United States District Court, E.D. Texas, Marshall Division
PAYNE, UNITED STATES MAGISTRATE JUDGE
United Services Automobile Association filed a
Daubert Motion to Strike Portions of the Expert
Report of Christopher Gerardi, which is now before the Court.
(Dkt. No. 79). USAA seeks to strike portions of the
expert report of Defendant Wells Fargo Bank, N.A.'s
damages expert, Christopher Gerardi, regarding a several
USAA's efforts to license the asserted patents
first asks the Court to strike Mr. Gerardi's discussions
of USAA's efforts to license the asserted patents since
the discussion is “irrelevant and will only serve to
confuse and mislead the jury.” (Dkt. No. 79 at 1.)
Specifically, USAA asks the Court to strike the discussion
found in Paragraphs 22, 68-69, 118-123, 148, and 177 of Mr.
Gerardi's Report. (See Dkt. No. 79-3.)
argues that Mr. Gerardi's discussion of USAA's
outreach “to over 1, 000 financial institutions with
less than $10 billion in assets” in order to license
its remote deposit capture portfolio of over fifty patents,
including three of the five asserted patents, was improper.
(Id. at 21) Most importantly, USAA argues that Mr.
Gerardi did not lay a proper foundation that the third-party
financial institutions USAA contacted were in comparable
situations to Wells Fargo in a hypothetical negotiation.
expert to introduce other licenses, agreements, negotiations,
or the like to support the expert's theory surrounding
the hypothetical negotiation, the Federal Circuit requires a
showing of comparability. A showing of comparability requires
showing that the other data point is comparable, both
technologically and economically, to the hypothetical
negotiation between the parties. See Virnetx, Inc. v.
Cisco Sys., Inc., 767 F.3d 1308, 1330 (Fed. Cir. 2014)
(“Thus, we have cautioned that ‘district courts
performing reasonable royalty calculations [must] exercise
vigilance when considering past licenses to technologies
other than the patent in suit,' ResQNet.com,
Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010),
and ‘must account for differences in the technologies
and economic circumstances of the contracting parties,'
Finjan, Inc. v. Secure Computing Corp., 626 F.3d
1197, 1211 (Fed. Cir. 2010).”).
also argues that the purported statements and views of
unnamed bank managers in response to USAA's outreach are
hearsay and it is improper for Mr. Gerardi to recite them in
his report or channel them to the jury. Further, USAA argues
that injecting these third-party quotes into the trial would
be confusing, prejudicial, and require a complicated
backstory and sideshow about various third parties, including
opening the door to discussion of the Patent Trial and Appeal
Board's denials of Wells Fargo's petitions for
Covered Business Method review.
Court excluded the same testimony, offered by Mr. Gerardi in
his expert report, in the previous case by the parties, No.
2:18-CV-245-JRG (“Case 1”). In Case 1, Chief
Judge Gilstrap granted USAA's motion to strike the same
material. He described his reasoning as such:
Well, I'm going to grant the motion in this regard. Mr.
Gerardi concedes, and counsel agrees, that these offers
weren't comparable, and there's nothing to support
comparability here. I'm very concerned about the
likelihood of jury confusion. If we start down this path,
this seems to me to be fraught with dangers of becoming a
distraction and side show. If Mr. Gerardi is going to talk
about these thousand banking institutions who declined, if
the Plaintiff has got evidence that they declined because
Wells Fargo leaned on Fiserv and Fiserv told them not to take
a license, we're going to -- we're going to end up in
a quagmire that is going to result in confusion and
distraction, that probative value is going to quickly get
swallowed up by the prejudice and the confusion. And I'm
not at all excited about opening the possible -- possibly
opening the door to talking about review at the PTAB or the
PTO under CBM or IPR. We went through all of that yesterday.
On balance, I think the probative value is exceeded by the
risk of prejudice and confusion. And on that basis alone,
especially considering the lack of comparability, I'm
going to grant Plaintiff's motion in regard to these
(Dkt. No. 79-8 at 16.)
Mr. Gerardi does not explicitly concede that USAA's
efforts to license the asserted patents are not comparable
here, neither does he lay a foundation in his report that the
efforts are comparable to a hypothetical negotiation.
Instead, Wells Fargo argues that it does not have a duty to
establish a comparability foundation between the terms of the
licensing contacts and the terms of the hypothetical license
at issue in this case. The Court disagrees.
Mr. Gerardi did not establish the comparability of the
hypothetical negotiation between USAA and Wells Fargo with
USAA's efforts to license its patents to smaller banks,
its relevance is quite unclear. See Fed. R. Evid.
401 (defining “relevant evidence”). Irrelevant
evidence is not admissible. Fed.R.Evid. 402. Further, even
relevant evidence may be excluded if there is a high risk of
confusing or misleading the jury. Fed.R.Evid. 403. As Chief
Judge Gilstrap discussed in Case 1, the probative value of
discussing the licensing campaign could easily be exceeded by
the risk of prejudice and confusion. Therefore, the Court
finds that Mr. Gerardi needed to establish comparability in
his report for it to be admitted.
Wells Fargo argues that the two are comparable, although a
similar argument cannot be found in Mr. Gerardi's report.
The Court will not find comparability based solely on Wells
Fargo's argument in its Response. (Dkt. No. 91 at 3-5.)
Thus, the Court grants the motion to strike the references to
USAA's licensing campaign in Paragraphs 22, 68-69,
118-23, 148, and 177 of Mr. Gerardi's Report since Mr.
Gerardi did not establish comparability and the probative
value is exceeded by the risk of prejudice and confusion.
USAA's prior litigation with Mitek
next asks the Court to strike Paragraphs 65, 66, and 67 of
Mr. Gerardi's report as they refer to unrelated prior
litigation between USAA and Mitek and will only serve to
confuse and mislead the jury. USAA argues that the
interactions, which led to litigation and settled in 2014,
did not involve the asserted patents or Wells Fargo. Wells
Fargo responds that it “does not intend to reference
USAA's litigation with Mitek at trial. Indeed, it filed a
motion in limine seeking to preclude such references
in [Case 1], which the Court granted as modified by
agreement. Dkt. No. 294 at 9-10 (‘USAA shall not
reference the Mitek litigation.')” (Dkt. No. 91 at
7.) The ...