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Golden Bridge v. Apple: No Third Bite at the Apple as Damage Expert Excluded After Two Failed Reports and Where Trial Was Already Underway

Two weeks earlier, the court excluded the expert opinion and testimony of Plaintiff Golden Bridge Technology’s (“GBT”) damages expert. Nonetheless, the court gave GBT one week to submit a new report based on a new theory. After GBT met its deadline, Apple moved to exclude the second report as well.

As explained by the court, “Apple’s motion points out several of the significant flaws in Schulze’s current report: (1) Schulze improperly and sub silencio allocated the entire value of Apple’s portfolio licenses with Ericsson and Nokia to a tiny subset of a subset of a subset of a subset of the patents and standards in those portfolios; (2) Schulze improperly tripled the per-unit rate that Apple would have paid to GBT based on purely academic articles; (3) Schulze improperly failed to compare the patent-in-suit’s technical merits to those of other standards essential patents and (4) Schulze improperly failed to allocate any value to the non-license terms of the Ericsson and Nokia agreements.”

The court then focused on the first of the these arguments and found that the error in analyzing the licenses was failed to the expert report. “The portfolio license agreements that undergird Schulze’s calculations covered “all standards essential patents” owned by those companies. These patents cover a wide array of technologies beyond the WCDMA standard, including but not limited to Wi-Fi, GSM, and LTE. Yet in calculating a reasonable royalty, Schulze begins with the premise that the under both agreements, “Apple was granted a license to all Nokia[/Ericsson] patents that are essential to the WCDMA standards.” This statement, while true, does not account in any way at all for the many other SEPs to which Apple was also granted a license. When pressed in deposition, Schulze admitted that he focused on the ‘793 patent and attributed no value whatsoever to patents essential to other standards because in his estimation, their value would be “marginal,” though his report does not acknowledge this omission, let alone attempt to explain it. At the hearing on this motion, counsel for GBT attempted to explain this omission by explaining that, at the time of the agreements “the [W]CDMA standard is what was being used in connection with the iPhone and iPad units accused here.” This explanation might have been sufficient if Schulze had cited any evidence supporting it in his report, but he did not.”

The court went on to explain that “[u]nder established Federal Circuit law, an expert may not rely on broad licenses that cover technologies far beyond the patents-in-suit without accounting for the differences in his calculations.7 That is precisely what Schulze did not do here, resulting in a fundamentally unsound calculation. That the entire dollar value of the Apple-Ericsson and Apple-Nokia agreements stemmed entirely from the actually-essential (not just declared essential) WCMDA patents (not those related to other active standards) relating to terminal devices is an implausible assumption to begin with, and Schulze does not even attempt to justify this assumption. Each of the other errors identified by Apple then compounded this basic error, with the end result that ‘there is simply too great an analytical gap between the data and the opinion proffered’ to allow its admission.”

The court then ordered that GBT’s damage expert would not be permitted to testify at the upcoming trial. “Schulze will not be permitted to testify in the upcoming trial. With the jury already picked and trial underway, Apple would suffer undue prejudice if GBT were to offer a new damages expert with yet a third theory, to which it would have had no meaningful time to respond. However, GBT is free to offer evidence of its damages from other, fact witnesses.”

Golden Bridge Technology v. Apple Inc., Case No. 5:12-cv-04882-PSG (N.D. Cal. June 1, 2014)

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