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`Analysis
`As of: Jul 10, 2014
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`NORDOCK INC., Plaintiff-Counterclaim-Defendant, v. SYSTEMS INC., Defend-
`ant-Counterclaimant.
`
`Case No. 11-C-118
`
`UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
`WISCONSIN
`
`2013 U.S. Dist. LEXIS 34661
`
`
`
`
`
`
`
`
`
`
`March 13, 2013, Decided
`March 13, 2013, Filed
`
`
`PRIOR HISTORY: Nordock Inc. v. Sys. Inc., 2013 U.S.
`Dist. LEXIS 26079 (E.D. Wis., Feb. 26, 2013)
`
`COUNSEL: [*1] For Nordock Inc, Plaintiff: Gregory
`W Lyons, O'Neil Cannon Hollman DeJong & Laing SC,
`Milwaukee, WI; .Jeffrey S Sokol, Sokol Law Office,
`Milwaukee, WI.
`
`For Systems Inc, doing business as PoweRamp, doing
`business as DLM Inc, doing business as McGuire, De-
`fendant: Philip P Mann, LEAD ATTORNEY, Mann Law
`Group, Seattle, WA; David A Affeldt, Affeldt Law Of-
`fices, West Allis, WI; John Whitaker, Whitaker Law
`Group, Seattle, WA.
`
`JUDGES: Hon. Rudolph T. Randa, U.S. District Judge.
`
`OPINION BY: Rudolph T. Randa
`
`OPINION
`
`DECISION AND ORDER
`This Decision and Order addresses the motions in
`limine
`filed by
`the Plaintiff and
`the Counter-
`claim-Defendant, Nordock Inc., ("Nordock") and the
`Defendant-Counterclaimant, Systems Inc. ("Systems"),
`rivals in the loading dock device industry. Also ad-
`dressed is Nordock's motion to seal.
`
`This action involves claims and counterclaims re-
`garding Nordock's design patent, United States Design
`Patent Number D 579,754 (the "'754 patent") and
`Nordock's unfair competition claims. Familiarity with the
`basic facts is presumed, and therefore minimal factual
`background is provided. Regional circuit law applies to
`evidentiary rulings in patent cases. See Pozen Inc. v. Par
`Pharm., Inc., 696 F.3d 1151, 1161 (Fed. Cir. 2012).
`A [*2] motion in limine is a motion "at the outset"
`or one made "preliminarily." Black's Law Dictionary,
`803 (8th ed. 2004). Although not explicitly authorized by
`the Federal Rules of Evidence, in limine rulings have
`developed pursuant to the inherent authority of district
`courts to manage the course of trials. Luce v. United
`States, 469 U.S. 38, 41 n.4, 105 S. Ct. 460, 83 L. Ed. 2d
`443 (1984). Judges have broad discretion when ruling on
`motions in limine. See Jenkins v. Chrysler Motors Corp.,
`316 F.3d 663, 664 (7th Cir. 2002). Regardless of a
`court's initial ruling on a motion in limine, the court may
`adjust a motion in limine during the course of a trial.
`Farfaras v. Citizens Bank & Trust of Chi., 433 F.3d 558,
`565 (7th Cir. 2006) (citing Luce, 469 U.S. at 41-42). See
`also, Luce, 469 U.S. at 41-42 ("Indeed even if nothing
`unexpected happens at trial, the district judge is free, in
`the exercise of sound judicial discretion, to alter a previ-
`ous in limine ruling."). In addition, if the in limine pro-
`cedural environment makes it too difficult to evaluate an
`evidentiary issue, it is appropriate to defer ruling until
`
`AVS EXHIBIT 2033
`Toyota Inc. v. American Vehicular Sciences LLC
`IPR2013-00417
`
`

`

`2013 U.S. Dist. LEXIS 34661, *
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`Page 2
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`trial. See Jonasson v. Lutheran Child & Family Servs.,
`115 F.3d 436, 440 (7th Cir. 1997)(delaying until trial
`may [*3] afford the judge a better opportunity to esti-
`mate the evidence's impact on the jury).
