PRE-TRIAL ORDER NO. 5 (PATENT CLAIMS)

Re: Dkt. Nos. 470-71, 514, 680-81, 685-87

YVONNE GONZALEZ ROGERS, District Judge.

This Order addresses: (1) the parties' outstanding motions in limine; (2) a Daubert motion as to plaintiff's damages expert; and (3) several pending administrative motions to seal. Having considered the papers submitted, the arguments of counsel at the August 21, 2015 pretrial conference, and good cause shown, the Court rules as follows.

I. MOTIONS IN LIMINE

Plaintiff filed three motions in limine (Dkt. No. 681) and defendants filed seven (Dkt. Nos. 680, 682-87). In light of apparent concessions in various opposition briefs, the parties were instructed to meet and confer and advise the Court of the aspects of the motions still at issue. The parties submitted a stipulation addressing defendants' motions in limine numbers four through six (Dkt. No. 725) and defendants submitted a supplemental statement regarding the same (Dkt. No. 726). The parties also provided revised proposed orders, indicating the specific rulings still required. (Dkt. Nos. 727, 738.) To the extent certain aspects of the motions were not reflected in the revised proposed orders, the Court deems them WITHDRAWN.1 On August 24, 2015, the Court issued Pre-Trial Order No. 4, addressing defendants' motions in limine one through three. (Dkt. No. 736.) The Court now addresses the remaining motions in limine.

A. Plaintiff's Motion in Limine No. 1

In its first motion in limine, plaintiff seeks to exclude, pursuant to Federal Rules of evidence 401, 402, and 403, testimony by defendants' expert Neil Sheehan which is purportedly contrary to the Court's claim construction orders. Specifically, plaintiffs seek to exclude: (i) paragraphs 114-17, 120-23, 128-29, 134, 140, and 144-45 from the Sheehan report relating to the construed terms "longitudinal expansion" and "longitudinally shorten," and (ii) paragraphs 151 and 154 relating to the construed term "attached." The Court GRANTS IN PART and DENIES IN PART the motion.

i. Longitudinal Expansion and Longitudinally Shorten

The Court previously construed the relevant, disputed terms as follows:

Plaintiff contends aspects of the November 19, 2014 Sheehan Report (Dkt. No. 681-3) are inconsistent with these constructions, including by adding an additional requirement that the expansion of struts at issue occurs along a particular axis. To the contrary, the relevant paragraphs explicitly adopt the Court's previous construction. Plaintiff misconstrues the Court's concern over defendant's proposed construction as it related to the connectors described in Claim 8 of U.S. Patent No.7,691,119 (the "patent-in-suit" or "`119 Patent") as applying to the struts as well. To the contrary, in construing "longitudinal expansion," the Court found that "[g]iven that the struts consist of metal wires, `straightening' necessarily means that when they expand, they expand in a longitudinal direction." (Dkt. No. 218 at 17.) Thus, to the extent the paragraphs in question discuss measurements along a longitudinal axis, such an approach is not contrary to the Court's prior orders. Moreover, Sheehan does not opine that the claims require the struts to grow or elongate, but rather merely to bend or straighten—an approach that is also consistent with the Court's earlier order. (See Dkt. No. 218 at 17 ("Nothing in the patent suggests this metal wire [of the struts] somehow increases in length. Rather, when the working portion of the balloon expands and applies radial pressure to the interior of the struts, the curvature of the bends in the struts decreases.").) The motion on this ground is therefore DENIED.

ii. Attached

The Court also previously resolved a claim construction dispute regarding the term "attached," finding its ordinary and customary meaning applies. (Dkt. No. 218 at 2.) Plaintiff had proposed the construction "directly or indirectly attached" and defendants had proposed "fixed directly to." (Dkt. No. 218 at 18.) The Court agreed with plaintiff that the patent does not require "direct, surface-to-surface attachment of the ends of the hypo tube to the ends of the catheter shaft." (Id.) It further found that plaintiff "is entitled to the full breadth" of the claim term "attached," rejecting defendants' contention that the prosecution history limited the claims to "direct, surface-to-surface attachment." (Id. at 19-21.) The Court found, however, that nothing suggests the patent uses "attached" as a technical term of art requiring elaborate interpretation and that the term's plain and ordinary meaning "more accurately captures the term's emphasis on connection and junction" than did plaintiff's proposal. (Id. at 18, 22.)

