AMY J. St. EVE, Magistrate Judge.
Zurn Industries, Inc. and Zurn Industries, LLC. (collectively, "Zurn") have moved the Court to strike the supplemental expert report of Richard F. Bero, Sloan Valve Company's ("Sloan") expert report. They also seek leave to amend the expert report of Ivan Hofmann, Zurn's own expert. The motion is granted in part and denied in part.
This case concerns U.S. Patent No. 7, 607, 635, entitled "Flush Valve Handle Assembly Providing Dual Mode Operation" (the "635 Patent" or the "Wilson Patent"), and the corresponding U.S. Patent Application Publication No. 2006/0151729 (the "Published Wilson Patent Application"). On January 13, 2010, Sloan commenced this action against Zurn seeking (a) damages and injunctive relief for Zurn's alleged infringement of the '635 Patent; and (b) provisional damages for Zurn's alleged making, sale, and use of inventions that the Published Wilson Patent Application covers. On December 13, 2012, the Court entered an Agreed Amended Scheduling Order that provided for the following expert discovery deadlines: initial expert reports due by January 28, 2013, rebuttal expert reports by March 4, 2013, and reply expert reports due by April 1, 2013. (R. 443.)
On January 28, 2013, Sloan served Zurn with the report of its damages expert Richard F. Bero (the "Initial Report"). The report consisted of approximately sixty pages of text and over one hundred pages of additional schedules. On March 8, 2013, Zurn served Sloan with the report of its expert, Dr. Ericksen, a statistician and survey expert. The report of Zurn's damages expert, Ivan Hofmann, was also served on Sloan. On April 5, 2013, Sloan served Bero's reply damages expert report on Zurn ("Reply Report"). Zurn contends that this Reply Report improperly presents new arguments that the Court should strike. Specifically, Zurn argues that the following arguments are new and should be stricken: 1) Bero's calculation of damages based on the "unweighted rations" rather than the "weighted ratios" used in the Initial Report; 2) Bero's addition of "an entirely new Schedule 20.0, which is yet another, alternative collateral sales ratio calculation based on Sloan's previously available sales data": and 3) Bero's "revised and increased estimate of Sloan's incremental costs" based on the inclusion of Sloan's freight-out and scrap costs which were included for the first time in the Reply Report. In addition, Zurn seeks leave to amend Mr. Hofmann's expert report. The Court will address each argument in turn.
Federal Rule of Civil Procedure 26(a)(2) governs expert discovery. Rule 26(a)(2)(b)(i) requires a party to disclose to the other parties a written report of a retained expert that includes "a complete statement of all opinions the witness will express and the basis and reasons for them." Fed.R.Civ.P.26(a)(2)(b)(i). An expert rebuttal report is designed to "contradict or rebut evidence" disclosed in the initial expert report. FedR.Civ.P. 26(a)(2)(D)(ii). "The proper function of rebuttal evidence is to contradict, impeach or defuse the impact of evidence offered by an adverse party." Peals v. Terre Haute Police Dep't, 535 F.3d 621, 630 (7th Cir. 2008). See also Butler v. Sears Roebuck & Co., No. 06-7023, 2010 WL 2697601, at *1, (N.D. Ill. July 7, 2010). Although the Rules do not expressly provide for reply expert reports, the parties agreed to such reports in this case. (R. 443.) Similar to reply briefs, advocates cannot advance new arguments for the first time in a reply expert report. Experts must limit their reply reports to the scope of the issues raised in the rebuttal reports. The reply report is not the appropriate vehicle for presenting new opinions.
Local Patent Rule 5.3 provides:
Amendments or supplementation to expert reports after the deadlines provided herein are presumptively prejudicial and shall not be allowed absent prior leave of court upon a showing of good cause that the amendment or supplementation could not reasonably have been made earlier and that the opposing party is not unfairly prejudiced.
L.P.R. 5.3. The Rule provides for a presumption against supplementation of expert reports after the deadlines. In order to supplement an expert report after the disclosure deadlines provided for in the Local Patent Rules, a party must obtain prior leave of court, show good cause that it could not have made the supplement earlier, and establish that the opposing party will not suffer undue prejudice from the supplementation. Federal Rule of Civil Procedure 26(e) also provides for supplementation of expert reports. "Although Fed.R.Civ.P. 26(e) requires a party to supplement or correct disclosure upon information later acquired, that provision does not give license to sandbag one's opponent with claims and issues which should have been included in the expert witness' report (indeed, the lawsuit from the outset)." Allgood v. Gen. Motors Corp., No. 02 C 1077, 2007 WL 647496, at **3-4 (S.D. Ind. Feb. 2, 2007) (citations and quotations omitted).
I. Bero's Reply Report
A. Weighted v. Unweighted Ratios
In his Initial Report, Bero calculated damages based on collateral unit sales ratios, and included both the weighted and unweighted ratios of the total number of collateral units - toilet valves, urinal valves and faucets - in sites investigated by Quest Consultants. Although Mr. Bero included both ratios, he used the weighted ratios as the basis of his collateral sales damages calculation "since use of the weighted ratios appears to represent a more accurate approximation for the ratios of collateral products to manual dual-flush valves." (R. 507, Ex. A, Bero Initial Report at 30.) According to Bero, "the un-weighted ratios simply use the investigated bathrooms and ignore the size differences of the projects." ( Id. ) In response to the Initial Report, Zurn's expert criticized the use of the weighted ratios. Consequently, in his Reply Report, Bero opined "whether one uses weighted or unweighted averages makes little difference." (R. 507-1, Ex. B, Bero Reply Report at 34.) Using the same unweighted numbers he included in his Initial Report, Bero calculated the collateral profit per value using both the weighted (as he had in his Initial Report) and the unweighted ratios to demonstrate that "whether one uses weighted or unweighted averages makes little difference." ( Id. at 34.) His Reply Report still contains the ...