While “reliability” of a methodology is the ultimate concern when a trial court applies the Daubert factors, the analysis of admissibility of expert testimony does not end. Rule 702 requires that expert testimony should be based on “sufficient data or facts.” Some recent Federal Circuit cases have addressed this issue.
In 2008, the Federal Circuit in Monsanto Co. v. David121 ruled that Rule 702 does not require that the facts or data which expert testimony relies on must be prepared by such expert.122 In Monsanto Co., the patent infringement dispute dealt with the issue that whether the defendant’s soybeans contained a gene that is claimed by the plaintiff’s patent.123 To prove infringement, the plaintiff prepared scientific field tests showing the defendant’s exclusive planting of the soybeans containing the patented gene.124 The plaintiff further presented expert testimony based on the scientific field tests.125 The defendant challenged the admission of the plaintiff’s expert testimony by stating that the tests the expert relied on were prepared by the plaintiff’s scientific team, but not by the expert.126
The Federal Circuit did not accept the defendant’s argument for two
119 Id.
120 Id.
121 Monsanto Co. v. David, 516 F.3d 1009 (Fed. Cir. 2008).
122 See id. at 1015-16.
123 See id. at 1012-13.
124 See id. at 1015.
125 See id.
126 See id.
sons.127 First, “Federal Rules of Evidence establish that an expert need not have obtained the basis for his opinion from personal perception.”128 By citing a state-ment in Daubert, the Federal Circuit recognized that an expert need not rely on first-hand knowledge.129 Second, Rule 703 supports that an expert herself need not prepare “facts or data” for her evidentiary analysis.130 The Federal Circuit in-terpreted Rule 703 as a provision that “expressly authorizes the admission of expert opinion that is based on ‘facts or data’ that themselves are inadmissible, as long as the evidence relied upon is ‘of a type reasonably relied upon by experts in the par-ticular field in forming opinions.’”131 Therefore, the admissibility of expert testi-mony does not depend on the admissibility for the “facts or date” prepared by oth-ers.132
In 2010, the Federal Circuit in i4i Ltd. P’ship v. Microsoft Corp.133 resolved whether a challenge to expert testimony is a question of weight or a question of admissibility. While recognizing that “Daubert requires the district court ensure that any scientific testimony ‘is not only relevant, but reliable,’”134 the Federal Circuit separated the issue of “relevance or reliability” and the issue of “the degree of relevance or reliability.”135 As the Federal Circuit held, “[w]hen the methodol-ogy is sound, and the evidence relied upon sufficiently related to the case at hand, disputes about the degree of relevance or accuracy (above this minimum threshold)
127 See id. at 1015-16.
128 Id. at 1015.
129 See id.
130 See id. at 1015-16.
131 Id. at 1016.
132 See id.
133 i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831 (Fed. Cir. 2010).
134 Id. at 852.
135 Id.
may go to the testimony’s weight, but not its admissibility.”136 Therefore, the re-view of an evidentiary ruling on admission or exclusion of expert testimony should not focus on arguments about “the degree of relevance or accuracy” of the method-ology or evidence the expert relies on.
On appeal, the defendant in i4i Ltd. P’ship challenged the district court’s evi-dentiary ruling on admission of expert testimony of the plaintiff’s damages ex-pert.137 The defendant’s main argument rested on the relevant facts the plaintiff’s expert used to evaluate a reasonable royalty rate.138 While agreeing with the de-fendant that “[the plaintiff’s] expert could have used other data in his calcula-tions,”139 the Federal Circuit held no abuse of discretion.140
The holding was based on a notion that “[t]he existence of other facts ... does not mean that the facts used failed to meet the minimum standards of relevance or reliability.”141 What Rule 702 requires, as the Federal Circuit held, is to ask
“whether the expert relied on facts sufficiently related to the disputed issue.”142 Therefore, although “the data were certainly imperfect, and more (or different) data might have resulted in a ‘better’ or more ‘accurate’ estimate in the absolute sense,”143 the Federal Circuit held that Daubert does not require a trial judge “to evaluate the correctness of facts underlying an expert’s testimony.”144 Instead, the Federal Circuit stated that it is the jury’s role to determine “what facts are most
136 Id. at 853.
137 See id. at 852.
138 See id. at 854.
139 Id. at 855.
140 See id. at 856.
141 Id. at 855-56.
142 Id. at 856.
143 Id.
144 Id.
relevant or reliable.”145 That is, when a case is subject to a jury trial, “[t]he jury [is]
entitled to hear the expert testimony and decide for itself what to accept or re-ject.”146
In 2011, the Federal Circuit in Uniloc USA, Inc. v. Microsoft Corp.147 clari-fied that the facts an expert relied on under Rule 702 must be tied to the facts of the case. In Uniloc USA, Inc., the Federal Circuit abrogated the 25% Rule as a reliable method for estimating a reasonable royalty as damages for patent infringement.
