Columbia v. Seirus - Columbia Brief Re 289

Case 3:17-cv-01781-HZ Document 342 Filed 09/25/17 PageID.
14963 Page 1 of 8
1 DAVID R. BOYAJIAN (SBN #257825)

2 DAVID W. AXELROD (OSB #750231)
admitted pro hac vice
3 BRENNA K. LEGAARD (OSB #001658),
4 admitted pro hac vice
NICHOLAS F. ALDRICH, JR. (OSB #160306),
5 admitted pro hac vice
6 SCHWABE, WILLIAMSON & WYATT, P.C.
1211 SW 5th Ave., Suite 1900
7 Portland, OR 97204
8 Telephone: 503.222.9981
E-mail: dboyajian@schwabe.com
9 daxelrod@schwabe.com
blegaard@schwabe.com
10 naldrich@schwabe.com
11 Attorneys for Plaintiff

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UNITED STATES DISTRICT COURT
14
FOR THE SOUTHERN DISTRICT OF CALIFORNIA
15
COLUMBIA SPORTSWEAR NORTH Case No.: 3:17-cv-01781-HZ
16 AMERICA, INC., an Oregon corporation,
COLUMBIAS MEMORANDUM
17 Plaintiff, REGARDING STANDARD FOR
COMPUTING DESIGN PATENT
18 v. DAMAGES UNDER 35 U.S.C.
289
19 SEIRUS INNOVATIVE ACCESSORIES,
INC., a Utah corporation, Judge: Marco A. Hernandez
20 Courtroom: 3C
Defendant. Date: September 25, 2017
21 Time: 9:00 a.m.
22 Date Action Filed: January 12, 2015
Trial Date: September 18, 2017
23
24 I. INTRODUCTION
25 At the pretrial conference, the Court held that, in identifying the relevant article
26 of manufacture for design patent damages calculations, the Court would instruct the
27 jury to use the test outlined in the Department of Justices amicus brief in Samsung
28
COLUMBIAS MEMO REGARDING STANDARD CASE NO.: 3:17-CV-01781
FOR COMPUTING DESIGN PATENT DAMAGES
Case 3:17-cv-01781-HZ Document 342 Filed 09/25/17 PageID.14964 Page 2 of 8
1 Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (2016). The Court further determined that
2 once the plaintiff has set forth what the article item is, the burden of persuasion lies
3 with the defense that the article of manufacture is something less than its entirety, and
4 that burden remains with the defense throughout. [Sept. 11, 2017, Columbia v. Seirus
5 Pretrial Conference Trans., p. 84:12-16.]
6 On August 1, 2017, Plaintiff submitted the supplemental disclosure of Serena
7 Morones, which concludes that the article of manufacture is the end-product sold to
8 consumers in every case but the HeatTouch Torche product, and which contains a
9 resulting straight-forward calculation of profits.
10 On September 7, 2017, Seirus disclosed a supplemental report by Dr. Block,
11 and on September 12, Seirus submitted the supplemental disclosure of Carrie Distler.
12 Dr. Block opined that labor and know how are components of Seiruss gloves
13 which should receive their respective allocations of profit. Ms. Distler calculates
14 damages by treating each step in the manufacturing processrather than each part of
15 the glovesas a separate component to which profits must be apportioned. [Dkt.
16 Nos. 300, 301, 303, 325 Ex. C at 9-10.] Plaintiff has moved to exclude this testimony
17 as untimely and unreliable. [Dkt. No. 300.]
18 In considering Columbias motion to exclude, the Court has asked the parties to
19 submit jury instructions regarding the computation of damages for design patent
20 infringement.
21 II. COLUMBIAS INSTRUCTION PROVIDES LEVEL OF GUIDANCE
COMPARABLE TO ANALOGOUS AREAS OF LAW
22
Columbias proposed jury instruction for determining the article of manufacture
23
in accordance with the Samsung opinion and the DOJ test as well as the computation
24
of those damages is attached as Appendix A to this brief. While the legal standard
25
under each cause of action is different, Columbias proposed instruction provides a
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level of guidance that is comparable to the guidance provided by Ninth Circuit model
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copyright and trademark instructions.
28 2
1 The Ninth Circuit model jury instruction regarding trademark damages states:
2 15.29 TRADEMARK DAMAGESDEFENDANTS PROFITS
3 (15 U.S.C. 1117(a))
4 In addition to actual damages, the plaintiff is entitled to any profits
5 earned by the defendant that are attributable to the infringement, which the
6 plaintiff proves by a preponderance of the evidence. You may not, however,
7 include in any award of profits any amount that you took into account in
8 determining actual damages.
9 Profit is determined by deducting all expenses from gross revenue.
10 Gross revenue is all of defendants receipts from using the trademark in
11 the sale of a [product]. The plaintiff has the burden of proving a defendants
12 gross revenue by a preponderance of the evidence.
13 Expenses are all [operating] [overhead] and production costs incurred in
14 producing the gross revenue. The defendant has the burden of proving the
15 expenses [and the portion of the profit attributable to factors other than use of
16 the infringed trademark] by a preponderance of the evidence.
17 Unless you find that a portion of the profit from the sale of the [specify
18 goods] using the trademark is attributable to factors other than use of the
19 trademark, you should find that the total profit is attributable to the
20 infringement.
21 The Ninth Circuit Model Jury Instruction regarding the award of the infringers
22 profits in a copyright action states:
23 17.34 COPYRIGHTDAMAGESDEFENDANTS PROFITS
24 (17 U.S.C. 504(b))
25 In addition to actual damages, the copyright owner is entitled to any
26 profits of the defendant attributable to the infringement. You may not include in
27 an award of profits any amount that you took into account in determining actual
28 3
1 damages.
2 You may make an award of the defendants profits only if you find that
3 the plaintiff showed a causal [relationship] [nexus] between the infringement
4 and the [profits generated indirectly from the infringement] [defendants gross
5 revenue].
6 The defendants profit is determined by [deducting] [subtracting] all
7 expenses from the defendants gross revenue.
8 The defendants gross revenue is all of the defendants receipts from the
