May 2018
Intellectual Property & Technology Law Journal
By Mark J. Feldstein, Ph.D.; Shana K. Cyr, Ph.D.; Kelly S. Horn
The first article in this three-article series, which appeared in the April 2018 issue of the Intellectual Property & Technology Law Journal, addressed critical differences in how the Federal Rules of Evidence apply to fact and expert witnesses and strategic considerations for offering lay testimony under Rule 701 or expert testimony under Rule 702. This article examines Rules 703 and 705, which govern the types and disclosure of information underlying expert opinions. Taken together, Rules 703 and 705 establish a framework for the permissible bases of an expert’s opinion and their disclosure. The third article, which will appear in an upcoming issue of the Intellectual Property & Technology Law Journal, examines court-appointed experts under Rule 706.
These rules can be significant in patent cases, which often turn on a battle of expert testimony. For example, Rule 703 allows experts to rely on information, such as hearsay test data, that is otherwise inadmissible. And Rule 705 dictates the way expert testimony may be presented. Understanding the principles embodied in these rules, as well as their application to the particular types of information relied on by experts in patent cases, will help patent practitioners maximize the presentation and force of their experts’ opinions.
Rule 703 answers the fundamental question of what information an expert is permitted to rely upon to derive opinions. The basic answer, provided by the Rule, is that an expert may rely on "facts or data in the case that the expert has been made aware of or personally observed."1 The facts or data need not be admissible if "experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject."2 Although an expert may rely on, for example, inadmissible hearsay, this does not mean that the underlying information may be disclosed to the jury; that is, "the underlying information is not admissible simply because the opinion or inference is admitted."3
In patent cases, the primary disputes under Rule 703 are whether otherwise inadmissible information relied on by an expert (1) is the type of information on which an expert in the field would reasonably rely and (2) should be disclosed to the jury.
Expert Type and Nature of the Facts or Data Weigh Heavily in Determining Whether Reasonable Reliance Standard Is Met
Otherwise inadmissible evidence must be of the type "experts in the particular field would reasonably rely on" in practice for it to be disclosed to a jury.4 In patent litigations, peer-reviewed journal articles, master’s theses, and patent applications are often accepted as the type of information on which experts routinely rely.5 There have been significant disputes, however, for other sources of information, with varying results depending on the context.
Test Results Not Conducted by the Expert Are Not Per Se Prohibited
While technical experts in patent cases routinely base their opinions on experimental testing of the allegedly infringing products, there is a risk of exclusion under Rule 703 if the expert did not herself perform or observe the testing. Courts have found some test results not obtained by the expert to be the type that technical experts "reasonably rely on" in practice while other test results are not. The decision often turns on the nature and purpose of the testing.
For example, in Monsanto Co. v. David, Monsanto’s technical expert relied on tests of accused soybean seeds conducted by Monsanto’s scientists—not Monsanto’s expert—informing his infringement opinions.6 The district court allowed Monsanto’s expert to rely on the hearsay test reports under Rule 7037 and the U.S. Court of Appeals for the Federal Circuit affirmed, holding that "scientific test results prepared by others may constitute the type of evidence that is reasonably relied upon" under Rule 703.8 Indeed, it expressly found that the seed test results obtained by company scientists other than the expert "are certainly of the type relied upon by experts" in practice.9
However, not all testing by others meets the Rule 703 reasonable reliance standard. For example, an accused infringer challenged an expert’s reliance on chemistry tests performed by another expert as part of an Australian litigation as not being the type of results pharmaceutical chemists rely on in practice.10 The district court agreed that "[p]harmaceutical chemists do not typically rely on reports created for the purpose of patent litigation in performing their regular tasks and duties."11
Thus, courts look to the nature, purpose, and context of the testing not generated by the expert to determine whether it is the type information technical experts "reasonably rely on" in practice.
Damages Experts' Reliance on Data Compilations Is Often Supported by Industry Standards
Where the expert is testifying about damages for patent infringement, disputes often arise as to whether data collected through surveys are the type reasonably relied on by such experts in practice. In resolving such disputes, courts often look to whether the surveys, although conducted for the litigation, are consistent with industry standards for data collection and analysis.
