Case5:08-cv PSG Document498 Filed08/15/13 Page1 of 6

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1 Case:0-cv-00-PSG Document Filed0// Page of 0 MICHAEL J. BETTINGER (SBN ) mike.bettinger@klgates.com TIMOTHY P. WALKER (SBN 000) timothy.walker@klgates.com HAROLD H. DAVIS, JR. (SBN ) harold.davis@klgates.com K&L GATES LLP Four Embarcadero Center, Suite 00 San Francisco, CA - Telephone:..00 Facsimile:..0 Attorneys for Plaintiffs, Counter-Defendants ACER, INC., ACER AMERICA CORPORATION and GATEWAY, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION 0 ACER, INC., ACER AMERICA CORPORATION and GATEWAY, INC., vs. Plaintiffs and Counter-defendants, TECHNOLOGY PROPERTIES LIMITED, PATRIOT SCIENTIFIC CORPORATION, and ALLIACENSE LIMITED, Defendants and Counter-claimants. AND RELATED COUNTERCLAIMS. Case No. :0-cv-00 PSG PLAINTIFFS MOTION IN LIMINE NO. TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS Date: August, 0 Time: :00 p.m. Place: Courtroom Judge: Hon. Paul S. Grewal PLAINTIFF S MOTION IN LIMINE NO. TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS

2 Case:0-cv-00-PSG Document Filed0// Page of 0 NOTICE OF MOTION PLEASE TAKE NOTICE THAT on August, 0, at :00 p.m. or as soon thereafter as the matter may be heard, in the Courtroom of the Honorable Paul S. Grewal, Courtroom, th floor at the United States District Court for the Northern District of California, San Jose Division, 0 South st Street, San Jose, California,, declaratory judgment plaintiffs and counterdefendants Acer, Inc., Acer America Corporation, and Gateway, Inc. (collectively Acer/Gateway ) will, and hereby do move in limine for an order excluding reference to or the introduction of settlement negotiations between Acer/Gateway and Defendants Technology Properties Limited, Patriot Scientific Corporation, or Alliacense Limited (collectively TPL ) and excluding any documents or testimony based on settlement communications. The Court should exclude such evidence on three grounds: () the evidence is inadmissible pursuant to Federal Rule of Evidence 0; () the evidence is irrelevant, and; () the evidence is unfairly prejudicial. This Motion is based on this Notice, the Memorandum of Points and Authorities, and any other argument or evidence that may be presented in advance or at any hearing of this Motion. 0 i PLAINTIFF S MOTION IN LIMINE NO. TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS

3 Case:0-cv-00-PSG Document Filed0// Page of 0 I. SUMMARY OF THE ARGUMENT Plaintiffs Acer, Inc., Acer America Corporation, and Gateway, Inc. (collectively Acer/Gateway ) anticipate that Defendants Technology Properties Limited, Patriotic Scientific Corp., and Alliacense Limited (collectively TPL ) will attempt to improperly introduce evidence of the parties settlement negotiations at trial. Specifically, TPL identifies settlement communications in its exhibit list, and its damages expert, Dr. Stephen Prowse, expressly relies on the parties settlement negotiations as foundation for his damages analysis under the Georgia-Pacific factors. Both Dr. Prowse s testimony regarding those settlement negotiations and any documents evidencing those negotiations are inadmissible. Specifically, such evidence is prohibited under Federal Rule of Evidence 0, is irrelevant under Rule 0, and is confusing, misleading and unfairly prejudicial under Rule 0. Acer/Gateway therefore requests that the Court grant this motion and generally preclude the introduction of evidence regarding the parties settlement negotiations, including, but not limited to, the documents and expert testimony identified below. II. FACTUAL BACKGROUND Acer/Gateway and TPL have engaged in various settlement negotiations since this dispute s 0 inception. The parties have exchanged numerous communications memorializing these negotiations that one or both parties labeled as subject to Fed. Rule of Evid. 0. TPL identifies a number of these communications on their exhibit list. TPL NDH - TPL NDH; TPL NDH - TPL NDH00; TPL NDH0 - TPL NDH0; TPL NDH0 - TPL NDH0; TPL NDH - TPL NDH; TPL NDH - TPL NDH. Additionally, in his report, Dr. Prowse expressly identifies various settlement negotiations as providing foundation for his expert opinion regarding TPL s damages. Specifically, paragraphs,,, and of his report identify the parties settlement negotiations as supporting his opinions based on Georgia-Pacific factors,, and. Dr. Prowse s report also identifies the underlying documents reflecting those settlement negotiations. Acer/Gateway therefore anticipates that Dr. Dr. Prowse s report identifies the following documents pertaining to the parties settlement negotiations: TPL-NDH-; TPLNDH-; TPL-NDH- PLAINTIFF S MOTION IN LIMINE NO. TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS

4 Case:0-cv-00-PSG Document Filed0// Page of Prowse will attempt to testify to these negotiations in support of his expert opinion at trial, and that TPL will attempt to introduce documentary evidence of the parties settlement negotiations. III. LEGAL ARGUMENT 0 0 Federal Rule of Evidence 0 states in pertinent part: Evidence of () furnishing or offering or promising to furnish, or () accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. The Ninth Circuit has explained that [b]y preventing settlement negotiations from being admitted as evidence, full and open disclosure is encouraged, thereby furthering the policy toward settlement. United States v. Contra Costa Cnty. Water Dist., F.d 0, (th Cir.). A. Evidence of the Parties Settlement Negotiations is Inadmissible Under Federal Rule of Evidence 0 Rule 0 specifically states that evidence of settlement negotiations is not admissible to prove liability for or invalidity of the claim or its amount. (emphasis added). Any attempt by Dr. Prowse to testify regarding these negotiations or any attempt by TPL to introduce the underlying documents in an effort to support TPL s damages claim would be improper and should be prohibited. Portugues-Santana v. Rekomdiv Int l., F.d, (st Cir. 0) (precluding evidence of a settlement agreement under Rule 0 where it was offered to argue reduction of damages); Cornell University v. Hewlett-Packard Co., Case No. 0-cv-, 00 WL, * (N.D. N.Y. May, 00) (Rader, J., sitting by designation) (precluding evidence of offers made during settlement negotiations under Rule 0). B. Evidence of the Parties Settlement Negotiations is Inadmissible as Irrelevant The introduction of evidence regarding the parties settlement negotiations is not only improper, it is irrelevant. Evidence is relevant if: (a) it has any tendency to make a fact more or less ; TPL-NDH0-; February, 0 Deposition of Daniel McNary Leckrone, at :-. PLAINTIFF S MOTION IN LIMINE NO. TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS

5 Case:0-cv-00-PSG Document Filed0// Page of 0 0 probable than it would be without the evidence; and (b) the fact is of consequence in determining the action. Fed. R. Evid. 0. Irrelevant evidence is not admissible. Fed. R. Evid. 0. Evidence regarding the parties settlement discussions in an effort to resolve this dispute outside of the courtroom has absolutely no bearing on the validity or value of TPL s claims in this litigation. That is, such evidence has no tendency to make TPL s claims more or less probable because the negotiations were part of a full and open disclosure in the interest of furthering the policy toward settlement. Contra Costa Cnty. Water Dist., F.d at. The negotiations reflect a number of considerations that have little to do with the parties actual evaluation of TPL s claims in litigation. The Court should therefore preclude its admission as irrelevant. McInnis v. AMF, INC., F. d 0, (st Cir. ) (explaining that evidence regarding settlement negotiations is of questionable relevance on the issue of... the value of a claim, since settlement [discussions] may well reflect a desire for peaceful resolution, rather than the litigants perceptions of the strength or weakness of their relative claims. ). C. Evidence of the Parties Settlement Negotiations is Inadmissible Under Federal Rule of Evidence 0 Finally, TPL s attempt to introduce evidence of settlement negotiations is misleading, confusing, and unfairly prejudicial. The Court may exclude any evidence, even if it is relevant, if its probative value is substantially outweighed by a danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence. Fed. R. Evid. 0. Rule 0 gives the Court broad discretion in determining whether to exclude such evidence. See Obrey v. Johnson, 00 F.d, (th Cir. 00) ( the district court retains broad discretion to determine whether the probative value of the evidence at issue is substantially outweighed by considerations of undue delay, waste of time, or needless presentation of cumulative evidence ); R.B. Matthews, Inc. v. Transamerica Transp. Servs., Inc., F.d, (th Cir., quoting United States v. Layton, F.d, (th Cir.) ( Trial judges have wide discretion to exclude evidence given their presence at the trial and because the considerations arising under Rule 0 are susceptible only to case-by-case determinations, requiring examination of the surrounding facts, circumstances, and issues ). PLAINTIFF S MOTION IN LIMINE NO. TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS

6 Case:0-cv-00-PSG Document Filed0// Page of 0 As discussed above, the parties settlement discussions reflect a mutual desire to resolve this dispute without having to bear the burdens and costs associated with litigation. Those discussions do not accurately reflect the parties true evaluation of TPL s claims from a litigation perspective. To admit such evidence would therefore present a distorted view of the parties positions to the jury. This would ultimately be confusing and misleading to the jury, and unfairly prejudicial to the parties. The Court should avoid such confusion and preclude TPL from introducing evidence regarding the parties settlement negotiations. See, e.g., Agrashell, Inc. v. Hammons Products Co., F.d, (th Cir. ) (affirming exclusion of settlement offer made by accused infringer to patentee based on probative value being outweighed by its prejudicial effect); Fenner Investments, Ltd. v. Hewlett-Packard Co., Case No. 0-cv-0-JDL, 00 WL, * * (E.D. Tex. 00) (granting patentee's motion in limine to exclude under Rule 0 evidence of prior settlement agreements and negotiations, the court finding that the prejudice and risk of jury confusion outweighed the probative value of the agreements, and rejecting the contention that ResQNet changed the law as to admissibility of such agreements). IV. CONCLUSION For the reasons stated above, Acer respectfully requests that this Court grant its Motion in Limine and exclude the introduction of settlement negotiations and/or any expert testimony based thereon including, but not limited to, the documents and testimony identified above. 0 Dated: August, 0 K&L GATES LLP By: /s/ Michael J. Bettinger Michael J. Bettinger Attorneys for Plaintiffs- Counterdefendants ACER, INC., ACER AMERICA CORPORATION, and GATEWAY, INC. PLAINTIFF S MOTION IN LIMINE NO. TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS

7 Case:0-cv-00-PSG Document- Filed0// Page of 0 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION 0 ACER, INC., ACER AMERICA CORPORATION and GATEWAY, INC., v. Plaintiffs and Counter-defendants, TECHNOLOGY PROPERTIES LIMITED, PATRIOT SCIENTIFIC CORPORATION, and ALLIACENSE LIMITED, Defendants and Counter-Claimants. AND RELATED COUNTERCLAIMS. Case No. :0-cv-00 PSG [PROPOSED] ORDER GRANTING PLAINTIFFS MOTION IN LIMINE NO. TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS [PROPOSED] ORDER GRANTING PLAINTIFFS MOTION IN LIMINE TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS

8 Case:0-cv-00-PSG Document- Filed0// Page of 0 Having considered the moving and responding papers of counsel, and oral argument, if any, the Court hereby GRANTS Plaintiffs Motion in Limine to Exclude the Introduction of Evidence of Settlement Negotiations. The Court further finds and orders as follows: () Defendants shall generally be prohibited from introducing evidence, either documentary or testimonial, regarding the parties settlement negotiations; () Defendants expert, Dr. Prowse, shall be prohibited from testifying regarding the parties settlement negotiations in support of his expert opinions under the Georgia-Pacific factors; () Defendants shall be prohibited from introducing the following documents: TPL NDH - TPL NDH; TPL NDH - TPL NDH00; TPL NDH0 - TPL NDH0; TPL NDH0 - TPL NDH0; TPL NDH - TPL NDH; TPL NDH - TPL NDH; TPL-NDH-; TPLNDH-; TPL-NDH-; TPL-NDH0-; February, 0 Deposition of Daniel McNary Leckrone, at :-. IT IS SO ORDERED. 0 Dated:, 0 By: Paul S. Grewal United States Magistrate Judge [PROPOSED] ORDER GRANTING PLAINTIFFS MOTION IN LIMINE TO EXCLUDE THE INTRODUCTION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS