Case 4:19-cv-03161-YGR Document 392 Filed 07/03/23 Page 1 of 8
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`IMPINJ, INC.,
`
`Plaintiff,
`
`v.
`
`
`NXP USA, INC.,
`
`Defendant.
`
`I.
`
`Pretrial Issues
`
`Case No. 19-cv-3161-YGR
`
`
`PRETRIAL ORDER NO. 4, INCLUDING
`MOTIONS TO EXCLUDE
`
`Dkt. Nos. 238, 240, 263, 269-8, and 297
`
`
`
`
`
`On Sunday, July 2, the parties sent the Court an email stipulating to excuse Juror Nos. 1, 9,
`
`22, 26, 27, and 35. Said jurors were excused.
`
`The Court has provided the parties with a draft of jury instructions for purposes of
`
`facilitating further instructions.
`
`The Court clarified that the parties should be prepared to proceed with opening statements
`
`if a jury is chosen quickly.
`
`II.
`
`Outstanding Motions to Exclude
`
`A. Motion to Exclude Kindler (Dkt. No. 240)
`
`The legal framework is not in dispute. Federal Rule of Evidence 702 permits opinion
`
`testimony by an expert as long as the witness is qualified and based upon that qualification, the
`
`witness’s opinion is relevant and reliable. An expert witness may be qualified by “knowledge,
`
`skill, experience, training, or education” as to the subject matter of the opinion. Fed. R. Evid. 702.
`
`The proponent of expert testimony has the burden of proving admissibility in accordance with the
`
`rule. Id., Advisory Committee Notes (2000 amendments). Scientific opinions must be based on
`
`scientifically valid principles. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993).
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Northern District of California
`
`United States District Court
`
`

`

`Case 4:19-cv-03161-YGR Document 392 Filed 07/03/23 Page 2 of 8
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Experts assist the factfinder in their own evaluation of the evidence by providing the factfinder
`
`with opinions based upon verifiable, scientific, or other objective analysis. Id. at 589–90.
`
`1. Overview
`
`The two remaining patents at issue in this suit are directed to the shape of the channel
`
`between large pads that minimize turbulence when customers attach the ICs of the products to
`
`their antennas (the ’302) and improved rectifier design for enhancing read/write performance (the
`
`’597). See Dkt. No. 279-2 (“Oppo.”) at 3. NXP moves to exclude paragraphs 114-183 of
`
`Kindler’s report on the grounds that (1) Kindler cannot have provided a reliable Georgia-Pacific
`
`analysis because her starting point is arbitrary; (2) Kindler fails to properly apportion what value
`
`derives from patented versus unpatented elements of the accused devices; (3) Kindler’s reliance on
`
`lay witness and Impinj employee Ron Oliver is not proper.
`
`Lauren Kindler is a managing principal at Analysis Group, Inc., which “provides
`
`economic, financial, and business strategy consulting to its clients and specializes in the
`
`interpretation of economic and financial data and the development of economic and financial
`
`models.” Kindler Rpt. ¶ 4. Kindler has provided financial and economic consulting services for
`
`over 18 years. See id. ¶ 5. Kindler received her B.A. in Economics from Tulane and her M.A. in
`
`Economics from Southern Methodist University. See id. ¶ 6. In forming her opinions, she
`
`reviewed legal documents, the patents themselves, deposition testimony, and other documents.
`
`See id. ¶ 8. In addition, she held discussions with several Impinj officers and employees,
`
`including Ron Oliver, a technical fellow. See id. In summary, Kindler opines that, due to NXP’s
`
`sales of its UCODE 8 and UCODE 9 products, Impinj suffered lost profits due to patent
`
`infringement, and she also calculated a reasonable royalty rate for sales NXP made for which
`
`Impinj is not seeking lost profits. See id. ¶ 10.
`
`Ms. Kindler’s report is founded on the premise that Impinj has lost sales of its Monza R6
`
`product (RAIN RFID tag chips with a variety of applications). Ms. Kindler’s key method
`
`underlying her reasonable royalty analysis is calculating the incremental losses to Impinj’s profits
`
`during the time period from October 6, 2017 through the second quarter of 2022, during which
`
`NXP made sales of the Accused Products. Impinj seeks damages with regard to RAIN RFID tags
`
`2
`
`Northern District of California
`
`United States District Court
`
`

