`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`CIVIL ACTION NO. 6:15-CV-00163-JDL
`
`CHRIMAR SYSTEMS, INC., CHRIMAR
`HOLDING COMPANY, LLC,
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`Plaintiffs,
`
`v.
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`ALCATEL-LUCENT ENTERPRISE USA
`INC.,
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`Defendant.
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`REDACTED MEMORANDUM OPINION AND ORDER
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`Before the Court is: (1) Defendant Alcatel-Lucent Enterprises USA, Inc. (“ALE”) Motion
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`for Judgment as a Matter of Law and Motion for A New Trial (Doc. No. 378); and (2) Plaintiffs’
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`Chrimar Systems, Inc. d/b/a CMS Technologies and Chrimar Holding Company LLC
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`(“Chrimar” or “Plaintiffs”) Motion for Judgment as a Matter of Law on ALE’s IEEE-related
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`Equitable Defenses and Counterclaims (Doc. No. 379). The Motions have been fully briefed.
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`For the reasons stated below, Defendant’s Motion for Judgment as a Matter of Law and Motion
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`for a New Trial (Doc. No. 378) is DENIED. Plaintiffs’ Motion for Judgment as a Matter of Law
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`(Doc. No. 379) is DENIED.
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`BACKGROUND
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`On March 9, 2015, Plaintiffs Chrimar Systems, Inc. d/b/a CMS Technologies and
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`Chrimar Holding Company LLC (“Chrimar”) filed the instant action against ALE. (Doc. No. 3.)
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`In this action, Chrimar alleges infringement of U.S. Patent Nos. 8,115,012 (“the ’012 Patent”),
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`8,902,760 (“the ’760 Patent”), 8,942,107 (“the ’107 Patent”), and 9,019,838 (“the ’838 Patent”)
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 2 of 19 PageID #: 18035
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`(“patents-in-suit”))1. Chrimar maintains that each of the patents-in-suit are standard essential
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`patents (“SEP”). Specifically, Chrimar maintains that the patents-in-suit are SEPs for Power over
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`the Ethernet (“PoE”) standards IEEE 802.3af-2003 and IEEE 803.3at-2009. This case proceeded
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`through claim construction, dispositive motions and pretrial, and the trial between Chrimar and
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`ALE commenced on October 3, 2016. The following claims, defenses, and counterclaims were
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`presented to the jury: damages, invalidity based on derivation and improper inventorship, fraud,
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`and breach of contract. (Doc. No. 350.)
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`At the conclusion of Plaintiffs’ case-in-chief, ALE moved pursuant to Rule 50(a) for
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`judgment as a matter of law on Plaintiffs’ allegations of willfulness and damages. Trial
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`Transcript “Tr.” at 612:17–616:3. The Court denied ALE’s motion as to Plaintiffs’ damages
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`model (Tr. at 616:8–9), and granted ALE’s motion as to willfulness (Tr. at 624:4–7). At the
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`close of Defendant’s case-in-chief, Plaintiffs moved pursuant to Rule 50(a) on the following
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`issues: (1) infringement; (2) invalidity; (3) derivation; (4) antitrust; (5) implied license; (6) fraud;
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`(7) breach of contract; and (8) damages reduction by noninfringing alternatives. (Tr. at 964:14–
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`984:14.) The Court denied all of these motions, but granted as to written description and
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`enablement, the antitrust claim, and implied license. (Tr. at 965:17–20; 966:12–18; 969:14;
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`969:25–970:1; 984:14; 986:4–9.) Additionally, at the close of evidence, the Court also provided
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`ALE an opportunity to present additional evidence pertaining to ALE’s equitable defenses.
