the evidence is not relevant and if relevant its prejudicial effect exceeds its probative value.
The law is undisputed that in determining whether infringement has been willful, a court should consider the totality of the circumstances. Rite-Hite Corp. v. Kelley Co., 819 F.2d 1120, 1125 (Fed. Cir. 1987). Factors to consider include, according to Mobil Oil Corp. v. Amoco Chemicals Corp., 779 F. Supp. 1429, 1484 (D. Del. 1991), aff'd, 980 F.2d 742 (Fed. Cir. 1992), "the infringer's behavior as a litigant," citing Bott v. Four Star Corp., 807 F.2d 1567, 1572 (Fed. Cir. 1986).
Other cases holding that a defendant's litigation behavior may be admissible include Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1547 (Fed. Cir. 1987); Afros SPA v. Krauss-Maffei Corp., 671 F. Supp. 1402 (D. Del. 1987); Gustafson, Inc. v. Intersystems Industrial Products, 897 F.2d 508, 511 (Fed. Cir. 1990).
NSK criticizes application of these cases by arguing that substantially all of these cases are non-jury cases where the issue of undue prejudice to a jury was not addressed. However, NSK did not cite any law supporting a theory that admissibility of evidence in a case such as this may be affected by the identity of the fact-finder. The cited caselaw is applicable here.
No case is cited for the proposition that every sanctionable litigation conduct may be admissible to show willfulness. Sanctionable rule infractions may include lateness in answering discovery, tardiness in making court appearances, inappropriate comments during depositions or in court, and a whole host of "Rambo" style litigation tactics. It can hardly be argued that any of this type of litigation behavior is admissible as being relevant to any issue in a patent case. The key to admissibility is relevance of the sanction to willful infringement.
On the matter of filing a second motion to bifurcate, THK argues relevance in that the purpose of the motion was to obtain a bifurcation of the liability issues from the damages which would then allow NSK to withhold attorneys' opinion letters during the liability sessions without any adverse inferences. The second motion was a futile second attempt to avoid disclosure of the documents. Such conduct is relevant to the issue of willfulness, argues THK. This Court disagrees.
There is no question that NSK had the right to bring its original motion to bifurcate. That motion was designed to avoid the very same disclosure of documents relating to willfulness as did the second motion. The original motion was a proper motion brought for a proper purpose. The second motion was sanctioned, not because it was brought for an improper purpose or because the motion was brought in order to avoid disclosure of documents, but rather because it duplicated a previously denied motion. A sanction for bringing a duplicate motion does not bear on the issue of willfulness. While such a sanction certainly bears on NSK's conduct in "pursuing protracted litigation and running of large fees to the detriment of its opponents," such conduct has been held to be irrelevant to issues of infringement. Electro Med Systems SA v. Cooper Life Sciences, Inc., 34 F.3d 1048, 1057 (Fed. Cir. 1994). Therefore, this Court grants NSK's motion to exclude evidence of sanctions relating to the duplicate motion to bifurcate.
NSK's overdesignation of documents as being for Attorneys Eyes Only is another matter. The conduct which was sanctioned was conduct intended by NSK to make it difficult or impossible for THK to discover documents that had been ruled discoverable. As pointed out by THK, NSK's bad faith designations of Attorneys Eyes Only had the effect of dramatically increasing the burden on the one attorney in the United States working on the case who could read Japanese and prevented him from discussing those documents with THK personnel. In short, it was a sophisticated way of hiding documents which documents may have indicated willful infringement. Hiding such documents is easily relevant to the issue of willful infringement. Therefore, in accordance with the caselaw cited above, this Court denies NSK's motion to bar evidence of the sanction of the Court as to the overdesignation of Attorneys Eyes Only to its documents.
NSK argues that informing the jury of these sanctions would so unfairly prejudice it as to overwhelm all other evidence. This Court disagrees. All evidence brought by any party is designed, in one way or another, to prejudice the opponent's case. It is only unfair prejudice that concerns this Court. As stated above, caselaw authorizes admission of this evidence. However, no authority cited nor found by this Court authorizes or requires the jury to be informed of the dollar amount of the sanction imposed nor of the descriptive words used by Magistrate Judge Rosemond in assessing the sanction.
As true as the dollar amount of $ 96,140 is and as true as Magistrate Judge Rosemond's descriptive phrases are, communication of them is neither relevant to the issue of willfulness nor necessary for THK to make its point. All the jury need be told is exactly what the sanctioned activity was, the fact that the activity was disapproved by the Court and sanctioned by the Court, and that the jury may use these circumstances as evidence on the issue of willful infringement giving the evidence as much weight as the jury deems appropriate. In this manner, NSK's fears of overwhelming prejudice are substantially ameliorated.
The Court, therefore, grants NSK's third motion in part and denies it in part, all as above described.
NSK's Fourth Motion In Limine: To exclude evidence of alleged lost profits in the period after the expiration of the '709 Patent.
Among its damage claims is THK's claim for "accelerated market entry damages." This is a theory which demonstrates damages by the circumstance that NSK, as an infringer, obtained a competitive advantage from the fact that it participated in the market for many years and that, therefore, NSK will enjoy the benefits of its headstart by increased sales when it reenters the market after the expiration of the patent and after the expiration of any injunction issued by this Court against it. The '709 Patent expires in 1999.
