustion Eng'g, Inc., 95 F.3d 1109, 1119 (Fed.Cir.1996)).
TVI contends Sony has not shown the noninfringing alternative would have been "available" because Mr. Byrd's expert analysis is laden with fundamental flaws and speculation. TVI puts forth several specific arguments pertaining to the inadequacy of Mr. Byrd's analysis. For the following reasons, the Court finds that each of TVI's arguments go to the weight of Mr. Byrd's testimony, not its admissibility.
TVI first argues Mr. Byrd's cost estimates are unreliable because Mr. Byrd relied on his own expertise rather than obtaining information from Sony regarding engineer salary rates or overhead costs. TVI also notes that Mr. Byrd failed to apply an exchange rate despite the fact Sony's Japanese engineers are generally paid in Japanese Yen. However, the fact Mr. Byrd relied on his own expertise to assess the cost and time required to implement the alternative, as opposed to retrieving data from Sony, does not render Mr. Byrd's methodology unreliable. TVI does not challenge Mr. Byrd's expertise, and TVI may cross-examine Mr. Byrd on his source of his data at trial. This goes to the weight of Mr. Byrd's testimony.
Next, TVI argues the redesigns could not have been "available" because they would have required modification of source code to which Sony did not have access. At the time of Mr. Byrd's deposition, Mr. Byrd was not aware that Sony did not have access to the source code of various accused products because of restrictions imposed by third parties. Mr. Byrd stated in his deposition, however, that the two alternatives "don't require access to all the source code at all times in order to implement them," and that "Sony had enough information in its possession at the time these devices were released certainly to do
TVI also contends Mr. Byrd's cost and time estimations are unreliable, as Mr. Byrd only did an analysis for a single model in each product category (DVD-S700, BDP-S1, and the 2006 PlayStation3). In response, Sony contends that TVI misconstrues the scope of an acceptable noninfringing alternative because after implementing the initial design for one product in a class, Sony would not have to redesign the later versions since they would have been designed with the alternative from the start. Again, the Court finds this matter appropriate for consideration by the jury. Both parties are entitled to present their opinions on how the alternatives would have been implemented, and the jury will accord each side's testimony the weight it is due.
Finally, TVI challenges Mr. Byrd's failure to analyze the acceptability of the noninfringing alternative to consumers. Mr. Byrd stated at his deposition that he had not analyzed whether the proposed alternatives would be acceptable with respect to consumers or the marketplace. Arenz Decl. Ex. 2 at 417. Although this is an important element pertaining to whether the alternatives were "available," this is not a basis to exclude Mr. Byrd's alternatives. Sony states that it will introduce other evidence on this issue. TVI has not cited any case in which an expert's opinion was excluded for this reason alone. The jury can hear evidence on whether these proposed alternatives would have been acceptable to consumers, and the jury can resolve this dispute.
Sony retained Mr. Creighton Hoffman to opine on damages and to rebut TVI's damages expert's opinion. In the event the jury finds TVI's patents are valid and infringed, TVI will be awarded damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." 35 U.S.C. § 284. To calculate a reasonably royalty rate, Mr. Hoffman analyzed a hypothetical negotiation based on fifteen Georgia-Pacific factors. See Arenz Decl. Ex. 12 (Expert Report of Creighton G. Hoffman); see also Lucent Technologies Inc. v. Gateway, Inc., 580 F.3d 1301, 1324-25 (Fed.Cir.2009). TVI challenges several portions of Mr. Hoffman's hypothetical negotiation analysis as incomplete and unreliable under Rule 702 and Daubert. The Court will assess each of TVI's challenges separately. As noted below, several portions of Mr. Hoffman's opinion must be excluded from evidence.
TVI first challenges Mr. Hoffman's reliance on Mr. Byrd's noninfringing alternatives which TVI contends should be excluded as unreliable. Mr. Byrd is precluded from presenting an expert opinion on his first "press any button" alternative, but his opinion pertaining to the "operating system reload" alternative is admissible. Thus, TVI's motion to exclude this evidence is only granted to the extent Mr. Hoffman relies on Mr. Byrd's "press any button" alternative.
It is not exactly clear where Mr. Hoffman relies on Mr. Byrd's "press any button" alternative in his expert report.
TVI also contends that Mr. Hoffman relies on Mr. Byrd's noninfringing alternatives when he critiques Professor Srinivasan's assessment of reasonable damages because, according to Mr. Hoffman, the survey fails to compare TVI's patented technology to the best noninfringing alternatives. However, a review of Mr. Hoffman's critique on this matter does not reveal a single reference to the "press any button" alternative, which the Court would exclude. See Arenz Decl. Ex. 12 at 33. Nor does Mr. Hoffman's critique expressly mention the "operating system reload" alternative, which the Court would not exclude. See id. Rather, Mr. Hoffman merely states that Professor Srinivasan failed to consider "[m]any other more simple and user friendly noninfringing alternatives [which] were available." Arenz Decl. Ex. 12 at 33. There will be at least one such alternative in evidence. Therefore, this testimony will not be excluded under Daubert.