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`On October 7, 2016, the trial concluded and the jury returned a verdict as follows: (1)
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`Claims 31, 35, 43, and 60 of the ’012 Patent were not invalid; Claims 1, 5, 72, and 103 of the
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`’107 Patent were not invalid; Claims 1, 59, 69, 72, and 145 of the ’760 Patent were not invalid,
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`and Claims 1, 7, and 26 of the ’838 Patent were not invalid; (2) the sum of money that would
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`1 Prior to trial, ALE stipulated to infringement of all of the asserted claims of the patents-in-suit. (Doc. Nos. 298,
`337.)
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`2
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 3 of 19 PageID #: 18036
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`fairly and reasonably compensate Chrimar for ALE’s infringement was $324,558.34; (3) ALE
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`did not prove by a preponderance of the evidence that Chrimar committed fraud against ALE;
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`and (4) ALE did not prove by a preponderance of the evidence that Chrimar breached a contract
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`with the IEEE. (Doc. No. 349.) Both Chrimar and ALE have now moved to renew their motions
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`for judgment as a matter of law pursuant to Rule 50(b). Specifically, ALE moves to renew its
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`motion on damages (Doc. No. 378); and Chrimar moves on all IEEE-related claims and
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`defenses, including (1) estoppel; (2) unclean hands; (3) waiver; (4) implied license; (5) patent
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`misuse; (6) unenforceability; (7) breach of contract; (8) fraud; (9) antitrust. (Doc. No. 379.)
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`I.
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`Judgment as a Matter of Law
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`LEGAL STANDARDS
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`A renewed motion for judgment as a matter of law (“JMOL”) is a challenge to the legal
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`sufficiency of the evidence supporting the jury’s verdict. Power-One, Inc. v. Artesyn Tech., Inc.,
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`556 F. Supp. 2d 591, 593 (E.D. Tex. 2008) (citing Flowers v. S. Reg’l Physician Servs., 247 F.3d
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`229, 235 (5th Cir. 2001)). Rule 50 provides that judgment as a matter of law is appropriate if the
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`court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for
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`the party on that issue. Fed.R.Civ.P. 50(a)(1). In ruling on a renewed motion for JMOL, the
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`court may allow judgment on the verdict, if the jury returned a verdict; order a new trial; or
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`direct the entry of judgment as a matter of law. Fed.R.Civ.P. 50(b).2 A post-trial motion for
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`JMOL should be granted only when the facts and inferences so conclusively favor one party
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`“that reasonable jurors could not arrive at a contrary verdict.” TGIP, Inc. v. AT&T Corp., 527 F.
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`Supp. 2d 561, 569 (E.D. Tex. 2007) (citing Tol–O–Matic, Inc. v. Proma Produkt–Und Mktg.
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`Gesellschaft m.b.H., 945 F.2d 1546, 1549 (Fed. Cir. 1991)). “If reasonable persons in the
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`2 In order to advance a renewed motion for judgment as a matter of law under Rule 50(b), the movant must raise the
`same arguments during trial, in a Rule 50(a) motion for judgment as a matter of law. Fed.R.Civ.P. 50 (a)-(b).
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`3
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 4 of 19 PageID #: 18037
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`exercise of impartial judgment could differ in their interpretations of the evidence, then the
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`motion should be denied.” Id. Thus, a jury’s verdict may be overturned if, viewing the evidence
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`and inferences therefrom in the light most favorable to the party opposing the motion, there is no
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`legally sufficient evidentiary basis for a reasonable jury to find as the jury did.3 Guile v. United
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`States, 422 F.3d 221, 225 (5th Cir. 2005) (citing Delano-Pyle v. Victoria County, 302 F.3d 567,
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`572 (5th Cir. 2002)). The court may not make credibility determinations, nor weigh the
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`evidence. Power-One, 556 F. Supp. 2d at 594 (citing Reeves v. Sanderson Plumbing Prods.,
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`Inc., 530 U.S. 133, 150 (2000)).
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`II.