Now, plaintiff argues paragraphs 151 and 154 of the Sheehan report misconstrue the Court's earlier findings in an attempt to rebut plaintiff's expert. The Court agrees in part. The first two sentences of paragraph 151 merely quote language from the patent and express the expert's understanding about a point of agreement between the parties regarding the connection point of the catheter shafts in the accused devices (at the balloon necks). Those apparently uncontroverted propositions shall not be stricken. However, the Court STRIKES the remainder of paragraph 151 and all of paragraph 154. Those portions of the report incorrectly suggest "attached," as used in the patent, cannot encompass indirect attachment. To the contrary, the Court previously rejected this specific argument by defendants as noted above.

B. Plaintiff's Motion in Limine No. 2

Plaintiff's second motion in limine seeks to exclude "evidence, testimony, and argument regarding statements by Martin B. Leon concerning the Chocolate balloon catheter" pursuant to Federal Rules of Evidence 403, 801, and 802 and Federal Rule of Civil Procedure 26. The Court has reviewed the relevant statement submitted in the form of an audiovisual recording of Leon. Therein, Leon discusses the Chocolate device, noting it is different than a scoring or cutting balloon (the types of devices covered by the patent-in-suit according to defendants). These statements are relevant to the question of infringement in this case. However, as out-of-court statements offered for the truth of the matters asserted, they are also hearsay under Rule 801.

Defendants argue they are not hearsay under Rule 801(d)(2)(A) and (C) (exempting from hearsay a party opponent's statements or those made by one authorized to speak on the subject on the party's behalf), because Leon is listed as chairman of plaintiff's medical advisory board. Defendants have failed to provide evidence describing the particulars of this role and legal authority addressing whether statements made by a company's advisor—as in the case of certain statements by its officers or directors—are per se authorized. Defendants have also failed to proffer any evidence suggesting the statements were specifically authorized in this case.

Defendants alternatively argue the statement should be admitted under Rule 807's residual exception because they have "equivalent circumstantial guarantees of trustworthiness" because plaintiff's CEO has testified Leon is highly regarded in the field. This proffer is insufficient to warrant introduction of this classic hearsay evidence.

Thus, finding no basis to admit the evidence, the motion is GRANTED insofar as it seeks exclusion of the video itself. The motion is otherwise DENIED without prejudice to plaintiff raising appropriate objections at trial. Defendants may be permitted to examine AngioScore witnesses regarding their knowledge of Leon's statement.

C. Plaintiff's Motion in Limine No. 3

Plaintiff's third motion in limine seeks to exclude, pursuant to Rules 401, 402, and 403, evidence, testimony, and argument regarding the July 2015 notices of allowance by the U.S. Patent and Trademark Office regarding defendants' U.S. Patent Application Nos. 13/044,425, 13/761,525, and 13/972,761, which defendants claim cover the Chocolate devices accused of infringement in this lawsuit. Plaintiff correctly notes that, in general, "where [a] defendant has appropriated the material features of the patent in suit, infringement will be found `even when those features have been supplemented and modified to such an extent that the defendant may be entitled to a patent for the improvement.'" Atlas Powder Co. v. E.I. du Pont De Nemours & Co., 750 F.2d 1569, 1580 (Fed. Cir. 1984). On this basis, plaintiff argues the recent allowance of these patents does not have any relevance to the question of whether the accused devices infringe plaintiff's preexisting patent.