TVI next contends that Mr. Hoffman's reference to the Sony licenses must be excluded from testimony because by Mr. Hoffman's own admission, the Sony licenses are not comparable. The Federal Circuit requires that "use of past patent licenses under [Georgia-Pacific] factors 1 and 2 ... account for differences in the technologies and economic circumstances of the contracting parties." Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1211 (Fed.Cir.2010) (citing Wordtech Sys. v. Integrated Networks Solutions, Inc., 609 F.3d 1308, 1319-20 (Fed.Cir.2010) ("[C]omparisons of past licenses to the infringement must account for `the technological and economic differences' between them") (quoting ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 870-73 (Fed.Cir.2010) (per curiam) (reversing the trial court's assessment of damages because similar to the district court in Lucent Technologies, it "made no effort to link certain licenses to the infringed patent"))). Mr. Hoffman references the Sony licenses in connection with his analysis of Georgia-Pacific Factor 2, which considers "[t]he rates paid by the licensee for the use of other patents comparable to the patent in suit." Lucent Technologies, 580 F.3d at 1325 (quoting Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970)).
Mr. Hoffman wrote the following regarding Georgia-Pacific Factor 2 in his expert report:
Sony argues that Mr. Hoffman should be permitted to opine on the Sony licenses because Mr. Hoffman only uses the Sony licenses for the limited purpose of noting that they "support" his royalty rate and do not support TVI's expert Mr. Wagner's royalty rate. This argument is without merit. The purpose of the Georgia-Pacific factors is to "support" an expert's proposed royalty rate, and the Federal Circuit has clearly prohibited the use of noncomparable licenses to do so. See id. Moreover, Mr. Hoffman used the Sony licenses in the context of Factor 2, which expressly requires the "use of other patents comparable to the patent in suit." Lucent Technologies, 580 F.3d at 1325 (emphasis added).
The Court is mindful that the Federal Circuit recently stated that "[t]he degree of comparability of [other] license agreements... [is a] ... factual issue[] best addressed by cross-examination and not by exclusion." Active Video Networks, Inc. v. Verizon Communications, Inc., 694 F.3d 1312, 1333 (Fed.Cir.2012). This statement, however, did not overrule the Federal Circuit's well-established precedent requiring some degree of comparability between licenses used in the Georgia-Pacific analysis for the jury to weigh. Here, Mr. Hoffman expressly stated that the Sony licenses "are not for technologies directly comparable" and offered no further testimony on the matter. Majiduddin Decl. Ex. 5 at 18. Moreover, six days after the Federal Circuit issued its decision in Active Video, the Federal Circuit criticized a district court's denial of a Daubert motion because that "ruling erroneously permitted continued reliance on this evidence where comparability between it and a hypothetical license to the [infringed patent] was absent." LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 80 (Fed.Cir.2012).
In his expert report, Mr. Hoffman bases his royalty rate of $0.07 per unit in part on "[i]ndustry `patent pools' for the hundreds of patents necessary to implement the DVD and BD standards [which] include royalty rates ranging from $2.50 to $9.00 per player." Majiduddin Ex. 5 at 29. Before Mr. Hoffman notes that the royalty rates from these patent pools support his calculation of a $0.07 reasonable royalty rate, he explains:
TVI contends that Mr. Hoffman's testimony on the patent pools must be excluded for the similar reason as the Sony licenses: because Mr. Hoffman fails to explain the technological or economic comparability between any one of the patents in the patent pools and license that would have been reached had the hypothetical negotiation taken place. TVI shows that other courts have excluded evidence pertaining to patent pools when the expert fails to explain how they are technologically or economically comparable to the hypothetical license. TVI Motion at 17-18 (citing DataQuill Ltd. v. High Tech Computer Corp., No. 08-0543, 2012 WL 1284381, *9, 2010 U.S. Dis. LEXIS 53164 *24-25 (S.D.Cal. April 16, 2012) (excluding an expert's opinion regarding a patent pool and noting that it "is a worldwide license for hundreds of patents covering an entire standard, and, therefore, is much larger in scope than the license that would have been reached at the hypothetical negotiation."); LaserDynamics, Inc. v. Quanta Computer, Inc., No. 06-0348, 2011 WL 7563818, *11, 2011 U.S. Dist. LEXIS 42590 (E.D.Texas Jan. 7, 2011) ("Particularly where a license covers a portfolio of patents or includes other intellectual property or services, Plaintiff must present evidence sufficient to allow the jury to weigh the economic value of the patented feature against the economic value of the features and services covered by the license agreement.")). The Court finds these well-reasoned principles persuasive, and will exclude Mr. Hoffman's testimony on the royalty rates associated with the patent pools as supporting the calculation of royalty rates in this case.
Sony contends Mr. Hoffman's information on the patent pools should not be excluded because Mr. Hoffman did not "derive" his proposed $0.07 reasonably royalty rate from the range of royalties associated with the patent pools, but merely used the patent pool rates to insure that his royalty rate was reasonable in comparison. This argument is without merit. Mr. Hoffman expressly "based" his conclusion that TVI and Sony would have negotiated a $0.07 per unit royalty rate in part on industry patent pools with "running royalties ranging from $2.50 to $9.00 per player." Majiduddin Decl. Ex. 5 at 29. Moreover, Mr. Hoffman uses this information in his analysis of Georgia-Pacific Factor 12, which also expressly requires some degree of comparability between the businesses. See Georgia-Pacific, 318 F.Supp. at 1120 (Factor 12 considers "[t]he portion of the profit or of the selling price that may be customary in the particular business or in comparable businesses to allow for the use of the invention or analogous inventions."). Mr. Hoffman failed to show any degree of comparability. Therefore, he may not refer to the royalty rates for the patent pools.
