Phenix Longhorn, LLC v. AU Optronics Corporation et al

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
PHENIX LONGHORN LLC,
Plaintiff,
v.
AU OPTRONICS CORPORATION,
HISENSE ELECTRONICA MEXICO,
S.A. DE C.V., HISENSE USA
CORPORATION, HISENSE VISUAL
TECHNOLOGY CO., LTD., and
DOES 1–10,
Defendants.
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CASE NO. 2:23-CV-00477-RWS-RSP
MEMORANDUM ORDER
Before the Court is Defendants’ Motion to Exclude Opinions of Justin R. Blok. Dkt. No.
251. The Motion is fully briefed. See Dkt. Nos. 294, 335, 340. In the Motion, Defendants seek to
exclude portions of Plaintiff’s damages expert’s opinions because he allegedly (1) bases his
opinions on a litigation settlement license without understanding how it was calculated, and
without apportioning out the value of six other included patents, (2) uses market data to estimate
importation but fails to account for sales from products of manufacturers other than AUO, (3)
parrots facts he learned through hearsay, and (4) relied on a late produced report. See Dkt. No. 251
at 1. For the reasons set forth below, the Motion is DENIED.
I. 	LEGAL STANDARD
An expert witness may provide opinion testimony if “(a) the expert’s scientific, technical,
or other specialized knowledge will help the trier of fact to understand the evidence or to determine
a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product
of reliable principles and methods; and (d) the expert has reliably applied the principles and
methods to the facts of the case.” Fed. R. Evid. 702.
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Rule 702 requires trial courts to make a preliminary determination, when requested, as to
whether the requirements of the rule are satisfied regarding a particular expert’s proposed
testimony. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149 (1999); Daubert, 509 U.S. at
592–93 (1993). Such courts are given broad discretion in making Rule 702 admissibility
determinations. Kumho Tire, 526 U.S. at 152 (“[A] judge must have considerable leeway in
deciding in a particular case how to go about determining whether particular expert’s testimony is
reliable”). Although the Fifth Circuit and other courts have identified various factors that the court
may consider in determining whether an expert’s testimony should be admitted, the nature of the
factors that are appropriate for the court to consider is dictated by the ultimate inquiry—whether
the expert’s testimony is sufficiently reliable and relevant to be helpful to the finder of fact and
thus to warrant admission at trial. See United States v. Valencia, 600 F.3d 389, 424 (5th Cir. 2010).
Importantly, in a jury trial setting, the Court’s role under Daubert is not to weigh the expert
testimony to the point of supplanting the jury’s fact-finding role; instead, the Court’s role is limited
to that of a gatekeeper, ensuring that the evidence in dispute is at least sufficiently reliable and
relevant to the issue before the jury that it is appropriate for the jury to consider. See Micro Chem.,
Inc. v. Lextron, Inc., 317 F.3d 1387, 1391–92 (Fed. Cir. 2003) (applying Fifth Circuit law) (“When,
as here, the parties’ experts rely on conflicting sets of facts, it is not the role of the trial court to
evaluate the correctness of facts underlying one expert’s testimony.”); Pipitone v. Biomatrix, Inc.,
288 F.3d 239, 249–50 (5th Cir. 2002) (“‘The trial court’s role as gatekeeper [under Daubert] is not
intended to serve as a replacement for the adversary system.’ . . . Thus, while exercising its role as
a gate-keeper, a trial court must take care not to transform a Daubert hearing into a trial on the
merits” (quoting an Advisory Committee Note to Fed. R. Evid. 702)). As the Supreme Court
explained, 	“[v]igorous 	cross-examination, 	presentation 	of 	contrary 	evidence, 	and 	careful
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instruction on the burden of proof are the traditional and appropriate means of attacking shaky but
admissible evidence.” See Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002).
Despite the above, however, “even if testimony is reliable, it may still be excluded if it
relies on information that violates the [Federal] [R]ules [of Civil Procedure].” Estech Sys. IP, LLC
v. Carvana LLC, No. 2:21-CV-00482, 2023 WL 3292881, at *2 (E.D. Tex. May 5, 2023).
II. 	DISCUSSION
As noted in the introduction, Defendants advance several theories for excluding portions
of Mr. Blok’s opinions. See Dkt. No. 251 at 3–15. The Court addresses each in turn.
