Judge Thynge considers motions to exclude expert testimony

Magistrate Judge Mary Pat Thynge recently issued a report and recommendation deciding four motions to exclude testimony and opinions of the parties’ experts. Masimo Corporation v. Philips Electronics North American Corporation, et al., C.A. No. 09-080-LPS-MPT (D. Del. May 20, 2013). The details of the case can be found here, in the Court’s previous report and recommendation regarding other motions at issue in the case.

The Court recommended exclusion of the following expert testimony:

-Defendants offered three experts to support their claim that one of their products was an acceptable non-infringing alternative. The Court recommended exclusion of any testimony by one of the experts concerning the significance of FDA approval or clearance regarding the performance of defendants’ product. This expert admitted that he was only familiar with the FDA approval process “in vague terms” and had “never been part of a formal application process for a device as of yet.” Id. at 17. But this expert’s “limited[]” reliance on FDA approval standards did not preclude the rest of his testimony because “the foundation for [this expert’s] opinion and testimony does not rest on FDA approval standards for medical devices.” Id.

-Plaintiff offered an expert (Dr. Quill) to support its claim that defendants’ product was not an acceptable non-infringing alternative. First, Dr. Quill’s testimony was inadmissible as to what would be acceptable to defendants’ customers because he did not speak to any such customers. Id. at 23-24. On the other hand, his background made him qualified to “testify about the type of medical equipment which meets the needs of medical professionals and hospitals.” Id. Second, “Dr. Quill may testify there is lack of peer reviewed studies on [defendants’ product] showing that it is an acceptable alternative, but cannot opine or testify that [the product] is [an] unacceptable alternative due to the lack of such studies.” Id. at 24. This expert had “admitted the absence of evidence demonstrating acceptability of a medical device does not prove the device is unacceptable.” Id.

-Dr. Quill’s supplemental report, filed after the applicable deadline, was inadmissible as untimely. Id. at 25. Plaintiff had not presented evidence that the information in the report could not have been prepared in the initial expert report. “Further, the scheduling order has been modified at the request of the parties several times, and none permit supplemental reports. If either party desired the option of supplemental reports, the matter could have been addressed in the numerous changes to the scheduling order, or requested of the court long before discovery ended.” Id. at 26.

-Defendants’ damages expert (Dr. Keeley) was precluded from relying on a certain license agreement as a basis for the reasonable royalty rate because there was insufficient evidence that this agreement was comparable to a hypothetical negotiated license for patents-in-suit. Id. at 45.

-The Court also limited Dr. Keeley’s testimony to the extent he provided an independent opinion on the acceptability of defendants’ product as a non-infringing alternative because this expert was an economist and not a medical professional. Id. at 40. But Dr. Keeley could rely on the admitted opinions of defendants’ other experts regarding acceptable non-infringing alternatives in order to calculate damages. Id.

-Defendants’ motion to exclude testimony of plaintiff’s damages expert (Wagner) attacked this opinion on nine different grounds. The Court recommended granting the motion with regard to two of them. First, the testimony regarding plaintiff’s profit margin was unreliable. “Wagner’s testimony evidence[d] a lack of familiarity with the underlying data for his conclusions on profit margin. In evaluating [plaintiff’s] profit margin, Wagner delegated work to his staff. As shown in his deposition, Wagner was unfamiliar with the supporting documents and other details for his assumptions.” Id. at 60. Second, Wagner’s opinion that defendants’ product was an unacceptable alternative was excluded to the extent the analysis relied on excluded testimony of Dr. Quill. Id. at 66.

The Court recommended denial of the parties’ motions with respect to the following:

-With the exception of the above re: testimony on FDA approval or clearance, plaintiff’s motion to exclude the testimony of defendants’ experts regarding acceptable non-infringing alternatives should be denied. Id. at 18.

-Dr. Quill’s testimony that plaintiff’s commercial success was due to its advanced technology was admissible. Dr. Quill relied on the “technical expertise” of another expert to support a finding that a nexus existed between plaintiff’s commercial success and the patents-in-suit. Id. at 28. This combination of expert opinions to show a nexus was appropriate, and “demonstrate[d] the required nexus and bases for commercial success.” Id.

-Dr. Keeley’s testimony was admissible to the extent it concluded what a hypothetical consumer of defendants would consider an acceptable alternative. “[Plaintiff] misapplie[d] the analysis in [Grain Processing Corp. v. American Maize-Products Co., 185 F. 3d 1341 (Fed. Cir. 1999) in arguing Dr. Keeley’s analysis was improper]. The focus is not what [defendants] would or would not consider to be an acceptable alternative, but rather, what a [hypothetical] consumer would or would not consider to be an acceptable alternative.” Id. at 42.

-Dr. Keeley’s testimony that limited plaintiff’s incremental profit margins based on regression analysis was admissible. “The court’s role [as gatekeeper] is to determine whether Dr. Keeley’s methodology is scientifically acceptable, not which calculation or opinion is more correct [between his and the expert of plaintiff]. . . . [T]he approach by Dr. Keeley is reasonable and substantially equivalent to [plaintiff’s] expert’s methodology.” Id. at 43.

-The Court rejected the majority of defendants’ arguments for excluding Wagner’s testimony as going to the weight of the evidence or to issues that may be addressed at cross examination. See id. at 46-66.

-Wagner’s testimony on a reasonable royalty rate was admissible because the report applied the Geogia-Pacific factors and Wagner’s “prior application of [these factors had been] affirmed by the Federal Circuit” in another case. Id. at 55.

-Wagner’s opinion on future damages was also admissible. The “commensurably greater” standard of Oiness v. Walgreen, Co., 88 F.3d 1025 (Fed. Cir. 1996), which defendants cited, applies to the burden “the patentee must meet to justify future damages” but “has no bearing on the admissibility of expert testimony, if Rule 702 is satisfied.” Id. at 57-58.

Masimo Corporation v. Philips Electronics North American Corporation, et al., C.A. Nos. 09-080-LPS-MPT (D….

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