Civil Action No. 1:17-cv-
`00687-WO-JLW
`
`
`
`Defendant.
`
`OPTOLUM, INC.,
`
`
`Plaintiff,
`v.
`
`CREE, INC.,
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
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`DEFENDANT CREE, INC.’S MOTION UNDER FEDERAL RULE OF CIVIL
`PROCEDURE 50(a) FOR JUDGMENT AS A MATTER OF LAW THAT THE
`ENTIRE MARKET VALUE RULE DOES NOT APPLY
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 1 of 13
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`
`00687-WO-JLW
`
`
`
`Defendant.
`
`OPTOLUM, INC.,
`
`
`Plaintiff,
`v.
`
`CREE, INC.,
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`
`
`DEFENDANT CREE, INC.’S MOTION UNDER FEDERAL RULE OF CIVIL
`PROCEDURE 50(a) FOR JUDGMENT AS A MATTER OF LAW THAT THE
`ENTIRE MARKET VALUE RULE DOES NOT APPLY
`
`
`
`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 1 of 13
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`TABLE OF CONTENTS
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`Page
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`I. STATEMENT OF THE NATURE OF THE MATTER ................ 1
`II. STATEMENT OF FACTS ................................... 1
`III. STATEMENT OF QUESTION PRESENTED ...................... 2
`IV. LEGAL STANDARD ....................................... 2
`A. JUDGMENT AS A MATTER OF LAW ..................... 2
`B. ENTIRE MARKET VALUE RULE ........................ 3
`C. EXPERT TESTIMONY ................................ 4
`V. ARGUMENT ............................................. 5
`A. OPTOLUM DID NOT ESTABLISH THAT MR. SCALLY’S
`DISCUSSIONS WITH MR. YORK ARE THE TYPE OF
`EVIDENCE REASONABLY RELIED ON IN MR. SCALLY’S
`FIELD ........................................... 6
`B. ANY PROBATIVE VALUE OF MR. SCALLY’S
`CONVERSATIONS WITH MR. YORK DOES NOT OUTWEIGH
`THEIR PREJUDICIAL EFFECT ........................ 6
`VI. CONCLUSION ........................................... 7
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`-i-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 2 of 13
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`TABLE OF AUTHORITIES
`
`
`CASES
`LaserDynamics, Inc. v. Quanta Computer, Inc.,
`694 F.3d 51 (Fed. Cir. 2012) ............................ 3
`Lucent Techs., Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009) .......................... 3
`
`Page
`
`Power Integrations, Inc. v. Fairchild
`Semiconductor Int’l, Inc.,
`904 F.3d 965 (Fed. Cir. 2018) ........................... 3
`Russell v. Absolute Collection Servs., Inc.,
`763 F.3d 385 (4th Cir. 2014) ............................ 2
`Wheatley v. Wicomico Cnty., Maryland,
`390 F.3d 328 (4th Cir. 2004) ............................ 3
`OTHER AUTHORITIES
`Fed. R. Civ. P. 50 ..................................... 1, 2
`Fed. R. Evid. 703 ................................... 4, 6, 7
`Fed. R. Evid. 801 ......................................... 4
`Fed. R. Evid. 802 ...................................... 4, 6
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`-ii-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 3 of 13
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`I.
`
`STATEMENT OF THE NATURE OF THE MATTER
`Defendant Cree, Inc. (“Cree”) moves under Federal Rule
`of Civil Procedure 50(a) for judgment as a matter of law
`(“JMOL”) that the accused bulbs are not subject to the
`entire market value rule. The only evidence that Plaintiff
`OptoLum, Inc. (“OptoLum”) presented to support its
`assertion that the entire market value rule applies here is
`the testimony of William Scally. Specifically, Mr. Scally
`testified that the allegedly claimed feature in the accused
`bulbs enabled the aspects of the bulbs that drove consumer
`demand for the bulbs. Mr. Scally admits that this opinion
`is not his. The opinion merely repeats statements from
`another expert—Brent York—who has not testified. Mr.
`York’s statements are inadmissible hearsay. Therefore, no
`evidence supports OptoLum’s assertion that the entire
`market value rule applies. Accordingly, the Court should
`grant JMOL in favor of Cree on this issue.
`II. STATEMENT OF FACTS
`Mr. Scally testified at trial that demand for the
`accused bulbs was driven entirely by the bulbs’ ability to
`provide omnidirectional warm light associated with
`traditional incandescent bulbs in the same form factor and
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 4 of 13
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`their ability to effectively manage heat generated by the
`light emitting diodes (“LEDs”) in the bulbs. Mr. Scally
`also testified that, according to his conversations with
`Brent York, those aspects of the accused bulbs were enabled
`by the allegedly claimed feature of the accused bulbs,
`Cree’s Filament Tower.