A. Mr. Blok’s Opinions Based on the Innolux Agreement
The Innolux Agreement is a licensing agreement that resulted from a settlement of a prior
litigation between Plaintiff and Innolux. See Dkt. No. 251-6 at 1; Dkt. No. 251-2 ¶ 85. The
consideration recited in the agreement is $3.825 million, see Dkt. No. 251-6 ¶ 2.1; Dkt. No. 251-
2 ¶ 87, and was “calculate[ed]” based, inter alia, on the fact that “Innolux sold 2,780,623 products
relevant to Phenix’s claims of infringement of the Asserted Patents” in the Innolux case during the
damages period, see Dkt. No. 251-6 ¶ 2.2; Dkt. No. 251-2 ¶ 87. The “Settlement Payment was
negotiated in an arms’ length discussion based on [that fact].” See id. It also included a “Covenant
Not To Sue” Innolux for the “Released Products.” See Dkt. No. 251-6 ¶ 2.4.
While the only asserted patents in that action were the same patents asserted here—U.S.
Patent Nos. 7,233,305 (“’305 Patent”) and 7,557,788 (“’788 Patent”)—the license was to
“Released Patents,” encompassing “all active and expired U.S. and foreign patents and patent
applications owned by [Plaintiff] as of the Effective Date of the Agreement, including the Asserted
Patents . . . including but not limited to those set forth in Exhibit A.” See id. at 1; id. ¶¶ 1.7, 2.4,
6.1. Exhibit A listed eight total patents, including the two asserted patents (the ’305 and ’788
Patents), as well as U.S. Patent Nos. (1) 6,693,828, (2) 8,188,952, (3) 7,554,843, (4) 8,194,015,
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(5) 6,985,372, and (6) 7,061,380. See id. at 12. Notably, the effective date of the agreement is the
date of execution, September 26, 2025. See id. at 11. Three of those six additional released patents
expired in 2023; only patents (2), (3), and (4) had remaining life at that time. See Dkt. No. 251-2
¶ 90. Both Parties agree that Mr. Blok relied on the Innolux Agreement in his calculation of the
reasonable royalty. See Dkt. No. 294 at 2; Dkt. No. 251 at 3–5.
Defendants first argue that Mr. Blok’s use of the Innolux Agreement is unreliable because
he allegedly compares the 2.78 million units (products) figure from that agreement with the 3.5 to
4.5 million units1 figure accused in this case to adjust the $3.825 million settlement payment from
that agreement upward in his calculation of the reasonable royalty in this case. See Dkt. No. 251
at 3, 5–9. Defendants argue that “it makes a difference” what those products were, and points to
Mr. Blok’s deposition testimony for support that he did not know “how that number was derived.”
See id. at 6, 6 n.4 (citing, e.g., Dkt. No. 251-5 at 115:22–116:2). Defendants also appear to argue,
in part, that the agreement itself is unreliable because it is a “litigation-driven settlement.” See id.
at 5. Defendants finally argue that Mr. Blok’s attribution of the entire settlement payment to the
two patents asserted here (the ’305 and ’788 Patents) is unreliable because he “failed to apportion
any value for the other six patents.” See id. at 9–10.
Defendants make heavy use of the recent Federal Circuit case, EcoFactor, Inc. v. Google
LLC, 137 F.4th 1333 (Fed. Cir. 2025) (en banc), to argue by analogy that Mr. Blok’s use of the
2.78 million units (products) figure from the Innolux Agreement is unreliable because the evidence
around the agreement itself “cannot reasonably support competing conclusions.” See Dkt. No. 251
at 6–7 (citing EcoFactor, 137 F.4th at 1346). But the analogy is weak. Specifically, in EcoFactor,
1 Plaintiff entered into a settlement agreement with iML for the ’305 Patent, and AUO sells LCD
panels incorporating some of iML’s Pgamma ICs. See Dkt. No. 251 at 2 n.2. The 3.5-million-units
number is without iML Pgamma ICs, while the 4.5-million-units number is with those ICs. See id.