`
`Motion in Limine to Exclude the Testimony of Norb-
`ert Hahn
`Nordock requests an order exclude the testimony of
`Norbert Hahn ("Hahn") (ECF No. 129). Citing Rule 403
`of the Federal Rules of Evidence, Nordock asserts that
`Hahn's recollection of events that took place over 20
`years ago is so unreliable that it should be excluded be-
`cause it will not assist the jury and presents a substantial
`danger of confusing the jury.
`Rule 403 provides: "The court may exclude relevant
`evidence if its probative value is substantially out-
`weighed by a danger of one or more of the following:
`unfair prejudice, confusing the issues, misleading the
`jury, undue delay, wasting time, or needlessly presenting
`cumulative evidence." Rule 403 requires the Court to
`balance the probative value of the evidence at issue
`against any potential harm its admission might cause.
`United States v. Taylor, 701 F.3d 1166, 1172 (7th Cir.
`2012). Rule 601 of the Federal Rules of Evidence pro-
`vides that every person is competent to be a witness.
`At trial, Systems will be calling Hahn, who has 38
`years in the loading dock industry, as a fact witness.
`Although [*4] Hahn has been deposed, neither Nordock
`nor this Court know the subjects about which Hahn will
`be called to testify. The pretrial context provides insuffi-
`cient context to evaluate the admissibility of Hahn's tes-
`timony. See Jonasson, 115 F.3d at 440. At this juncture
`of the proceedings, Nordock's motion to exclude Hahn's
`testimony is denied.
`
`Motion in Limine to Establish the Priority Date of the
`'754 Design Patent
`Nordock seeks an order establishing a December 23,
`2002, priority date for the '754 design patent. (ECF No.
`131.) Systems contends that the priority date is a con-
`tested factual issue that must be determined by the jury.
`Determination of a priority date is purely a question
`of law if the facts underlying that determination are un-
`disputed. Bradford Co. v. Conteyor N. Am., Inc., 603
`F.3d 1262, 1268 (Fed. Cir. 2010). Because the underly-
`ing facts are contested, the Court cannot rule as a matter
`of law on the issue. Nordock's motion to establish a pri-
`ority date is denied.
`
`Motion in Limine for an Order that the America In-
`vents Act ("AIA") Does Not Apply
`
`Nordock requests a ruling that the America Invents
`Act ("AIA") does not apply to this case and must not be
`presented to the jury at trial. [*5] (ECF No. 133.) It
`maintains that, because the '754 Design Patent was filed
`May 31, 2007, and issued November 4, 2008, the AIA
`does not apply to it. Systems contends the motion is
`premature or irrelevant because Nordock has not identi-
`fied any evidence that would be affected by its motion or
`any issue that may arise at trial.
`Section 35 of the AIA provides:
`
`
`
` Except as otherwise provided in this
`Act, the provisions of this Act shall take
`effect upon the expiration of the 1-year
`period beginning on the date of the en-
`actment of this Act and shall apply to any
`patent issued on or after that effective
`date.
`
`
`
`
`Leahy-Smith America Invents Act, 112 Pub. L. No.
`112-29, § 35, 125 Stat. 284 (2011). The AIA was enacted
`on September 16, 2011, and unless otherwise provided
`the provisions of AIA took effect on September 16,
`2012. See e.g., Flo Healthcare Solutions, LLC v. Kappos,
`697 F.3d 1367, 1370 n.4 (Fed. Cir. 2012).
`Whether a particular portion of the AIA governs any
`of the facts or legal issues in this action is an is-
`sue-by-issue question. However, at this time, there is no
`indication that the AIA will be relevant to any issue at
`trial. Therefore, the motion is granted, without prejudice.
`If Systems [*6] believes any portion of the AIA is ap-
`plicable at trial, it should bring the matter to the attention
`of Nordock and the Court.
