Kawasaki Jukogyo Kabushiki Kaisha v. Rorze Corporation

Background

The order addresses two expert-related motions in a patent case. Kawasaki moved to strike portions of Rorze’s damages expert Christian Tregillis’s supplemental report. Rorze moved to exclude portions of Kawasaki’s damages expert David Haas’s testimony under Federal Rule of Evidence 702, which governs the admissibility of expert testimony. The parties also asked to file material containing Rorze’s confidential business information under seal.

Kawasaki’s Motion to Strike

The court granted Kawasaki’s motion in part. Tregillis’s original report calculated reasonable-royalty damages using robot operating-profit figures in Schedule 3. His supplemental report instead used operating-profit figures for the accused equipment front-end modules in Schedule 4 and updated calculations in Schedule 12.

The court held that Tregillis may update Schedule 12 to use the Schedule 4 figures. It treated that change as a permissible correction of an error under Federal Rule of Civil Procedure 26(e), which requires parties to supplement expert information that later proves incomplete or incorrect. Tregillis had identified the error during his deposition, and Kawasaki did not object to similar corrections elsewhere in the report.

The court did not permit Tregillis to offer new opinions about how the correction affected hypothetical royalty negotiations. The supplemental report added seven paragraphs discussing a cap on royalty payments and the possibility that Kawasaki should receive no royalty in years when Rorze had no operating profits. Because those opinions were not disclosed in the original report and were added after expert discovery closed, Kawasaki had no opportunity to depose Tregillis about them. The court ruled that the supplementation rule could not be used to present entirely new opinions after the disclosure deadline.

Rorze’s Motion to Exclude

The court granted Rorze’s motion in part and denied it in part. Rorze challenged five categories of Haas’s opinions: damages related to foreign sales, damages incurred before notice, lost-profits damages, reasonable-royalty damages, and commercial success.

The court allowed Haas to testify about damages related to foreign sales. It explained that whether particular sales were legally domestic or foreign concerns infringement liability, not the reliability of an expert’s damages opinion. Rorze had not raised that argument in its summary-judgment motion, and the court’s standing order limited the parties’ summary-judgment filings. The court also found a factual dispute because, although many products were manufactured and delivered abroad, significant parts of the relevant contracts were formed in the United States, were governed by California law, and required sales through a domestic ordering system.

The court excluded Haas’s testimony about damages incurred before Kawasaki gave Rorze actual notice of the alleged infringement. Under 28 U.S.C. § 287(a), a patent owner generally cannot recover infringement damages before marking its products or notifying the alleged infringer. Kawasaki asserted that third-party products containing its robots were covered by the patents but offered no evidence that it made reasonable efforts to ensure those products were properly marked. The court therefore agreed that Haas could not testify about damages before the actual-notice date.

The court allowed Haas to testify about lost-profits damages. Rorze’s objections concerned issues such as noninfringing alternatives, Kawasaki’s manufacturing capacity, market competition, and possible additional costs. The court concluded that these arguments primarily challenged the weight or credibility of Haas’s opinions rather than their reliability under Rule 702. It also found that Haas could rely on discussions with Kawasaki employees and their depositions when forming his opinions.

The court also allowed Haas to testify about reasonable-royalty damages. It rejected Rorze’s arguments that Haas needed separate calculations for each patent-reissue date and that his $10,000 licensing figure lacked a sufficiently definite starting point. Haas explained that the related patents could be licensed as a bundle, that his calculations would be the same for the relevant reissue years, and that his report analyzed the applicable royalty factors in detail.

Finally, the court allowed Haas to testify about commercial success. Rorze argued that Haas improperly relied on the opinions of Kawasaki’s technical expert, Dr. Glew. The court found that reliance on another expert did not make Haas’s opinion unreliable, particularly because Rorze had not shown that Glew’s underlying opinions were unreliable.

Sealing Motions and Disposition

The court granted the related sealing motions because there was good cause to seal material concerning Rorze’s confidential business information.

The court’s final disposition was that Kawasaki’s motion to strike was granted in part, with Tregillis permitted to update Schedule 12 but barred from offering opinions about the effect of that update on hypothetical negotiations. Rorze’s motion to exclude was also granted in part, with Haas barred from testifying about damages incurred before Kawasaki provided actual notice and permitted to testify on the other challenged subjects.