`

`Case 4:19-cv-03161-YGR Document 392 Filed 07/03/23 Page 3 of 8
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`placed into products and distributed in the United States, and Impinj also seeks a reasonable
`
`royalty for other unit sales.
`
`Kindler has calculated a reasonable royalty rate for all NXP sales of the Accused Products,
`
`in the event that the jury finds that lost profits are not an acceptable remedy. Kindler has also
`
`produced a reasonable royalty rate for those sales on which Impinj fails to recover if the jury
`
`awards compensation for some lost sales.
`
`2. Criticism of Kindler’s Method
`
`According to NXP, Kindler identifies four primary features: (1) “sensitivity
`
`improvements,” (2) “big pads,” (3) “auto tune”1 and (4) “memory safeguard.”2 In light of these,
`
`NXP argues, Kindler assigned no value to other features. For each given feature, Kindler assigns
`
`a percentage value attributable to the teachings of the patent. For example, for sensitivity
`
`improvements, that figure is 50% to the ’597, and for big pads, that amount is 75% attributable to
`
`the ’631 and 25% attributable to the ’302. NXP’s profit margin is 41.8%, and Kindler applies
`
`these percentages to the 57% of allegedly “at risk” sales at that profit margin. So, for example,
`
`Kindler arrives at a 3% reasonable royalty rate for the ’597 by multiplying at risk sales (57%) by
`
`profit margin (41.8%) by whole divided by one fourth because of the four features (25%) x 50%
`
`attributable to the ’597.
`
`Ms. Kindler’s reasonable royalty analysis is based on the assumption that the parties would
`
`be negotiating in view of potential lost profits. Kindler’s reasonable royalty calculations for the
`
`’302 and ‘597 are based on a hypothetical negotiation concerning a license taking place in or
`
`around May 2017. Kindler Rpt. ¶ 18. Kindler sets forth her formula for the royalty rates near the
`
`end of her report. Id., n.444 (percentages referenced above)).
`
`NXP argues that Kindler lacks a starting point, while Impinj labels this as “semantics.”
`
`The Court agrees. Given the ending point, a starting point exists. Kindler arrives at her rates with
`
`
` 1 “Auto tune” is relevant only to the ’266 patent, and the Court dismissed claims of
`infringement of the ‘266 in its Summary Judgment Order. See Dkt. No. 339, MSJ Order at 4-6.
`
`2 “Memory safeguard” is not relevant to the asserted patents in this case.
`
`3
`
`Northern District of California
`
`United States District Court
`
`

`

`Case 4:19-cv-03161-YGR Document 392 Filed 07/03/23 Page 4 of 8
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`the following equation: (percentage of sales of accused products that would have been at risk
`
`without a license, i.e. adjusted market share (Exhibit 7.3 to Kindler Rpt.)) x (profit margin) x (1/4
`
`for the four primary, patented features of the accused products) x (the value of the patented feature
`
`attributable to the particular patent).3
`
`The Court finds Kindler’s formula provides a “classic way to determine the reasonable
`
`royalty amount,” as was used in Open Text S.A. v. Box, Inc.: “multiply[ing] the royalty base,
`
`which represents the revenue generated by the infringement, by the royalty rate, which represents
`
`the percentage of revenue owed to the patentee[.]” No. 13-CV-04910-JD, 2015 WL 349197, at *1
`
`(N.D. Cal. Jan. 23, 2015). Here, the market share and the profit margin represent the royalty base,
`
`and the fractions Kindler identifies as representing the value of the patented features and the
`
`degree to which that value is assignable to a given patent represent the royalty rate. That is the
`
`starting point. Kindler’s choice to reveal the starting point towards the end of her report is of no
`
`material consequence.
`
`3. Criticism of Kindler’s Calculations and Inputs
`
`NXP argues that Kindler does not account for the value of unpatented features, and, if she
`
`does, that those features may provide value even if they do not drive demand. Impinj contests
`
`this, arguing that the 43% of the market that would not be at risk represents demand that would not
`
`have deviated from the status quo, i.e. products that did not have the patented features. Kindler
`
`argues that the sharp decrease in UCODE 7 products from 2017 to 2021 at the same time as the
`
`steep rise in demand for Impinj’s products shows strong demand for products with the patented
`
`features. Kindler Rpt. ¶ 13, n.7. Kindler acknowledges that NXP would have continued making
`
`sales of non-infringing products, and she assumes that about 10% of the market for NXP’s
`
`
`3 Kindler derives the 57% figure from adjusted market share. NXP’s profit margin on the
`accused products (specifically the UCODE 8), was 41.8% in 2017. The 25% figure is derived
`from the fact that, at the outset of the hypothetical negotiation, there would be no need for such a
`reduction because the parties would be negotiating over patents that cover only one feature. By
`the end of the negotiations, however, the parties would have come to terms on patents for four
`features. Notably, however, one of those features is no longer in play in this suit and another is
`being litigated in the Western District of Texas. For the ‘302, Kindler opines, based on
`conversations with Oliver, that 25% of the improved sensitivity is due to its teachings. For the
`’597, that number is 50%.
`
`4
`
`Northern District of California
`
`United States District Court
`
`