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`New Trial
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`Under Federal Rule of Civil Procedure 59, a new trial may be granted to any party to a
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`jury trial on any or all issues “for any reason for which a new trial has heretofore been granted in
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`an action at law in federal court.” Fed.R.Civ.P. 59. “A new trial may be granted, for example, if
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`the district court finds the verdict is against the weight of the evidence, the damages awarded are
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`excessive, the trial was unfair, or prejudicial error was committed in its course.” Smith v.
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`Transworld Drilling Co., 773 F.2d 610, 612–13 (5th Cir. 1985). The Court is required to view
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`the evidence “in a light most favorable to the jury’s verdict, and [] the verdict must be affirmed
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`unless the evidence points so strongly and overwhelmingly in favor of one party that the court
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`believes that reasonable persons could not arrive at a contrary conclusion.” Dawson v. Wal-Mart
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`Stores, Inc., 978 F.2d 205, 208 (5th Cir. 1992).
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`ALE’S MOTION FOR JUDGMENT AS A MATTER OF LAW AND MOTION FOR
`NEW TRIAL ON DAMAGES
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`3 Because a motion for judgment as a matter of law is a procedural matter not unique to patent law, the law of the
`regional circuit governs under Rule 50(b). See SynQor, Inc. v. Artesyn Techs., 709 F.3d 1365, 1373 (Fed. Cir. 2013)
`(“This court reviews the grant or denial of a motion for JMOL under the law of the regional circuit . . . .”).
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`4
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 5 of 19 PageID #: 18038
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`ALE moves for JMOL, a vacatur of the damages verdict, or in the alternative, a new trial,
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`on grounds that Chrimar failed to prove damages. Specifically, ALE claims that: (1) Chrimar’s
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`damages expert, Mr. Mills, improperly based his opinions on the Entire Market Value Rule
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`(“EMVR”); (2) Mr. Mills failed to properly apportion; (3) the Court erred in its instruction on
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`smallest saleable unit; (4) the Court erred in allowing Chrimar to present evidence of and rely on
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`settlement agreements; and (5) the Court erred in allowing Chrimar to present evidence on
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`Georgia-Pacific Factors 8, 9, and 10. (Doc. No. 378).
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`a. Applicable Law
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`The damages statute, 35 U.S.C. § 284, sets the floor for “damages adequate to
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`compensate for [patent] infringement” at “a reasonable royalty for the use made of the invention
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`by the infringer.” The burden of proving damages falls on the patentee. Dow Chem. Co. v. Mee
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`Indus., Inc., 341 F.3d 1370, 1381 (Fed. Cir. 2003). Calculation of a reasonable royalty requires
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`determination of two separate and distinct amounts: (1) the royalty base, or the revenue pool
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`implicated by the infringement; and (2) the royalty rate, or the percentage of that pool “adequate
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`to compensate” the plaintiff for the infringement. See Cornell Univ. v. Hewlett-Packard Co.,
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`609 F. Supp. 2d 279, 286 (N.D.N.Y. 2009). A reasonable royalty is based on a hypothetical
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`negotiation that takes place between the patentee and the infringer on the date infringement
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`began. Unisplay, S.A. v. American Electronic Sign Co., Inc., 69 F.3d 512, 517 (Fed. Cir. 1995).
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`“Although this analysis necessarily involves an element of approximation and uncertainty, a trier
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`of fact must have some factual basis for a determination of a reasonable royalty.” Id. The trial
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`court has discretion to discern the reliability of methods used to arrive at a reasonable royalty.
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`See SmithKline Diagnostics, Inc. v. Helena Labs. Corp., 926 F.2d 1161, 1164 (Fed. Cir. 1991)
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`(“[D]ecisions underlying a damage theory are discretionary with the court, such as, the choice of
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`5
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 6 of 19 PageID #: 18039
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`an accounting method for determining profit margin, or the methodology for arriving at a
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`reasonable royalty.”) (internal citations omitted)).