That this theory of damages is well recognized by the courts is not seriously contested by NSK and this Court need not cite the extensive authority in its support. However, NSK contends that THK has stretched the application of the theory so far that it has entered the area of speculation. And, of course, lost profits "must not be speculative," although they may be estimated. Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555 (Fed. Cir. 1992). The crux of NSK's argument is that if it is assumed that this case is tried in 1996 and an injunction entered against it which expires in 1999, it will have been out of the market for a period in excess of three years, so that the effects of the "headstart" would be gone. Furthermore, the picture of a market starting in 1999 is pure speculation because no person could predict the future competition, pricing, demand, and other economic factors so far in advance. This Court disagrees with NSK.
A theory of damages is speculative if it has no basis in fact - in short - an expert's guess. If there are any facts to support a theory, the fact-finder is at liberty to accept or reject the underlying fact and, by so doing, reject the damages. The facts necessary for this theory to apply are few: The theory assumes THK wins an injunction good until 1999 - a fact within the contemplation of this lawsuit. It further assumes that NSK would be unable to develop a non-infringing product during the interim - a circumstance that may fairly be found since NSK has been unable, thus far, to do so. Finally, it assumes that NSK would reenter the market in 1999. Since the linear guides involved in this case constitute a major technological advance, one may fairly assume an involvement by NSK in the market. THK's theory of damages is founded on recognized facts and logical conclusions based on those facts, and thus, are not speculation. Instead, the theory provides a classic jury question. NSK's fourth's motion in limine is, therefore, denied.
NSK's Fifth Motion In Limine: To exclude evidence and argument regarding International Trade Administration investigations of dumping in the bearing industry.
Starting in the 1970's, the International Trade Administration commenced investigations concerning charges that foreign manufacturers, specifically including NSK, were selling certain products in the United States at less than fair market value. NSK was found guilty of numerous "dumping" violations in its sale of bearing products in the United States. THK seeks to introduce evidence of these violations in order to demonstrate that THK either lost sales as a result of the dumping or had to make sales at lower prices because of NSK's charging unfairly low prices.
THK's tender of this evidence is, however, undermined by the fact that linear guides, the devices in issue in this case, have never been involved in any dumping investigations and decisions. Thus, THK is unable to show any actual price difference as a result of dumping. THK counters that it ought to be able to show NSK's propensity to charge unfair low prices in the United States - a corporate disposition which caused THK to sell linear guides at lower prices in view of the contemplated unfair competition.
The problem with THK's position is that evidence of dumping of a few other products out of the many products sold by NSK, does not prove dumping of linear guides. In fact, THK admitted to the International Trade Administration that linear guides are not even within the "class or kind" of merchandise which was actually dumped. The evidence is simply not relevant.
Furthermore, the violations for which the United States government agencies imposed anti-dumping penalties occurred prior to the alleged infringement here and the more current allegations are, at this time, pending and undetermined.
For the above reasons, this Court grants NSK's fifth motion in limine. THK is, therefore, prohibited from bringing any evidence or argument regarding International Trade Administration investigations of dumping in the bearing industry.
NSK's Sixth Motion In Limine: To exclude testimony of witnesses, Bjorge, Mackey and Pantuliano.
NSK has moved for various reasons to exclude witnesses Mackey and Pantuliano who are included in THK's "will call" list of witnesses. THK has not argued these motions, but instead has indicated in its brief that it will not call these individuals. The Court, therefore, grants NSK's motion to exclude witnesses Mackey and Pantuliano.
NSK further moves to exclude testimony of THK witness Bjorge on the grounds that he is an expert who will testify on the same subject as expert witness, Sears, i.e., the subject of "U.S. Patent Office procedures." NSK contends that using two experts on the same subject violates the Standing Order Establishing Pretrial Procedure in the Northern District which specifies that, "only one expert witness on each subject for each party will ordinarily be permitted." (fn. 8 to P (e) of the Model Pretrial Order).
Where the testimony of one expert merely overlaps the testimony of another, this Court deems it unnecessary to bar one of them. In a case such as this, involving claims exceeding 140 million dollars, which has lasted over five years and has involved untold hours of lawyers' work and which may take five or more weeks to try, the Court believes that any doubts as to whether one or two experts should be employed should be resolved by allowing the additional expert. In these circumstances, the attorneys should be allowed to try their own cases.
In this case, there is clearly overlap between THK's two experts. THK intends to use witness Bjorge to testify early in the trial generally about patent office procedures, patents in general, patent claims, etc. Sears, on the other hand, will testify specifically about why he thinks NSK's infringement was willful, why there was no inequitable conduct and why the patents were not invalid. While both witnesses are experts on all of the topics, THK will use each for different subjects, although there will be overlap. Their use does not violate the Standing Order. NSK's motion is, therefore, denied.
THK, in its brief, suggests that, in the event the Court grants NSK's motion to bar one of its experts, it should also bar one of NSK's two damage experts, Lakshmanan and Langenfeld. Since this Court, by this Order, declined to bar one of THK's experts, it is not necessary to rule of THK's conditional motion to bar. For the sake of completeness, however, the Court hereby denies THK's motion to bar since each of the challenged experts approached the damages issue from a different perspective - Lakshmanan from an accounting standing and Langenfeld from an economic standpoint. Although there will be considerable overlap and although one expert may comment and build upon the report of the other, the Standing Order does not mandate using one expert only under these circumstances. Any doubt is resolved in favor of allowing the additional expert.
MARTIN C. ASHMAN
United States Magistrate Judge
Dated: January 9, 1996.