Case 2:21-cv-00040-JRG Document 147-4 Filed 12/03/21 Page 1 of 11 PageID #: 5953
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`Exhibit H
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`Case 6:19-cv-00513-ADA Document 205 Filed 11/09/21 Page 1 of 10Case 2:21-cv-00040-JRG Document 147-4 Filed 12/03/21 Page 2 of 11 PageID #: 5954
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`6:19-CV-00513-ADA
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`CloudofChange, LLC,
` Plaintiff
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`-v-
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`NCR Corporation,
` Defendant
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is Defendant NCR Corporation (“NCR”)’s Motion to Exclude the opinions
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`and testimony of Plaintiff CloudofChange, LLC’s (“CoC”) technical expert Mr. Gregory Crouse
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`(“Crouse”). Dkt. 68. The Court heard the parties’ arguments on April 29, 2021 and made oral
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`rulings on the Motion during the hearing. Dkt. 127. Consistent with the Court’s oral rulings and
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`for the reasons set forth below, Defendant NCR’s Motion is GRANTED-IN-PART and
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`DENIED-IN-PART.
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`I.
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`BACKGROUND
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`This is a patent infringement case involving two patents related to point of sale (“POS”)
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`systems. Plaintiff CoC has asserted U.S. Patent Nos. 9,400,640 (“the ’640 patent”) and
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`10,083,012 (“the ’012 patent”) (collectively, the “asserted patents”) against Defendant NCR.
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`Both asserted patents are entitled “Web-Based Point of Sale Builder” and are directed to a
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`system used to build POS terminals for use in a “store or business.” ’640 patent, col. 2, line 57.
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`CoC’s technical expert Mr. Crouse has submitted three documents containing his opinions: an
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`opening report on infringement, a declaration concerning his apportionment analysis, and a
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`rebuttal report on the issue of patent validity. NCR filed its Motion to exclude Crouse’s opinions
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`(Dkt. 68), which was subsequently fully briefed (Response, Dkt. 83; Reply 94).
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`II.
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`LEGAL STANDARD
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`An expert witness may provide opinion testimony only if “(a) the expert’s scientific,
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`technical, or other specialized knowledge will help the trier of fact to understand the evidence or
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`to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the
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`testimony is the product of reliable principles and methods; and (d) the expert has reliably
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`applied the principles and methods to the facts of the case.” Fed. R. Evid. 702.
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`Rule 702 requires the district court to act as a gatekeeper to “ensure that any and all
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`scientific testimony or evidence admitted is not only relevant, but reliable.” Daubert v. Merrell
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`Dow Pharm., Inc., 509 U.S. 579, 592–93 (1993). The “basic gatekeeping obligation” articulated
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`in Daubert applies not only to scientific testimony but to all expert testimony. Kumho Tire Co. v.
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`Carmichael, 526 U.S. 137, 149 (1999). Accordingly, “a district court may exclude evidence that
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`is based upon unreliable principles or methods, legally insufficient facts and data, or where the
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`reasoning or methodology is not sufficiently tied to the facts of the case.” Summit 6, LLC v.
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`Samsung Elecs. Co., 802 F.3d 1283, 1295 (Fed. Cir. 2015). A district court shall consider
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`“whether the theory or technique the expert employs is generally accepted; whether the theory
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`has been subjected to peer review and publication; whether the theory can and has been tested;
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`whether the known or potential rate of error is acceptable; and whether there are standards
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`controlling the technique’s operation.” Knight v. Kirby Inland Marine Inc., 482 F.3d 347, 351
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`(5th Cir. 2007) (citing Daubert, 509 U.S. at 593). Further, a district court “must be assured that
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`the proffered witness is qualified to testify by virtue of his ‘knowledge, skill, experience,
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`training, or education.’” Wilson v. Woods, 163 F.3d 935, 937 (5th Cir. 1999) (quoting FED. R.
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`Evid. 702). The ultimate inquiry in a Rule 702 determination is whether the expert’s testimony is
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`sufficiently reliable and relevant to be helpful to the finder of fact and thus to warrant admission
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`at trial. United States v. Valencia, 600 F.3d 389, 424 (5th Cir. 2010).
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`“[W]hether Daubert’s specific factors are, or are not, reasonable measures of reliability in
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`a particular case is a matter that the law grants the trial judge broad latitude to determine.”
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`Kumho Tire, 526 U.S. at 147. Thus, “the trial judge must have considerable leeway in deciding
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`in a particular case how to go about determining whether particular expert testimony is reliable.”