`
`Motion in Limine to Preclude Systems from Using
`Asserted Cost Savings to Attempt to Show Invalidity
`Nordock seeks an order precluding Systems from
`using asserted cost savings to attempt to show invalidity
`at trial. (ECF No. 135.) Nordock states the motion is
`conditioned on the Court's denial of Nordock's motion to
`compel
`the production of
`the Bero report with
`post-October 2011 profit information and the production
`of timely requested financial information.
`On February 19, 2013, the Court granted Nordock's
`motion to compel as to the production of timely request-
`ed financial information and denied it to the remainder of
`the motion. (See ECF No. 137.) Systems states it has
`produced all the financial documents upon which Sys-
`tems' damages expert relied and it will be immediately
`producing the updated financial data reflecting Systems'
`ongoing sales.
`
`

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`2013 U.S. Dist. LEXIS 34661, *
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`Page 3
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`Based on the foregoing, Nordock has not presented a
`basis to exclude Systems' evidence of cost savings. The
`motion is denied without prejudice.
`
`Motion in Limine to Exclude "Undated" and "Un-
`published" References from Entry into [*7] Evi-
`dence as Asserted "Prior Art" References at Trial
`Nordock seeks to exclude "undated" and "un-
`published" references from entry into evidence as as-
`serted "prior art" references at trial. (ECF No. 141).
`Nordock refers to the Crawford Door N.V. ("Crawford")
`brochure and Combursa drawings, 1 and asserts they
`should be excluded as evidence of "prior art" references
`applicable to the '754 Design Patent at trial.
`
`
`1 These documents were discussed at pages 42
`through 45 of the Court's February 26, 2013, De-
`cision and Order. (See ECF No. 143.)
`Systems indicates that the evidence is relevant to its
`defense of the unfair competition claims and it will be
`able to establish a proper foundation for the two docu-
`ments. However, it does not contend that either docu-
`ment is admissible as prior art.
`Because insufficient evidence has been presented
`regarding the dates of the two publications, they are not
`admissible as prior art and Nordock's motion to exclude
`"undated" and "unpublished" references from evidence
`as asserted "prior art" references is granted. This ruling
`does not bar the introduction of the documents as evi-
`dence regarding the unfair competition claims.
`
`Motion in Limine to Preclude Testimony of [*8]
`Systems' Newly Added Lay Witnesses
`Nordock seeks to exclude the testimony of Systems'
`newly added lay witnesses. (ECF No. 144.) Nordock
`maintains that Systems added eight new lay witnesses for
`the first time in its final pretrial report. These witnesses
`include five European residents, Brian Fulton ("Fulton"),
`and two Systems employees. Nordock maintains that
`Systems failed to timely disclose these witnesses as re-
`quired by the Court's July 21, 2011, Scheduling Order,
`denying Nordock the opportunity to depose them.
`Systems responds that its final pretrial report was
`filed prior to the issuance of the Court's February 26,
`2013, claim construction and summary judgment deci-
`sion, and in the wake of those rulings it intends to call
`only two of those eight witnesses -- Mark Lobel ("Lo-
`bel"), and Steve Robbins ("Robbins"). Systems states
`that both witnesses were disclosed on October 11, 2011,
`in response Nordock's second interrogatory requesting
`the identification of persons involved in developing the
`lip securing mechanism for each of Systems' accused
`dock levelers.
`
`With respect to Lobel and Robbins, Systems did not
`supplement its Rule 26(b)(1) disclosures and it did not
`provide any indication [*9] as to the expected testimo-
`ny of either witnesses as required by Rule 26. Noncom-
`pliance with Rule 26(a) generally precludes testimony of
`undisclosed witnesses. Systems does not assert that the
`omission is either harmless or justified. Systems waited
`until too long to identify the additional lay witnesses and
`has not offered any justification or established that its
`non-disclosure is harmless.
`Nordock has established that the eight lay witnesses
`were not previously disclosed as required by Rule
`26(b)(1) and, therefore, its motion is granted.