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`b. Analysis
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`1. Entire Market Value Rule
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`ALE argues that Mr. Mills improperly calculated his royalties by “applying percentage
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`rates from Chrimar’s past licenses to ALE’s net sales of the accused products,” “which is
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`equivalent to the entire market value of such products.” (Doc. No. 378, at 5.) Chrimar points out
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`that ALE never objected to Mr. Mills’s testimony as violating the EMVR, and argues that Mr.
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`Mills properly “apportioned the value of the patented technology and arrived at a royalty rate
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`tied to the number of PoE ports per device, regardless of the price or revenue generated by the
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`product,” and that “he does not use the entire accused device as the royalty base.” (Doc. No. 393,
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`at 5.)
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` In determining a reasonable royalty for a multi-component product, it is generally
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`required that “royalties be based not on the entire product, but instead on the ‘smallest salable
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`patent-practicing unit.’” LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 67 (Fed.
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`Cir. 2012). The entire market value rule is an exception to this rule, and “allows a patentee to
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`assess damages based on the entire market value of the accused product only where the patented
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`feature creates the ‘basis for customer demand’ or ‘substantially create[s] the value of the
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`component parts.’” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011)
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`(quoting Lucent Techs. V. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009); Rite–Hite Corp.
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`v. Kelley Co., 56 F.3d 1538, 1549–50 (Fed. Cir. 1995)).
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`The accused devices in this case were Powered Device (“PD”) and Power Sourcing
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`Equipment (“PSE”) products compliant with the relevant IEEE PoE standards. Sealed Tr. at
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`6
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 7 of 19 PageID #: 18040
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`17:9–18:12; Doc. No. 206, at 4. Specifically, Chrimar accused ALE’s PD products such as
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`wireless access points, VOIP phones, and WLAN controllers that comply with the PoE standard.
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`Id. As an initial matter, Mr. Mills did not base his reasonable royalty off of the entire accused
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`device. 4 Instead, Mr. Mills testified that he used PoE ports as a royalty base. Sealed Tr. at 8:7 –9.
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`In fact, the parties agreed to the number of PoE ports as a royalty base on which the jury was
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`instructed. See Final Jury Instructions (Doc. No. 350, at 19) (“[i]n this case, the parties have
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`stipulated that there are 268,971 ports sold by ALE that create the royalty base.”) ALE did not
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`then, nor does it now, object to this instruction.
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`When ALE filed its initial Daubert motion challenging Mr. Mills’s opinions, ALE did
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`not accuse Mr. Mills’s opinions of violating the EMVR. (Doc. No. 205.) It was not until ALE’s
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`reply brief that ALE first challenged Mr. Mills’s opinions based on the EMVR.5 (Doc. No. 228.)
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`In its reply, the only basis ALE identified as violating the EMVR was Mr. Mills’s comparison of
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`PoE premiums that were based on the sale of an end product. (Doc. No. 228, at 3.) As to that
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`specific challenge, the Court found that “Mr. Mills’s consideration of the price difference
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`between Defendants’ products that include PoE functionality and those that do not include PoE
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`functionality, does not violate the entire market value rule” because “Mr. Mills is not using the
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`revenue numbers of the final products to establish a royalty base or to assess damages based on
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`the entire market value of the accused products, but instead has isolated the premium in an
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`attempt to apportion and value the patented features.” (Doc. No. 253, at 7.)
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`4 ALE disputes this because they contend the ports are not distinct components. (Doc. No. 378, at 5.) Regardless, it
`is undisputed that Mr. Mills did not use the entire revenue of the accused devices to begin his analysis, but instead
`started his analysis with an average revenue per PoE port. Id.; Sealed Tr. at 53:4–12.
`5 See Jones v. Cain, 600 F.3d 527, 541 (5th Cir. 2010) (“Arguments raised for the first time in a reply brief are
`generally waived.”) Although this argument was waived during briefing, the Court nonetheless considered the
`argument in ruling on ALE’s Daubert motion.