For example, in Inline Connection Corp. v. AOL Time Warner Inc., a damages expert relied on data collected via interviews with employees and other third parties to determine a reasonable royalty rate using methods to compile the data that the party argued comported with "professional standards for litigation services for accountant or economic experts in obtaining their data."12 Specifically, the experts collected and analyzed the data "using methodologies consistent with the Litigation Services and Applicable Professional Standards of the AICPA [American Institute of Certified Public Accountants]."13 The court found this to be sufficient under Rule 703 because "[u]nder the AICPA standards, experts may base opinion testimony on either facts or assumptions, including assumptions provided by the client."14 Thus, the court concluded that "the type of information and manner in which it was acquired is reasonably relied upon by experts within their field."15
Reliance on Hearsay Statements Is Sometimes Allowed
An expert in a patent case may seek to rely on hearsay statements, such as conversations with an employer’s engineers or the affidavits of others. Rather than applying a bright-line rule, courts generally consider the nature of the statements and the type of expert in determining whether the Rule 703 is met.16
For example, in Wonderland Nurserygoods Co. v. Thorley Industries, LLC, the patentee’s damages expert relied on interviews and conversations with sales and manufacturing personnel in forming his opinion on lost profits.17 The Western District of Pennsylvania found such communications to be the type of information reasonably relied on by accountants when estimating market share and consumer behavior in markets.18 Accordingly, the interviews and conversations met the reasonable reliance test of Rule 703.
On the other hand, multiple courts have rejected an expert’s reliance on conversations with a party’s employees as an improper end run around the general prohibition on hearsay. For example, in Trustees of Boston University v. Everlight Electronics Co., the defendant’s damages expert based his opinions on the following statement:
According to Titus Chang, the Associate Vice President of Epistar Cor[po]ration, since at least 2007, all of the purchase orders from Bridgelux for the accused products were received in Epistar’s Taiwan office.19
This was deemed improper, with the District of Massachusetts stating that experts "cannot merely 'parrot' the out-of-court statements of employees, for an expert who does as much is merely a ‘ventriloquist’s dummy.'"20 That is, an expert cannot be used as a mere conduit for passing along the words of a company’s employees to the jury under the cover of Rule 703.
Similarly, another district court rejected an expert’s reliance on a physician’s affidavit submitted to the Brazilian Patent Office during prosecution of a corresponding patent application where the physician addressed nonobvious.21 The court rejected the affidavit as a basis for the expert’s opinions, stating that it was a “net opinion” by another physician that does not "constitute[] the type of data typically relied upon by individuals in the field."22 The court did not, however, address whether the outcome might be different if, for example, the affidavit included test results performed by the physician.23
District Courts Generally Favor the Admissibility of Underlying Facts or Data under the Balancing Test in Patent Cases
Rule 703 provides that "when an expert reasonably relies on inadmissible information to form an opinion or inference, the underlying information is not admissible simply because the opinion or inference is admitted."24 This part of the rule establishes a balancing test that permits disclosure of otherwise inadmissible facts or data to the jury "only if their probative value in helping the jury evaluate the opinion substantially outweighs their prejudicial effect."25 The fact-specific nature of this rule coupled with the district court’s "considerable leeway" in evaluating expert testimony results in a broad range of admissibility rulings.26 Further, "[e]videntiary rulings by the district court are reviewed under regional circuit law,"27 many of which adopt the abuse of discretion standard.28 As such, the district court judge’s determination of whether to exclude certain bases evidence of an expert’s opinion is typically dispositive.
In patent litigations specifically, courts also generally favor admissibility of bases evidence. For example, in Forest Laboratories, Inc. v. Ivax Pharmaceuticals, Inc., the accused infringer’s expert relied on published studies directed to the effect of marketing on the behavior of physicians.29 The District of Delaware found that the "studies have some probative value in supporting [the expert’s] contention that marketing has an effect on physicians’ prescribing habits."30 And, the court found, the probative value outweighed the prejudicial effect because "the evidence does not directly relate to Plaintiffs."31
For further example, in i4i Ltd. Partnership v. Microsoft Corp., the accused infringer challenged the admission of survey evidence used by the patentee’s damages expert that was used to show the amount of infringing uses.32 The Federal Circuit found the probative value to be high because "the survey was used to estimate the amount of infringing use, a key number in i4i’s damage calculation."33 Further, the court placed importance on the fact that evidence about the survey’s methodology and findings would be helpful to the jury in evaluating the expert’s opinion.34