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`Id. at 152. However, in a jury trial setting, the Court’s role under Daubert is not to weigh the
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`expert testimony to the point of supplanting the jury’s fact-finding role; instead, the Court’s role
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`is limited to that of a gatekeeper, ensuring that the evidence in dispute is at least sufficiently
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`reliable and relevant to the issue before the jury that it is appropriate for the jury’s consideration.
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`See Pipitone v. Biomatrix, Inc., 288 F.3d 239, 249–50 (5th Cir. 2002) (“‘The trial court’s role as
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`gatekeeper [under Daubert] is not intended to serve as a replacement for the adversary system.’ .
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`. . Thus, while exercising its role as a gate-keeper, a trial court must take care not to transform a
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`Daubert hearing into a trial on the merits.” (quoting Fed. R. Evid. 702 advisory committee
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`note)). Rather, “[v]igorous cross-examination, presentation of contrary evidence, and careful
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`instruction on the burden of proof are the traditional and appropriate means of attacking shaky
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`but admissible evidence.” Daubert, 509 U.S. at 596.
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`A.
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`Crouse’s Qualification as an Expert
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`III. ANALYSIS
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`Witnesses may be qualified as experts if they possess the relevant specialized
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`“knowledge, skill, experience, training, or education.” Fed. R. Evid. 702. “The standard for
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`qualifying expert witnesses is fairly liberal; the witness need not have specialized expertise in the
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`area directly pertinent to the issue in question if the witness has qualifications in the general field
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`related to the subject matter in question.” Wealthmark Advisors Inc. v. Phoenix Life Ins. Co., No.
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`SA16CA00485FBESC, 2017 WL 1133506, at *3 (W.D. Tex. Mar. 24, 2017).
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`NCR contends that Crouse is not a person of ordinary skill in the art even according to
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`his own standard and is therefore not qualified as an expert witness. Dkt. 68 at 3–4. In his
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`opening expert report, Crouse opines that a person of ordinary skill in the art would have “at
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`least a Bachelor’s of Science in computer engineering, software engineering, computer science,
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`or an equivalent degree and/or equivalent practical work experience and two years of work
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`experience with point of sale systems.” Dkt. 68, Ex. 3 at 9 (emphasis added). NCR contends that
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`Crouse does not meet the education standard because he only has a Bachelor’s degree of
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`Business Administration in finance. Dkt. 68 at 4. NCR further contends that Crouse does not
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`meet the experience standard because Crouse’s three relevant work experiences with
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`BearingPoint, Dell/Perot Systems, and KPMG involved projects for bank clients, and none of the
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`projects “involved systems that involved the use of web servers” or “the use of the Internet.” Id.
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`at 4–5. However, CoC proffers evidence that during Crouse’s three years at BearPoint from 2004
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`to 2007, Crouse worked on two projects involving point of sale solutions for large financial
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`institutions and dealt with most of the major point of sale vendors, including “Hypercom,
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`Verifone, IBM, and about five others” and their “POS terminals plus software.” Dkt. 83 at 4–5
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`and 8. Further, while at Perot Systems (now Dell), Crouse was involved in another point of sale
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`system project for a financial institution from 2007 to 2009. Id. NCR contends that Crouse’s
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`working experiences are “in the field of banking” and “did not include the manual coding” of the
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`point of sale system as described in the asserted patents. Dkt. 68 at 11. However, as courts have
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`recognized, a witness “need not have specialized expertise in the area directly pertinent to the
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`issue in question if the witness has qualifications in the general field related to the subject matter
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`in question.” Wealthmark, 2017 WL 1133506, at *3; see also Massok v. Keller Indus., Inc., 147
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`F. App’x 651, 656 (9th Cir. 2005) (“[A]n expert need not be officially credentialed in the
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`specific matter under dispute.”). This same standard also applies to NCR’s own technical expert
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`Dr. Chatterjee, whose Ph.D. thesis is not related to point of sale systems specifically (Dkt. 83 at
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`7), but he is qualified because of his education in the general field of computer science. Thus, the
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`Court finds that Crouse is a person of ordinary skill in the art since he has about five years of
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`working experiences involving point of sale systems. Accordingly, the Court finds that Crouse is
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`qualified to testify in this case as a technical expert.
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`B.
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`Crouse’s Application of the Court’s Claim Construction
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`Expert opinions that contradict or disregard a court’s claim constructions should be
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`excluded. See, e.g., MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 913 (Fed. Cir. 2012)
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`(“expert testimony [that] ignored the court’s claim construction ‘is irrelevant to the question of
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`infringement’ and is inadmissible under Daubert”).