`

`Case 4:19-cv-03161-YGR Document 392 Filed 07/03/23 Page 5 of 8
`
`
`
`products would have come from other sources.
`
`Impinj argues, moreover, that Kindler is not ignoring the value of unpatented features that
`
`NXP added to the accused products. Rather, she is merely assigning them a value of zero. There
`
`is no requirement that an expert find that the non-patented technologies of the accused products
`
`have a nonzero value. The expert is required only to provide an apportionment. See Salazar v.
`
`HTC Corp., No. 2:16-CV-01096-JRG-RSP, 2018 WL 1783157, at *1 (E.D. Tex. Apr. 13, 2018)
`
`(allowing apportionment of zero for nonpatented features where expert did consider them). NXP’s
`
`marketing efforts to promote those other features as “key” contrasts with other evidence of their
`
`relative worthlessness, such as customers requesting that they be removed from the products. The
`
`Court agrees with Impinj that these arguments go to weight, not admissibility.
`
`Further, Kindler opines that, absent any one of the patented features, NXP would have
`
`failed to make 57% of its infringing sales, and consequently would have been willing to forego its
`
`incremental profit margin on 57% of its sales in exchange for the opportunity to sell products with
`
`those patented features. Ms. Kindler appropriately hypothesizes about each patent independently,
`
`but she reasonably constrains her analysis by assuming that NXP would not have been willing to
`
`pay more than its total incremental profits on all allegedly infringing sales. As a result, inputs to
`
`Ms. Kindler’s analysis shift accordingly. At each juncture, the market loss risk remains the same,
`
`because it is Impinj’s and Kindler’s opinion that each patented feature is sufficiently in demand to
`
`warrant buying a product with that feature. Thus, the 57% remains the same, and in a true
`
`hypothetical negotiation absent the entrance of the other patent negotiations, there would be no
`
`need to apportion the value by feature. However, the sum of the rates cannot be equal to more
`
`than the fractional value of the patents as a whole. Further, if Impinj fails to convince the jury of
`
`the underlying theory then a failure of proof will exist and lost profit damages will not issue.
`
`NXP’s argument that Kindler should be excluded from testifying as to the value that each
`
`patent contributes to the patented features fails to persuade. First, Kindler is entitled to rely on
`
`Oliver, a technical expert, because this is a technical input. Second, and to that end, Ms. Kindler
`
`does not intend to testify about these apportionments themselves. Third, there is no prohibition
`
`against experts obtaining inputs from other sources. See Finjan, Inc. v. Blue Coat Sys., Inc., No.
`
`5
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Northern District of California
`
`United States District Court
`
`

`

`Case 4:19-cv-03161-YGR Document 392 Filed 07/03/23 Page 6 of 8
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`13-CV-03999-BLF, 2015 WL 4272870, at *5 (N.D. Cal. July 14, 2015) (reasoning that patent
`
`damages experts frequently rely on the technical expertise of others, and looking “to whether the
`
`factual basis for [the contested expert’s] opinion was properly disclosed and available for cross-
`
`examination) (internal citations omitted).
`
`Relatedly, NXP’s final argument is that Kindler’s testimony should be excluded because
`
`she relies on Oliver for her technical knowledge of the extent to which each asserted patent
`
`contributes to the protected features is duplicitous. NXP cannot have it both ways. NXP
`
`essentially criticizes Kindler for opining on technical elements when she is not a technical expert
`
`while also lambasting her for relying on a technical expert for technical expertise. Nothing about
`
`Kindler’s reliance on Oliver is outside the bounds of “facts or data in the case that the expert has
`
`been made aware of[.]” Fed. R. Evid. 703. Moreover, “if experts in the particular field would
`
`reasonably rely on those kinds of facts or data in forming an opinion on the subject, they need not
`
`be admissible for the opinion to admitted.” Id.
`
`For the foregoing reasons, the Court DENIES NXP’s motion to exclude Kindler.
`
`B. Motion to Exclude Haas (Dkt. Nos. 238/242)
`
`Plaintiff seeks to exclude opinions of Mr. Haas reflected in paragraphs 15 (fourth bullet),
`
`16, 84, 90-100, 106-07, 111, 146, 160, 173-74, 183, 188-89, and 191.
`
`Impinj seeks a broad exclusion of Mr. Haas’ opinions because he allegedly omits
`
`consideration of Impinj’s anticipated loss of sales and profits, and defendant’s anticipated gain of
`
`sales and profits, from the hypothetical negotiation, which Impinj believes are both relevant
`
`factors. Further, Impinj seeks exclusion because Mr. Haas assumes that the parties would have
`
`known that Impinj would recover lost profits for the sales not subject to a reasonable royalty, and
`
`as a result, Haas claims that Ms. Kindler is “double counting” in her analysis. Said differently,
`
`Impinj claims that Mr. Haas’ opinion suggests that by “simply seeking lost profits,” Impinj is
`
`precluded from relying on the fact that it would have anticipated losing sales at the hypothetical
`
`negotiation, which is the key consideration that would have driven the negotiation, and in effect,
`
`results in “double counting.” NXP claims the issue is one of semantics.
`
`Second, Impinj seeks to exclude Mr. Haas’ affirmative opinion that “lost profits damages
`
`6
`
`Northern District of California
`
`United States District Court
`
`