`III. STATEMENT OF QUESTION PRESENTED
`Whether, in light of the evidence that OptoLum
`presented at trial and the authority provided herein, a
`reasonable jury would have no legally sufficient
`evidentiary basis to find that the accused bulbs are
`subject to the entire market value rule.
`IV. LEGAL STANDARD
`A.
`Judgment As a Matter of Law
`Judgment as a matter of law is appropriate where “a
`party has been fully heard on an issue during a jury trial
`and the court finds that a reasonable jury would not have a
`legally sufficient evidentiary basis to find for the party
`on that issue.” Fed. R. Civ. P. 50(a)(1); Russell v.
`Absolute Collection Servs., Inc., 763 F.3d 385, 391 (4th
`Cir. 2014). “Such a motion is properly granted if the
`nonmoving party failed to make a showing on an essential
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`-2-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 5 of 13
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`element of his case with respect to which he had the burden
`of proof.” Wheatley v. Wicomico Cnty., Maryland, 390 F.3d
`328, 332 (4th Cir. 2004) (internal citations and quotations
`omitted).
`B.
`Entire Market Value Rule
`“A patentee is only entitled to a reasonable royalty
`attributable to the infringing features.” Power
`Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc.,
`904 F.3d 965, 977 (Fed. Cir. 2018). “The patentee must, in
`every case, give evidence tending to separate or apportion
`the defendant’s profits and the patentee’s damages between
`the patented feature and the unpatented features.” Id.
`(internal quotation marks and citations omitted). “The
`entire market value rule is a narrow exception to this
`general rule.” LaserDynamics, Inc. v. Quanta Computer,
`Inc., 694 F.3d 51, 67 (Fed. Cir. 2012).
`“For the entire market value rule to apply, the
`patentee must prove that the patent-related feature [in the
`accused products] is the basis for customer demand.”
`Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336
`(Fed. Cir. 2009) (internal quotation marks and citations
`omitted); see also Power Integrations, 904 F.3d at 979
`-3-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 6 of 13
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`(“[T]he entire market value rule is appropriate only when
`the patented feature is the sole driver of customer demand
`or substantially creates the value of the component
`parts.”).
`C.
`Expert Testimony
`Under Federal Rule of Evidence 703, “[i]f experts in
`the particular field would reasonably rely on . . . facts
`or data in forming an opinion on the subject, they need not
`be admissible for the opinion to be admitted.” Fed. R.
`Evid. 703. “But if the facts or data would otherwise be
`inadmissible, the proponent of the opinion may disclose
`them to the jury only if their probative value in helping
`the jury evaluate the opinion substantially outweighs their
`prejudicial effect.” Id. (emphasis added).
`Under Federal Rule of Evidence 802, hearsay is not
`admissible. Fed. R. Evid. 802. Hearsay is any statement
`that “the declarant does not make while testifying at the
`current trial or hearing[,] and a party offers in evidence
`to prove the truth of the matter asserted in the
`statement.” Fed. R. Evid. 801(c).
`
`-4-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 7 of 13
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`V.
`
`ARGUMENT
`No reasonable jury could find that the entire market
`value rule applies to the accused bulbs. For the entire
`market value rule to apply, OptoLum had to establish that
`the patent-related feature in the bulbs was the basis for
`customer demand. The record evidence is devoid of such a
`showing. Accordingly, the Court should grant JMOL in favor
`of Cree on this issue.
`The only evidence OptoLum presented that could support
`its assertion that the entire market value rule applies is
`Mr. Scally’s opinion that the allegedly claimed feature in
`the accused bulbs enabled the aspects of the bulbs that
`drove consumer demand. Mr. Scally based that opinion on
`his hearsay discussions with Mr. York.
`That opinion from Mr. Scally is inadmissible because
`OptoLum provided no evidence that Mr. Scally’s
`conversations with Mr. York are the type of facts or data
`that experts in Mr. Scally’s field reasonably rely on.
`Moreover, Mr. Scally’s hearsay conversations with Mr. York
`cannot be presented to the jury because OptoLum failed to
`provide any evidence that the probative value of the
`conversations outweighs their prejudicial effect.
`-5-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 8 of 13
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`A.
`
`OptoLum Did Not Establish that Mr. Scally’s
`Discussions with Mr. York Are the Type of Evidence
`Reasonably Relied on in Mr. Scally’s Field
`Mr. Scally’s discussions with Mr. York are inadmissible
`hearsay under Federal Rule of Evidence 802. Under Federal
`Rule of Evidence 703, Mr. Scally can rely on such hearsay
`evidence for his expert opinion only if “experts in the
`particular field would reasonably rely on” such evidence.