By contrast, defendants argue the allowance may be relevant for a number of purposes, including: (1) as evidence of separate patentability, suggesting non-infringement under the doctrine of equivalents; (2) to rebut plaintiff's damages expert's reliance on a license of the newly allowed patents; (3) as evidence of the design and operation of the accused devices; and (4) as evidence relevant to whether any infringement by defendants was willful. The Court finds the first argument persuasive. Pending developments at trial, newly allowed patents may be relevant as to the question of whether the accused devices infringe the patent-in-suit. See Nat'l Presto Indus., Inc. v. W. Bend Co., 76 F.3d 1185, 1192 (Fed. Cir. 1996) ("Whether a modified device is within the scope of the prior patent, literally or by equivalency, depends on the particular facts. The fact of separate patentability is relevant, and is entitled to due weight."); Siemens Med. Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., 637 F.3d 1269, 1281 (Fed. Cir. 2011) (noting "separate patentability, while potentially relevant to the equivalence issue and deserving of due weight in the infringement analysis, does not merit a heightened evidentiary burden" in an infringement analysis). Defendants have proffered that they will be able to establish the necessary links at trial establishing the relevance of this evidence (e.g., demonstrating that the accused devices practice the newly allowed patents). Accordingly, it is improper to exclude this evidence at this juncture.2

Therefore, the Court DENIES the motion. The Court will entertain an appropriate jury instruction proposal, informing the jury that the allowances in question do not preclude a finding of infringement of the patent-in-suit.

D. Defendants' Motion in Limine No. 4

Defendants move to preclude evidence of a device constructed for plaintiff's employee and designated expert Jeffrey Bleam that purportedly embodies the patent-in-suit. (Dkt. No. 685.) The purpose of constructing the device was apparently to rebut anticipated testimony by defendants that a device as described in the '119 Patent is not feasible. (Dkt. No. 743 (Tr.) at 90-91.) Specifically, defendants seek to strike paragraphs 7-13 of Bleam's expert report on the grounds that: (1) plaintiff failed to identify such a device in their infringement contentions; and (2) Bleam does not offer an opinion that the constructed device actually embodies the '119 Patent. (Dkt. No. 688-9.) As plaintiff has indicated it only seeks to introduce this evidence in rebuttal, to the extent defendants argue the patented design is not feasible, the Court RESERVES on this remaining portion of the motion.

E. Defendants' Motion in Limine No. 5

Defendants move to preclude certain testimony by plaintiff's expert Marc Levenston. (Dkt. Nos. 686 (Motion), 393-14 (Report).) Specifically, they seek to exclude testimony regarding three claim limitations: "attached," "longitudinal expansion," and "end." They also seek to preclude him from testifying on the ultimate issue of whether the accused devices infringe.

As for the "attached" limitation, defendants argue Levenston's opinion contradicts the Court's construction. As discussed above in connection with plaintiff's motion in limine number one, the Court did not hold that "attached" excludes indirect attachment. Defendants again misconstrue the Court's earlier order. The motion on this ground is DENIED.

As for the "longitudinal expansion" term, defendants contend that Levenston's opinion relies on measurements of two accused Chocolate devices for which he improperly withheld the underlying data. Plaintiff asserts Levenston will no longer rely upon aspects of his opinion derived from the measurement data, but argues he should be permitted to rely on opinions based on simple visual observations—not measurements—of the status of the balloon as inflated or deflated. The Court agrees with and hereby adopts that approach. Therefore, the motion on this ground is GRANTED IN PART. The following aspects of the report are STRICKEN as clearly falling within the scope of this ruling: on page 12 of the report, the sentence referencing "experimental measurements"; the first full paragraph on page 13 through the end of section 1e on page 15; pages 26-38 (section regarding experimental measurements); and the text listing measurements accompanying Figures 4 and 8. In light of this ruling excluding testimony as to any of these measurements, to the extent Levenston seeks to opine as to his observations, plaintiffs shall first make a proffer, outside of the presence of the jury, establishing that testimony did not inappropriately rely on the excluded measurements.