`
`Motion to Seal Profit Data for Systems' Accused Lev-
`elers in Nordock's Opposition to Systems' Motion to
`Strike Nordock Experts, and Financial Data in Ex-
`hibit A
`Pursuant to General Local Rule 79(d), Nordock filed
`a motion to seal profit data for Systems' accused levelers
`on page four of its Nordock's opposition to Systems' mo-
`tion to strike Nordock experts, and financial data in ex-
`hibit A thereto. (ECF No. 148.) Having reviewed the
`relevant papers, the Court finds good cause to seal por-
`tions of those papers because they contain the parties'
`sensitive financial information not generally available to
`the public. See County Materials Corp. v. Allan Block
`Corp., 502 F.3d 730, 740 (7th Cir. 2007). [*10] The
`sealing order will expressly provide that any party and
`any interested member of the public may challenge the
`sealing of those papers. Id.
`
`Systems' Motions in Limine
`By its motions in limine (ECF No. 140), Systems
`seeks an order barring Nordock from offering any expert
`testimony, opinion, or evidence on Nordock's unfair
`competition claims, and specifically as to secondary
`meaning. Systems also asserts that pursuant to Daubert
`v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113
`S. Ct. 2786, 125 L. Ed. 2d 469 (1993), the Court should
`exclude both expert reports and any testimony by Prof.
`Stan V. Smith ("Smith") regarding Nordock's purported
`damages in this action.
`
`Technical Expert Testimony on Non-Patent Issues
`Systems maintains that Nordock failed to identify
`any technical expert or to serve an expert report on any
`non-patent issues and should be barred from offering any
`expert evidence regarding non-patent issues. Nordock
`concedes the motion as to its technical expert, Steven
`Carl Visser ("Visser"), not testifying as to secondary
`meaning. However, it asserts that Visser should be al-
`lowed regarding common elements to design patent and
`
`

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`2013 U.S. Dist. LEXIS 34661, *
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`Page 4
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`product configuration trade dress validity and infringe-
`ment, such as the ornamental [*11] functional dichot-
`omy and the distinctiveness of a design relative to exist-
`ing and prior art designs.
`Under Rule 26(a)(2), a party that intends to rely up-
`on an expert witness's testimony is required to furnish by
`a date set by the district court a report containing, among
`other information, "a complete statement of all opinions"
`the retained expert will provide, "and the basis and rea-
`sons for them." Ciomber v. Coop. Plus, Inc., 527 F.3d
`635, 641 (7th Cir. 2008) (citing Fed. R. Civ. P.
`26(a)(2)(B)(I), (a)(2)(C)). Failure to comply with Rule
`26(a)(2)'s requirements results in sanction: the offending
`party is not allowed to introduce the expert witness's
`testimony as "evidence on a motion, at a hearing, or at a
`trial." Id. (citing Fed. R. Civ. P. 37(c)(1)). This sanction
`is " 'automatic and mandatory' " unless the offending
`party can establish " 'that its violation of Rule 26(a)(2)
`was either justified or harmless.'" Id.
`The parties' combined joint status report and discov-
`ery plan states "The parties agree that initial [e]xpert
`reports on matters for which the parties bear the burden
`of proof will be served by June 20, 2012, that rebuttal
`expert reports shall be served by July 20, 2012, [*12]
`and that expert discovery shall be completed by August
`20, 2012." (emphasis added.) (ECF No. 12.) While there
`are overlapping elements of trade dress and patent in-
`fringement, Nordock did not disclose any expert on trade
`dress. Nordock vigorously emphasized that point at pag-
`es two, three, and eleven of its memorandum in support
`of its motion to strike Brookman as an expert witness on
`trade dress and unfair competition. (ECF No. 53.)
`Nordock does not assert that the omission is either
`harmless or justified. Nordock apparently made a tactical
`decision and it is too close to trial to change that ap-
`proach. Therefore, Systems' motion to exclude any tech-
`nical expert evidence on behalf of Nordock on any
`non-patent issues is granted.
