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Prism Technologies LLC v. Sprint Spectrum L.P.

United States District Court, District of Nebraska

January 23, 2015

PRISM TECHNOLOGIES LLC, Plaintiff,
v.
SPRINT SPECTRUM L.P., d/b/a SPRINT PCS, Defendant. PRISM TECHNOLOGIES LLC, Plaintiff,
v.
T-MOBILE USA, INC., Defendant. PRISM TECHNOLOGIES LLC, Plaintiff,
v.
UNITED STATES CELLULAR CORPORATION, d/b/a U.S. CELLULAR, Defendant. PRISM TECHNOLOGIES LLC, Plaintiff,
v.
CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS, Defendant.

ORDER

LYLE E. STROM, Senior Judge United States District Court

This matter is before the Court on two sets of motions filed by plaintiff Prism Technologies (“Prism”) against Sprint Spectrum (“Sprint”), T-Mobile U.S.A. (“T-Mobile”), United States Cellular Corp. (“U.S. Cellular”), and Cellco Partnership (“Cellco”) (collectively, the “Carrier Defendants”) in four related, though separate, cases. In Prism’s first set of motions (Filing No. 252 in 8:12CV123; Filing No. 263 in 8:12CV124; Filing No. 253 in 8:12CV125; and Filing No. 235 in 8:12CV126), Prism seeks to supplement its expert reports.

In its second set of motions (Filing No. 261 in 8:12CV123; Filing No. 274 in 8:12CV124; Filing No. 260 in 8:12CV125; and Filing No. 244 in 8:12CV126), [1] Prism requests oral argument regarding its request to supplement its reports. The Court finds as follows.

I. BACKGROUND

Prism accuses the Carrier Defendants of infringing upon its patents, 8, 127, 345 (“the ‘345 Patent”) and 8, 287, 155 (“the ‘155 Patent”). Though Prism filed different actions against each Carrier Defendant, the parties agreed to common resolution of certain issues which traversed the cases. For example, Prism, AT&T Mobility, and the remaining Carrier Defendants agreed to resolve “common” issues in summary judgment and Daubert motions in addition to case specific issues (Filing No. 214). The Court adopted this policy and resolved the common issues pertaining to Prism’s expert witnesses and various legal issues. The Court made two determinations which play into Prism’s current motions. First, the Court granted the Carrier Defendants’ motions to exclude the expert report and opinions of Mr. Malackowski, Prism’s damages expert, due to the method of his damages calculations (Filing No. 246). Second, the Court did not grant Prism’s motion to exclude AT&T’s damages expert on the basis that he relied upon settlements, instead of licenses, in computing damages. Case 8:12CV122, Filing No. 410, at 10-14.

Now, Prism seeks leave to amend the expert reports of its damages and validity experts based on new agreements executed by Prism and AT&T Mobility, LLC (“AT&T”) that resolved the matter of Prism Technologies LLC v. AT&T Mobility, LLC (Docket No. 8:12CV122) (the “AT&T Matter”). More specifically, the parties in the AT&T Matter executed a Memorandum of Agreement on October 23, 2014 (the “AT&T MOA”), and a Settlement and License Agreement (the “AT&T Settlement License”) (collectively the “AT&T Documents”), executed on November 13, 2014, both of which reflect a confidential settlement agreement between the parties that resolved the AT&T Matter. Prism wishes to use this new evidence to extrapolate cost-savings of each of the Carrier Defendants and to amend its validity contentions.

II. LEGAL STANDARDS

Federal Rule of Civil Procedure 26(e) provides that a party has a duty to supplement its expert report in a timely manner when the party obtains additional information or learns that in some material respect the disclosure or response is “incomplete or incorrect.” Fed.R.Civ.P. 26(e)(1)(A); (2). Courts may permit amended expert reports past the Rule 26(e) deadline pursuant to Fed. R. of Civ. P. 37©, if the failure to timely disclose the amendment was substantially justified or harmless. While the Court “need not make explicit findings concerning the existence of a substantial justification or the harmlessness of a failure to disclose, ” the Court should be guided by the following factors: (1) the prejudice or surprise to the party against whom the testimony is offered; (2) the ability to cure any prejudice; (3) the potential for trial disruption if the testimony is allowed; and (4) the erring party’s bad faith or willfulness. Sibley v. Sprint Nextel Corp., No. 08-2063-KHV, 2013 WL 1819773, at *7 (D. Kan. April 30, 2013).

III. DISCUSSION

The Carrier Defendants object to the admission of the new reports on various grounds. First, the Carrier Defendants argue that the evidence upon which the experts rely in their new reports was available at the time of the original submissions. The Court finds that the AT&T Documents constitute new evidence. This evidence was unavailable prior to the experts’ original reports and prior to the Court’s “common” Daubert motion excluding Mr. Malackowski. The new evidence is relevant to the remaining cases. See Case 12CV122, Filing No. 410, at 10-14. The prejudice to the Carrier Defendants, if any exists, is negligible. The Court, with the support of Prism and the Carrier Defendants, has attempted to balance the interests of Prism to file five separate, closely related, law suits and the interests of the Court and the Carrier Defendants to dispose of as many common issues as possible. Though the amendment comes after the deadlines which spanned all cases, the Carrier Defendant has time before its trial with Prism which the Court deems sufficient not to prejudice them or the remaining Carrier Defendants. If prejudice exists, sufficient time exists to cure it. The Court finds that the inclusion of some damages model is certainly preferable to the absence of one and, therefore, there would be a benefit, and no disruption, at trial. Finally, the Court finds no evidence of bad faith on behalf of any party.

Second, the Carrier Defendants object because the methodology Mr. Malackowski wishes to use is drastically different than what he original submitted. The Court finds no reason to exclude an amended report because of its dissimilarity to the original report.

Third, the Carrier Defendants make arguments as to the admissibility of the report. The Court finds that such arguments are more appropriate in a case-specific Daubert motion following submission of these amended reports.

Fourth, the Carrier Defendants argue that Mr. Duman’s reasonable royalty rate of 5% is not admissible because he asserted privilege until the time of the AT&T Matter. The Court also finds such argument more appropriate in a case-specific Daubert motion following submission of this amended report.

Fifth, the Carrier Defendants object to the new damages calculations because the figures are larger. The Court did not strike Mr. Malackowski’s report because the numbers were large or small; the Court ...


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