Judge Pitman Grants Summary Judgment of No Damages After Excluding Plaintiff’s Expert Damages Testimony

Defendant Microsoft Corporation (Microsoft) filed a motion for summary judgment of no remedy, which Judge Pitman granted on August 15, 2024, resulting in final judgment on all claims in favor of Microsoft.

Plaintiff Exafer Ltd (Exafer) filed suit in 2019, alleging that certain networking technology used in Microsoft’s Azure platform infringed its United States Patents Nos. 8,325,733 and 8,971,335.

After the close of fact discovery, Microsoft moved to exclude Exafer’s damages theory for using unaccused products as the royalty base; the court granted the motion on April 11, 2024, resulting in the exclusion of Exafer’s expert damages testimony in its entirety.

Microsoft then moved for summary judgment of no remedy. The court first considered whether Microsoft met its initial showing that there was no evidence to support Exafer’s damages claims. It found that the striking of Exafer’s damages testimony and Exafer’s failure to disclose other damages evidence or theories in interrogatory responses or through its 30(b)(6) representative at deposition were sufficient to meet Microsoft’s initial burden.

The court then turned to whether Exafer had raised a genuine issue of fact that it was entitled to a non-zero royalty. Exafer had identified five categories of evidence, which it claimed supported a reasonable royalty by showing alleged cost savings attributable to use of the patents. The court addressed each category in turn.

First, Exafer identified its own technical expert, who opined that the benefits of the patents include saving CPU cycles and improving performance. The court ruled that this was merely evidence of an alleged technical benefit, not of a royalty amount. The court explained that Exafer “does not point to anything in Dr. Congdon’s reports or testimony that a court or a jury could use to determine how much money Microsoft saved … if Microsoft even did cut down on costs.” The court also observed that the expert had admitted he was not qualified to opine on damages.

Second, Exafer identified the testimony of a Microsoft fact witness. Here again, the court ruled that Exafer had only identified evidence of an alleged technical benefit, but not cost savings. The court explained that any verdict based on this testimony would rest on “pure speculation” as to the amount of the alleged cost savings.

Third, Exafer identified Microsoft’s rebuttal damages expert, who had offered a report responding to the now-struck Exafer damages expert report. The court ruled that his testimony and report were inadmissible hearsay because a litigation expert hired as an independent expert witness for trial is not an agent of a party and therefore his statements do not qualify as admissions of a party, so no hearsay exception applied.

Fourth, Exafer identified Microsoft’s rebuttal non-infringement expert. Again, the court found that this evidence merely identified an alleged technical benefit, but provided no evidence of any amount of cost savings, and thus could not support any royalty.

Finally, Exafer referred to various Microsoft documents. The court found that Exafer had attached only one document, which referenced only the same alleged technical benefit of CPU improvement. The court found that Exafer failed to identify anything specific that supported a non-speculative, non-zero royalty.

The court therefore concluded that Exafer had failed to identify any evidentiary support for a reasonable royalty award, and granted summary judgment in favor of Microsoft.