Laatz v. Zazzle

Background

Nicky Laatz is a font designer whose primary source of income comes from creating and licensing type fonts. In 2016, she created the Blooming Elegant Trio (the “BE Trio”) and offered a single-seat license for $20 through Creative Market. The license allowed purchasers to modify or incorporate an item into other content, but restricted sharing the item through a shared drive or similar system and prohibited end users from extracting the item separately from the finished product.

In May 2017, Mohamed Alkhatib purchased one BE License through Creative Market on behalf of Zazzle, Inc. Zazzle later made the BE Trio available through its online design tool. Laatz sued Zazzle and Alkhatib, asserting claims for fraudulent misrepresentation, fraudulent concealment, promissory fraud, copyright infringement, trademark infringement, and breach of contract. Earlier orders granted summary judgment for Defendants on the first, second, third, and fifth claims and entered judgment for Defendants on the copyright claim after reconsideration. The breach-of-contract claim was the only claim remaining when the court decided these expert-evidence motions.

Legal standard

The parties filed eight motions under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc. A Daubert motion asks the court to determine whether expert testimony is relevant and reliable enough to be presented to the jury. The court evaluates the expert’s qualifications, factual basis, methods, and application of those methods. Challenges that concern the strength of admissible testimony generally go to the testimony’s weight rather than its admissibility.

Defendants’ motions

Stuart Sandler. Defendants’ motion was GRANTED-IN-PART and DENIED-IN-PART. The court excluded portions of Sandler’s proposed testimony that offered legal conclusions about the meaning of the BE License, whether Defendants breached it, and the parties’ intentions. The court also excluded his opinion that the number of users with access to the BE Trio was substantially higher than the number reflected in finished designs because that opinion was speculative. Sandler may testify generally about the role of licenses in marketing and distributing fonts, but may not interpret the license, testify about breach, testify about contracting parties’ intent, or give an opinion about the total number of infringing uses of the design tool.

Daniel Garrie. Defendants’ motion was GRANTED-IN-PART and DENIED-IN-PART. Garrie may not offer legal opinions about whether Defendants knowingly breached the BE License or whether Laatz had notice of a breach. He also may not testify that users literally used the underlying BE font software, speculate that the number of pending designs was significantly higher than the available figures, or provide excessive factual narratives unrelated to understanding his technical opinions. He may testify about how Zazzle customers interacted with the design tool and how that interaction related to the underlying technology, as long as he does not say that customers used the underlying BE font software. He may also testify about the number of customers who used the design tool without speculating that the actual number was significantly higher.

Sara Parikh. Defendants’ motion was DENIED. Parikh designed and conducted a double-blind survey of 136 graphic designers who sold on Zazzle at the “Bronze” level or above. The court concluded that Defendants’ objections to the survey’s respondent group, comparator fonts, lack of a control group, and connection between the questions and conclusions primarily concerned the survey’s weight rather than its admissibility.

Dominic Persechini. Defendants’ motion was GRANTED-IN-PART and DENIED-IN-PART. The court excluded Persechini’s disgorgement or lost-profits theory because disgorgement was not a proper remedy in the remaining single-count contract action. The court also excluded opinions that damages could be calculated by multiplying a $14 license fee by all design-tool users, by users who created pending designs, or by 54 percent of design-tool users. The court found that those calculations lacked a sufficient factual and analytical foundation and improperly assumed that access to the design tool or creation of a pending design established a breach. Persechini’s testimony was limited to opining, based on his regression analysis, on the number of users who had access to the BE Trio.

Plaintiff’s motions

Christopher Rucinski. Laatz’s motion was DENIED. Rucinski was qualified to testify about general computer-science principles, including the differences between data and software and how the design tool interacted with underlying files to render text. The court found his opinions about the design tool as it existed in 2021 and afterward adequately supported.

Ellen Shapiro. Laatz’s motion was GRANTED-IN-PART and DENIED-IN-PART. Shapiro could rebut Parikh’s survey even though Shapiro was not a survey expert, because her design expertise could address the comparability of the fonts used in the survey. But the court excluded Shapiro’s subjective opinions that the BE Trio was not unique, important, appealing, or difficult to replace, as well as related opinions about similarities among handwriting-style typefaces and font groupings. Shapiro’s testimony was limited to opinions specifically discussing the comparability of the BE Trio to the other fonts in Parikh’s report.

Dr. Swain. Laatz’s motion was DENIED. The court found that Swain’s challenged opinions did not rely on the portions of Shapiro’s report that had been excluded and that Swain was not merely repeating Shapiro’s opinions.

Jeff Kinrich. Laatz’s Daubert motion and motion in limine were GRANTED-IN-PART and DENIED-IN-PART. The court excluded Kinrich’s opinions about disgorgement because that remedy was irrelevant to the contract action. It also granted Laatz’s motion in limine concerning Kinrich’s proposed affirmative theory of damages, concluding that this testimony was not proper rebuttal and was untimely. Kinrich may not present an independent damages theory. He may testify only to rebut Persechini’s damages opinions by addressing their economic unreasonableness, to the extent those opinions remain admissible.

Disposition and effect

Judge Beth Freeman ordered the parties’ expert testimony limited as described above. The order did not decide the merits of Laatz’s remaining breach-of-contract claim or determine the amount of any damages. It resolved which expert opinions could be presented to the jury and in what form. The final order states that Defendants’ motions concerning Sandler, Garrie, and Persechini were GRANTED-IN-PART and DENIED-IN-PART; Defendants’ motion concerning Parikh was DENIED; Laatz’s motions concerning Rucinski and Swain were DENIED; Laatz’s motion concerning Shapiro was GRANTED-IN-PART and DENIED-IN-PART; and Laatz’s Daubert motion and motion in limine concerning Kinrich were GRANTED-IN-PART and DENIED-IN-PART.