`
`Damages Expert Testimony
`Systems asserts that Smith's damages opinion and
`report must be excluded as being far-fetched, and based
`on faulty factual and legal analysis that render it "fatally"
`unreliable. Nordock states that Systems' criticisms of the
`Smith report on Nordock's lost profits are without merit,
`and notes that Systems' motion does not directly address
`Smith's damages calculations under 35 U.S.C. § 289, or
`Smith's November 5, 2012, supplemental report.
`Rule 702 of the Federal Rules of Evidence [*13]
`governs the admissibility of expert testimony. Daubert,
`509 U.S. at 588. Rule 702 provides as follows:
`
`
` A witness who is qualified as an expert
`by knowledge, skill, experience, training,
`or education may testify in the form of an
`opinion or otherwise if:
`(a) the expert's scientific, technical,
`or other specialized knowledge will help
`the trier of fact to understand the evidence
`or to determine a fact in issue;
`(b) the testimony is based on suffi-
`cient facts or data;
`(c) the testimony is the product of re-
`liable principles and methods; and
`(d) the expert has reliably applied the
`principles and methods to the facts of the
`case.
`
`
`
`
`Regional circuit law governs the decision whether to
`admit expert testimony in a patent case. See Micro
`Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1390-91
`(Fed. Cir. 2003).
`The Court engages in a three-step analysis for de-
`termining whether the expert testimony is both relevant
`and reliable: "[T]he witness must be qualified 'as an ex-
`pert by knowledge, skill, experience, training, or educa-
`tion,' Fed. R. Evid. 702; the expert's reasoning or meth-
`odology underlying the testimony must be scientifically
`reliable, Daubert, 509 U.S. at 592-93, . . . ; and the tes-
`timony must assist [*14] the trier of fact to understand
`the evidence or to determine a fact in issue. Fed. R. Evid.
`702." Ervin v. Johnson & Johnson, Inc., 492 F.3d 901,
`904 (7th Cir. 2007).
`In determining reliability, courts are to consider the
`following non-exhaustive list of guideposts: "(1) whether
`the scientific theory can be or has been tested; (2)
`whether the theory has been subjected to peer review and
`publication; (3) whether the theory has been generally
`accepted in the scientific community." Ervin, 492 F.3d at
`904 (citing Daubert, 509 U.S. at 593-94). "The propo-
`nent of the expert bears the burden of demonstrating that
`the expert's testimony satisfies the Daubert standard," by
`the preponderance of the evidence. Lewis v. CITGO Pe-
`troleum Corp., 561 F.3d 698, 705 (7th Cir. 2009). The
`weight and credibility of an expert's testimony may be
`challenged
`through "[v]igorous cross examination,
`presentation of contrary evidence, and careful instruction
`on the burden of proof." Daubert, 509 U.S. at 596.
`Although Smith's qualifications are not challenged,
`the Court notes Smith has a Bachelor's Degree from
`Cornell University, and a Master's Degree and a Ph.D. in
`Economics from the University of Chicago. (June 12,
`[*15] 2012, Smith Report, 1.) (ECF No. 86-4.) He has
`
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`2013 U.S. Dist. LEXIS 34661, *
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`Page 5
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`worked as an economic and financial consultant since
`1972. His experience included authoring the first text-
`book on economic damages; creating and teaching the
`first course in forensic economics nationwide as an ad-
`junct professor at DePaul University in Chicago; per-
`forming economic loss analysis since the early 1980s in
`several thousand cases throughout the county, including
`business valuation, financial analysis, antitrust, contract
`losses, class actions, employment discrimination, and
`intellectual property valuations including evaluations of
`reasonable royalty. The Court concludes Smith has spe-
`cialized training and experience as an economist to ena-
`ble him to assist the jury on the issue of damages in this
`action.
`Next, the Court must consider whether the method-
`ology underlying Smith's expert reports of June 20, and
`November 5, 2012, is reliable. Smith indicates his opin-
`ions are in accordance with the generally accepted
`standards within the field of economics and are ex-
`pressed to a reasonable degree of economic certainty. He
`also maintains that it is reasonable for experts in the field
`of economics to rely on the type of materials that [*16]
`he has in this case. Thus, the Court concludes that, in
`general, Smith's methodology is reliable.