Nevertheless, Mr. Hoffman's consideration of the patent pools in Georgia-Pacific Factor 13 does not suffer from the same fatal flaws. Georgia-Pacific Factor 13 considers the "portion of the realizable profit that should be credited to the invention as distinguished from non-patented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer."
TVI also argues that Mr. Hoffman should not be permitted to testify about an effective $0.02 royalty rate he calculated from the lump-sum settlement and licensing agreement between TVI and Microsoft. In his expert report, Mr. Hoffman notes that Microsoft and TVI entered into an agreement wherein Microsoft agreed to pay TVI [Redacted] for its alleged infringing sales of [Redacted] PC units between January 29, 1997 and June 30, 2005. Arenz Dec. Ex. 12 at 16. Mr. Hoffman notes this payment included a license for past sales, as well as future sales made during the nine additional years of life remaining on TVI's patents. Id. Mr. Hoffman does not state in his expert report that this lump-sum agreement translates to a $0.02 effective rate. See id.
At his deposition, however, Mr. Hoffman was asked: "At the hypothetical negotiations, were the parties aware that Microsoft would later license the TVI's patents?" Arenz Decl. Ex. 13 at 59:14-16. Mr. Hoffman first responded that this question was "wholly irrelevant," but eventually stated that "Microsoft settled out something like two cents a copy was the effective rate." Arenz Decl. Ex. 13 at 58:18-19, 59:23-25. When asked how he reached that conclusion, Mr. Hoffman explained:
Id. at 60:12-23. In Sony's Opposition to TVI's Daubert motion, Sony states that Mr. Hoffman took Microsoft's sales, doubled them to account for the fact that the paid up license also would cover Microsoft's sales for an additional nine years, and divided the [Redacted] payment by these sales. Sony Opp. at 30.
TVI contends that Mr. Hoffman's testimony on the $0.02 effective rate which he calculated from the lump sum agreement between TVI and Microsoft should be excluded for two reasons: first, because Mr. Hoffman failed to disclose this effective rate in his expert report, and second, because the opinion is legally deficient for Mr. Hoffman's failure to account for "significant" and "fundamental" differences between lump-sum licenses and running royalty licenses. See Lucent Technologies, 580 F.3d at 1325-36, 1329-30. In response, Sony asserts that all evidence pertaining to the settlement between TVI and Microsoft should be excluded in its entirety.
TVI's prior settlement agreements are not admissible for the purpose of calculating a reasonable royalty rate. Mr. Hoffman is therefore excluded from opining on any effective royalty rate calculated from the lump-sum agreement between TVI and Microsoft. In addition, as the $0.02 effective rate was not disclosed in his expert report, Mr. Hoffman is precluded from testifying to this matter at trial.
TVI's final challenge is to the portion of Mr. Hoffman's opinion which critiques Professor Srinivasan's conjoint analysis. As described in below in the discussion of Sony's Daubert motion, Professor Srinivasan is an expert in the area of marketing research known as "conjoint analysis," and has written twenty-four peer-reviewed research papers on the topic. According to Professor Srinivasan, conjoint analysis quantifies customer preferences for certain attributes in a product, and has enabled Professor Srinivasan to estimate the "market's willingness to pay" for TVI's patented technology as an incremental benefit in Sony's accused products. See Declaration of Charles P. Kennedy in Support of Sony's Daubert Motion ("Kennedy Decl."), Ex. 8A at 4.
A section of Mr. Hoffman's expert report (Opinion III) critiques Professor Srinivasan's conjoint analysis. See Arenz Decl. Ex. 12 at 38-41. In particular, Mr. Hoffman offers his expert opinion that (a) Professor Srinivasan's methodology was inappropriate given the large number of features of the products which were not tested; (b) the results were nonsensical in the manner that the respondents interpreted the price discounts used in the surveys; (c) the reboot times were vastly overstated in comparison to reboot times determined by TVI's own expert; and (d) the price discount levels were not appropriately chosen. See id.
TVI argues that Mr. Hoffman should not be allowed to opine on Professor Srinivasan's conjoint survey analysis because Mr. Hoffman admitted at his deposition that he is not an expert in conjoint analysis:
Arenz Decl. Ex. 13 at 109:15-25, 110:1-5. TVI contends that because Rule 702 only permits expert testimony from "[a] witness who is qualified as an expert by knowledge, skill, experience, training, or education," Mr. Hoffman's opinion on the conjoint analysis should be excluded. Fed. R.Evid. 702. In response, Sony argues that Mr. Hoffman offers proper testimony in his area of expertise because he testifies to such matters as whether Professor Srinivasan's surveys are appropriate for determining a reasonable rate.
The Court finds that Mr. Hoffman's opinion is proper in this regard. Mr. Hoffman is an expert in the area of damages determined through the Georgia-Pacific analysis. His critiques of Professor Srinvasan's surveys are in the context of his
Sony first argues that the entirety of TVI expert Professor Srinivasan's conjoint surveys should be excluded from evidence as they are unreliable in the face of Daubert. Professor Srinivasan has served as a tenured and emeritus professor at the Stanford Graduate School of Business for the last thirty-nine years. Declaration of Professor V. Seenu Srinivasan ("Srin. Decl.") ¶ 2. He has authored over one-hundred articles in peer-reviewed journals, including twenty-three on conjoint analysis. Id. In 1978, Professor Srinivasan coined the term "conjoint analysis" in a peer-reviewed article that he co-authored with his professor. Id.
