Case 2:15-cv-01274-JRG-RSP Document 385 Filed 01/11/17 Page 1 of 5 PageID #: 29168
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`Case No. 2:15-cv-1274-JRG-RSP
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`ORDER
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`Blitzsafe Texas, LLC,
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`Plaintiff,
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`Honda Motor Co., Ltd., et al.,
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`v.
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`Defendants.
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`Before the Court is the Motion to Exclude Certain Testimony Under Daubert And To
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`Strike Portions of the Report of Dr. Stephen Becker (Dkt. No. 235) (the “Motion”) filed by
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`Volkswagen Group of America, Inc. and Volkswagen Group of America Chattanooga Operations,
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`LLC’s (“Volkswagen”). Having considered the Motion, the Court is of the opinion that the Motion
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`should be DENIED.
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`APPLICABLE LAW
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`Rule 702 provides that an expert witness may offer opinion testimony if (a) the expert’s
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`scientific, technical, or other specialized knowledge will help the trier of fact to understand the
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`evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c)
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`the 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. “The inquiry
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`envisioned by Rule 702 is . . . a flexible one,” but, in Daubert, the Supreme Court held that the
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`Rules also “assign to the trial judge the task of ensuring that an expert's testimony both rests on a
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`reliable foundation and is relevant to the task at hand.” Daubert v. Merrell Dow Pharms. Inc., 509
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`U.S. 579, 594, 597 (1993). “The proponent need not prove to the judge that the expert's testimony
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`is correct, but she must prove by a preponderance of the evidence that the testimony is reliable.”
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`Case 2:15-cv-01274-JRG-RSP Document 385 Filed 01/11/17 Page 2 of 5 PageID #: 29169
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`Johnson, 685 F.3d at 459 (quoting Moore v. Ashland Chem., Inc., 151 F.3d 269, 276 (5th Cir.
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`1998) (en banc)). At base, “the question of whether the expert is credible or the opinion is correct
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`is generally a question for the fact finder, not the court.” Summit 6, LLC v. Samsung Elecs. Co.,
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`Ltd., 802 F.3d 1283, 1296 (Fed. Cir. 2015).
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`ANALYSIS
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`I.
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`Dr. Becker’s Reliance on Mr. McAlexander’s Opinion
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`Volkswagen argues that Dr. Becker relies on undisclosed and unexplained opinions of
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`Blitzsafe’s technical expert, Mr. McAlexander, to conclude that: (1) the Affinity Patents are
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`narrower in scope than the patents-in-suit (and therefore, in Dr. Becker’s view, less valuable); and
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`(2) there are no commercially-acceptable non-infringing alternatives. (Dkt. No. 235 at 5.) Dr.
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`Becker is not a person of ordinary of skill in the art and hence, he is not qualified to opine on the
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`scope of the Affinity Labs Patents compared to the patents-in-suit or the availability of non-
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`infringing alternatives. Accordingly, Dr. Becker relies on Mr. McAlexander’s opinion instead.
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`Volkswagen does not dispute that Dr. Becker may rely on Mr. McAlexander’s expertise
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`and opinion. Rather, it argues that if Dr. Becker does, Mr. McAlexander’s opinions should be
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`separately disclosed pursuant to Fed. R. Civ. P. 26(a)(2). The Court agrees. While Blitzsafe
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`correctly asserts that “[e]xperts routinely rely upon other experts hired by the party they represent
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`for expertise outside of their field,” (Dkt. No. 265 at 4 (quoting Apple, Inc. v. Motorola, Inc., 757
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`F.3d 1286, 1321 (Fed. Cir. 2014)), the critical issue is not that Dr. Becker relied on Mr.
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`McAlexander’s opinion, but rather that Mr. McAlexander has not disclosed said opinions. For
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`that reason, the authority cited by Blitzsafe—which mostly stands for the proposition that an expert
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`may base his or her opinion on another’s expertise—is unavailing.
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`In EMC Corp., an authority cited by Blitzsafe, the Court stated that the expert disclosed
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`“enough detail to permit . . . meaningful cross examination and other discovery.” EMC Corp.v.
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`Pure Storage, Inc., 154 F. Supp. 3d 81, 116 (D. Del. 2016). Here, based on the submissions, this
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`Case 2:15-cv-01274-JRG-RSP Document 385 Filed 01/11/17 Page 3 of 5 PageID #: 29170
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`Court cannot draw the same conclusion. Neither party has cited to or attached any portion of Mr.
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`McAlexander’s report with an opinion on the scope of the Affinity Patents or non-infringing
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`alternatives, which suggests to the Court that Mr. McAlexander’s disclosure is either insufficient
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`or that no such disclosure exists.
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`Accordingly, Blitzsafe shall have until January 16, 2017 to serve a supplemental report
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`disclosing Mr. McAlexander’s opinions on the scope of the Affinity Patents and non-infringing
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`alternatives in sufficient to detail. Should Blitzsafe fail to do so, the Court may strike portions of
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`Dr. Becker’s damages report based on Mr. McAlexander’s undisclosed opinions. See GPNE Corp.