`The next question is whether Smith's reports and
`testimony will assist the trier of fact in understanding
`evidence or in determining a fact in issue. In a patent
`infringement action, a plaintiff may recover "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, together with interest and
`costs as fixed by the court." 35 U.S.C. § 284 (2006). The
`statute authorizes two categories of infringement com-
`pensation: lost profits and reasonable royalty damages.
`Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301,
`1324 (Fed. Cir. 2009). Damages for design patent in-
`fringement may include lost profits, a reasonable royalty,
`or infringer's profits. See 35 U.S.C. § 289. An expert's
`damages theory must be based on "sound economic and
`factual predicates." LaserDynamics, Inc. v. Quanta
`Computer,
`Inc., 694 F.3d 51, 67
`(Fed. Cir.
`2012)(quoting Riles v. Shell Exploration & Prod. Co.,
`298 F.3d 1302, 1311 (Fed. Cir. 2002)); IP Innovation
`LLC v. Red Hat, Inc., 705 F. Supp. 2d 687, 689-91 (E.D.
`Tex. 2010) (rejecting [*17] damage expert's report be-
`cause he relied upon irrelevant unreliable evidence and
`failed to account for economic realities). In any case in-
`volving multi-component products, patentees may not
`calculate damages based on sales of the entire product, as
`opposed to the smallest salable patent-practicing unit,
`without showing that the demand for the entire product is
`attributable to the patented feature. LaserDynamics, Inc.,
`694 F.3d at 67-68.
`
`
`Lost Profits
`Systems states that Smith first analyzes the apparent
`value of gross revenue that Nordock would have realized
`if it had sold the same number of Nordock dock levelers
`as Systems sold of Systems' dock levelers and that he did
`not conduct the requisite "but for" analysis required
`when calculating lost profits damages. See Rite-Hite
`Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1555 (Fed. Cir.
`1995) ("To recover lost profits damages, the patentee
`must show a reasonable probability that, 'but for' the in-
`fringement, it would have made the sales that were made
`by the infringer.") Nordock can establish this "but for"
`causation by proving: (1) a demand for the patented
`product; (2) the absence of acceptable noninfringing
`substitutes; (3) the manufacturing [*18] and marketing
`capacity to exploit the demand; and (4) the amount of
`profit it would have made absent System's infringement.
`See Panduit Corp. v. Stahlin Bros. Fibre Works, Inc.,
`575 F.2d 1152, 1156 (6th Cir.1978). The "Panduit test"
`is a useful, but non-exclusive way for a patent holder to
`establish entitlement to lost profits damages. Rite-Hite,
`56 F.3d at 1545.
`Smith's report began by calculating loss sales reve-
`nue. Because Systems had not provided sales revenue
`data from the infringing models, (see Smith Report, 4),
`Smith used the number of dock levelers sold by Systems
`and the revenue data provided by Nordock for compara-
`ble models. Calculating lost sales revenue was the first
`step in Smith's two-part analysis, the second portion of
`that section addresses lost profits. The "but for" element
`of Smith's analysis is added at pages four and five of his
`November 5, 2012, supplemental report. (ECF No.
`147-3.) Smith's supplemental report also adjusts his lost
`profits opinion based on information Systems disclosed
`in the report of its damages expert, Richard Bero.
`Systems states that Smith never addressed the im-
`pact of non-infringing alternatives on his lost profits
`analysis, and that Smith's [*19] opinion regarding price
`erosion 2 is so devoid of actual analysis that it can "barely
`be believed." Such concerns are more properly viewed as
`addressing the weight of Smith's anticipated testimony
`rather than its admissibility. The Court's role is not to
`determine whether an expert's testimony is correct, but
`only whether it falls "outside the range where experts
`might reasonably differ." Daubert, 509 U.S. at 596.
