United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION AND ORDER
PAYNE, UNITED STATES MAGISTRATE JUDGE
the Court is CEATS, Inc.'s Motion for Leave to Serve the
Supplemental Expert Report of Robert McSorley [Dkt. # 160].
Defendants TicketNetwork, Inc. and Ticket Software, LLC
(together, “TicketNetwork”) only oppose the
motion with respect to Sections 9 and 11 of the report, which
TicketNetwork contends constitute improper surrebuttal.
considering the parties' briefing, the Court will
GRANT the motion IN PART .
Specifically, the Court will GRANT the
motion except as to Section 9 and some portions of
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.
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”).
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.
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.
summarizes the parties' positions with this graphic:
Mot. for Summ. J. [Dkt. # 112] at 24.
are also some secondary issues particularly relevant to the
present motion. For one, TicketNetwork claims sales made
through its call center are not “Transactions”
under the Agreement. Id. at 27. TicketNetwork also
claims ticket sales made by a user on its mobile platform
cannot qualify as Transactions. Id. CEATS claims
certain ticket purchases constitute two Transactions.
CEATS's 2d Supp. Discl. [Dkt. # 112-6] at 2
(“Because each ticket sold through TicketNetwork's
POS and Mercury products involves a purchase of a ticket from
inventory and then a corresponding sale, each ticket
represents two transactions for purposes of calculating the
royalty payment due to CEATS . . . .”). Thus, if
TicketNetwork is found to have breached the Agreement,
resolution of these secondary issues will impact the amount
and TicketNetwork retained Robert McSorley and Keith Ugone,
respectively, as their damages experts. On September 22,
CEATS served McSorley's initial report on damages. On
October 16, TicketNetwork served ...