Rule 705 specifies the timing of disclosure of the facts or data forming the basis of an expert’s opinion, and more specifically allows an expert to "state an opinion¼without first testifying to the underlying facts or data."35 However, the rule safeguards against unfairness by further stating that the "expert may be required to disclose those facts or data on cross-examination"36 and by not restricting "the discretionary power of the judge to require preliminary disclosure in any event."37
Courts have found that "[p]atent cases, so often typified by lengthy testimony on complex technical issues, are particularly served by" Rule 705 because it reduces the need for complex and time-consuming testimony.38 Importantly, if opposing counsel does not challenge the brevity of an expert’s testimony through rigorous cross-examination of the underlying facts, the party often faces difficulty in disputing the sufficiency of the expert’s opinions. Indeed, courts have frequently rejected attacks on expert testimony presented without the underlying facts, finding that conclusory statements may be appropriate under Rule 705 "during trial when the opposing party can challenge the factual basis of the expert’s opinion during cross-examination."39
For example, in Symbol Technologies, Inc. v. Opticon, Inc., the patentee’s technical expert testified to his opinion of infringement through claim charts applying a single claim construction for means-plus-function claims.40 The patentee’s counsel offered the exhibits to the court, explaining that admission would relieve the court of the "need to 'go through lengthy testimony explaining with each infringing device how [the expert] found that each element was infringed.'"41 Opposing counsel acquiesced without objection.42
On appeal to the Federal Circuit, however, the accused infringer argued that the expert "testified on the ultimate issue of infringement without discussing in detail equivalency between the structures of the accused devices and the structures disclosed in the patent specifications," as required for means-plus-function claims.43 The court disagreed, finding it to be the defendant’s burden to bring the patentee’s errors to the jury’s attention.44 Because the defendant "chose not to expose [the expert’s] testimony to the glaring light of cross-examination," the defendant could not successfully argue on appeal that a prima facie case of infringement was not established.45
As patent practitioners consider the type of information their expert witnesses are relying on to form opinions on infringement and other critical issues, the type of the expert and the underlying facts or data should be carefully considered. While in some cases it may not be important that the underlying facts or data reach the jury, in other instances the jury may be unlikely to adopt the expert witness’s opinions without understanding how they were reached. Further, if an opposing expert presents an unfavorable opinion resting on faulty assumptions or data, practitioners should take care to cross-examine the expert on the underlying facts or data since Rule 705 does not require an expert to disclose the bases of the opinions stated at trial.
Endnotes
1 Fed. R. Evid. 703.
2 Id.
3 Fed. R. Evid. 703 advisory committee’s note to 2000 amendment.
4 Fed. R. Evid. 703.
5 See, e.g., Reckitt Benckiser Pharm. Inc. v. Watson Labs., Inc., Nos. 13-1674-RGA, 14-422-RGA, 2015 WL 6456551, at *2 (D. Del. Oct. 26, 2015).
6 Monsanto Co. v. David, 516 F.3d 1009, 1015 (Fed. Cir. 2008).
7 Id.
8 Id.
9 Id. at 1016.
10 In re Omeprazole Patent Litigation, 490 F. Supp. 2d 381, 531 n.111 (S.D.N.Y. 2007), aff’d, 281 F. App’x 974 (Fed. Cir. 2008), and aff’d on other grounds, 536 F.3d 1361 (Fed. Cir. 2008).
11 Id.
12 Inline Connection Corp. v. AOL Time Warner Inc., 470 F. Supp. 2d 435, 442 (D. Del. 2007).
13 Id. at 443.
14 Id.
15 Id.
16 See, e.g., Godo Kaisha IP Bridge 1 v. Broadcom Ltd., No. 2:16-CV-00134-JRG, 2017 WL 2844646, at *3 (E.D. Tex. May 19, 2017).
17 Wonderland Nurserygoods Co. v. Thorley Industries, LLC, No. 12-196, 2013 WL 6328772, at *4 (W.D. Pa. Dec. 5, 2013).
18 Id.
19 Trustees of Boston University v. Everlight Electronics CoT., 141 F. Supp. 3d 147, 149 (D. Mass. 2015).
20 Id. at 149 (quoting United States v. Brownlee, 744 F.3d 479, 482 (7th Cir. 2014)).
21 Eli Lilly & Co. v. Actavis Elizabeth LLC, No. 07-cv-3770 (DMC), 2010 WL 1931233, at *9 (D.N.J. May 7, 2010) (citations omitted).
22 Id.
23 See supra.
24 Fed. R. Evid. 703.
25 Id.
26 Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999).
27 Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1218 (Fed. Cir. 2006).
28 See, e.g., Kumho Tire, 526 U.S. at 152; United States v. Allen, 390 F.3d 944, 949 (7th Cir. 2004).
29 Forest Laboratories, Inc. v. Ivax Pharmaceuticals, Inc., 237 F.R.D. 106, 112 (D. Del. 2006).
30 Id.
31 Id.
32 i4i Ltd. Partnership v. Microsoft Corp., 598 F.3d 531, 856 (Fed. Cir. 2010).
33 Id.
34 Id.
35 Fed. R. Evid. 705.
36 Id.
37 Id.; Fed. R. Evid. 705 advisory committee’s note on proposed rules.
38 Symbol Techs., Inc. v. Opticon, Inc., 935 F.2d 1569, 1576 (Fed. Cir. 1991).
39 Arthur A. Collins, Inc. v. N. Telecom Ltd., 216 F.3d 1042, 1047 (Fed. Cir. 2000).
40 Symbol Techs., 935 F.2d at 1575.
41 Id.
42 Id.
43 Id.
44 Id. at 1576.
45 Id.
Originally printed in Intellectual Property & Technology Law Journal in May 2018. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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