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`7
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 8 of 19 PageID #: 18041
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`Despite the fact that Mr. Mills’s damages opinions have not changed, not once did ALE
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`affirmatively raise an issue with respect to his opinions and the EMVR, let alone the plethora of
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`issues it now outlines for the Court in its JMOL. Indeed, ALE filed a second motion to strike Mr.
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`Mills’s opinions and again did not raise any argument that his opinions violated the EMVR.
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`(Doc. No. 284.) Similarly, ALE did not challenge these opinions at the pretrial conference. (Doc.
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`No. 268.) Most importantly, not once during the entirety of Mr. Mills’s testimony, did ALE
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`object. Sealed Tr. at 5:5–34:6. Thus, ALE waived its contention it now brings that Mr. Mills
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`violated the EMVR. Rather than objecting to Mr. Mills’s testimony on this basis, at trial, ALE
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`instead attempted to insert the EMVR in cross examining Mr. Mills. For example, ALE’s Motion
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`begins by citing a portion of Mr. Mills’s testimony that was solicited on cross-examination.
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`(Doc. No. 378, at 4.)
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` In the entirety of that testimony, Mr. Mills actually explained that
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`8
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 9 of 19 PageID #: 18042
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`Next, ALE argues that Mr. Mills violated the EMVR by using net sales of the accused
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`products in his analysis of past licenses. (Doc. No. 378, at 5.) As Mr. Mills testified, where he
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`looked at past licenses and considered net sales, he did so in order to do a direct comparison
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`because those past licenses were running royalty agreements based on a percentage of net
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`revenue. Sealed Tr. at 6:12–16; 8:16–21. Because the royalty bearing licenses were negotiated
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`based on the invention or comparable inventions—not the value of the accused products—the
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`starting point for such an analysis cannot be said to be off of the total revenue of the accused
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`product. Thus, multiplying a running royalty from a past license that was based on a percentage
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`of net sales to ALE’s net sales of the accused products does not violate the EMVR. Instead, it
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`provides a direct comparison to apportion the value of the technology (as previously licensed)
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`and ascertain a reasonable royalty as to ALE.
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`In sum, Mr. Mills is not using the revenue numbers of the final products to establish a
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`royalty base or to assess damages based on the entire market value of the accused products.
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`Accordingly, ALE’s motion is DENIED as to its challenges based on EMVR.
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`2. Apportionment
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`ALE argues that Mr. Mills failed to apportion for the features of the accused products that
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`are unrelated to PoE, that he failed to apportion for the patented versus unpatented features of the
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`PoE standard, and that he failed to apportion for the value of standardization. (Doc. No. 378, at
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`7–10.)
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`9
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 10 of 19 PageID #: 18043
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`During direct examination, Mr. Mills identified for the jury these three issues with
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`respect to apportionment in this case:
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` Q. Now, do we have any particular apportionment issues in this case that we need
`to talk about?
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`A. Yes. There are three issues in this case. One is the value of PoE functionality.
`The products at issue here have other functionality besides just PoE
`functionality; so, we need to focus, when we're talking about profit, on the profit
`associated with PoE functionality.
`The second is within PoE functionality there are technologies that are
`covered by the patents-in-suit and technologies that are not. And, so, we need to
`focus the analysis on the aspects of PoE that are covered by the patents-in-suit.
`And, finally, we need to consider the value of standardization to determine
`whether the act of standardization itself provided any kind of artificial value or
`enhanced value to the patents-in-suit.
`
`(Sealed Tr. at 21:7–23.)
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`Mr. Mills then went on to testify as to how he accounted for apportionment in each of
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`these manners. Sealed Tr. at 22:5–26:22. With respect to apportionment of the value of the
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`patented PoE technology, Mr. Mills testified that he was able to look at PoE price and profit
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`premiums to compare the prices (and profits) of the exact same products with and without the
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`PoE functionality. Sealed. Tr. at 22:5–25:12.
