Opinion ID: 856284
Heading Depth: 3
Heading Rank: 2

Heading: expert testimony on damages

Text: Fairchild additionally challenges the evidentiary basis of the jury’s award, which was based on a damages estimate provided at trial by Power Integrations’ damages expert Dr. Troxel. Dr. Troxel formulated his estimate based on a document describing worldwide shipments of mobile phones during the third quarters of 2004 and 2005. Although the document relates generally to worldPOWER INTEGRATIONS v. FAIRCHILD SEMI 40 wide sales of mobile phones from all vendors, it contains more detailed information for some vendors, including Samsung. Specifically, Dr. Troxel relied on a table in the document that indicates that during the third quarter of 2005, Samsung shipped 26.8 million phones worldwide, up from 22.7 million phones during the third quarter in 2004. Dr. Troxel used the worldwide sales data for Samsung’s mobile phones to estimate sales of the accused power circuits, which Samsung incorporated into its mobile phone chargers. On appeal, Fairchild argues that Dr. Troxel’s testimony was speculative and his data inadmissible. In Fairchild’s view, Dr. Troxel’s methodology suffered from layered assumptions and unwarranted speculation. Fairchild insists that Dr. Troxel made two speculative leaps in his analysis: First, he assumed that each Samsung mobile phone included a charger. Second, he assumed that each of these chargers incorporated an infringing power circuit. Fairchild further argues that the document on which Dr. Troxel relied for Samsung’s sales data was an unauthenticated hearsay “press release” retrieved from the Internet. In sum, Fairchild argues that Dr. Troxel’s testimony, in view of his methodology and data sources, was uniquely unreliable and legally inadmissible. Power Integrations responds that Dr. Troxel’s methodology was reasonable and his data source reliable. According to Power Integrations, Dr. Troxel’s methodology did not require any more speculation than is usually permitted in calculating compensatory damages. Power Integrations further argues that because the document on which Dr. Troxel relied in his expert analysis would be reasonably relied upon by experts in his field, the document need not be independently admissible. 41 POWER INTEGRATIONS v. FAIRCHILD SEMI In determining damages, a jury may rely on expert testimony. 35 U.S.C. § 284. District courts, as gatekeepers, must nevertheless ensure that all expert testimony is rooted in firm scientific or technical ground. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589–90 (1993); Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 148 (1999). To that end, the Federal Rules of Evidence require that an expert’s testimony be the product of reliable principles and methods applied to sufficient facts or data. Fed. R. Evid. 702(b),(c). The trial judge must ensure that the expert has “reliably applied the principles and methods to the facts of the case.” Id. at 702(d). Data relied on by the expert “need not be admissible for the opinion to be admitted” if experts in the field would reasonably rely on such data. Fed. R. Evid. 703. The trial judge must have considerable leeway in deciding how to determine whether the expert’s testimony is sufficiently reliable. Kumho Tire, 526 U.S. at 152. Here, Dr. Troxel’s damages testimony was unreliable in several respects. Initially, the source of the documents on which Dr. Troxel relied for his estimate of Samsung’s worldwide sales is unclear. When asked whether the provider of the documents “found [them] off the internet,” Dr. Troxel responded, “I can only assume so.” Power Integrations’ only response to the questionable source of Dr. Troxel’s sales documents is that Dr. Troxel “was a qualified expert, and he found the [documents] and other materials he considered, while researching the case.” We disagree with Power Integrations that the source and reliability of data relied upon by an expert is otherwise immaterial. Our rules of evidence require that an expert’s testimony be “the product of reliable principles and methods” applied to “sufficient facts or data.” Fed. R. Evid. 702(b),(c). Thus, while an expert’s data need not be admissible, the data cannot be derived from a manifestly unreliable source. See Montgomery County v. Microvote POWER INTEGRATIONS v. FAIRCHILD SEMI 42 Corp., 320 F.3d 440, 448 (3d Cir. 2003) (finding expert’s data source unreliable where “some of the things that were shown to [the expert] he didn't seem to know where they were from or what the source of them were”); cf. Emigh v. Consol. Rail Corp., 710 F. Supp. 608, 612 (W.D. Pa. 1989) (“[W]hen the underlying source is so unreliable as to render it more prejudicial than probative, . . . Rule 703 cannot be used as a backdoor to get the evidence before the jury.”). While Dr. Troxel’s data source was unreliable, so was his methodology. Here, Dr. Troxel made two speculative leaps. First, the document on which Dr. Troxel relied for his worldwide damages estimate indicated worldwide shipments of Samsung’s mobile phones. As Dr. Troxel testified, however, the infringing power circuits were found in mobile phone chargers, not in mobile phones. Dr. Troxel’s sales document does not mention chargers or otherwise indicate sales of chargers. His analysis assumed that each of Samsung’s phones shipped with a charger. While Power Integrations is quick to point out that Dr. Troxel’s assumption was not unreasonable, the document relied upon by Dr. Troxel does not specify the nature of the shipments, nor does it provide any reliable link which might indicate that the shipped phones included chargers. Without more, we cannot safely assume that all of these shipments must have included a charger. Dr. Troxel’s second speculative step was when he assumed from his document not only that each of Samsung’s shipments included a charger, but that each of these chargers incorporated an infringing power circuit. Dr. Troxel’s sales document lists no model numbers or other indicia from which he could reasonably infer that chargers assumed to be included incorporated Fairchild’s infringing power circuits. Power Integrations’ Vice President of Worldwide Sales testified at trial that several 43 POWER INTEGRATIONS v. FAIRCHILD SEMI other companies sold competing power circuits to Samsung. Further, Power Integrations retained more than 50% of Samsung’s business. Thus, the data indicate that at least some of Samsung’s chargers could have incorporated the competing power circuits or Power Integrations’ own circuits, which do not infringe. Dr. Troxel had no way to distinguish between infringing and noninfringing chargers, and his assumption that all chargers incorporated an infringing power circuit was speculation. In the end, we are left with an expert opinion derived from unreliable data and built on speculation. Without more, Dr. Troxel’s testimony and data regarding worldwide shipments of Samsung’s mobile phones are too far removed from the facts of this case, which involves Fairchild’s infringing power circuits. Dr. Troxel’s layered assumptions lack the hallmarks of genuinely useful expert testimony. Kumho Tire, 526 U.S. at 156. Such unreliable testimony frustrates a primary goal of expert testimony in any case, which is meant to place experience from professional specialization at the jury’s disposal, not muddle the jury’s fact-finding with unreliability and speculation. For these reasons, we find that the district court abused its discretion in admitting Dr. Troxel’s testimony, which was both unreliable and based on insufficient data. In view of our other holdings in this case, we do not find that the district court’s decision to admit Dr. Troxel’s testimony warrants a new trial.