Apple v Samsung Daubert Motion Hearing – January 23, 2014

Damages Expert Exclusions or Prohibitions

The focus of the discussion was on damages experts. I don’t believe there was much discussion of infringement or validity expert reports or testimony. Judge Koh indicated that there are two or three areas in which she was tentatively leaning to prohibit or exclude.

Dr. Christopher Vellturo

The first area is some of the expert witness testimony or reports coming from Dr. Christopher Vellturo. If I understood correctly, Judge Koh mentioned that she might accept the calculations for reasonable royalty, but not for lost profits.

Dr. Shevalia

There is also mention of an expert whose name sounded like “Shevaila.” But on reviewing documents I have not been able to locate anybody with a name like “Shevalia.” From the back and forth I was able to pick up that this expert is female.

In my notes I have something that appears to indicate that this may have been in relation to a Samsung motion to exclude Shevalia in relation to the HTC agreement. There is some mention that that analysis of other license agreements not specific to technology – that there was not the comparability analysis required in ResQNet or Laser Dynamics. My notes have some mention, apparently from Judge Koh, in relation to intending to grant Hauser Vellturo survey in relation to the 414′ patent.

Hauser Report

It is also somewhat possible that some small part of the Hauser report might not be allowed, but I think it is more likely that a particular use of the Hauser survey by an expert might be what is being called into question.

Apologies

Unfortunately I went into the hearing without having read much about the case. And I had a few difficulties with my computer. In the days after the hearing, when I tried to determine what some of the things in my notes meant, it was difficult because as it turns out so much of what is referenced has either been redacted or entirely sealed.  So the result here is far from perfect. This still might be helpful to those who have good knowledge of the case until an official transcript comes out. It is for that reason that I decided to go ahead and publish what I have here. If anybody has insight into particular loose ends I present here please let me know. For example, who the expert with the name like “Dr. Shevalia” is.

Rough Transcript

Transcript is probably not the right word. What follows is a rough paraphrase of a majority of the hearing with some comments from me interspersed.

Speaking of the Dr. Shevalia witness, Judge Koh asked, I believe Samsung – if her market approach is excluded and she could still rely on her income approach, would she reach the same damages result?

Samsung’s response was that consideration of licensing fees actually pushes the Shevalia rate up not down. Samsung went on to mention something about licensing information impeaching Apple.

Judge Koh mentioned that technology wasn’t specified and that she (the expert) doesn’t do comparable analysis. Under Federal Circuit law that’s not qualified 702′ expert testimony.

Speaking still I think about the same expert a little later, Judge Koh mentioned that the expert’s credentials are excellent but not for doing technology comparisons. I believe at that point Samsung objected somewhat, stating that Apple had not put a single license up saying it was not comparable. Much later I think Apple objected to this saying that producing particular licenses in this context is putting the burden on the wrong party.

Judge Koh responded asking if her (the expert’s) 35 cent royalty would decrease if something is done to the market approach and relies on income analysis.

Later, Judge Koh asked Apple – if market approach is excluded, what are you going to need?

Somebody at that point mentioned ResQNet and cherry picking. I am not sure if that was Judge Koh or Apple.

At this point Samsung jumped in and stated that that was not what was going on. Samsung claimed Dr. Shevalia is “moving it up.” And that the only reason Apple is bringing it up at all is that the license data is bad for Apple.

I am guessing here this is reference to the fact that Apple did give licenses to HTC – and that could undermine arguments for a permanent injunction.

Judge Koh mentions that both sides were stretching. And then asked, her reasonable royalty rate of 35 cents. How did she arrive at that?

The response was Exhibit 97.

Judge Koh then mentioned that there were all these factors – and how the number was computed.

Somebody at this point spoke of paragraph 334 ranges for each case. Exhibit 97 and Shevalia – that after taking things like Apple observed competitors takes all data and synthesizes into expert opinion. Mentions 8 different approaches and I think that the results are very similar.

Koh then said that the approaches then are the same.

Samsung then stated that this was the fist time anybody had argued to throw something out that moved things in their direction. This is an even stronger indication to me that this was in relation to licenses that were granted, probably in relation to Apple v HTC, and that computationally those licenses actually helped Apple’s damages numbers, but in terms of the more important permanent injunction issue, the fact that Apple was willing to license makes it harder to get such an injunction.

Samsung argued that if Apple’s request was granted in full, then the jury would not hear anything about any license in the smartphone space. Judge Koh responded that some of the patents involved desktop computers not smart phones.

Samsung’s response was that there was a lot of evolution and that some desktop patents were now smartphone patents.

Judge Koh mentioned that there would be a new design around date beginning on the date of infringement and that that would require no change in method. There was agreement on that.

Judge Koh asked if there were exclusions how much time would be needed.

Samsung said none. Judge Koh went on to hope no changes in the reports would be needed because that might cause the trial date to slip.

Apple indicated 5 days necessary to say what they would need to do, if anything. Apple indicated it would need to confer with its expert Vellturo.

Judge Koh responded that she was informing them of the scope. Exclusion on Hauser claim 20.

From this I am guessing that either Vellturo or Shevalia used a portion of the Hauser study and that that use by Vellturo or Shevalia was what she was considering excluding. That it may have created some confusion with respect to claim 20.

Apple still indicated it would need to talk to Dr. Vellturo.

Samsung then mentioned it shared Judge Koh’s feelings about redoing the reports.

Samsung: Discussed Watson and Samsung – no dispute that license another company in smartphone space covering patents at issue. Which distinguishes from last case.

