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NetAirus v. Apple: District Court Strikes Survey Expert Where Survey Expert’s Methodology Made No Effort to Shield Respondents from Study Goals and Included Both Owners and Prospective Purchasers as Respondents

In this patent infringement action, Plaintiff NetAirus Technologies, LLC (“NetAirus”) asserted that Apple infringes U.S. Patent No. 7,103,380 (the “‘380 Patent”). The ‘380 Patent claims methods in which a “handset unit [ ] configured to a personal digital assistant (PDA)” wirelessly communicates over both a local area network (“LAN”) and a wide area network (“WAN”). Apple filed a Daubert Motion to exclude the expert reports and opinions of NetAirus’ survey experts and any references to those opinions in the opinion of NetAirus’ damage expert.

After reciting the standards for a Daubert challenge, the district court addressed the specific survey opinions at issue. “No portion of the Marylander and Berger surveys directly accounted for all of limitations of the asserted claims; specifically, the surveys did not ask consumers about the limitations concerning transmission power. Mot., Dkt. 424 at 3-4, 9-12. Apple argues that the failure to align the scope of the claimed invention with the scope of the features explored in the survey means that this case is on all fours with Fractus, S.A. v. Samsung, No. 6:09-cv-203-LED-JDL, 2011 WL 7563820 (E.D. Tex. Apr. 29, 2011). In Fractus, the plaintiff commissioned two surveys to value “incorporating internal antennas in cell phones in place of external antennas” and “the relative importance of internal antennas in cell phones to consumers.” 2011 WL 7563820 at *1. The court excluded the surveys because they measured the value of something -¬internal vs. external antennas – that was more broad than what was covered by the patents — specific improvements to internal antennas. Id.”

The district court further noted that “[i]f considered in isolation, the Marylander and Berger surveys have the same defect as those that were excluded in Fractus. Neither Marylander nor Berger attempted to determine if consumers cared whether data formatted for computer email was sent to and from a local area network at a lower transmit power level than other data sent to a wide area network, as required by the asserted claims. However, NetAirus contends that the transmission power limitations are always met by iPhone 4 users. The Court has held that the nature of the transmission levels is a factual issue for the jury to determine.”

Nonetheless, the district court found that NetAirus could rely on its version of the facts at this stage but cautioned that would have consequences if the jury determined the factual issue against NetAirus. “Here, NetAirus has chosen not to attempt to value the transmit power limitation, and instead relies on the opinion of its technical expert that the limitation is always necessarily met. Should the jury reject that factual assertion in considering the damages evidence presented by NetAirus, then the surveys will be deemed flawed. But if the jury accepts NetAirus’s technical evidence on transmit power levels, then the assumption in the Marylander, Berger, and Gemini reports that the transmit power requirements are met will be validated.”

Apple also asserted that only three of the questions in the Marylander survey have “even a vague relationship” to the claimed method, and that the others are general or background questions. The district court disagreed with the majority of Apple’s criticisms on this point because the survey was well crafted and the questions were not designed to lead to a particular answer, with one exception. “In contrast to the questions designed to avoid suggesting an answer, the Marylander survey then asked a question “designed to assign some value to the Wi-Fi accessibility feature on the iPhone.” Id. at ¶ 25. Thus, respondents were asked whether they would have preferred to pay $20 less for an iPhone without Wi-Fi capability or would have purchased their current phone at the price they paid.” Id. This figure appears to have been selected without a sufficient factual basis: it was not in the first draft of Marylander’s survey, and was suggested by NetAirus’s counsel. Aug. 16, 2011 Deposition of Howard Marylander, Cannom Decl., Dkt. 403 at ¶ 4, Ex. C. at 88:15-89:4. After having focused on email use while connected to Wi-Fi, this $20 question broadened the focus to valuing all Wi-Fi use on the iPhone. Doing so seeks to value something that is significantly broader than the claimed invention without adequate justification. See Cornell University v. Hewlett-Packard Co., 609 F.Supp.2d 279 (N.D.N.Y 2009) (Rader, J.) (holding that a larger unit could not be used as measure of value of the invention, even though using smaller unit required estimations and hypothetical calculations because it had no listed price.).

Accordingly, the district court excluded this part of the survey “[b]ecause the $20 figure has no reliable basis and was tied in the survey to functionality far beyond the asserted claims.”

With respect to the Berger survey, the district court found that it was not based on sound methodology and excluded it in its entirety. “There was no effort made in connection with the Berger survey to shield participants from study goals. See Berger Rep., Dkt. 403-5 at NET8797-8800. The survey did not take measures to adjust for response rates to balance the gender of respondents. Berger Rep., Dkt. 403-5 at NET8774 (Berger survey population was 27% male and 73% female). “It is incumbent on the expert presenting the survey results to analyze the level and sources of nonresponse, and to assess how that nonresponse is likely to have affected the results.” Reference Manual on Scientific Evidence 383 (3d ed. 2011). There is no showing that the Berger survey did so. As noted above, the Marylander survey did so effectively.”

Further, the Berger survey made no effort to different between owners and prospective purchasers. “‘In a carefully executed survey, each potential respondent is questioned or measured on the attributes that determine his or her eligibility to participate in the survey.’ Reference Manual on Scientific Evidence 386 (3d ed. 2011). Here, Berger included both iPhone 4 owners and prospective purchasers of the iPhone 4. Berger Rep., Dkt. 403-5 at NET8774. It is fundamentally flawed methodology to have asked prospective purchasers many of the questions posed that required present use of the iPhone 4.”

Accordingly, this expert testimony was excluded in its entirety.

NetAirus Technologies, LLC v. Apple, Inc., Case No. CV10-03257 JAK (Ex) (C.D. Cal. Oct. 23, 2013)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or