Professor Srinivasan describes conjoint analysis as a type of survey or market research, which, at the most general level, conceptualizes products as bundles of attributes, treating price as an attribute. Id. ¶ 3. Conjoint analysis uses customer surveys to determine "values" for each attribute. By choosing among multiple bundles of attributes, survey participants make implicit tradeoffs one would make in real-world purchasing decisions. Id. "For example, conjoint analysis offers respondents hypothetical products in several combinations, some of which might contain feature 1 (but not feature 2), and some of which might contain feature 2 (but not feature 1)." Id. Professor Srinivasan explains that by comparing respondents' choices when presented with different features, one can estimate the quantitative values of specific features. Id. According to Professor Srinivasan, studies have validated that this implicit tradeoff is more reliable than asking consumers directly what they would pay for a specific feature. Id.
In his particular study for this case, Professor Srinivasan estimated the "market's willingness to pay" ("MWTP") for TVI's patented technology as an incremental benefit in Sony's accused products. Srin. Decl. Exs. 1-3 at 3. Professor Srinivasan conducted three surveys to measure the MWTP for the benefit of using the autoplay feature (which he termed "next disc playback") in a DVD player, Blu-ray player, and a PlayStation 3 console. Id. at 3-4. The surveys incorporate two noninfringing alternatives to autoplay identified by Dr. Wolfe in his expert report for TVI: (1) a reboot option (measured by the increased time it takes to restart and play the next disc), and (2) a filename option (the device displays a virtual keyboard on the screen and instructs the user to type in a file name to play the next disc). Id. at 3; see also Arenz Decl. Ex. 7 (Opening Expert Report of Dr. Andrew Wolf) ¶ 97. The MWTP is the amount by which Sony would be able to increase the price of its accused products yet suffer no reduction in the number of units sold if Sony were to use autoplay rather one of Professor Srinivasan's two proposed noninfringing alternatives. Srin. Decl. Exs. 1-3 at 4.
To conduct his conjoint analysis, Professor Srinivasan used a mathematical formula to determine the MWTP for the autoplay feature in each of the three accused products. Id. at 5. He did this by using a particular type of conjoint analysis called Choice-Based Conjoint Analysis, in which survey respondents chose among various options of combinations of the product attributes. Professor Srinivasan recognized that a challenge to his study was that each of the accused products had various attributes (18 in Blu-ray, 20 in DVD, and 18 in PS3). Id. The accepted methodology for conjoint analysis is to limit the number of attributes to six or fewer. If survey respondents were asked to evaluate 18 — 20 attributes, Professor Srinivasan states
In Phase 1 of his study, Professor Srinivasan asked respondents to prioritize 18 attributes of each accused product to come up with a list of six attributes that have similar values as the autoplay feature. Id. at 6. Professor Srinivasan asserts that Phase 1 also allowed him to determine a price discount that approximately has the same or smaller value as the autoplay, which led to a conservative bias of the MWTP. Id.
In Phase 2 of his study, Professor Srinivasan determined the estimate values which the survey respondents attached to autoplay as compared to the two noninfringing alternatives. Id. The six comparable attributes chosen from Phase 1 were broken into set A and set B, each of three attributes. The survey respondents were then presented with hypothetical products with five total attributes (the attribute of interest (autoplay); three other attributes of similar value; and a price discount of $0, $3, $5, $10 or $20), and were asked to assume that all other attributes were the same across the four options in each choice set. Id. at 5. Professor Srinivasan tested autoplay against his two noninfringing alternatives. Id. at 6. Each survey respondent saw fifteen randomized choice sets. Id. at 6, 14.
Professor Srinivasan then analyzed the data using industry-standard software according to peer-reviewed research and presented his conclusions in a "Dashboard" exhibit. Id. at 6. The Dashboard is dynamic in that it shows the MWTP for autoplay over reboot on a second-by-second basis. For example, considering the values of 20 seconds for autoplay and 75 seconds for reboot (a 55 second difference), the MWTP for autoplay is $9.86 for Bluray players. Id. at 6. If the difference between autoplay and reboot is faster or slower, then the MWTP adjusts accordingly. Professor Srinivasan's results are shown below considering the MWTP over the two noninfringing alternatives, for each of the three products (Blu-ray player, DVD and PS3). The estimated MWTP results below account for the margin of error due to sample size at a 95% confidence interval:
AUTOPLAY v. REBOOT
Product Type MWTP
Blu-Ray $7.61
DVD $2.33
PS3 $5.73
AUTOPLAY v. FILENAME
Product Type MWTP
Blu-ray $10
DVD $5
PS3 $10
Srin. Decl. Exs. 1-3 at 6, 16-17. The estimated MWTP was used as a baseline by TVI's other expert Mr. Wagner in his calculation of a reasonable royalty rate. See Declaration of Michael J. Wagner Ex. 1 at 37.
