United States District Court, E.D. Texas, Tyler Division
TINNUS ENTERPRISES, LLC, ZURU LTD., ZURU, INC., ZURU, LLC, ZURU PTY LTD., ZURU UK LTD., Plaintiffs,
TELEBRANDS CORPORATION, BED BATH & BEYOND INC., BULBHEAD.COM, LLC, Defendants.
REDACTED MEMORANDUM OPINION AND ORDER
LOVE, UNITED STATES MAGISTRATE JUDGE
the Court is Defendants' Telebrands Corporation
(“Telebrands”), Bed Bath & Beyond Inc.
(“Bed Bath”), and Bulbhead.com LLC
“Defendants”) Motion to Exclude Plaintiffs'
expert Alan Ratliff's Opinion on Damages. (Doc. No. 419.)
Plaintiffs Tinnus Enterprises, ZURU Ltd., ZURU Inc., ZURU
LLC, ZURU PTY Ltd., and ZURU UK Ltd. (collectively
“Plaintiffs”) filed a response (Doc. No. 434), to
which Defendants filed a reply (Doc. No. 452). For the
reasons stated herein, Defendants' Motion (Doc. No. 419)
9, 2015, Plaintiffs ZURU Ltd. and Tinnus filed the instant
action against Defendants Telebrands and Bed
(collectively “Defendants”) alleging infringement
of U.S. Patent No. 9, 051, 066 (“the '066
Patent”). Shortly after the filing of this case, the
Court issued an injunction preventing Telebrands from selling
its accused water balloon products-Balloon Bonanza. (Doc.
Nos. 66, 84, 91.) This case then proceeded through claim
construction, numerous discovery disputes, contempt
proceedings, and up to dispositive motions and pretrial. At
that point in time, concurrent proceedings at the Patent
Trial and Appeal Board (“PTAB”) concluded and the
PTAB issued a final written decision holding that the
asserted claims of the '066 Patent were invalid as
indefinite. The decision of the PTAB was appealed to the
Federal Circuit and Defendants asked the Court to stay the
case. This Court ultimately stayed this case on January 24,
2017, pending appeal of the PTAB's decision. (Doc. No.
308.) On June 7, 2018, the parties filed notices informing
the Court of the Federal Circuit's decision reversing and
remanding the PTAB's final written decision. (Doc. Nos.
332, 333.) The Court therefore lifted the stay in this case
and held a status conference to discuss resuming this action.
(Doc. No. 334.) At the status conference, the parties raised
issues that needed to be resolved before proceeding to trial,
including claim construction, estoppel, venue, and standing.
case has since been proceeding on an expedited schedule for
trial. (Doc. No. 382.) On March 5, 2019, the parties filed
their dispositive and/or Daubert motions. (Doc. Nos.
394, 395, 396, 397, 398, 399, 400, 401, 402, and 403.) The
Court denied the motions, directing the parties to meet and
confer and re-file the remaining motions by March 15, 2019.
(Doc. No. 411.) The Court instructed the parties that each
re-filed motion should begin with “a paragraph
explaining why the motion is timely, which issues the Court
has previously resolved, and what specific issues remain for
the Court to resolve prior to trial.” Id. at
4. Accordingly, Defendants re-filed the instant motion. (Doc.
702 provides that an expert witness may offer opinion
testimony if: (a) the expert's scientific, technical, or
other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b)
the testimony is based on sufficient facts or data; (c) the
testimony is the product of reliable principles and methods;
and (d) the expert has reliably applied the principles and
methods to the facts of the case. Fed.R.Evid. 702.
Rules also “assign to the trial judge the task of
ensuring that an expert's testimony both rests on a
reliable foundation and is relevant to the task at
hand.” Daubert v. Merrell Dow Pharms. Inc.,
509 U.S. 579, 594, 597 (1993). “The relevance prong [of
Daubert] requires the proponent [of the expert
testimony] to demonstrate that the expert's
‘reasoning or methodology can be properly applied to
the facts in issue.'” Johnson v. Arkema,
Inc., 685 F.3d 452, 459 (5th Cir. 2012) (quoting
Curtis v. M & S Petroleum, Inc., 174 F.3d 661,
668 (5th Cir. 1999)). “The reliability prong [of
Daubert] mandates that expert opinion ‘be
grounded in the methods and procedures of science and . . .
be more than unsupported speculation or subjective
belief.'” Johnson, 685 F.3d at 459
(quoting Curtis, 174 F.3d at 668).
assessing the “reliability” of an expert's
opinion, the trial court may consider a list of factors
including: “whether a theory or technique . . . can be
(and has been) tested, ” “whether the theory or
technique has been subjected to peer review and publication,
” “the known or potential rate of error, ”
“the existence and maintenance of standards, ”
and “general acceptance” of a theory in the
“relevant scientific community.”
