Kewazinga Corp. v. Google LLC

Background

Kewazinga Corporation asserted that Google LLC infringed three patents concerning navigable telepresence methods and systems using arrays of cameras. After discovery, the parties cross-moved for summary judgment. In connection with those motions, Google moved to preclude, meaning exclude, the testimony of Kewazinga’s damages expert, Michele Riley.

Riley sought to calculate a hypothetical royalty for Google’s alleged use of the patents in Google Street View and the Dynamic Street View application programming interface, features of Google Maps. Her damages calculation included a royalty base, meaning the revenues to which a royalty rate would be applied, and a royalty rate.

Legal standard

The court applied Federal Circuit law to the patent-related expert-testimony issues. Under Federal Rule of Evidence 702, expert testimony must help the factfinder, rely on sufficient facts or data, result from reliable principles and methods, and reliably apply those principles and methods to the case. The judge acts as a gatekeeper by assessing whether the expert’s reasoning and methodology are reliable and appropriately connected to the facts.

For a reasonable royalty, the royalty base and royalty rate must reflect the value attributable to the infringing features, rather than the value of unrelated features. The court noted that apportionment—separating the value of the patented feature from other product features—must be supported by reliable and tangible evidence.

Royalty-base testimony

One part of Riley’s royalty base used Google Search advertising revenue. She started with worldwide search advertising revenue, limited it to United States revenue and then to revenue from local searches. She made additional deductions for revenue specific to Google Maps and costs of acquiring Street View images. She then applied a “Maps to Street View Adjustment,” based on the percentage of Google Maps users who used Street View, and further reduced the figure based on the percentage of those users who received transition imagery between panoramas.

The court held that the Maps to Street View Adjustment was unreliable. Riley used the percentage of Google Maps users who used Street View to estimate the revenue from local-search users who interacted with Street View. The court found this unreasonable because Google Search and Google Maps are distinct products with different purposes and user metrics. Google presented unrebutted evidence that the percentage of local-search users who clicked through to Street View was an order of magnitude smaller than the percentage of Maps users who did so.

The court rejected Kewazinga’s arguments that other deductions in Riley’s calculation solved the problem or that Street View’s value to Google’s broader local-search ecosystem justified the method. The court explained that the issue was not whether search users might receive value from Street View without directly using it; the issue was that Riley provided no reliable basis showing that her method measured that value. Google’s other objections to the royalty-base calculation were left for the jury because they did not justify excluding the testimony.

Royalty-rate testimony

The court denied Google’s motion to exclude Riley’s royalty-rate testimony. Riley used three standard quantitative valuation methods and a qualitative analysis based on recognized reasonable-royalty factors. One method used half of Google’s segment operating margin during the damages period as an indicator of the patents’ value in a hypothetical negotiation.

Google argued that the segment included all of Google’s main products, even though those products differed in profitability and some were excluded from the royalty base. The court concluded that this argument challenged whether Riley’s opinion was accurate, rather than showing that her methodology was unreliable. Those concerns could be addressed through cross-examination and contrary evidence. The court also noted that the parties’ stipulation limited Google’s ability to challenge the testimony for failing to use more detailed revenue and profit information.

Disposition

The court ordered that Google’s motion to preclude Michele Riley’s testimony was granted in part and denied in part. Riley may not testify to profits attributable to Google Search advertising revenue using the Maps to Street View Adjustment. Her testimony concerning the royalty rate was not excluded. The Clerk of Court was directed to close the motion at Docket No. 281.