9 [use] [sale] of a [[product] [work]] [[containing or using the copyrighted work]
10 [associated with the infringement]]. The plaintiff has the burden of proving the
11 defendants gross revenue by a preponderance of the evidence.
12 Expenses are all [operating costs] [overhead costs] [and] production costs
13 incurred in producing the defendants gross revenue. The defendant has the
14 burden of proving the defendants expenses by a preponderance of the
15 evidence.
16 Unless you find that a portion of the profit from the [use] [sale] of a
17 [product] [work] containing or using the copyrighted work is attributable to
18 factors other than use of the copyrighted work, all of the profit is to be
19 attributed to the infringement. The defendant has the burden of proving the
20 [portion] [percentage] of the profit, if any, attributable to factors other than
21 [copying] [infringing] the copyrighted work.
22 III. THE COURT RETAINS THE RESPONSIBILITY TO EXCLUDE
UNRELIABLE TESTIMONY.
23
District courts are charged as gatekeepers that evaluate the admissibility of
24
expert opinion testimony. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999).
25
Rule 702 of the Federal Rules of Evidence permits a court to admit expert testimony
26
that is (1) based upon sufficient facts or data, (2) the product of reliable principles and
27
methods, and (3) delivered by a witness who has applied the principles and methods
28 4
1 reliably to the facts of the case. The admissibility of expert testimony turns on
2 whether expert testimony proffered in the case is sufficiently tied to the facts of the
3 case that it will aid the jury in resolving a factual dispute. Daubert v. Merrell Dow
4 Pharms., Inc., 509 U.S. 579, 591 (1993) (citation omitted). The proponent of expert
5 testimony has the burden of demonstrating its admissibility. Lust v. Merrell Dow
6 Pharms., Inc., 89 F.3d 594, 598 (9th Cir. 1996).
7 Columbia believes that Ms. Distlers and Dr. Blocks testimony regarding the
8 computation of Seiruss profits from its sale of articles of manufacture to which the
9 infringing device is affixed is clearly improper and unreliable. However, Columbia
10 does not believe that a jury instruction can be used to address the problem of improper
11 testimony. The complexity of the analysis surrounding this question means that
12 inevitably Defendants experts will employ analysis that contradicts the law in order
13 to minimize damages awards, and they will do so in too great a variety of different
14 methods to be addressable through jury instructions. Instead, the Court must exercise
15 its authority under F.R.E. 702 to exclude unreliable expert testimony.
16 Copyright and trademark analyses illustrate this point. Copyright and
17 trademark law both permit damages based on the defendants profits. The Ninth
18 Circuit Model Jury Instructions contain form instructions for profits-based damages
19 calculations in both contexts. In neither context is the model jury instruction detailed
20 enough to preclude unlawful or unreliable testimony on the computation of damages.
21 The legal standards regarding profits-based damages for each of these claims is
22 different, and none are directly applicable to the calculation of an infringers profit for
23 the sale of an article of manufacture to which an infringing design has been applied.
24 But all of these different statutory entitlements relate damages to the scope or effect of
25 the infringement in some manner. A trademark plaintiff is entitled to damages
26 attributable to the infringement, and juries are instructed that unless they find that a
27 portion of the profit from the sale of the [specify goods] using the trademark is
28 5
1 attributable to factors other than use of the trademark, you should find that the total
2 profit is attributable to the infringement. Similarly, copyright juries are instructed
3 that unless you find that a portion of the profit from the [use] [sale] of a [product]
4 [work] containing or using the copyrighted work is attributable to factors other than
5 use of the copyrighted work, all of the profit is to be attributed to the infringement.
6 The defendant has the burden of proving the [portion] [percentage] of the profit, if
7 any, attributable to factors other than [copying] [infringing] the copyrighted work.
8 In neither copyright nor trademark contexts do the jury instructions require
9 juries to reject testimony that does not comport with the law. In both contexts, what
10 restrains damages experts from conjuring up analyses and calculations that diminish
11 or exaggerate the award to which plaintiffs are entitled is Rule 702 and Daubert.
12 Fahmy v. Jay Z, No. 2:07-cv-05715-CAS (PJWx), 2015 U.S. Dist. LEXIS
13 129446 (C.D. Cal. Sept. 24, 2015) provides guidance. In that case, plaintiff sued for
14 copyright infringement, claiming that defendants song Big Pimpin' infringes
15 plaintiffs rights in the song Khosara, Khosara. Plaintiffs damages claim turned on
16 the complex evaluation of the contribution Big Pimpin made to the commercial
17 success of Jay Zs concerts, films, recordings, and other activities. The court took up
18 five Daubert motions. It precluded, limited, and allowed various testimony from
19 various experts depending on its rigor and precision, whether there had been timely
20 disclosure to the opposing party, and the experts qualifications. No jury instruction
21 could have enabled the jury to evaluate this testimony for reliability. That job
22 belonged to the Court.
23 IV. ADDITIONAL SUPPLEMENTAL JURY INSTRUCTIONS
24 In addition to its proposed instruction regarding the computation of damages for
25 design patent infringement, Columbia proposes two additional instructions, which are
26 attached as Appendix C: an instruction regarding willful blindness, in accordance
27 with its opposition to Seiruss Motion for Judgment as a Matter of Law regarding
28 6
1 willfulness; and a supplemental instruction regarding the relevance of foreign patent