Daubert, 509 U.S. at 593-94; see also Kumho Tire
Co., Ltd. v. Carmichael, 526 U.S. 137, 150 (1999)
(“Daubert makes clear that the factors it
mentions do not constitute a ‘definitive
checklist or test.'”); U.S. v. Valencia,
600 F.3d 389, 424 (5th Cir. 2010). “The proponent need
not prove to the judge that the expert's testimony is
correct, but she must prove by a preponderance of the
evidence that the testimony is reliable.”
Johnson, 685 F.3d at 459 (quoting Moore v.
Ashland Chem., Inc., 151 F.3d 269, 276 (5th Cir. 1998)
(en banc)). At base, "the question of whether the expert
is credible or the opinion is correct is generally a question
for the fact finder, not the court." Summit 6, LLC
v. Samsung Elecs. Co., Ltd., 802 F.3d 1283, 1296 (Fed.
seek to exclude Dr. Ratliff s opinions regarding Zuru
Ltd.'s profit margin as unreliable because they contend
it is an improper attempt to seek damages for all Zuru
entities and is not based on a true analysis of Zuru Ltd.
(Doc. No. 419, at 9.) Specifically, Defendants contend that
Mr. Ratliff did not identify costs for Zuru Ltd. and assumed
they would be the same as Zuru Inc. which is a fiction
because Zuru Inc. manufactured the product, incurred the
costs of goods sold, and handled shipping and other costs to
fulfill orders. Id. at 9-10. Defendants next
challenge Mr. Ratliff s upper boundary of a royalty rate of $
per unit derived from testimony of Plaintiffs' corporate
witness, Anna Mowbray. Id. at 11. Defendants argue
that "an expert opinion cannot be based on the say so of
his client." Id. at 12. Lastly, Defendants
argue that Mr. Ratliff cannot present new opinions not in his
report. Id. at 13-14.
contend that Defendants' arguments go to the weight of
Mr. Ratliff s opinions, not then admissibility. (Doc. No.
434, at 7.) Specifically, Plaintiffs contend that
assumptions, like the one Mr. Ratliff made with respect to
costs, go to the expert's credibility. Id. at 8.
Plaintiffs further contend that Mr. Ratliff explained that
the Zuru Ltd.'s costs were not independent of Zuru
Inc.'s costs because Zuru Inc. was the manufacturing and
marketing entity. Id. at 9. Plaintiffs also contend
that Defendants misconstrue Mr. Ratliff s royalty opinions as
he clearly explained the $∟ royalty discussed at the
Tinnus II trial was only an additional basis for his
opinion of a ∟% royalty. Id. at 13. Lastly,
Plaintiffs contend that Defendants went beyond the scope of
Mr. Ratliff's report in questioning him during his
deposition and suggest that such cross-examination by
Defendants at trial would open the door to Mr. Ratliff's
answers. Id. at 15.
Zuru Ltd.'s Costs
contend that Mr. Ratliff's opinions are a proxy to
recover Zuru Inc.'s profits because his costs for the
profit margin are Zuru Inc.'s costs. (Doc. No. 419, at
9.) Defendants contend this proxy is so because Mr.
Ratliff's Ltd.-specific incremental profit margin assumes
that Zuru Ltd. would have the same costs as Zuru Inc.
Id. at 10. Defendants contend that this assumption
is an unreliable fiction because there is “no dispute
that INC manufactured the product, incurred the costs of
goods sold, and handled shipping and other costs to fulfill
orders.” Id. Plaintiffs contend that an attack
on an expert's assumptions, like Mr. Ratliff's cost
assumptions, go to the credibility of the expert's
testimony, not the admissibility. (Doc. No. 434, at 8.)
Further, Plaintiffs contend that Mr. Ratliff properly
calculated the profit margin for Zuru Ltd. by starting with
sales to Wal-Mart and subtracting the costs of goods sold.