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` Sealed Tr. at
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`24:10–13. The use of price and profit premiums from the sale of non-PoE products as compared
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`to the same products with PoE functionality is a measurable and appropriate way to isolate the
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`value of the PoE functionality. This analysis alone allowed Mr. Mills to begin to apportion the
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`value of the patented technology.
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`With respect to the value of the patented features contained in the standard, Mr. Mills
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`testified that he relied on Dr. Madisetti’s opinions that “the patents-in-suit relate to the majority
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`and the most critical aspects of the standard,” and that therefore the patents “should be credited
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`10
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 11 of 19 PageID #: 18044
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`with a significant portion of this profit premium”—
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` discussed above. Sealed Tr. at
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`25:13–26:11. Mr. Mills then testified that this information indicated his $2.50 per port rate was
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`inherently reasonable. Id. And ultimately, Mr. Mills testified that $2.50 was reasonable for just
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`the contributions of the patents and setting aside artificial value due to standardization. Sealed
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`Tr. at 26:12–22.
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`The jury heard evidence that the profit premium on ALE’s accused products that include
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`the PoE functionality is
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`As discussed above, because this premium is the difference
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`between the same products that have and do not have the PoE functionality, it is a reliable
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`indicator of the value of the PoE functionality. The jury was thus then able to consider Mr.
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`Mills’s $2.50 royalty rate as a fraction of that value that he opined was reasonable based on Dr.
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`Madisetti’s opinions regarding the importance of the patented technology to the standard and
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`irrespective of any value from standardization itself.6 Moreover, the jury heard evidence as to
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`how Mr. Mills’s analysis of Chrimar’s past license agreements led him to believe $2.50 was a
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`reasonable rate. Sealed Tr. at 5:5–6:16; 28:3–29:7. The jury also heard Mr. Mills testify
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`regarding a
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`that Mr. Mills testified
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`showed what ALE was willing to pay for comparable technology. Sealed Tr. at 9:5–10:23.
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`The jury heard all of this testimony and evidence on apportionment and ultimately did not
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`fully accept Mr. Mills’s rate, but determined a rate of $1.2067 per port was reasonable:
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` Sealed Tr. at 10:8–11.
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`6 The jury heard Dr. Madisetti’s testimony on the importance of the “detection” and “classification” aspects of the
`patented inventions as it relates to the IEEE standard. See, e.g., Tr. at 316:23–319:10. The jury was allowed to weigh
`the credibility of this testimony based on the evidence presented.
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`11
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 12 of 19 PageID #: 18045
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`(Doc. No. 349, at 2.)
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`In light of the testimony that was provided at trial, the Court finds that substantial
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`evidence supported the jury’s damages determination. Accordingly, the Court DENIES ALE’s
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`request for judgment as a matter of law that Chrimar failed to prove damages.
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`3. The Court’s Instructions
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`Finally, ALE argues that the Court erred in three ways: (1) its instructions on the smallest
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`saleable unit; (2) by allowing Chrimar to present evidence of settlement agreements to support its
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`royalty rate; and (3) by allowing Chrimar to present evidence on Georgia-Pacific Factors 8, 9,
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`and 10. (Doc. No. 378, at 11–16.)
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`i. Smallest Saleable Unit
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`As to the instructions on the smallest saleable unit, ALE objects to the following
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`instruction by the Court:
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`12
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 13 of 19 PageID #: 18046
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`(Doc. No. 350, at 19.)
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`As discussed above, while the Court did not intend to provide this instruction based on
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`the testimony presented in this case, because ALE interjected this issue during the cross-
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`examination of Mr. Mills, the Court felt it necessary to clarify the issue for the jury. Not
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`surprisingly, it was ALE who proposed and argued for such an instruction in the first place.
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`(Doc. No. 317, at 64.) ALE now objects to the change from “the ‘smallest salable unit’ that
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`practices the patent and has close relation to the claimed invention” to “the ‘smallest salable
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`unit’ that infringes the patent and has close relation to the claimed invention.” (Doc. No. 378, at
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`11.)