Sony moves to exclude the entirety of Professor Srinivasan's conjoint surveys on the basis that they are fundamentally flawed and unreliable, and therefore should be excluded under Daubert. The Court notes from the outset, however, that Sony's criticism of the survey designs is more appropriate for consideration by a jury, rather than the Court on a Daubert motion. The Ninth Circuit has stated that "[u]nlike novel scientific theories, a jury should be able to determine whether asserted technical deficiencies undermine a survey's probative value." Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1143 n. 8 (9th Cir.1997). See also Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1263 (9th Cir.2001) ("[I]ssues of methodology, survey design, reliability, the
Sony first criticizes Professor Srinivasan's choice to use price discounts — as opposed to price itself — as one of the attribute variables in Phase 2 of his study. Sony argues that Professor Srinivasan's "price discount methodology" has not been accepted in the relevant scientific community, a consideration which weighs heavily in the Daubert analysis. In response, TVI argues that this argument underscores Sony's fundamental misunderstanding of the conjoint analysis.
The Court agrees with TVI. Professor Srinivasan did not create a novel "price discount method" solely for this litigation. Rather, price discount was just one of the variables in the conjoint analysis, which is accepted by the relevant community.
Srin. Decl. ¶ 4. Professor Srinivasan provides a handful of examples in which price was incorporated in ways other than product price, such as a discount card or as a percentage of the price of the base product. Id. ¶ 5.
Professor Srinivasan also explains why using price discounts was better than using price in this particular case. Id. ¶ 8. Here, the objective was to measure the MWTP of a single feature of a product, such as Blu-ray which has prices ranging from about $140 to $210. If Professor Srinivasan had used price, there would have been three levels of prices for the Blu-ray ($140, $170 and $210), and survey respondents would have been comparing a single feature (autoplay v. reboot) against price differentials of $30, $40 or $70. Professor Srinivasan states that the measuring interval would have been much greater than the likely value for the feature of interest and could have created a non-conservative bias. Id.
Sony also argues that the choice to use price discounts made the results of his survey illogical, and demonstrate that Professor Srinivasan's survey method was unreliable. Sony expert Mr. Klein re-analyzed the data from Professor Srinivasan's surveys using the same survey software. Unlike Professor Srinivasan, however, Mr. Klein did not constrain the utility of the price variable. "Constrained estimates for price, by definition, constrains the results so that a lower discount has no greater value than a higher discount." Srin Decl. ¶ 17. According to Professor Srinivasan,
By re-analyzing Professor Srinivasan's data and not constraining the price variable, Mr. Klein infers that approximately one-half of the survey respondents violated the rational assumption that consumers prefer a larger discount to a smaller discount:
Blu-ray: 24% prefer $0 to $10 discount
25% prefer $0 to $5 discount
36% prefer $5 to $10 discount
50% with some price preference inconsistency
DVD: 20% prefer $0 to $5 discount
25% prefer $0 to $3 discount
38% prefer $3 to $5 discount
52% with some price inconsistency
PS3: 23% prefer $0 to $20
25% prefer $0 to $10
31% prefer $10 to $20.
46% with some price preference inconsistency
Klein Decl. ¶ 7. Mr. Klein attributes this illogic to the possibility that survey respondents misunderstood the price discount for a price surcharge, or did not follow Professor Srinivasan's instructions to hold all the non-tested attributes constant. Id. ¶ 12.
In response, Professor Srinivasan criticizes Mr. Klein's failure to prove that any of his results are statistically significant. Srin. Decl. ¶¶ 10-16. Professor Srinivasan notes that testing for statistically significancy is an "elementary" principle in survey analysis, and without having conducted such a test, Mr. Klein cannot know whether the perceived inconsistencies are true.
Blu-ray: 1.7% prefer $0 to $5 discount (compare Mr. Klein's 25%)
2.7% prefer $0 to $10 discount (compare Mr. Klein's 24%)
2.7% prefer $5 to $10 discount (compare Mr. Klein's 36%)
9.5% with some inconsistency (compare Mr. Klein's 50%)
DVD: 3.0% prefer $0 to $3 discount (compare Mr. Klein's 25%)
4.0% prefer $0 to $5 discount (compare Mr. Klein's 20%)
2.0% prefer $3 to $5 discount (compare Mr. Klein's 38%) 9.5% with some inconsistency (compare Mr. Klein's 52%) PS3: 6.8% prefer $0 to $20 (compare Mr. Klein's 23%) 5.1% prefer $0 to $10 (compare Mr. Klein's 25%) 3.7% prefer $10 to $20 (compare Mr. Klein's 31%) 13.9% with some inconsistency (compare Mr. Klein's 46%)
Id. ¶ 12. These results demonstrate that a statistically insignificant number of respondents valued lower discounts over greater discounts. As Professor Srinivasan explained, the 95% confidence level means that even if every one of the respondents' true preferences are consistent with economic rationality, we would incorrectly identify approximately five percent of the respondents as violating economic rationality. Id. ¶ 14. Consequently, in interpreting the results above, the amount in excess of 5% is a more accurate indication of the prevalence of true economic irrationality. An examination of the table above therefore indicates that the prevalence of true economic irrationality is less than 5% in 11 out of the 12 cells in the table above. Because only in the PS3 case did approximately 9% of respondents violate the rational economic assumption (13.9%-5% = 8.9%), Professor Srinivasan concludes that there is very little prevalence of true economic irrationality. Id. Based on Professor Srinivasan's findings, there is certainly not enough evidence to render the method unreliable under Daubert.