As for the term "end," defendants argue the report fails to identify the function, way, or result by which the accused devices purportedly infringe the patent-in-suit under the doctrine of equivalents. As a result, they claim the testimony should be stricken. However, the authority they provide for this proposition does not go so far. In Amgen Inc. v. F. Hoffman-La Roche Ltd., 580 F.3d 1340, 1382 (Fed. Cir. 2009), the Federal Circuit held an expert offering an opinion of infringement under the doctrine of equivalents is required to present, "on a limitation-by-limitation basis, particularized testimony and linking argument" either: (1) "as to the insubstantiality of the differences between" the limitation and the accused product; or (2) "with respect to the function, way, result test." In the report, Levenston opines that "[e]limination of a small fraction of one strut would not alter the behavior of the Chocolate devices in a manner that would fall outside of any of the claim limitations" and would merely constitute "normal design iteration," not "substantial differences." (Dkt. No. 393-14 at 10.) Therefore, the motion on this ground is DENIED in light of prong one of Amgen.

Finally, as to the request to preclude Levenston's testimony as to the ultimate issue of infringement, the Court RESERVES.

F. Defendants' Motion in Limine No. 6

Defendants move to preclude testimony of plaintiff's expert Michael Horzewski (Dkt. No. 393-13) regarding certain infringement theories not disclosed in plaintiff's infringement contentions and testimony concerning the ultimate issue of infringement. The motion is GRANTED IN PART and DENIED IN PART. The Court notes, as a threshold matter, that plaintiff sought leave to amend its infringement contentions in November 2014. Plaintiff submitted to the Court, and defendants, a proposed amended set of contentions at that time, including many of the specific theories or explanations now challenged. (Dkt. No. 352.) Leave to amend was denied as untimely and unnecessary in light of plaintiff's contention that no new theories of infringement were presented, merely additional detail. (Dkt. No. 453.)

"The scope of contentions and expert reports are not . . . coextensive." Apple Inc. v. Samsung Electronics Co., No. 5:12-CV-0630-LHK-PSG, 2014 WL 173409, at *1 (N.D. Cal. Jan. 9, 2014) ("Contentions need not disclose specific evidence, whereas expert reports must include a complete statement of the expert's opinions, the basis and reasons for them, and any data or other information considered when forming them."). In evaluating defendants' challenge, the Court considers whether the paragraphs at issue permissibly address, in greater detail, a previously disclosed theory, or impermissibly substitute a new theory altogether. Id.

First, as to the limitation "wherein each strut extends from the proximal end to the distal end," defendants seek to strike paragraphs 34-36 and page 6 of Exhibit 3 of the report regarding the doctrine of equivalents. The Court finds that paragraph 34 merely describes the Chocolate device, and therefore need not be stricken. Paragraph 36 notes "eliminating a very small segment of the strut is an insubstantial difference because the missing segment is not necessary to allow longitudinal or radial expansion of the constraining structure." (Dkt. No. 393-13 at ¶ 36.) While neither party provided a copy of the infringement contentions, plaintiff represents that the contentions similarly asserted that removing "a small portion of the strut" was an "insubstantial difference." Thus, the general theory underlying paragraph 36 was apparently disclosed. Paragraph 35, however, asserts that the struts and rings of the accused device are "part of a single integral structure," thus performing "substantially the same function as the end-to-end struts of the claimed '119 device—to provide longitudinal structures that allow the constraining structure to span the entire inflatable portion of the balloon with no unterminated struts exposed to the vessel." (See Dkt. No. 352-2 at 15.) This doctrine of equivalents theory was apparently not disclosed in the contentions. Therefore, paragraph 35 and the similar language in the last paragraph on the right side of page 6 of Exhibit 3 are STRICKEN.