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`The Court previously construed the term “point of sale builder software” to mean
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`“software that builds the POS terminals.” Dkt. 44 at 3. NCR contends that Crouse misapplies the
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`Court’s claim construction of this term because “he adds the word ‘content’” to the Court’s
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`construction. Dkt. 68 at 12. Specifically, NCR argues that the point of sale terminal used in the
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`accused NCR Silver product is “static code that is not ‘built or edited,’” but Crouse opines that
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`mere data entry in NCR Silver’s “POS content management system” is “building.” Id. In the
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`relevant part, Crouse opines that the “POS content [of the accused NCR Silver] can be added or
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`managed from both the POS device itself, or from a workstation with access to the back-office
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`component.” Dkt. 68, Ex. 3 at 16. The Court does not find anything in Crouse’s opinion that
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`contradicts the Court’s claim construction of the term “point of sale builder software.” This is a
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`classical battle between the experts, where the expert from one side opines that adding content
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`constitutes “building” of the POS terminal, while the expert from other side opines that it does
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`not. Therefore, this is not an inadmissibility issue but an issue for the jury to weigh the
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`competing expert opinions.
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`C.
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`Crouse’s Apportionment Analysis
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`In patent infringement cases, a damages expert may rely on a technical expert’s technical
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`analysis regarding which components of the accused products are attributable to the patented
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`invention and the economic value of those components. See, e.g., Realtime Data, LLC v. Oracle
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`Am., Inc., 2017 U.S. Dist. LEXIS 187717 at *14 (E.D. Tex. Mar. 22, 2017). However, “the
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`reasoning and methodology underlying a proffered expert opinion [must be] scientifically valid
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`and that the reasoning and methodology [must be] applied properly to the facts in issue.” Allen v.
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`Pennsylvania Eng’g Corp., 102 F.3d 194, 196 (5th Cir. 1996) (citing Daubert, 509 U.S. at 592–
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`93). For every conclusion contained in the expert’s proposed testimony, the Court must
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`determine if the methodology leading to that conclusion is sound. Id.
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`Crouse’s opening expert report includes an apportionment opinion to assist CoC’s
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`damages expert on calculating damages. Dkt. 68, Ex. 3 at 17–20. After concluding that POS
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`systems commonly offer six high level components and the first four components are considered
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`to be “the core functions of a POS system” (Id. at 17–18), Crouse conducts his whole
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`apportionment calculation in one single paragraph:
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`Based on my review, it is my opinion that every element of the asserted claims
`of the CloudofChange Patents are contained in the accused NCR Silver
`Essentials system. It is my opinion that approximately 80% of the NCR Silver
`Essentials product embodies
`the asserted patented components of
`the
`CloudofChange Patents. My opinion of this approximate 80% apportionment is
`based on my analysis of the value of the patented components based on the
`importance of the patented components to the function of the POS system in the
`manner intended. Accordingly, because the patented components make up
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`approximately 80% of the essential functionality of the POS system, additional
`options such as security and reporting features and other add-on features
`customized for specific uses such as restaurants, fall into categories that are nice
`to have, but that are not essential to a functioning POS system. Accordingly, I
`attribute approximately 20% to all add on components above the essential
`approximately 80% represented by the CloudofChange Patents for a POS
`system.
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`Id. at 19–20.
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`NCR contends that Crouse’s percentage calculation is conclusory and that NCR has “no
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`way to understand or meaningfully rebut that number.” Dkt. 68 at 15. The Court agrees.
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`Nowhere in Crouse’s report does Crouse explain how he reached his “80% apportionment” of
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`the accused product to the patented features, nor does he provide any factual foundation to
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`support this 80% apportionment. In his opening report, Crouse simply offers no explanation on
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`how he reaches this 80% apportionment. Therefore, this Court will exclude Crouse’s
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`apportionment opinion since his “reasoning or methodology is not sufficiently tied to the facts of
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`the case.” See Summit 6, 802 F.3d at 1295.
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`Indeed, Crouse’s apportionment calculation is exactly the kind of “plucked out of thin
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`air” apportionment that the Federal Circuit and many other district courts have rejected. See, e.g.,
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`Exmark Mfg. Co. Inc. v. Briggs & Stratton Power Prods. Grp., LLC, 879 F.3d 1332, 1351 (Fed.