2 actions.
3 Dated: September 25, 2017
4 SCHWABE, WILLIAMSON & WYATT, P.C.
5
6 By: /s/ Nicholas F. Aldrich
David R. Boyajian
7 E-mail: dboyajian@schwabe.com
David W. Axelrod, pro hac vice
8 E-mail: daxelrod@schwabe.com
Brenna K. Legaard, pro hac vice
9 E-mail: blegaard@schwabe.com
Nicholas F. Aldrich, Jr., pro hac vice
10 E-mail: naldrich@schwabe.com
11 Attorneys for Plaintiff
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28 7
1 CERTIFICATE OF SERVICE
2 I hereby certify that on September 25, 2017, I served the foregoing document
3 on the following counsel of record for Defendant Seirus Innovative Accessories, Inc.:
4 By electronic service via the Rene E. Rothauge
5 Courts CM/ECF System ReneeRothauge@markowitzherbold.com
Markowitz Herbold PC
6 Suite 3000, Pacwest Center
7 1211 SW Fifth Avenue
Portland, OR 97204-3730
8 Christopher S. Marchese
9 marchese@fr.com
Garrett K. Sakimae
10 sakimae@fr.com
11 Michael A. Amon
amon@fr.com
12 Seth M. Sproul
13 sproul@fr.com
Tucker N. Terhufen
14 Terhufen@fr.com
15 Fish & Richardson PC
12390 El Camino Real
16 San Diego, CA 92130
17
18
19 by delivering to them a true and correct copy thereof, certified by me as such.
20
21
/s/ Nicholas F. Aldrich
22 Nicholas F. Aldrich
23 Email: naldrich@schwabe.com
24
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26
27
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CERTIFICATE OF SERVICE CASE NO.: 3:17-CV-01781