As to the "attached" limitation, plaintiff represents the infringement contentions asserted the "attached" limitation was literally infringed by the accused devices. The challenged portions of the report—paragraphs 46-49, and page 8 of Exhibit 3—merely discuss theories of indirect attachment, including by way of reference to specifications not available to plaintiff at the time of its infringement contentions. These opinions merely present greater detail as to the basic theory of infringement. Thus, the motion on this ground is DENIED.

As to the "longitudinal expansion" limitation, defendants seek to strike paragraphs 41-42 and page 7 of Exhibit 3. These paragraphs are STRICKEN to the extent they rely on Levenston's separately stricken measurements (for which the underlying data was undisclosed, as addressed above). To the extent they rely on his observations, however, these opinions are permitted. Plaintiff shall make a proffer to the Court, outside the presence of the jury, before presenting any opinions from these paragraphs, establishing that they were not indirectly derived from the impermissible measurements.

Additionally, defendants move to preclude testimony regarding "summary points" not included in any expert report, but instead in a document entitled "Additional Support for My Opinions Based on Claim Construction Order and Sheehan Report." (Dkt. No. 688-20.) As noted above, no expert may offer testimony exceeding the bounds of their reports. The Court does not construe this document as an expert report or supplement thereto. To the extent material included in that document was also part of a report, such testimony may be elicited at trial if not otherwise prohibited.

Finally, as to the request to preclude Horzewski's testimony as to the ultimate issue of infringement, the Court RESERVES.

G. Defendants' Motion in Limine No. 7

Defendants seek to preclude plaintiff from introducing evidence at trial of defendant TriReme's 510(k) submissions to the U.S. Food and Drug Administration relating to the Chocolate PTA Balloon Catheter devices. (Dkt. No. 687.) For the reasons stated on the record at the August 21, 2015 hearing, the motion is GRANTED.

II. DAUBERT MOTION

Defendants seek to exclude the testimony of plaintiff's damages expert, Gary Olsen, as unreliable. (Dkt. No. 471.) Plaintiff opposes the motion. (Dkt. No. 499.) Rule 702 provides that "scientific, technical, or other specialized knowledge" by a qualified expert is admissible if it will "help the trier of fact to understand the evidence or to determine a fact in issue." Fed. R. Evid. 702. Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and Kumho Tire Co. v. Carmichael, 526 U.S. 137(1999), "require that the judge apply his gatekeeping role . . . to all forms of expert testimony, not just scientific testimony." White v. Ford Motor Co., 312 F.3d 998, 1007 (9th Cir. 2002). However, "far from requiring trial judges to mechanically apply the Daubert factors—or something like them—to both scientific and non-scientific testimony, Kumho Tire heavily emphasizes that judges are entitled to broad discretion when discharging their gatekeeping function." United States v. Hankey, 203 F.3d 1160, 1168 (9th Cir. 2000). Indeed, the Ninth Circuit has determined that a "trial court not only has broad latitude in determining whether an expert's testimony is reliable, but also in deciding how to determine the testimony's reliability." Elsayed Mukhtar v. Cal. State Univ., 299 F.3d 1053, 1064 (9th Cir. 2002) (citing Hankey, 203 F.3d at 1167) (emphasis in original), overruled on other grounds, Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 467 (9th Cir. 2014).

Defendants argue Olsen's report contains a number of flawed methodologies. For instance, they argue: (1) his starting royalty rate is flawed; and (2) his upward adjustments from that figure are improper.

As to the first, they argue the 2.2-8.9 percent starting range is flawed because of the use of data from a limited, 13-month time period and use of average gross margins in a purportedly improper industry classification (Medical and Hospital Equipment). However, as to the former, the expert relied on that time period as a result of then-available data produced by defendants. As to the latter, a difference of opinion as to the proper classification is not grounds for excluding the report in its entirety. Additional challenges to the starting rate, such as his failure to consider earlier gross margins (he determined the earlier figures were less relevant as the defendants were in start-up mode at the time), also go to weight, not admissibility. In his Second Supplemental Report, Olsen further relied upon Eitan Konstantino's license to QT Vascular Ltd., and specifically the finding of independent financial adviser SAC Capital that the 5 percent rate was at the lower end of a 2-30 percent range for comparable licenses. (Dkt. No. 463-3 ¶ 14.)