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`v. Apple, Inc., 2014 WL 3870256, at *7 (N.D. Cal. Aug. 6, 2014) (“[T]o the extent that Mr. Dansky
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`relies on technical analysis, those opinions must be separately disclosed by GPNE’s technical
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`expert.”); Alaman v. Life Ins. Co. of N. Am., 2011 WL 2160242, at *2 (D. Mont. June 1, 2011)
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`(“Rule 703 does not allow for the use of hearsay opinions on the pretense that it is the basis for
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`their own expert opinion”).
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`II.
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`Dr. Becker’s Reliance on Mr. McAlexander’s Opinion
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`Volkswagen argues that Dr. Becker does not properly apportion the amount arrived at in
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`Affinity Labs to only the value of the interface. Specifically, Volkswagen argues that although
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`Dr. Becker notes that “the patents-in-suit cover only the interface, his reliance on the Affinity
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`Labs-Hyundai/Kia verdict fails to account for this limitation because in that case the asserted
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`claims covered the vehicle head unit and the interface and in this case it covers the interface only.”
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`(Dkt. No. 235 at 10.) (internal quotations omitted.)
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`The fact that the experts disagree as to the breadth of the Affinity Labs patents does not
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`mean that Dr. Becker’s opinions are unreliable. Once Blitzsafe discloses Mr. McAlexander’s
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`opinion on the scope of the Affinity Labs patents, Volkswagen’s complaint should become an
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`issue that goes more to credibility and not reliability. At trial, Volkswagen should be able to
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`explore through cross-examination, “the traditional and appropriate means of attacking shaky but
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`Case 2:15-cv-01274-JRG-RSP Document 385 Filed 01/11/17 Page 4 of 5 PageID #: 29171
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`admissible evidence,” Daubert, 509 U.S. at 596, whether Dr. Becker should have discounted the
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`$11 per unit royalty to account for unpatented features.
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`III. Dr. Becker’s Per Unit Running Royalty Opinion
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`Volkswagen argues that Dr. Becker’s opinion concerning a running royalty is arbitrary and
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`untethered to the facts. Volkswagen points out that the majority of the licenses of record for the
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`patents-in-suit are structured as a lump sums and further that the remaining licenses require a
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`running royalty applied to sales only as a penalty for exceeding certain sales caps, and do not
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`support a running royalty structure. (Dkt. No. 235 at 11.) Volkswagen argues that while Blitzsafe
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`claims that Dr. Becker points to evidence that Blitzsafe would prefer a running royalty, the only
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`evidence that Dr. Becker cites is undisclosed discussions with Ira Marlowe. (Dkt. No. 302 at 7.)
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`Further, Volkswagen argues that Blitzsafe’s argument that a running royalty structure “would
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`make sense” is contrary to evidence in record. (Id. at 7–8.)
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`Blitzsafe responds that Dr. Becker fully explains the basis for his opinion and how his
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`opinion is tied to the facts. Specifically, Blitzsafe argues that Dr. Becker explains that the lump-
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`sum settlement agreements are not comparable for a number of reasons, including that (1)
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`Blitzsafe’s preferred licensing approach outside the context of litigation would be a running
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`royalty, (2) that a running royalty structure would make economic sense for the parties because,
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`at the time of the hypothetical negotiation, OEM car manufacturers were just beginning to
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`introduce USB and Bluetooth connectivity for portable devices and (3) a per-unit royalty would
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`have been preferred over a percentage of revenue royalty because “over time the infringing
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`interface capability would have been bundled with other features and capabilities into an overall
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`‘package’ price” and “[e]vidence from Volkswagen indicates that the patented features have
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`become standard.” (See Dkt. No. 265 at 7–9.)
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`The Court finds that Dr. Becker provided an adequate basis for his opinion that a running
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`royalty is the appropriate structure. The fact that Volkswagen disagrees with Dr. Becker’s
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`Case 2:15-cv-01274-JRG-RSP Document 385 Filed 01/11/17 Page 5 of 5 PageID #: 29172
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`interpretation of the facts does not make his opinion unreliable under Daubert. Accordingly, the
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`Court will not strike Dr. Becker’s opinion on the appropriate structure of a royalty between
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`Blitzsafe and Volkswagen.
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`CONCLUSION
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`For the reasons stated above, Volkswagen’s Motion to Exclude Certain Testimony Under
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`Daubert And To Strike Portions of the Report of Dr. Stephen Becker (Dkt. No. 235) is DENIED.
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`Blitzsafe has leave to serve a supplemental report disclosing Mr. McAlexander’s opinion
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`concerning the scope of the Affinity Labs patents and non-infringing alternatives no later than
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`January 16, 2017. Upon service, the parties are ORDERED to meet-and-confer to discuss
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`whether a short, additional deposition of Mr. McAlexander is needed and if so, the logistics of
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`such deposition. Should Blitzsafe fail to supplement Mr. McAlexander’s report, Volkswagen may
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`reurge its motion to strike, and upon consideration, the Court may strike portions of Dr. Becker’s
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`damages to the extent he relies on Mr. McAlexander’s undisclosed opinions.
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