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`As an initial matter, ALE did not clearly object on the bases it now raises. At the charge
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`conference, counsel for ALE stated “I don’t think any change needs to be made” and that a
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`change would be “to basically just skew the argument in favor of the Madisetti testimony.” Tr. at
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`1099:23–1100:14. Thus, the arguments now raised are extraneous to what was raised on the
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`record and have been waived. However, even if not waived, the focus of ALE’s current argument
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`is on the need to include the idea that the “smallest saleable unit” have “close relation to the
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`claimed invention.” The Court instructed the jury that the smallest saleable unit must have “close
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`relation to the claimed invention.” (Doc. No. 350, at 19.) Thus, the only real objection can be
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`13
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 14 of 19 PageID #: 18047
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`some imputed difference between the words “practice” and “infringe.” ALE has not explained
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`the significance of that difference such that a new trial would be warranted. Moreover, even if an
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`error was made in stating the word “infringes” instead of “practices” in the instructions, that
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`error was harmless because, as discussed above, the royalty base was agreed and the jury was
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`instructed on the exact per port base at issue in this case. See Final Jury Instructions (Doc. No.
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`350, at 19) (“[i]n this case, the parties have stipulated that there are 268,971 ports sold by ALE
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`that create the royalty base.”) For these reasons, the Court DENIES ALE’s request for judgment
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`and a new trial based on this instruction.
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`ii. Settlement Licenses
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`As to the settlement licenses, ALE did not challenge these licenses as unreliable in its
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`Daubert motions or during the pretrial proceedings. See Doc. Nos. 205, 284, 268.7 ALE also did
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`not object to this evidence and testimony regarding the licenses at trial. In fact, each of the
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`licenses were admitted into evidence without objection. Tr. at 602:1–16. Accordingly, this
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`argument was waived. ALE’s failure to timely raise objections on the issues it now presents to
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`the Court is a consistent theme throughout its JMOL. While the Court functions as a gatekeeper,
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`it is the litigant’s responsibility to raise issues they believe warrant gatekeeping in a timely
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`manner at an appropriate stage in the case. Here, the Court held an early damages hearing on
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`April 19, 2016, where early damages expert reports were exchanged by the parties on March 31,
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`2016. As early as that point in time, ALE knew Mr. Mills was relying on these license
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`agreements and yet never challenged those opinions or testimony during pretrial or trial.
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`7 ALE’s only objection to the licenses in its Daubert motion was that the licenses were entered after industry
`adoption of the standard and that therefore Mr. Mills did not properly account for the value of the standard. (Doc.
`No. 205, at 12–13.) ALE raised no objection to reliance on these licenses because they were the result of a litigation
`settlement—the challenge it now raises.
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 15 of 19 PageID #: 18048
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`Finally, even if the settlement licenses here had not been presented to the jury, the jury’s
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`verdict is still supported by the additional evidence discussed above including the PoE
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`premiums. Accordingly, there is no basis for a judgment of no damages or a new trial based on
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`this evidence and the Court DENIES ALE’s requests.
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`iii. Georgia-Pacific Factors 8, 9, and 10
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`As to Georgia-Pacific Factors 8, 9, and 10, it was the Court that first raised a concern on
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`these issues with the parties. Again, ALE has filed a motion for judgement as a matter of law on
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`an issue that ALE did not raise with respect to Mr. Mills’s opinions before or during trial. When
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`Mr. Mills testified as to these factors during the trial, ALE did not object to this testimony.
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`Sealed Tr. at 5:5–34:6. The Court, recognizing the precedent on this issue and having concerns
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`with Mr. Mills’s testimony, had to call the parties into chambers to discuss if and how the Court
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`could proceed in light of Mr. Mills’s testimony. The Court and the parties were in agreement that
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`any harm could be cured with specific jury instructions. Therefore, the Court carefully crafted its
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`final instructions to the jury to address this issue. Specifically, the Court removed factors 8, 9,
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`and 10 from its list of factors to be considered and instead instructed the jury as follows:
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`You may also consider the established profitability of the product made under the
`patents, its commercial success, and its current popularity; the utility and
`advantages of the patented property over the old modes or devices, if any, that had
`been used for working out similar results; and the nature of the patented
`invention, the character of the commercial embodiment of it as owned and
`produced by the licensor, and the benefits to those who have used the invention.