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`Cir. 2018) (excluding an expert’s damages opinion where the expert “plucked the 5% royalty
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`rate out of nowhere” because it “is not enough for an expert to simply assert that a particular
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`royalty rate is reasonable in light of evidence without tying the proposed rate to that evidence”);
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`LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 69 (Fed. Cir. 2012) (rejecting
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`apportionment that was “plucked out of thin air based on vague qualitative notions of the relative
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`importance of the [accused technology]”); NetFuel, Inc. v. Cisco Sys. Inc., Case No. 5:18-cv-
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`02352-EJB, 2020 WL 1274985, at *9 (N.D. Cal. Mar. 17, 2020) (excluding apportionment
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`analysis where the expert “failed to provide the methodology underlying his apportionment
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`amount or explain how he arrived at that figure based on the facts of this case”); Guardant
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`Health, Inc. v. Found. Med., Inc., No. CV 17-1616-LPS-CJB, 2020 WL 2461551, at *18–19 (D.
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`Del. May 7, 2020), report and recommendation adopted, No. CV 17-1616-LPS-CJB, 2020 WL
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`5994155 (D. Del. Oct. 9, 2020) (excluding a technical expert’s 50% apportionment analysis,
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`where the expert failed to tie the relative value of the patented features to the accused products).
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`D.
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`Crouse’s Convoyed Sales Analysis
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`During the April 29, 2021 hearing, CoC’s counsel represented that its damages expert,
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`Ms. Ambreen Salters, does not offer any opinion on convoyed sales and would not rely on any
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`convoyed sales analysis by Mr. Crouse. Dkt. 127 at 26–27. Therefore, this issue is moot.
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`E.
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`Crouse’s Rebuttal Opinions regarding Secondary Considerations of Non-
`Obviousness
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`Determining whether an invention is obvious from the prior art can require more than
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`merely analyzing the differences between the prior art and the claimed invention. Graham v.
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`John Deere Co. of Kansas City, 383 U.S. 1, 17 (1966). Courts may also evaluate “secondary
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`considerations” of obviousness, i.e., other objective factors that may show that an invention was
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`not obvious from the prior art, even if the differences between the prior art and the claimed
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`invention seem slight. Id; see also Apple Inc. v. Samsung Elecs. Co., 839 F.3d 1034, 1052 (Fed.
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`Cir. 2016). Such secondary considerations include commercial success enjoyed by devices
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`practicing the patented invention, industry praise for the patented invention, copying by others,
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`and the existence of a long-felt but unsatisfied need for the invention. Apple, 839 F.3d at 1052.
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`However, “a nexus between the copying and the novel aspects of the claimed invention must
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`exist for evidence of copying to be given significant weight in an obviousness analysis.” Wm.
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`Wrigley Jr. Co. v. Cadbury Adams USA LLC, 683 F.3d 1356, 1364 (Fed. Cir. 2012).
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`In his rebuttal report, regarding secondary considerations, Crouse opines that the asserted
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`patents have been “copied by others.” Dkt. 68, Ex. 5 (Crouse Rebuttal Report) at ¶ 215. For this
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`proposition, Crouse relies on “letters [sent] to various players in the point-of-sale industry, based
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`on CloudofChange’s determination that its patented technology is being used by others.” Id. He
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`performed “a superficial review” of those third party products and opines that “others are using
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`similar hosted, cloud-based technologies, as NCR’s internal documents show.” Id. at ¶ 216.
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`NCR contends that Crouse’s opinions regarding secondary considerations should be excluded
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`because “they are admittedly not supported by any opinion that there is a nexus between the
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`Asserted Claims and the alleged third party activities.” Dkt. 68 at 17–18. However, Crouse has
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`provided at least some evidence of the nexus between the asserted claims and the third party
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`products in his rebuttal report, albeit extremely weak. See Dkt. 68, Ex. 5 (Crouse Rebuttal
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`Report) at ¶ 216. As such, the Court will not exclude Crouse’s opinion regarding secondary
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`considerations because “[i]t is for the fact finder to determine the magnitude of the nexus that
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`connects a given piece of evidence to the patents in suit and to give appropriate weight to that
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`evidence.” Genband US LLC v. Metaswitch Networks Corp., 2016 U.S. Dist. LEXIS 2651 *5–*6
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`(E.D. Tex. Jan. 8, 2016); see also Primrose Operating Co. v. Nat’l Am. Ins. Co., 382 F.3d 546,
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`562 (5th Cir. 2004) (The nexus requirement goes primarily to the weight secondary
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`considerations should be given.).
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`IV. CONCLUSION
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`For the foregoing reasons, the Court GRANTES IN-PART and DENIES IN-PART
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`Defendant NCR’s motion to exclude the opinions and testimony of Mr. Gregory Crouse.
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`Specifically, NCR’s motion is GRANTED with respect to Mr. Crouse’s apportionment analysis,
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`is MOOTED as to his convoyed sales analysis, and is DENIED as to the remainder.
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`SIGNED this 9th day of November, 2021.
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`ALAN D ALBRIGHT
`UNITED STATES DISTRICT JUDGE
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