`

`Case 4:19-cv-03161-YGR Document 392 Filed 07/03/23 Page 7 of 8
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`in this matter should be $0” in paragraph 63 of the Haas Report because this opinion is not based
`
`on an affirmative analysis and evaluation of the relevant legal factors.
`
`The dispute centers on Ms. Kindler’s opinions that Impinj is entitled to (i) lost profits on
`
`57% of defendant’s infringing sales, and her separate (ii) determination that royalty rates that
`
`should be applied to any of defendant’s infringing sales for which Impinj is not awarded lost
`
`profits—whether that be 43%, 100%, or anywhere in between.
`
`The motion is granted wherein Mr. Haas assumes that the hypothetical negotiation would
`
`assume the results of the lost profits analysis, e.g. ¶¶ 91-93. Mr. Haas’ opinion that Impinj’s
`
`request for lost profits should affect the reasonable royalty analysis is excluded. Further, his
`
`references to “double counting” are similarly excluded, e.g. ¶¶ 15, 92, 93, 111, 160, 183. The request
`
`to otherwise exclude Mr. Haas’ critique of Ms. Kindler’s analysis is denied except that because
`
`Mr. Haas did not conduct an affirmative analysis resulting in lost profits of zero, he may not so
`
`opine. He certainly can opine regarding his view on Ms. Kindler’s failure of proof, but that is
`
`different than claiming an analysis led to zero dollars in lost profits.
`
`The request to seal at Docket No. 242 is granted as for the name of defendant’s customer,
`
`defendant’s profit margins, as both confidential and not material to the motion and denied as to
`
`Mr. Haas’ deposition testimony.
`
`The request to seal at Docket 269-8 is denied. Evidence regarding damages does not
`
`warrant sealing.
`
`The request to seal at Docket No. 297 is denied. The deposition testimony is not confidential
`
`information warranting sealing.
`
`Because plaintiff’s motion was overbroad, and to ensure there is no dispute regarding the scope
`
`of this ruling, the parties shall meet and confer as to the affected paragraphs of Mr. Haas’ report and
`
`shall identify any disagreements no later than Friday, July 7, 2023 at 12:00 p.m. noon. The parties
`
`shall avoid raising further disputes with the Court regarding semantics.
`
`III.
`
` Pending Administrative Motions to Seal
`
`Pending before the Court are several administrative motions to seal relating to the parties’
`
`cross motions for summary judgment and related motions to exclude. (See e.g., Dkt. Nos. 342,
`
`7
`
`Northern District of California
`
`United States District Court
`
`

`

`Case 4:19-cv-03161-YGR Document 392 Filed 07/03/23 Page 8 of 8
`
`352, 356, 363.) As indicated herein, many of the requests are denied. Not only are the
`
`designations related to anticipated testimony, but in general it does not relate to confidential
`
`information that should be sealed during trial. The Court is not inclined to seal any information
`
`which will be made public during the trial.
`
`To address these motions efficiently and expeditiously, and to clean up the Court’s docket
`
`in the meantime, the Court orders the parties to review all pending motions, meet and confer, and
`
`to file appropriate withdrawals of the motions. For any item which remains an appropriate request
`
`for sealing, the parties shall file a joint chart summarizing that which remains outstanding, as
`
`depicted below:
`
`The parties shall file the requested chart by Monday, July 17, 2023. The parties shall also
`
`submit a Word version of the chart to the chambers proposed order email address:
`
`ygrpo@cand.uscourts/gov. Thereafter, the Court will issue an omnibus order addressing the
`
`sealing motions. Any request which is denied shall be filed on the public document within five (5)
`
`business days of the order denying the request, including this one.
`
` This terminates Docket Nos. 238, 242, 263, 269-8, 297.
`
`IT IS SO ORDERED.
`
`Dated: 7/3/2023
`
`______________________________________
`
`YVONNE GONZALEZ ROGERS
`UNITED STATES DISTRICT COURT JUDGE
`
`8
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Northern District of California
`
`United States District Court
`
`