Under Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,393 ex-pert testimony on damages must be based on sales data representing infringing products. In Power Integrations, Inc., the patented technology was an electric cir-cuit used in a power supplier for a mobile phone.394 The plaintiff’s damages ex-pert used the sales data of some company’s mobile phones to estimate damages, but did not clarify whether all mobile phones sold were embedded with a power sup-plier that uses the patented electric circuit.395 The expert only made an assumption that all sold mobile phones used a power supplier with the patented circuit.396 The district court admitted the plaintiff’s expert testimony as evidence.397
On appeal, the Federal Circuit found two flaws in the plaintiff’s expert report.
First, while the expert testified that the infringing circuit was found in a mobile phone charger, not in a mobile phone, the sales data did not reflect any sales of chargers or refer to chargers.398 Instead, the expert relied on the sales data of mo-bile phones.399 The expert’s analysis indicated that the sold mobile phones were assumed to include a charger with the infringing circuit.400 However, the Federal Circuit pointed out that “the document relied upon by [the expert] does not specify the nature of the shipments, nor does it provide any reliable link which might
393 Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348 (Fed. Cir.
2013).
394 See id. at 1357.
395 See id. at 1372.
396 See id. at 1373-74.
397 See id. at 1374.
398 See id. at 1373.
399 See id.
400 See id.
cate that the shipped phones included chargers.”401 That is, the documents show nothing about whether the shipped mobile phones used any charger. Thus, the ex-pert’s assumption was groundless.402
Second, the plaintiff’s expert speculatively assumed that all chargers include an infringing circuit.403 The Federal Circuit criticized that the expert’s data has
“no model numbers or other indicia from which he could reasonably infer that chargers assumed to be included incorporated [the infringing circuit].”404 That is, without product model information, there is no possible way to infer whether a mobile phone does have a charger and whether that charger incorporates an infring-ing circuit. Further more, the plaintiff’s vice president of worldwide sales testified that the plaintiff and other companies also sold competing chargers to the same mobile phone company.405 That is, the sales data covered mobile phones of both infringing chargers and non-infringing chargers. Because the expert did not distin-guish the sales of infringing products from those of non-infringing products, the Federal Circuit held the expert’s assumption was only speculation.406
Because the plaintiff’s “expert opinion derived from unreliable data and built on speculation,”407 the Federal Circuit concluded that “[w]ithout more, [the ex-pert’s] testimony and data regarding worldwide shipments of [those] mobile phones are too far removed from the facts of this case, which involves [the] infringing power circuits.”408 This holding reflects the Federal Circuit’s attitude that “facts or
401 Id.
402 See id. at 1373-74.
403
See id. at 1374.
404 Id.
405 See id.
406 See id.
407 Id.
408 Id.
data” must be tied to the facts of the dispute. The basis of damages calculation must be tied to the sales of infringing products.
Finally, the Federal Circuit cited Kumho to criticize that the expert’s “layered assumptions lack the hallmarks of genuinely useful expert testimony,”409 and fur-ther held that “[s]uch unreliable testimony frustrates a primary goal of expert testi-mony in any case, which is meant to place experience from professional specializa-tion at the jury’s disposal, not muddle the jury’s fact-finding with unreliability and speculation.”410 So, the Federal Circuit held the district court’s admission of the plaintiff’s damages expert was an abuse of discretion.411
Therefore, the damages calculation based on the sales data of infringing prod-ucts and non-infringing prodprod-ucts is not “sufficient facts or data” required by Rule 702. Expert testimony must be based on the sales data that represents infringing products. Otherwise, it is inadmissible evidence.
6. CONCLUSION
While Rule 702 requires an expert to have “scientific, technical, or other spe-cialized knowledge,” it is opt to a district court judge to admit or exclude expert witnesses or expert opinions as evidence heard by jury. Further more, the Federal Circuit’s review standard is abuse of discretion. So, a district court judge usually has much leeway in her evidentiary ruling.
According to the Federal Circuit case law, a trial judge is obligated under Rule 702 and Daubert to exclude irrelevant or unreliable expert testimony from evi-dence. She must apply those four Daubert factors for determining the admissibility of expert testimony: “(1) whether the methodology can and has been tested, (2)
409 Id. (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 156 (1999)).
410 Id.
411 See id.
whether the methodology is subject to peer review, (3) the potential rate of error, and (4) the general acceptance of the methodology.” If the principles or methods an expert relies on fulfill any Daubert factor, such expert testimony is admissible. Ad-ditionally, such admitted principles or methods are still required to be relevant to the disputed issue.
The Federal Circuit also requires that the facts or data on which an expert re-lies should be relevant to the disputed issue. However, the accuracy or reliability of the facts or data is not subject to the Rule 702 examination, because it is opt to the jury to weigh evidence. In the damages calculation context, the Federal Circuit re-quires the damages theory proposed by a patentee to be tied to the factual scenario in the case. Besides, the data must come from a reliable source.
Moreover, an admitted expert cannot testify on everything, even though it is reliable and relevant. Rule 26 of the Federal Rules of Civil Procedure requires a disclosure of expert opinions probably presented to the jury, because it is fair to let the other party know such information to prepare for rebuttal or cross-examination.
Therefore, the content not disclosed under Rule 26 may not be testified on.
Finally, if there is no negative indication about a challenged expert’s knowl-edge required for certain factual issue in litigation, the Federal Circuit will allow such expert to be admitted. However, the case may not be vacated if there is no prejudice to the party that opposes the district court’s ruling. If the improper ruling of admissibility of expert testimony is harmless, the Federal Circuit may still sus-tain the lower court’s final decision.
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