Samsung said there were five ways this case was different from the last. Here it seems to me what he is trying to get included is information on the patents that Apple licensed out – probably to HTC. My guess is that this is to help buttress a later argument against permanent injunction if it becomes necessary.

1) No design patents only utility patents.

2) I didn’t catch what the second factor was.

3) Unique procedural posture. Court trying to keep things the same for the two trials as much as possible.

4) I don’t understand this one: The case is a year or less from HTC. While last case was over 2 years and smartphones develop rapidly.

5) Last case HTC came late. Here everybody has looked at this license. It is not coming in late in the game.

I think there was some discussion comparing Dr. Vellturo and Dr. Shevalia.

I believe Samsung discussed that they needed to be able to use the licensing and I think Dr. Shevalia and to confront Vellturo.

Judge Koh asked that wouldn’t that shrink after the lost profits is excluded?

Samsung agreed would shrink but that it was still out of all proportion to all cell phone patents. Mentions that 64′ patent in Motorola 60 cents or so and that they are asking over $6. Claimed that they have to show the jury there is a license for these things. Apple should not be allowed to put huge number totally disproportionate to the market. No supporting Federal Court Precedent.

Judge Koh then asked to hear from Apple. First stating that HTC court’s reason for exclusion before is still true and can’t say out loud in Court but in brief. Why not Watson distinguished.

Apple answered that significant economic terms are not established. That there is no way to say licenses can give any kind of economic analysis transferable to this case.

Judge Koh asked about it being easier on retrial.

Apple responded that it was still not comparable and was prejudicial for reasons that could not be said aloud in open court. Apple claimed that HTC is not Samsung. That HTC is not in the two horse race. Said that Dr. Shevalia basic point was not that they need these licenses to use them to impeach Vellturo analysis. Problem is there is nothing about noncomparable licneses that could be used for impeachment.

As to the matter of presenting individual licenses not comprable Apple said that that turned the proper burden on its head.

Koh – She didn’t know the technology. Didn’t do it even if she could. As for this winnowing from big to smaller.

***

Koh – asked about Vellturo reliance on conjoint survey to determine Samsung’s market share – where in Vellturo’s report does rely on Hauser ?? 2 and ??? 4? Which include market share ???

Koh – So I just want to find the reliance in Vellturo on Hauser’s survey for market share.

Sansung: Your honor 311 317 and 319. What Vellturo does is not expert work. All he’s doing is taking a calculation factor to Samsung unit sales and from subscription data determine how much of a decrease.

Vellturo was pretty clear about that we asked him at his deposition what information he had. Answer was he didn’t have. If I could put deposition testimony – slide testimony.

Do you have quantitative data other than Hauser output? I predict based on survey data – willingness to buy. Slide 2.

Methodology – no court or academic writing backs. They cite a couple of papers that we will address.

Willingness to pay – Oracle v Google. Alsup said conjoint study in Oracle improperly focused consumers on small features.

So he excluded in briefing Apple does not dispute. Should not use conjoint small factors would run into Alsup.

But that is exactly ?? not using conjoint market share. Not saying – not allowed to say out loud in open court.

The issue is joined on that. Does Apple ?? Hauser data to predict shifts in market share. No question they do. You didn’t need an expert to do that.

Shugan did same thing. Minor features did same. Alsup you can’t survey minor features.

Comparison Shugan versus Hauser. Surveyed many – only used a few. Purposely left off things. Like battery weight. Said we can’t test.

Conjoint survey there are limits to number of features you can test. Its just your say so. Who are you to say?

Samsung presents Apple’s own survey on slide – (Palm buyer suvey). They didn’t test there?

10 min break****

Koh – I don’t recall how was subscription data used in Vellturo? If correct serious 702 problem.

Apple: in first trial, 2 kinds of lost profits. 1) ??? Off wk to? 2) back on market design sell fewer

246′ how many lost Samsung to apple. – profit on these

Off the market lost profit. Only in ? 246′?

Koh: How calculated?

Apple – I did not get a clear response to the question. (I meaning me)

Apple: Conservative bound back. New data when – how much did they bounce back?

Exhibit A20 A22 Cracken declaration intro. CBC based . The relative of choice based conjoint analysis. 18.67. “None Option.”

A20 pg 9 and Hauser reports.

Distraction features. $ screen camera. Willingness to pay and buy. Versus Sanche’ publication. Willingness to buy. Is widely accepted in this technology field. No evience from Samsung. Shugan survey. We have not found case where ?used?

Discussion of Google v Oracle

Shugan print screen oils. Value startup

Study $2B in front of tentative product in Samsung. ? Ritehike en banc.

Edgeworth box and Apple willingness to settle.

Ignore GA pacific factors.

Vellturo ?? the GA Pace. None adjust. Only the lost profits.

Default

Ritchkite – they were not seeking 100%. Exclude willingness to pay. Ga pac en banc.

Apple: Samsung inviting reversible error. Ritehike at dissent. Ritchite early look at Daubert to 774 F. 15?4 1543 – 3825. 343?? Lost profit. “But-for”.

Apple: Do cross-examination not Daubert.

Koh – asked if you can ever do reasonable royalty.

Samsung mentioned Pioneering patent. For lost profit.

Koh: Tentatively, 414′ patent claim 20 and 11. 20 requires 3 synchronizations. 11 requires 1. Concern Hauser and 414′. Monday morning joint on is claim 20 and claim 11 properly disclosed.

Mention of Posner. Mention of Datamize and Oxygene.

© 2009-2014 Alta Financial & Insurance Services, LLC