After the court struck plaintiff's damage expert's report for failing to tie damages to the limited feature of the patented invention, the court permitted the plaintiff to submit a supplemental expert report. Once the supplemental expert report was served, AT&T again moved to exclude the plaintiff's damage expert from the upcoming trial.
AT&T contended that the opinions in the Supplemental Report, organized around four alternative damages calculations presented in two sets of two, did not correct the defects in the original report because plaintiff's expert (Parr) did not tie "his damages calculations to the value of the patented invention." AT&T further argued that the calculations simply attempt to exclude certain non-infringing revenue from the royalty base and do not attempt to address apportionment at all, which runs afoul of the entire market value rule.
In response, Enovsys maintained that Parr's Supplemental Report "does not in fact use the entire market value" but instead appropriately apportions revenue to include "only that which is associated with sales that AT&T would have lost without the inclusion of the patented invention."
The court concluded that the revenue bases in the supplemental report fail to even attempt apportionment and improperly "skew the damages horizon." The calculations still attributed to Enovsys the entirety of "revenue without showing that the patented feature, selective location disclosure, creates the basis for customer demand or substantially creates the value of the component parts."
The court further explained that "Parr has failed to show in any reliable way that Enovsys' selective location disclosure invention is what motivates consumers to subscribe to AT&T's network. Without such proof, the royalty bases established by Calculation 1 and Calculation 2 are impermissibly broad and unreliable. Even to the extent that Calculation 1 and Calculation 2 could be construed as arguably relevant under the Federal Rules' generous relevancy standards, any probative value they may have is outweighed by the dangers of prejudice, confusion of the issues, and the risk of misleading the jury."
Due to the close proximity of the trial date, the court then ordered that the trial would be bifurcated into liability and damage phases to be tried to different juries. "Because the Parties and the Court have already devoted extensive resources to prepare for trial, which is scheduled to start on August 18, 2015, and because further delay in this case, which was filed more than four years ago, would be prejudicial to the Parties, the Court concludes that the interests of justice will be served by bifurcating the trial of this matter into a liability phase and, if necessary, a damages phase, to be tried before different juries. . . . In the event that a damages trial is necessary, the Court will allow Enovsys to submit a Second Revised Damages Report and will reopen discovery for the limited purpose of permitting AT&T to conduct discovery on the opinions in the Second Supplemental Damages Report."
Enovsys LLC v. AT&T Mobility LLC, Case No. CV 11-5210 SS (C.D. Cal. Aug. 10, 2015)