The holding was based primarily on a notion that “[e]xpert testimony which does not relate to any issue in the case is not relevant and, ergo, non-helpful,”148 and the notion was taken from Daubert.149 With that notion, the Federal Circuit further held, “If the patentee fails to tie the theory to the facts of the case, the testimony must be excluded.”150
To support its holding, the Federal Circuit further analyzed General Elec. Co.
and Kumho to highlight why the Supreme Court affirmed the exclusion of expert testimony in both cases.151 Regarding General Elec. Co., the Federal Circuit pointed out the Supreme Court’s critique that “[t]he studies [done by the expert]
were so dissimilar to the facts presented in this litigation.”152 This critique indi-cates the relevancy requirement of expert testimony. Regarding Kumho, the Federal Circuit characterized the issue there as “whether ‘it was [reasonable to] us[e] such an approach ... to draw a conclusion regarding the particular matter to which the
145 Id.
146 Id.
147 Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011).
148 Id. at 1315.
149 See id.
150 Id.
151 See id. at 1315-16.
152 Id. at 1315 (quoting General Elec. Co. v. Joiner, 522 U.S. 136, 144-45 (1997)).
expert testimony was directly relevant.’”153 Particularly, the Federal Circuit stated that Kumho required the district court to “decide whether this particular expert had sufficient specialized knowledge to assist the jurors ‘in deciding the particular is-sues in the case.’”154 This requirement indicates that the methodology the expert relies on has to relate to the particular issues.
The discussions on those two cases reflect the third requirement of expert tes-timony under Rule 702, that is, “the witness has applied the principles and methods reliably to the facts of the case.” Drawing from those two cases, the Federal Circuit concluded that “[t]he bottom line of [Kumho and General Elec. Co.] is that one major determinant of whether an expert should be excluded under Daubert is whether he has justified the application of a general theory to the facts of the case.”155
In 2013, the Federal Circuit in Power Integrations, Inc. v. Fairchild Semicon-ductor Int’l, Inc.156 held that “data” must come from a reliable source. 157 In Power Integrations, Inc., the expert testimony of the plaintiff was used for dam-ages calculation.158 When preparing the damages testimony, the expert relied on some documents to estimate the shipments of infringing products.159 On appeal, the defendant challenged the admissibility of the expert testimony because the ex-pert used the data that “was an unauthenticated hearsay ‘press release’ retrieved
153 Id. at 1315-16 (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 153-54 (1999))
(em-phasis original).
154 Id. at 1316 (quoting Kumho Tire Co., 526 U.S. at 156).
155 Id. at 1315-16 (quoting Kumho Tire Co., 526 U.S. 137, 153-54 (1999)) (emphasis original).
156 Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348 (Fed. Cir.
2013).
157 Id. at 1373.
158 See id. at 1370.
159 See id. at 1372.
from the Internet.”160 The plaintiff responded that the “data source” was reliable because the same data “would be reasonably relied upon by experts in [the expert’s]
field.161 However, the Federal Circuit disagreed with the plaintiff.162
The Federal Circuit questioned the source of those documents the plaintiff’s damages expert relied on.163 First, when the expert was asked of “whether the pro-vider of the documents ‘found [them] off the internet,’” the answer was “I can only assume so.”164 Second, the plaintiff unpersuasively responded that the expert “was a qualified expert, and he found the [documents] and other materials he considered, while researching the case.”165
This questioning reflects the Federal Circuit’s rephrasing of Rule 702(b) & (c) as amended in 2011. That is, expert testimony should be “‘the product of reliable principles and method’ applied to ‘sufficient facts or data.’”166 However, this view may cause a conflict with the Federal Circuit’s past view regarding “facts or data.”
The traditional view (e.g., i4i Ltd. P’ship) does not require “facts or data” be reli-able. Instead, the Federal Circuit has held that the reliability of “facts or data” is subject to cross-examination and is a question of credibility to be decided by the jury. Now, under Power Integrations, Inc., both “reliable principles and methods”
and “sufficient facts or data” are considered as a whole.167 As Federal Circuit held,
“while an expert’s data need not be admissible, the data cannot be derived from a
160 Id.
161 Id. at 1373.
162 See id.
163 See id.
164 Id. (quoting the expert’s answer).
165 Id. (quoting the plaintiff’s response).
166 Id. (quoting Rule 702(b), (c)).
167 See id.
manifestly reliable source.”168
Maybe in the context of damages calculation, any method for calculation is drawn from data or facts in the market. So, “facts or data” that form the basis of expert testimony have to be reliable to some extent that the expert acquires the facts or data from a reliable source.