Expert’s Opinion Go to Weight Rather Than Admissibility

PHILIPPI-HAGENBUCH, INC., and LEROY HAGENBUCH, Plaintiffs,
v.
WESTERN TECHNOLOGY SERVICES INTERNATIONAL, INC., and WOTCO, INC., Defendants.
Case No. 12-1099
United States District Court, C.D. Illinois.
April 8, 2015.

This case was before the Court for a Daubert hearing on two pending Daubert motions, as well as two other motions concerning expert testimony. For purposes of this article, we only concentrate on the opinion of the Court regarding the damages expert.

Rule 702 of the Federal Rules of Evidence governs the admissibility of expert testimony:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of this case.

The Court’s role in determining the admissibility of expert testimony is that of a gatekeeper. In performing this role, the Court must determine whether the expert testimony in question meets two essential requirements: (1) it must be based on scientific, technical, or other specialized knowledge and (2) it must assist the trier of fact in understanding the evidence or determining a fact in issue. In other words, the opinion must be reliable and relevant.

Daubert provides a list of four factors to be considered in determining the soundness of the expert’s methodology:

(1) whether the proffered conclusion lends itself to verification by the scientific method through testing; (2) whether it has been subjected to peer review; (3) whether it has been evaluated in light of the potential rate of error of the scientific technique; and (4) whether it is consistent with the generally accepted method for gathering the relevant scientific evidence.

However, these factors are non-exclusive and do not constitute a definitive checklist. The key concern is that the expert “employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” Ultimately, the trial judge is vested with considerable discretion in deciding whether particular expert testimony is reliable.

Defendants made a motion to exclude opinions and testimony of Plaintiff’s damages expert, Michael E. Tate. Mr. Tate’s qualifications to testify as an expert were not challenged. Plaintiffs sought both lost profits and reasonable royalty damages on the patents of a truck body type they owned.

Defendants argued that Tate’s lost profits opinion must be excluded because in applying the Panduit factors, Tate relied on the challenged opinions of Plaintiff’s technical expert, Frederick Smith (that there is demand for the patented truck bodies and that there are no acceptable, non-infringing options), and that without Smith’s opinions, Tate’s opinions have no basis. Plaintiffs responded that there is nothing wrong with Smith’s opinions and that Tate can reasonably rely on the opinion of another expert in that expert’s area of expertise. Defendants also claimed that Tate conflates demand for custom truck bodies with demand for truck bodies designed using Plaintiffs patented process in rendering his damages opinion. Plaintiffs point to testimony from the head of Defendants’ sales department that customers purchased the custom truck bodies over generic bodies because they are designed to meet the customer’s specifications, carry a particular load, and “max out” the trucks performance; these benefits make the additional cost worthwhile to the customer. Having denied the request to exclude Smith’s opinions, the Court found that the remaining challenges to Tate’s opinions go to weight rather than admissibility.

Tate’s reasonable royalty opinions were challenged for failure to apportion reasonable royalty damages between the patented and non-patented features of the patents. The basis for this argument is the assertion that reasonable royalty damages cannot be calculated based on the market value of the entire product, but rather must be based on the smallest salable component that practices the invention; calculations based on the entire product market value are only appropriate where the patented feature creates the demand for the product. As Tate did no investigation or analysis on the demand for truck bodies designed using the patented process, Defendants maintain that he has no basis for using the entire product value in his calculations.

The Federal Circuit has established that royalty awards are based on “the smallest salable patent-practicing unit.” Plaintiffs maintained that their patented design process created a truck body or water tank; the Court determined that there is no smaller, salable unit that can be separated or apportioned out for purposes of calculation. The Court also determined that the patented inventions (even as licensed by Plaintiffs) are the entire water tank and the process for creating an entire truck body, whereas the relief sought by Defendants applies only where the patented invention/process is part of a larger, multi-component product that combines the patented invention/process along with other non-patented inventions/processes. Moreover, the Court opined, even if Plaintiffs were required to show that the patented features created a demand for the entire product, they argued that the emphasis on the benefits of the patented features in Defendants’ own advertising would have made such a showing.

Therefore, the Courtdenied Defendants’ challenge to deny the damages expert’s opinions and testimony.

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