Regents of the University of Minnesota v. AT&T Mobility LLC

Background

Regents sued cellular network companies for allegedly infringing patents involving cellular data-transmission technology. Ericsson, Inc., Nokia of America Corp., and Nokia Solutions and Networks US LLC intervened as defendants in the related actions. The opinion addresses damages expert reports in four related cases identified in the caption.

Regents’ damages expert was Dr. Matthew Lynde. The defendants’ damages expert was Lauren Kindler. Neither expert calculated lost profits. Instead, both used a hypothetical-negotiation approach to estimate reasonable royalties—the amount a patent holder and alleged infringer might have agreed to before the alleged infringement began. Kindler calculated a lump-sum royalty range of roughly $400,000 to $9.2 million and apportioned it among defendants based on U.S. market share. Lynde calculated total damages of $217.5 million under one model and $600.6 million under another.

Legal Standard

Federal Rule of Evidence 702 governs expert testimony. It requires the party offering the testimony to show that the expert is qualified, that the opinion is based on sufficient facts or data, that the methods are reliable, and that the expert reliably applied those methods to the case. The court explained that it generally resolves doubts about the usefulness of expert testimony in favor of allowing the testimony. Challenges to the factual basis of an opinion usually affect its credibility and are addressed through cross-examination, unless the opinion is so fundamentally unsupported that it could not assist the jury.

Regents’ Motion to Exclude Kindler’s Testimony

Regents argued that Kindler’s opinion was speculative because it relied on incomplete licensing negotiations with Intellectual Ventures and on evidence suggesting that Regents had made a counteroffer even though Regents never formally made one. The court held that proposed licenses and unaccepted offers may be considered when they are reliable or consistent with commercial value. It found that Kindler accounted for differences between the negotiations and the hypothetical negotiation and relied on multiple sources of evidence concerning the possible counteroffer. The court therefore treated these objections as challenges to the factual basis of her opinion, not grounds for exclusion.

Regents also challenged Kindler’s calculation of profit participation and her use of a valuation prepared by the Global Technology Transfer Group. The court described the profit-participation issue as the most problematic part of her report, but found that Kindler explained her calculation and accounted for an element of the negotiations rather than ignoring it. Regarding the third-party valuation, the court found that Kindler explained how she used it and that the report described a process based on statistical comparisons with completed patent transactions and discounts for patent age. The court declined to categorically exclude the valuation or Kindler’s opinion.

Defendants’ Motion to Exclude Lynde’s Testimony

The defendants challenged Lynde’s use of total subscriber revenue as the royalty base, his use of forward citations without accounting for patent age, and his reliance on the General Access Solutions, Ltd. agreement while disregarding nearly 200 other licensing agreements.

The court found Lynde’s use of total subscriber revenue highly concerning. It explained that when an infringing feature is only a small part of a larger product or network, damages generally must be apportioned to reflect the value attributable to the infringement. The court found that Lynde could not rely on built-in apportionment because he used a royalty rate from a comparable license but applied it to a significantly larger royalty base. The court was also not convinced that his alternative choices of royalty rates constituted apportionment. Nevertheless, the court viewed these concerns as challenges to the factual basis of his opinion rather than defects requiring exclusion, because Lynde could theoretically apportion the royalty rate appropriately.

The court declined to extend a Federal Circuit decision concerning two different royalty rates at different points in a supply chain because the facts and method in Lynde’s report differed. The court also held that the defendants had not shown that Lynde’s failure to account for patent age required exclusion of his forward-citation analysis. Whether his explanation was persuasive was for the jury to decide.

Regarding the General Access Solutions agreement, the court said that a comparable license must be sufficiently similar to the hypothetical license, although it need not be identical. Lynde’s supplemental report explained why he considered the agreement comparable based on the technology and services involved. The court found that his use of the agreement was concerning but not so unsupported that exclusion was warranted.

Order and Effect

The court held that none of the objections met the high standard for excluding the experts’ testimony. It ordered that Regents’ motion to exclude Lauren Kindler’s expert testimony was DENIED and that the defendants’ motion to exclude Dr. Matthew Lynde’s testimony and opinions was DENIED. The order addressed admissibility of expert evidence; it did not decide the ultimate patent-infringement or damages questions.

Judge

The order was signed by John R. Tunheim, United States District Judge.