`"Vigorous cross examination, presentation of contrary
`evidence, and careful instruction on the burden of proof
`are the traditional and appropriate means of attacking
`shaky but admissible evidence." Id.
`
`
`2 To recover price erosion damages, a pa-
`tent-holder must show that the infringing conduct
`affected retail prices. See Crystal Semiconductor
`Corp. v. Tritech Microelecs. Int'l, Inc., 246 F.3d
`
`

`

`2013 U.S. Dist. LEXIS 34661, *
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`Page 6
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`1336, 1357 (Fed. Cir. 2001) (stating that to re-
`cover price erosion damages, a patent-holder
`must show that "'but-for infringement, it would
`have sold its product at higher prices"). "A pa-
`tentee's price erosion theory must account for the
`nature, or definition, of the market, similarities
`between any benchmark market and the market in
`which price erosion is alleged, and the effect of
`the hypothetically [*20] increased price on the
`likely number of sales at that price in that mar-
`ket." Id.
`Systems also states that Smith's calculation of addi-
`tional damages based on "loss of marginal profit from
`the sale of accessory items that could have been made by
`Nordock if not for Systems' infringement," Smith June
`20, 2012, Report at 8, and was rejected in Rite-Hite
`Corp., 56 F.3d at 1550.
`the Rite-Hite holding.
`In
`Systems overstates
`Rite-Hite, 56 F.3d at 1550-51, lost profits were awarded
`for the patentee's lost sales of truck restraints, a device
`which holds a vehicle to a loading dock, (even though
`protected only under an unasserted patent), and lost prof-
`its were denied on "convoyed" sales of a loading dock
`leveler. King Instruments Corp. v. Perego, 65 F.3d 941,
`951 (Fed. Cir. 1995), states that when a patent holder
`seeks damages on an entire machine where its patent
`covers only a patented component or damages for lost
`sales of unpatented goods sold along with a patented
`device ("convoyed" sales), the patent holder must satisfy
`the entire market value rule, requiring that the patent
`holder prove that the patent-related feature is the basis
`for customer demand for the unpatented parts to which it
`seeks [*21] to extend its damages. Id. In Rite-Hite, the
`court reaffirmed the viability of the entire market value
`rule and imposed a further limitation that "convoyed"
`sales must bear a functional relationship with the patent-
`ed goods. Id.
`Rite-Hite is likely to preclude Nordock from recov-
`ering any losses on lost profits from truck restraints. It
`may also preclude claims of lost profits on door seals and
`shelters. However, disposition of those issues are de-
`pendant on factual issues that will be resolved at trial.
`Thus, at this juncture. it would be premature to decide
`whether Smith may testify as to loss of marginal profit
`from the sale of accessories
`
`Reasonable Royalties
`"'[A] reasonable royalty analysis requires a court to
`hypothesize, not to speculate. . . . [T]he trial court must
`carefully tie proof of damages to the claimed invention's
`footprint in the market place.'" Laser Dynamics, Inc., 694
`F.3d at 67 (quoting ResQNet.com, Inc. v. Lansa, Inc.,
`594 F.3d 860, 869 (Fed. Cir. 2010)). By statute, reason-
`
`able royalty damages are deemed the minimum amount
`of infringement damages "adequate to compensate for
`the infringement." Id. (citing 35 U.S.C. § 284). Such
`damages must be awarded "for the use [*22] made of
`the invention by the infringer." Id.
`"A 'reasonable royalty' derives from a hypothetical
`negotiation between the patentee and the infringer when
`the infringement began." ResQNet.com, Inc. v. Lansa,
`Inc., 594 F.3d 860, 868 (Fed. Cir. 2010). "The hypothet-
`ical negotiation tries, as best as possible, to recreate the
`ex ante licensing negotiation scenario and to describe the
`resulting agreement. In other words, if infringement had
`not occurred, willing parties would have executed a li-
`cense agreement specifying a certain royalty payment
`scheme." Lucent Techs., Inc., 580 F.3d at 1325. (Empha-
`sis added.) To determine a reasonably royalty, courts
`apply an
`"unprioritized and often overlapping,"
`ResQNet.com, 594 F.3d at 869, list of fifteen relevant
`factors found in Georgia-Pacific Corp. v. United States
`Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970).
`A reasonable royalty should be based upon the amount
`that a willing licensor and a willing licensee would have
`agreed upon during a hypothetical negotiation at the time
`the infringement began, if both parties had been reasona-
`bly and voluntarily trying to reach an agreement. 318
`F.Supp. at 1120.
`Systems states that Smith's assertion that [*23] "my
`opinion of a reasonable royalty on sales of dock levelers
`would be 100 percent of Nordock's lost sales as calcu-
`lated above," (citing Smith Report, 11), is incredible and
`should be sufficient to disqualify Smith as an expert. In
`so contending, Systems states even using a 25% royalty
`rate is generally thought to be unreasonable in view of
`recent Supreme Court decisions, citing LaserDynamics,
`694 F.3d at 69 (quoting Uniloc USA, Inc. v. Microsoft
`Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011)). (The use
`of 25% royalty rate fails to pass muster under Daubert).
`Smith cites the Georgia Pacific factors, generally
`used to evaluate reasonable royalties, and states he relies
`on factors four through eight. However, Smith states that
`"the patents owned by Nordock provide valuable product
`differentiation in the market, so Nordock management
`would never have been willing to license its patents."
`(Smith June 20, 2012, Report, 11.) (Emphasis added.) A
`reasonable royalty requires willing parties and a balanc-
`ing of their interests. Smith's reliance on the 100% roy-
`alty figure does not reflect Nordock being a willing party
`or that he engaged in any balancing of the parties' inter-
`ests. His opinion as to [*24] the "reasonable royalty" is
`unreliable and excluded under Daubert and Rule 702.
`See id.
`NOW, THEREFORE, BASED ON THE
`FOREGOING, IT IS HEREBY ORDERED THAT:
`
`

`

`2013 U.S. Dist. LEXIS 34661, *
`
`Page 7
`
`Nordock's motion for an order precluding Hahn's
`testimony (ECF No. 129) is DENIED;
`Nordock's motion for an order establishing the De-
`cember 23, 2002, priority date of the '754 design patent
`(ECF No. 131) is DENIED;
`Nordock's motion for a ruling that the America In-
`vents Act does not apply to this case and must not be
`presented to the jury at trial (ECF No. 133) is
`GRANTED;
`Nordock's motion for an order precluding Systems
`from using asserted cost savings to attempt to show inva-
`lidity at trial (ECF No. 135) is DENIED;
`Nordock's motion to exclude "undated" and "un-
`published" references from entry into evidence as as-
`serted "prior art" references at trial (ECF No. 141) is
`GRANTED and this ruling does not bar the introduction
`of the documents as evidence regarding the unfair com-
`petition claims;
`Nordock's motion to exclude undisclosed lay witness
`(ECF No. 144) is GRANTED;
`Nordock's motion to seal (ECF No. 148) profit data
`for Systems' accused levelers on page four of its
`
`
`Nordock's opposition to Systems' motion to strike
`Nordock experts, and financial [*25] data in exhibit A
`thereto is GRANTED and any party and any interested
`member of the public may challenge the sealing of those
`papers;
`Systems' motions in limine (ECF No. 140), as to an
`order barring Nordock from offering any technical expert
`testimony, opinion, or evidence on its unfair competition
`claims is GRANTED; and as to an order barring Smith's
`reports and testimony is GRANTED with respect to
`reasonable royalties and DENIED in all other respects.
`At trial, if a party believes evidence is being intro-
`duced in violation of these rulings, the party must object
`at that time.
`Dated at Milwaukee, Wisconsin this 13th day of
`March, 2013.
`BY THE COURT
`/s/ Rudolph T. Randa
`Hon. Rudolph T. Randa
`U.S. District Judge
`
`