PDX\106477\192966\BKL\21531196.1
Case 3:17-cv-01781-HZ Document 342-1 Filed 09/25/17 PageID.14971 Page 1 of 4
APPENDIX A
COLUMBIA REQUESTED FINAL JURY INSTRUCTION NO. 12

(AMENDED)
Measure of DamagesArticle of Manufacture
I have already determined that all of Seiruss Heat Wave products infringe
Columbias D093 Design Patent, regardless of how the Heat Wave fabric is
oriented on the product. The law provides that an infringer who (1) applies the
patented design, or any colorable imitation thereof, to any article of manufacture
for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to
which such design or colorable imitation has been applied shall be liable to the
owner to the extent of his total profit. 1
To calculate the total profits, you must first identify the articles of
manufacture to which the infringing design has been applied. Second, you must
calculate the total profit Seirus made on the sale of those articles of manufacture.2
If the product as sold to consumers is a single component product, then that
product is the relevant article of manufacture. 3
1
35 U.S.C. 289
2
Samsumg Elecs. Co., Ltd. v. Apple Inc., 137 S. Ct. 429 (2016)
3
Id. (In the case of a design for a single-component product, such as a dinner
plate, the product is the article of manufacture to which the design has been
applied. In the case of a design for a multicomponent product, such as a kitchen
oven, identifying the article of manufacture to which the design has been applied
is a more difficult task.)
1-
APPENDIX A
If the product as sold to consumers is a multi-component product, then you
must use the factors listed below to determine whether the relevant article of
manufacture is the product sold to consumers or a component of that product.4
Columbia contends that all of Seiruss Heat Wave products are single
component products with the exception of the Heat Touch Torche. Seirus contends
that for all Heat Wave products, the relevant article of manufacture is Heat Wave
fabric. Seirus bears the burden of proving that the articles of manufacture to which
the infringing design is applied is the Heat Wave fabric, not the products as sold to
consumers. 5
In determining what the relevant article of manufacture is, you should
consider the following: 6
First, the scope of the design claimed in the plaintiffs patent, including
drawing and written description, to determine which portions of the product the
design is intended to cover. The patented design does not need to and usually does
not extend to the entire article of manufacture.7
4
Id.
5
Sept. 11, 2017, Columbia v. Seirus Pretrial Conference Trans., (Page 84:12 to
84:16) (holding that once the plaintiff has set forth what the article item is, the
burden of persuasion lies with the defense that the article of manufacture is
something less than its entirety, and that burden remains with the defense
throughout.)
6
Brief for the United States as Amicus Curiae, pp. 26-29, Samsung Elecs. Co. Ltd.
v. Apple Inc., 137 S. Ct. 429 (2016).
7
Samsung, 137 S. Ct. at 435 (citing Application of Zahn, 617 F.3d 261 (CCPA)).
2-
APPENDIX A
Second, you should consider the relative prominence or importance of the
design within the product as a whole. If the design is a significant attribute of the
entire product, affecting the appearance of the product as a whole, that fact
suggests that the article should be the product.
Third, you should consider whether the design is conceptually distinct from
the product as a whole.
Fourth, you should consider the physical relationship between the patented
design and the rest of the product as sold to consumers.
Once you determine which article of manufacture the infringing design is
applied to, you must determine the total profit Seirus made on sales of those
articles of manufacture. 8
To determine Seiruss total profits for the sales of the relevant articles of
manufacture, you must first determine Seiruss gross revenues for those sales.
Columbia has the burden of proving those gross revenues by a preponderance of
the evidence. 9
8
Samsumg Elecs. Co., Ltd. v. Apple Inc., 137 S. Ct. 429 (2016).
9
Brief for the United States as Amicus Curiae, p. 26-29, Samsung Elecs. Co. Ltd.
v. Apple Inc., 137 S. Ct. 429 (2016).
3-
APPENDIX A
Seiruss profits are determined by subtracting from those revenues any
expenses that are directly variable with the production or sale of the articles of
manufacture to which the design is applied. 10
Expenses are such amounts as cost of goods, packaging costs, and shipping
costs. Expenses that are directly dependent upon, or variable with, the manufacture
or sale of the infringing HeatWave products are deducted. Certain fixed or
overhead costs that do not vary with increases in the production or sale of the
HeatWave products, such as taxes, insurance, rent, and administrative overhead,
should not be subtracted from gross revenue. 11
10
FCBA Model Patent Jury Instructions (UPDATED DRAFT July 2016).
11
Id.
4-
APPENDIX B
COLUMBIA REQUESTED SUPPLEMENTAL FINAL