`However, if you consider these factors you must also consider the standard’s role
`(as opposed to the patents’ role) in causing commercial success, as well as the
`standard’s role in the profitability of the accused products and the accused
`products’ popularity. In addition, you must consider the benefits of the standard
`over old modes as well as the benefits to those who use the standard to which the
`patents-in-suit are alleged to be essential. You must take this into consideration
`because the patentee’s royalty must be premised only on the value of the patented
`feature, not any value added by the standard’s adoption of the patented
`technology. These steps are necessary to ensure that the royalty award is based on
`the incremental value that the patented invention adds to the product, not any
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 16 of 19 PageID #: 18049
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`value added by the standardization of that technology. In other words, the patent
`holder should only be compensated for the approximate incremental benefit
`derived from his invention.¶ This is particularly true for standard essential
`patents. When a technology is incorporated into a standard, it is typically chosen
`from among different options. Once incorporated and widely adopted, that
`technology is not always used because it is the best or the only option; it is used
`because its use is necessary to comply with the standard. In other words,
`widespread adoption of a standard essential technology is not entirely indicative
`of the added usefulness of an innovation over the prior art.
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`(Doc. No. 350, at 18–19.)
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`The Court finds these instructions were sufficient to cure any harm that may have come
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`from Mr. Mills’s testimony on these factors. Indeed, the Federal Circuit has never stated that
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`these factors should be all together removed in a case involving standard essential patents, but
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`instead that they should be modified. For example, in Ericsson, the Federal Circuit stated as
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`follows:
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`Several other Georgia–Pacific factors would at least need to be adjusted for
`RAND-encumbered patents—indeed, for SEP patents generally. For example,
`factor 8 accounts for an invention’s “current popularity,” which is likely inflated
`because a standard requires the use of the technology. Factor 9—“utility and
`advantages of the patented invention over the old modes or devices,”—is also
`skewed for SEPs because the technology is used because it is essential, not
`necessarily because it is an improvement over the prior art. Factor 10, moreover,
`considers the commercial embodiment of the licensor, which is also irrelevant as
`the standard requires the use of the technology. Other factors may also need to be
`adapted on a case-by-case basis depending on the technology at issue.
`Consequently, the trial court must carefully consider the evidence presented in the
`case when crafting an appropriate jury instruction. In this case, the district court
`erred by instructing the jury on multiple Georgia–Pacific factors that are not
`relevant, or are misleading, on the record before it, including, at least, factors 4, 5,
`8, 9, and 10 of the Georgia–Pacific factors.
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`See Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1231 (Fed. Cir. 2014) (emphasis added).
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`Given this precedent, the Court’s instructions on these issues were proper and Mr. Mills’s
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`testimony cited by ALE was not so harmful that the bell could not be “unrung” as ALE claims. It
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`is again important emphasize that litigants carefully consider the testimony and evidence
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`Case 6:15-cv-00163-JDL Document 417 Filed 02/13/17 Page 17 of 19 PageID #: 18050
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`presented to the jury and timely raise objections where appropriate. While the Court will always
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`proactively scrutinize evidence that comes in during a trial to ensure the jury is not
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`impermissibly tainted by any testimony and/or evidence, the Court must also rely on litigants to
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`raise meritorious objections when warranted. In this case, not a single objection was raised by
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`counsel and the parties submitted proposed agreed jury instructions with a parroted list of
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`Georgia-Pacific factors. (Doc. No. 317, at 59–63.) This issue should have been teed up by the
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`parties long before trial when the Court had to initi