Fair Isaac Corporation v. Federal Insurance Company

Background

Fair Isaac Corporation (FICO) sued Federal Insurance Company and ACE American Insurance Company, collectively called Defendants, alleging breach of contract and copyright infringement involving Blaze Advisor. A jury awarded FICO $40 million in actual damages. The court granted Defendants’ motion for a new trial on actual damages after finding that the trial evidence did not support the award and that certain evidence was inadmissible. FICO rejected the court’s remittitur, and the new trial was scheduled to begin on June 10, 2024.

The parties filed motions in limine, which are requests to decide before trial whether particular evidence or arguments may be presented to the jury.

FICO’s Motions

FICO Motion No. 1: 2006 FICO–ACE American License Agreement

The court denied FICO’s motion to exclude evidence of a 2006 license agreement between FICO and ACE American. Defendants may introduce the agreement as one piece of evidence about FICO’s prior licensing practices. They may not argue that the agreement represents the value of a Blaze license.

FICO Motion No. 2: Exhibits D-0160 and DTC-0434

The court granted FICO’s motion to exclude both exhibits. Exhibit D-0160 concerned optional maintenance after the first year of a license, and Exhibit DTC-0434 concerned application sizing and enterprise-wide licensing. The court held that support and maintenance fees were not recoverable as actual damages because they were not part of Defendants’ infringing use of Blaze. The court also held that application-based pricing evidence was excluded. Under Evidence Rules 401, 402, and 403, the exhibits were irrelevant or had probative value outweighed by the risk of confusing or misleading the jury.

FICO Motion No. 3: Statements About Payment for a Blaze License

The court denied as moot FICO’s motion to exclude statements that Defendants had already paid for a Blaze license. Defendants represented that they would not argue that the $1.3 million paid by Chubb for a 2006 Blaze license fully compensated FICO for the fair market value of a license for the combined Chubb-ACE entity after March 31, 2016.

FICO Motion No. 4: Previously Dismissed Grounds

The court granted FICO’s motion to exclude references to breach-of-contract grounds that had previously been dismissed or decided. The trial would concern only actual damages for Defendants’ infringing use of Blaze Advisor. Neither side could introduce evidence or elicit testimony about liability issues that had already been decided. Documents referring to those disputes had to be redacted as required by the order.

FICO Motion No. 5: Exhibit D-153

The court denied FICO’s motion to exclude Exhibit D-153 and related testimony. The exhibit was a February 2016 email chain in which FICO employees discussed a possible license fee of more than $3 million after the ACE/Chubb merger. The court held that the email was relevant to the fair market value of the infringing use because it reflected FICO’s internal valuation of a possible new license. Any lack of knowledge by the employee who wrote the email concerned the weight of the evidence, rather than whether the evidence was admissible.

FICO Motion No. 6: Dr. Steven Kursh’s Testimony

The court denied FICO’s motion to exclude Dr. Steven Kursh’s testimony. The court held that portions of his report contained independent opinions about customary software-industry sales practices that were relevant to determining the fair market value of a Blaze license. The court allowed the opinions in paragraphs 55–68, 126, 134’s first sentence only, 135, and 136. It excluded the opinions in paragraphs 125 and 127–131 because they were tied to opinions from FICO’s witness Neil Zoltowski concerning matters that would not be presented at the upcoming trial.

Defendants’ Motions

Defendants’ Motion No. 1: Actual License-Fee and Support-and-Maintenance Damages

The court stated that it would decide Defendants’ motion to prevent FICO from requesting actual license-fee damages or support-and-maintenance fees in a separate order. The opinion does not state the disposition of that motion.

Defendants’ Motion No. 2: $21 Billion in Revenue Connected to Blaze

The court granted Defendants’ motion to exclude references to the $21 billion in revenue that had “touched” Blaze. FICO could not introduce evidence or testimony referring to that figure. The court held that, although the figure might have some relevance to the scope of Defendants’ use, its potential to unfairly prejudice, confuse, or mislead the jury substantially outweighed its value. The court also noted that the figure had been prepared for a previously decided claim seeking Defendants’ profits and did not establish that Defendants’ infringing use contributed to those revenues.

Defendants’ Motion No. 3: References to Liability

The court granted in part and denied in part Defendants’ motion to exclude references to breach, infringement, or wrongdoing. The court denied the motion to the extent it sought to prevent the court from giving the jury a summary that referred to liability and infringement. The court granted the motion to the extent it sought to prevent FICO from introducing evidence or eliciting testimony about Defendants’ liability. The court reasoned that the jury needed background information, but that the court—not the parties—would provide that background.

Disposition

The court entered the following rulings: FICO’s Motion in Limine Nos. 1 and 5 were DENIED; FICO’s Motion No. 2 was GRANTED; FICO’s Motion No. 3 was DENIED AS MOOT; FICO’s Motion No. 4 was GRANTED; FICO’s Motion No. 6 was DENIED; Defendants’ Motion No. 2 was GRANTED; and Defendants’ Motion No. 3 was GRANTED IN PART AND DENIED IN PART. David T. Schultz signed the order as a U.S. Magistrate Judge.