JURY INSTRUCTION NO. 1
Willfulness Willful Blindness
You may find that Seirus willfully infringed the 270 Patent if you find that
it was willfully blind as to its infringement of the 270 Patent. You may find that
Seirus was willfully blind as to its infringement if (1) it subjectively believed that
there was a high probability that Columbia had obtained a patent covering the
Omni-Heat Reflective technology, and that Seirus infringed it, and (2) Seirus
took deliberate actions to avoid learning of that fact.
Global-Tech Appliances, Inc. v. SEB SA, 131 S. Ct. 2060, 2070 (2011)
1-
APPENDIX B
COLUMBIA REQUESTED SUPPLEMENTAL FINAL

JURY INSTRUCTION NO. 2
Foreign Patentability Issue is not Relevant
You heard some testimony regarding foreign patents and the patent laws of
foreign countries. Foreign patent law is different from U.S. patent law, and the
rules for acquiring patents and infringing patents are different in foreign countries
than in the United States. In this case, you are being asked whether Seirus
infringes a United States patent under U.S. law, and whether that patent is valid
under U.S. law. In answering that question, you should not consider any issues
concerning foreign law or foreign patents.
2-

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Case 3:17-cv-01781-HZ Document 342 Filed 09/25/17 PageID.

1 DAVID R. BOYAJIAN (SBN #257825)

11 Attorneys for Plaintiff

1 willfulness; and a supplemental instruction regarding the relevance of foreign patent

CERTIFICATE OF SERVICE CASE NO.: 3:17-CV-01781

COLUMBIA REQUESTED FINAL JURY INSTRUCTION NO. 12

patented design, or any colorable imitation thereof, to any article of manufacture

owner to the extent of his total profit. 1

If the product as sold to consumers is a single component product, then that

product is the relevant article of manufacture. 3

If the product as sold to consumers is a multi-component product, then you

manufacture is the product sold to consumers or a component of that product.4

In determining what the relevant article of manufacture is, you should

consider the following: 6

not extend to the entire article of manufacture.7

Second, you should consider the relative prominence or importance of the

suggests that the article should be the product.

the product as a whole.

design and the rest of the product as sold to consumers.

Once you determine which article of manufacture the infringing design is

Columbia has the burden of proving those gross revenues by a preponderance of

Seiruss profits are determined by subtracting from those revenues any

manufacture to which the design is applied. 10

or sale of the infringing HeatWave products are deducted. Certain fixed or

HeatWave products, such as taxes, insurance, rent, and administrative overhead,

should not be subtracted from gross revenue. 11

COLUMBIA REQUESTED SUPPLEMENTAL FINAL

Willfulness Willful Blindness

took deliberate actions to avoid learning of that fact.

COLUMBIA REQUESTED SUPPLEMENTAL FINAL

Foreign Patentability Issue is not Relevant

concerning foreign law or foreign patents.

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