As to the second, defendants raise a slew of challenges, including as to: (a) Olsen's reliance on a development agreement license between defendant TriReme Medical, LLC and InnoRa GmbH; (b) Olsen's failure to afford weight to the transaction in which plaintiff acquired the patent-in-suit; (c) Olsen's assumption of a worldwide, exclusive license; and (d) Olsen's reliance on "comparable" license summaries selected from a reference database by plaintiff. The approaches are not so unreasonable as to warrant exclusion under Rule 702 and Daubert. In evaluating "comparable" licenses, an expert "must consider licenses that are commensurate with what the defendant has appropriated." ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 872 (Fed. Cir. 2010) ("If not, a prevailing plaintiff would be free to inflate the reasonable royalty analysis with conveniently selected licenses without an economic or other link to the technology in question."). The Court agrees that some of Olsen's decisions regarding comparable licenses are questionable, however those concerns, in this case, are more properly directed to the weight of the testimony, not its admissibility. Olsen presented a colorable, though perhaps questionable, basis for selecting and weighing each of the licenses included (or, in the case of plaintiff's acquisition of the patent, for choosing to discount that particular transaction). Defendants may challenge each of these bases during cross-examination. Plaintiff also adequately defends, for purposes of admissibility, Olsen's assumption of a "worldwide" license by contending it was necessarily limited to the United States—because the hypothetical license involves only a U.S. patent—and suggests Olsen's finding that it would have been an "exclusive" license is also of minimal significance, because he placed limited weight on that particular factor. Thus, the motion is DENIED.

III. MOTIONS TO SEAL

The Court has pending before it three administrative motions to seal briefs or other documents filed in connection with various pretrial motions. (Dkt. Nos. 470, 514, 680.) In the Ninth Circuit, two different standards govern motions to seal, depending upon the nature of the proceeding in connection with which the documents are submitted. Pintos v. Pac. Creditors Ass'n, 565 F.3d 1106, 1115-16 (9th Cir. 2009) opinion amended and superseded on denial of reh'g, 605 F.3d 665 (9th Cir. 2010). For many judicial records, the party seeking to seal the record must demonstrate "compelling reasons" that would overcome the public's right to view public records and documents, including judicial records. Id. (citing Kamakana v. City & County of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006)). However, a different standard applies to private documents submitted in connection with non-dispositive motions, since such motions are often unrelated or only tangentially related to the merits of the underlying claims. Kamakana, 447 F.3d at 1179-80. The Rule 26(c) "good cause" standard applies to documents submitted in connection with non-dispositive motions, such as discovery motions, which the court may seal "to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Pintos, 565 F.3d at 1116. The requested redactions involve information related to the functioning of the accused devices, along with other purportedly proprietary business information, such as contract terms (e.g., royalty rates) or financial statements.

The Court finds the requests sufficiently justified and narrowly tailored for purposes of the pending, non-dispositive motions with which they are connected. Thus, the Court GRANTS the motions, but solely for purposes of those motions and under the lower "good cause" standard. The documents and portions of documents subject to the motions are therefore sealed. The Court cautions the parties, however, that the documents are sealed solely for purposes of these pretrial motions. This Order does not allow any party to seal the documents or portions thereof in connection with trial or with any dispositive motions. Any party seeking to seal documents in those contexts will be required to meet the higher "compelling reasons" standard. The parties are directed to meet and confer on the proper scope of any sealing requests at trial and to present them jointly.

IV. CONCLUSION

For the foregoing reasons, the Court rules as follows:

This Order terminates Docket Numbers 470-71, 514, 680-81, 687.

IT IS SO ORDERED.