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CEATS, Inc. v. TicketNetwork, Inc.

United States District Court, E.D. Texas, Marshall Division

January 17, 2018

CEATS, INC., Plaintiff,
v.
TICKETNETWORK, INC. and TICKET SOFTWARE, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROY S. PAYNE, UNITED STATES MAGISTRATE JUDGE

         Before the Court is CEATS, Inc.'s Opposed Motion to Exclude Testimony and Strike the Expert Report of Dr. V. Thomas Rhyne [Dkt. # 114]. After considering the parties' briefing, the Court will GRANT the motion IN PART.

         I. BACKGROUND

         TicketNetwork's business comprises four components. First, it markets ticket inventory owned by others directly to end users through internally owned and operated websites, such as TicketNetwork.com and TicketLiquidator.com. Kruse Decl. (Oct. 27, 2017) [Dkt. # 112-28] ¶ 4. Second, it licenses a range of products and services to independently owned, operated, and controlled third-party ticket marketers. Id. ¶ 5. Third, it operates a backend ticket exchange whereby ticket brokers exchange ticket inventory with one another. Id. ¶ 6. Fourth, it operates a call center for its internal and third-party websites for facilitating purchases by end users. Id. ¶ 9.

         In 2010, CEATS sued TicketNetwork for patent infringement. The parties settled mid-trial and later executed a license agreement concerning 16 of CEATS's patents. Settlement & License Agreement for CEATS Patents (Mar. 28, 2012) [Dkt. # 38-5] (hereafter, “the Agreement”).

         This lawsuit concerns TicketNetwork's alleged breach of the Agreement. CEATS contends TicketNetwork has not performed its obligation under Paragraph 5.2 of the Agreement to pay CEATS $0.50 for each “Transaction, ” which is “[t]he purchase of one ticket directly using an online ticketing system freely available via the Internet from a general purpose computer, without the use of any dedicated resident ticket vending software on such computer, providing such system includes the Subject Functionality.” CEATS' Standard Licensing Rates [Dkt. # 38-34]; see also Agreement [Dkt. # 38-5] ¶ 1.13 (defining “Transaction” to have “the meaning set forth in CEATS' Standard Licensing Rates for Licenses Under the Patent Portfolio Held by CEATS, Inc.”). “Subject Functionality” means “[f]unctionality in a system or method that provides (i) an interactive seat map and (ii) additional information or an additional display of information in response to user interaction with the display of seats in such seat map by placing a mouse indicator over the seat map.” CEATS' Standard Licensing Rates [Dkt. # 38-34]; Agreement [Dkt. # 38-5] ¶ 1.10 (defining “Subject Functionality” to have “the meaning set forth in CEATS' Standard Licensing Rates for Licenses Under the Patent Portfolio Held by CEATS, Inc.”).

         The functionality at issue concerns TicketNetwork's web interface that allows a user to purchase tickets on-line. In the image below, which is exemplary only, the interface (everything inside the red dashed line) includes an available ticket listing panel (blue) on the left side that is populated by a listing of sections with available seats. The right side of the interface (green dashed line) is a venue diagram providing a display of seats. When a user rolls a mouse icon over a section of available seats in the left (blue) panel, the interface highlights the physical location of those seats in the right venue-diagram panel.

         (IMAGE OMITTED)

         The parties' main dispute concerns the meaning of “seat map” in the definition of Subject Functionality and how it applies to this layout. TicketNetwork contends the “seat map” is limited to the right panel-what CEATS calls the “venue diagram”-and the “display of seats” is the collection of seats composing the seat map along with any other elements of the event venue, such as the concert stage. Defs.' Summ. J. Reply [Dkt. # 147] at 5 n.3. CEATS agrees the “display of seats” makes up the venue diagram map and that it is separate from the available ticket list. Pl.'s Resp. to Defs.' Mot. for Summ. J. [Dkt. # 138] at 7 (“On the right-hand side of the interface . . . is a dynamic venue diagram providing a display of seats.”); Pl.'s Sur-Reply [Dkt. # 156] at 1 (“A ‘display of seats' is a subset of the larger phrase ‘seat map' . . . .”). But CEATS contends the “seat map” is the entire interface (in this example, everything within the red dashed line), including the available ticket list within the left panel.

         TicketNetwork summarizes the parties' positions with this graphic:

         (IMAGE OMITTED)

         Defs.' Mot. for Summ. J. [Dkt. # 112] at 24.

         Dr. Rhyne is TicketNetwork's expert on two broad subjects: (1) What constitutes use of the Subject Functionality, Rhyne Opening Rep. (Oct. 16, 2017) [Dkt. # 125-1] at 19-53, and (2) when TicketNetwork implemented the Subject Functionality, id. at 53-80. Rhyne is a former professor of computer engineering, id. at 2, an experienced programmer, id. at 3, and a registered practitioner with the USPTO, id. at Ex. A (p.4). He served as TicketNetwork's technical expert in the prior litigation. Id. at 7 (¶ 28).

         CEATS's motion lodges two complaints concerning Rhyne's report. First, because this case concerns contract interpretation-i.e., the meaning of “Subject Functionality” in the Agreement-Rhyne may not provide conclusions as to the meaning of that term or the parties' intent in reaching the Agreement. Second, Rhyne improperly relies on cherry-picked screen shots and hearsay. CEATS's ...


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