Mr. Klein also claims in his expert report that he determined the extent to which respondents who were presented with two choices (out of a total of four) in which all the features were identical except the price discount illogically selected the alternative with the smaller discount. Klein Decl. ¶ 10. Mr. Klein's results purportedly show that 26% chose the lower discount for DVDs, 28% chose the lower discount for Blu-ray, and 29% chose the lower discount for PS3. Id. and Exs. 4-6 thereto. In response, Professor Srinivasan points out that this data is taken from 82 choice sets out of a total of 14,535, which is one-half of one percent of the total number of choice. Srin Decl. ¶ 20. Again, this small sample of illogical choices is not significant, and cannot bar introduction of the surveys under Daubert. Even considering this small portion of the survey results to be material, Professor Srinivasan notes that Mr. Klein ignored the very rational possibility that these survey respondents may have simply not paid attention to the price discount, considering it to be a much less important factor than the other tested product attributes. Id. ¶ 19.
Professor Srinivasan also accuses Mr. Klein and Sony of merely speculating that any price inconsistencies arise from his choice to use the price discount, as opposed to product price. Id. ¶ 18. Professor Srinivasan states that such price inconsistencies often arise in conjoint analysis, and this is true regardless of whether the product price or a price discount is used. Id. Moreover, Professor Srinivasan conducted what he calls a "robustness check" in response to Mr. Klein's critique of his report. See id. ¶ 21. According to Professor Srinivasan, the Dashboard results provide an opportunity exclude lower quality data and tested at a 95% level, thereby excluding respondents who exhibit great error in their responses distort the MWTP results. When examining only the higher-quality data, the MTWP numbers for the reboot option decrease on average by two cents, demonstrating that his original MTWP calculations were sound. Id.
In the face of Professor Srinivasan's convincing rebuttal evidence, Sony cannot
Sony also argues that Professor Srinivasan's surveys are unreliable because he only tested a portion of all the attributes of each product. As noted above, Professor Srinivasan asked respondents to rank 18 — 20 product attributes in Phase 1 of his study. In Phase 2, he only used the five attributes respondents chose in Phase 1 to have the closest value to autoplay. Sony contends that the exclusion of the majority of product attributes from Phase 2 led respondents to overvalue each of the product attributes that were tested.
In response, TVI claims this argument disregards long-standing peer-reviewed literature that using six or fewer variables leads to better predictive results because survey respondents are not overwhelmed by too much data. See Srin. Decl. Ex. 1-3 at 5-6. TVI quotes Mr. Klein's partner, Professor Hauser, in a declaration for his work in the Apple v. Samsung case in which he wrote that "from a scientific perspective, it is unnecessary to include all features of a product when designing a conjoint study. Such a requirement is not consistent with the academic literature or commercial use of conjoint studies." Arenz Decl. Ex. 13 ¶ 7. Sony does not respond to this point.
Once again, Sony uses Mr. Klein's re-analysis of Professor Srinivasan's survey data to attempt to discredit Professor Srinivasan's findings by showing how testing only a portion of the product features encouraged respondents to overvalue the product features which were tested. Using the data from Phase 2 of the survey and employing the same software used by Professor Srinivasan, Mr. Klein measured the MWTP for the six other features tested in Phase 2. Klein Dec. ¶ 14 and Ex. 7 thereto. Mr. Klein shows the MWTP for each of the six other tested features for the Blu-ray player:
Feature MWTP Ability to play video from computer $ 26.79 Adjustable picture settings $ 18.24 Camera memory slot $ 16.89 Video noise reduction $ 20.59 Surround sound $ 31.22 Instant skip/replay $ 19.40Total value of six features: $133.11
Id. ¶ 15. Mr. Klein opines that such MWTP results are "absurd" because $133.11 is the total value for only six of the 18 possible features chosen for inclusion in the study, and a fully-featured Blu-ray player can cost as little as $150.
In response to this analysis, Professor Srinivasan accuses Mr. Klein of violating "a very basic principle in conjoint analysis that the analyst should not `extrapolate.'" Srin. Decl. ¶ 22 ("Any reasonable data analyst, and certainly a conjoint expert should know that extrapolation is to be avoided."). Professor Srinivasan explains:
Id. Professor Srinivasan gives an example of the results for autoplay v. filename for Blu-ray players, where the MTWP value exceeded $10 but Professor Srinivasan nevertheless entered $10 for the MWTP. Id. ¶ 23. Professor Srinivasan states that "[m]aking projections beyond these values is considered "extrapolation," and that "Mr. Klein's refusal to apply this basic tenet of conjoint analysis makes his opinions regarding values of individual features that exceed the dollar ranges above for the respective product categories ... completely wrong." Id. In response to this, Sony notes that even avoiding such extrapolation, six features of the PS3 would still amount to $120, which is more than a reasonable portion of the retail price.
The foregoing dispute is a classic example of the "battle of the experts" for the jury to decide. While the Court is skeptical of Mr. Klein's violation of what Professor Srinivasan calls a basic principle in conjoint analysis to avoid extrapolation, the Court recognizes the oddity in finding such a high valuation of each individual product feature. Nevertheless, the literature on conjoint analysis condones testing six or fewer variables to produce results with a better predictive value, and the Court will not exclude the Srinvasan surveys for failing to depart from this accepted methodology.
The Court is aware that Judge Alsup recently excluded a conjoint analysis on a Daubert motion for its illogical results, noting that testing only a portion of the total number of features may have caused the problem. See Oracle America, Inc. v. Google, Inc., No. 10-3561-WHA, 2012 WL 850705, *9-13 (N.D.Cal. Mar. 13, 2010). However, in that study, the expert tested seven features in the analysis, three of which were covered by the patented technology, and four of which were not. Id. at *10. Judge Alsup remarked that the expert offered no principle basis for selecting the four non-patented features for inclusion in the analysis. In contrast, Professor Srinivasan conducted his conjoint analysis in two phases, and the objective of Phase 1 entailed a principled basis for choosing the five features which would be tested alongside autoplay in Phase 2 — their similar values relative to the other features.
Finally, Sony contends that Professor Srinivasan's surveys should be excluded for failure to compare the value of the autoplay feature next to what Sony considers to be the best two noninfringing alternatives. As discussed above, Sony's "press any button" alternative is excluded from evidence because it still infringes TVI's patents. Moreover, because Sony's other proposed noninfringing alternative — the operating system reload alternative — was not in existence at the time the hypothetical negotiation would have taken place, Sony bears the burden of proving before the jury that this alternative was
TVI hired Mr. Wagner to offer an expert opinion on a reasonable royalty rate owed to TVI in the event TVI prevails on its infringement claims. Sony moves to exclude Mr. Wagner's expert opinion on five grounds — the first and last of which the Court quickly rejects. The Court will not exclude Professor Srinivasan's conjoint analysis, thus Mr. Wagner's use of Professor Srinivasan's calculation of the MWTP as a baseline for his royalty rates is admissible. The Court will also not exclude Mr. Wagner's opinion because he considered qualitative factors — the essence of Sony's final argument. Mr. Wagner based his assessment of a reasonable royalty on several underlying considerations and performed the analysis required by Georgia-Pacific. See Declaration of Michael J. Wagner ("Wagner Decl.") Ex. 1. The Court will now address Sony's more interesting arguments.
Sony contends Mr. Wagner's opinion should be excluded from evidence because of his purported failure to account for price elasticity — the amount by which Sony's sales would decrease as a result of the increase in price associated with Mr. Wagner's reasonable royalties. Sony cites Crystal Semiconductor Corp. v. TriTech Microelectronics International, Inc., where a district court set aside a jury award for lost profits based on a price erosion theory because it lacked adequate record support, and the Federal Circuit affirmed this determination. 246 F.3d 1336, 1361 (Fed.Cir.2001). The Federal Circuit noted several deficiencies of the patent-holder's expert's report, including the fact the expert "did not present any evidence of how a hypothetical increase in price would have affected Crystal's profits due to lost sales." Id. at 1360. The court thought this problematic because "[l]ost sales and price erosion damages are inextricably linked." Id.
TVI persuasively distinguishes Crystal Semiconductor from the instant case. That case arose in the context of price erosion damages, a theory which is not at issue in this case and which differs from an expert's calculation of a reasonable royalty. To be entitled to damages on a price erosion theory, the patent holder must "show that `but for' infringement, it would have sold its product at a higher price." Id. at 1357. The Federal Circuit has noted that "in a credible economic analysis, the patentee cannot show entitlement to a higher price divorced from the effect of that higher price on the demand for the product." Id. Therefore, "the patentee's price erosion theory must account for the nature, or definition, of the market,... and the effect of the hypothetically increased price on the likely number of sales at that price in that market." Id. Thus, Crystal Semiconductor requires a price elasticity analysis when a patent holder seeks to collect damages on a price erosion theory.
Mr. Wagner's rebuttal evidence persuades the Court that the reasoning in Crystal Semiconductor cannot simply extend to calculations of a reasonably royalty. To collect price erosion damages, a
According to Mr. Wagner, his proposed royalty for the Playstation3 would have resulted in a total added cost of [Redacted] to Sony based on the sales information that Sony has provided. Wagner Decl. ¶ 5. Sony's total cost of goods sold for Playstation3 is [Redacted] (not including any sales, general, or administrative costs). Id. The [Redacted] royalty expense would only be an increase of two-tenths of one percent of the total costs. Id. According to Mr. Wagner, "Sony has already agreed not to charge over [Redacted] dollars of costs of goods sold to their customers." Id. In that case, the [Redacted] would be absorbed as a portion of the costs Sony already chooses not to pass onto its customers. See id.
Sony next argues that Mr. Wagner's opinion must be excluded for his calculation of a reasonably royalty using retail prices instead of whole sale prices. Upon a finding of infringement this Court must award damages "adequate to compensate for the infringement, but in no event less than a reasonably royalty for use made of the invention by the infringer..." 35 U.S.C. § 284 (emphasis added). Sony contends that as a wholesaler, Sony's "use made of the invention" must be measured by wholesale prices as opposed to retail prices, which Mr. Wagner recognizes is usually double in relation to the wholesale price.
Sony does not cite any case in support of this argument. TVI contends that nothing in § 284 or Federal Circuit precedent requires the use of wholesale prices to calculate a reasonable royalty to be paid by a wholesaler. TVI notes that Mr. Wagner is required to "carefully tie proof of damages to the claimed invention's footprint in the market place," ResQNet.com, ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed.Cir.2010), and contends Mr. Wagner has done just that by considering the value of TVI's patented technology to consumers in the context of the Georgia-Pacific factors. TVI also argues that Sony's argument makes no sense in a real-world application. TVI asserts that because it may recover on the theory of indirect infringement through its retailers' or end-consumers' infringing use, Mr. Wagner's consideration of the value to end consumers is appropriate. In the same regard, TVI argues that under the theory of patent exhaustion, downstream infringers (retailers and end-consumers) effectively receive a license to use TVI's patented technology and thus consideration of retail prices is appropriate.
The Court will not exclude Mr. Wagner's opinion from evidence on this basis. While Sony puts forth an interesting argument, Sony lacks any precedential support for the argument that a hypothetically-calculated reasonable royalty must be tied to wholesale prices as opposed to retail prices. Sony has failed to prove that Mr. Wagner's use of retail prices renders his opinion unreliable under Daubert. If Mr. Wagner's use of retail prices rendered his calculation of a reasonable royalty inaccurate, that goes to the weight of his testimony rather than admissibility.
Sony's final argument is that Mr. Wagner improperly used Professor Srinivasan's MWTP as a baseline for his royalty rates because Professor Srinivasan's surveys were taken in 2011 and 2012, fifteen years after the date of the hypothetical negotiation in 1997. Sony cites LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (Fed.Cir.2012), where the Federal Circuit stated that "[a] reasonably royalty determination for purposes of making a damages evaluation must relate to the time infringement occurred, and not be an after-the-fact assessment." Id. at 75 (quoting Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1313 (Fed.Cir. 2002)). In LaserDynamics, the Federal Circuit reversed the district court for requiring the parties to set their hypothetical negotiation at the time the lawsuit was filed as opposed to when infringement began. Id. Here, Mr. Wagner calculated a reasonable royalty using a hypothetical negotiation date in 1998, which is the date Sony began selling the accused products. Wagner Decl. Ex. 1 at 31.
Sony's challenge to Mr. Wagner's opinion is therefore more subtle than the issue presented in LaserDynamics. Sony contends that even though Mr. Wagner agrees a reasonable royalty rate should correspond to the hypothetical negotiation in 1997-1998, Mr. Wagner's consideration of surveys from 2011-2012 render his calculations unreliable. More specifically, Sony argues that consumers value autoplay in relation to reboot more than they did fifteen years ago. In response, TVI argues that because DVD prices have decreased since they were first introduced, survey respondents likely placed less importance on price than they would have done in 1997.
Sony may be correct in its assessment that consumers value autoplay more today than they did fifteen years ago, but this is an issue for the jury to decide. It simply does not follow that Mr. Wagner's consideration of the Srinivasan surveys from 2011-2011 render his calculations unreliable in the face of Daubert. Rather, the lapse in time goes to the weight of Mr. Wagner's testimony. In the same regard, Mr. Wagner's failure to consider the 1997 licensing agreement negotiated between TVI and Intel for the same technology bears on the weight of his testimony, but does not merit total exclusion. Accordingly, the Court will not exclude Mr. Wagner's opinion on this basis.
Dr. Wolfe was hired by TVI as an expert on the best noninfringing alternatives. Arenz Decl. Ex. 7 (Opening Expert Report of Dr. Andrew Wolfe). As mentioned in the discussion of Professor Srinivasan's surveys, Dr. Wolfe's expert report suggests that the two next-best noninfringing alternatives are the filename and the reboot alternatives. Id. ¶ 97. In filename alternative, a user inputs a filename in order to begin playback of content from a disc. In the reboot alternative, a user reboots between disc insertions. According to Dr. Wolfe, "[t]his would cause the user interface, both on the video display and the device front panel, to disappear for at least some period of time. It would also cause an additional delay in playing the new disc." Id.
Dr. Wolfe conducted a series of experiences to quantify the impact of the delay incurred as a result of using the reboot noninfringing alternative. Id. ¶ 98. Dr. Wolfe took two time-estimates to document the time it would take for content from a disc to be displayed on the screen using both autoplay and the reboot noninfringing alternative. Dr. Wolfe captured the playback of each disc on HD video and then extracted the playback time by reviewing
Sony challenges Dr. Wolfe's time measurements on grounds that his "tests were not derived from scientific methods." Sony Daubert Motion at 23. Sony asserts that "Dr. Wolfe has not pointed to any peer review or publication to support that his tests rest on scientifically valid principles." Id. Sony criticizes Dr. Wolfe's failure at his deposition to explain the details about how he conducted his tests, and failure to include the tape-recordings of Dr. Wolfe's time measurements in his expert report as required by Rule 26 of the Federal Rules of Civil Procedure. Id.
Sony's contentions are meritless. Dr. Wolfe more than adequately explained each step of the process in his expert report. Sony makes much of the fact that such time-measurements have not been "peer-reviewed" and tested for accuracy. However, with respect to measurement of time by tape-recordings, no such peer-review is necessary. The Court will therefore not exclude Dr. Wolfe's expert opinion.
Furthermore, the fact that Dr. Wolfe tape-recorded his tests does not mean he violated the Federal Rules of Civil Procedure by not including these recordings in his expert report. Pursuant to Rule 26, Dr. Wolfe was required to disclose in his opening report "(i) a complete statement of all opinions the witness will express and the basis and reasons for them; [and] (ii) the facts or data considered by the witness in forming them." Fed.R.Civ.P. 26(a)(2)(B). He did so. Sony learned of the videotapes at deposition but neither sought them, moved to compel, nor moved to supplement its expert opinions. This motion came too late.
For the reasons stated above, Sony's Daubert Motion is DENIED and TVI's Partial Daubert Motion is GRANTED in part and DENIED in part as set forth above.
IT IS SO ORDERED.