`At the close of OptoLum’s evidence, OptoLum had not
`asserted, nor presented any evidence, that Mr. Scally’s
`conversations with Mr. York are the type of “facts or data”
`that “experts in [his] particular field would reasonably
`rely on.” Fed. R. Evid. 703. Accordingly, Mr. Scally’s
`opinion is inadmissible and the jury cannot rely on the
`opinion.
`B.
`
`Any Probative Value of Mr. Scally’s Conversations
`with Mr. York Does Not Outweigh Their Prejudicial
`Effect
`Even if OptoLum had established that the hearsay
`conversations with Mr. York are the type of evidence that
`is reasonably relied on in Mr. Scally’s field, those
`conversations cannot be presented to the jury because their
`“probative value in helping the jury evaluate the opinion”
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`-6-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 9 of 13
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`does not “substantially outweigh[] their prejudicial
`effect.” Fed. R. Evid. 703.
`Mr. Scally’s conversations with Mr. York have no basis
`in fact. No evidence supports Mr. York’s assertion that
`the allegedly claimed feature in the accused bulbs, the
`Cree Filament Tower, enables the bulbs to provide
`omnidirectional light, have a “form factor” like an
`incandescent bulb, and efficiently conduct heat away from
`the LEDs.
`Instead, the record evidence has established that the
`asserted claims do not cover the features of the bulb that
`enable those aspects of the bulbs. The inventor, Joel Dry,
`admitted that the asserted claims do not cover a globe, an
`Edison cap, or a particular level of light output. October
`26th Unedited Tr. 66:16-67:3.
`Therefore, the minimal probative value of Mr. Scally’s
`conversations with Mr. York do not outweigh the prejudicial
`effect of such evidence that has no basis in fact.
`VI. CONCLUSION
`Mr. Scally’s opinion that the allegedly claimed feature
`in the accused bulbs enabled the aspects of the bulbs that
`drove consumer demand is inadmissible. OptoLum presented
`-7-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 10 of 13
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`no other evidence that could support its assertion that the
`entire market value rule applies to the accused bulbs.
`Therefore, no reasonable jury could find that the entire
`market value rule applies. Accordingly, the Court should
`grant JMOL in favor of Cree on this issue.
`
`Dated: November 1, 2021 Respectfully submitted,
`
`By: /s/ Blaney Harper
`Blaney Harper
`JONES DAY
`51 Louisiana Avenue, N.W.
`Washington, D.C. 20001-2113
`Telephone: (202) 879-3939
`Facsimile: (202) 626-1700
`Email: bharper@jonesday.com
`
`/s/ Peter D. Siddoway
`Peter D. Siddoway
`NC State Bar No. 45647
`SAGE PATENT GROUP
`4120 Main at North Hills St.,
`Suite 230
`Raleigh, NC, 27609
`Telephone: 984-219-3358
`Facsimile: (984) 538-0416
`Email: psiddoway@sagepat.com
`
`Attorneys for Defendant Cree, Inc.
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`-8-
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 11 of 13
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
`OPTOLUM, INC.,
`Plaintiff,
`
`Civil Action No.
`1:17-cv-00687
`
`
`
`v.
`CREE, INC.,
`Defendant.
`CERTIFICATE OF WORD COUNT
`I hereby certify that Defendant Cree, Inc.’s Motion
`
`Under Federal Rule of Civil Procedure 50(a) for Judgment As
`a Matter of Law that the Entire Market Value Rule Does Not
`Apply complies with the limitations set forth in Local Rule
`7.3(d) by not exceeding 6,250 words, including the body of
`the brief, headings and footnotes, but excluding the
`caption, signature lines, certificate of service, and cover
`page or index.
`
`/s/ Peter D. Siddoway
`Peter D. Siddoway
`
`
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 12 of 13
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`CERTIFICATE OF SERVICE
`I hereby certify that on November 2, 2021, I
`electronically filed the foregoing with the Clerk of Court
`for the United States District Court for the Middle
`District of North Carolina using the CM/ECF Filing System,
`which will send notification via electronic means to all
`counsel of record.
`
`
`
`/s/ Peter D. Siddoway
`Peter D. Siddoway
`NC State Bar No. 45647
`SAGE PATENT GROUP
`4120 Main at North Hills St.,
`Suite 230
`Raleigh, NC, 27609
`Telephone: 984-219-3358
`Facsimile: (984) 538-0416
`Email: psiddoway@sagepat.com
`
`
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`Case 1:17-cv-00687-WO-JLW Document 325 Filed 11/02/21 Page 13 of 13
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