A blog about patent, copyright and trademark law in the U.S. District Court
for the Southern District of New York

Court Denied in Part, and Granted in Part, Defendant Monster Energy Company’s Motion To Preclude Plaintiff Beastie Boys’ Expert Witness Concerning Music Licensing.

In a March 6, 2014 Opinion and Order, the Honorable Paul A. Engelmayer denied defendant Monster Energy Company’s motion to preclude plaintiff Beastie Boys’ expert witness. The plaintiff intended to offer expert testimony from Lisa Thomas concerning the fair market value of (1) a license to use the musical composition and sound recordings included in the allegedly infringing video and (2) the implied endorsement allegedly created by defendant’s use of plaintiffs’ names and trademarks in the video. The defendant moved to preclude Thomas’s testimony from trial.

“Federal Rule of Evidence 702 grants an expert witness testimonial latitude unavailable to other witnesses, provided that (1) ‘the testimony is based on sufficient facts or data,’ (2) ‘the testimony is the product of reliable principles and methods,’ and (3) ‘the expert has reliably applied the principles and methods to the facts of the case.’” “The proponent of expert testimony has the burden of establishing by a preponderance of the evidence that the admissibility requirements of Rule 702 are satisfied.” The Court’s task “is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” “A trial judge should exclude expert testimony if it is speculative or conjectural or based on assumptions that are so unrealistic and contradictory as to suggest bad faith.” Additionally, “an expert opinion requires some explanation as to how the expert came to his conclusion and what methodologies or evidence substantiate that conclusion.” Pursuant to Rule 403, the Court may also exclude evidence if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.

Important here, “[a] minor flaw in an expert’s reasoning or a slight modification of an otherwise reliable method will not render an expert’s opinion per se inadmissible.” “The judge should only exclude the evidence if the flaw is large enough that the expert lacks good grounds for his or her conclusions.” “This limitation on when evidence should be excluded accords with the liberal admissibility standards of the federal rules and recognizes that our adversary system provides the necessary tools for challenging reliable, albeit debatable, expert testimony.”

The defendant did not dispute Thomas’ expertise in music licensing, nor did it take issue with the five factors that Thomas stated, in her experience, usually affect the negotiated value of a music license. Instead, the defendant disputed her application of those factors to the facts at hand.

In the main, the Court found defendant’s objections were without merit, or went to the credibility of Thomas’s testimony, which were to be tested not by preclusion but by “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof,” which “are the traditional and appropriate means of attacking shaky but admissible evidence.”

The defendant did have one trenchant objection to Thomas’s report and testimony. Thomas estimated the fair market value of an appropriate license based on a perpetual term of use. But the measure of damages must be based on “the use the infringer made,” not unrealized risks created by the infringer’s use. Thomas’s decision to value the license and implied endorsement based on a perpetual term of use, when the law requires her to use a five-week term of use, was not a “minor flaw.” Rather, “the flaw is large enough” that, while it remained a basis for her report, the report “lacks good grounds for [its] conclusions.” This flaw, however, was eminently correctable, the court ruled. Thomas was allowed to render a prompt, revised opinion, that valued the license based on a factually defensible assumption as to the term of use.

In a subsequent May 7, 2014 ruling,  Judge Engelmayer again refused to prohibit Thomas from testifying.  The defendant argued that Thomas's estimate of damages was so vague as to be illusory.  The Court wrote that Thomas "is not fairly to be faulted for acknowledging that inherent uncertainty in estimating the value of a unique, intangible good.  In acknowledging that uncertainty, Thomas, in fact, keeps company with the Second Circuit, which, when it first approved the method of measuring a copyright holder's actual damages through the fair market value of a hypothetical license fee, recognized the difficulty of that exercise."  The Court did, however, did preclude Thomas from testifying about the settlement of a widely-publicized dispute between the Beastie Boys and toymaker GoldieBlox under Federal Rule of Evidence 403.  Judge Engelmayer wrote that "the confusion and delay occasioned by introduction of evidence as to the GoldieBlox Settlement would substantially outweigh -- indeed, it would overwhelm -- the limited probative value of the GoldieBlox testimony."
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