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one of the relied-upon licenses stated that the “amount is not based upon sales and does not reflect
or constitute a royalty,” see 137 F.4th at 1333, and another stated that the payment is “based on
what [plaintiff] believes is a reasonable royalty,” without defendant conceding that it was in fact a
reasonable royalty, as well as another similar statement to the first license, see id. at 1342, and the
final relied-upon license contained “substantially the same recital,” see id. at 1343. The Federal
Circuit therefore explained that “the plain language of the license agreements does not support
[plaintiff’s damages expert]’s testimony that [the licensees] agreed to pay the” asserted royalty
rate, which was asserted as a fact without qualification by that plaintiff’s damages expert. See id.
at 1343.
But the Innolux Agreement contains no such qualification or recital, as Plaintiff points out.
See Dkt. No. 294 at 6–7. Instead, as indicated earlier, it states in full the following:
2.1 Payment. As consideration for the releases and covenants granted herein . . .
Innolux will pay to Phenix the total sum of $3,825,000 U.S. Dollars ($) (the
“Settlement Payment”) . . . .
2.2 Calculation of Settlement Payment. From October 10, 2017 through June 15,
2025, Innolux sold 2,780,623 products relevant to Phenix’s claims of infringement
of the Asserted Patents. Based on the amount of the Settlement Payment and the
total number of relevant products, the effective royalty rate paid is $1.375 per unit.
The Parties acknowledge and agree that the amount of the Settlement Payment was
negotiated in an arms’ length discussion based on the total number of relevant
products that Innolux sold.
Dkt. No. 251-6 ¶¶ 2.1–.2 (emphasis in original). While Defendants do not dispute that this was a
deciding point of EcoFactor, they pivot to arguing that Mr. Blok’s reasonable royalty calculation
based on the Innolux Agreement “suffers from the same fundamental flaw” as the licenses in
EcoFactor because “the licensees’ agreement to the rate was untethered from the license and
unsupported by the evidence.” See Dkt. No. 335 at 1.
The Court disagrees. In EcoFactor, “the only evidence” other than the language of the
licenses themselves upon which plaintiff’s damages expert relied was the testimony of plaintiff’s
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CEO, see 137 F.4th at 1343, and it contradicted the language of the agreements, see id. at 1343–
44 (e.g., “Mr Habib testified that the lump-sum payments for each of the three licenses was
calculated by multiplying the licensee’s past and future projected sales by the … per unit rate.”).
Thus, the Federal Circuit found that “a fundamental premise of [plaintiff’s damages expert]’s
testimony—that [the licensees] agreed to pay the rate—was not based on sufficient facts or data,”
see id. at 1345. While Defendants may be correct that Mr. Domengeaux, Plaintiff’s representative,
admitted he doesn’t “know which products are among the 2.78 million,” the fact of the matter is
that the Innolux License here does state that it is based on those sales, unlike in EcoFactor. And
despite Defendants’ contention that his “extent of use” adjustment was lacking, see Dkt. No. 335
at 	1–3, 	having 	reviewed 	the 	briefing 	and 	Mr. 	Blok’s reports, the 	Court 	finds 	that 	his
acknowledgement of the figure and the bases for it are sufficiently reliable.
Defendants’ other arguments here are likewise unpersuasive. To Defendants’ second
argument, licenses resulting from litigation may be used in a damages expert’s calculation of a
reasonable royalty so long as, inter alia, they are sufficiently comparable (technically and
economically). See, e.g., ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 872–73 (Fed. Cir. 2010);
Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1369–72 (Fed. Cir. 2017); Laser
Dynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 77 (Fed. Cir. 2012) (holding that settlement
licenses may be considered in “proper context within the hypothetical negotiation framework”).
To Defendants’ final argument, the Innolux Agreement itself acknowledges that it resulted
from a settlement of a litigation involving only the same two patents asserted here—the ’788 and
’305 Patents. See Dkt. No. 251-6 at 1. Although it also includes licenses to other non-asserted
patents that Plaintiff owned at that time, three of those patents were expired, and the other three
were, of course, not involved. Moreover, Mr. Blok acknowledges all of this in his analysis, and
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states that he has accounted for these facts. See Dkt. No. 251-2 ¶¶ 85–91. Even if his accounting
for these additional patents is zero, as Defendants complain, see Dkt. No. 251 at 10; Dkt. No. 335
at 3–4, Defendants have not met their burden of showing that this accounting alone is insufficiently
reliable such that Mr. Blok’s opinions should be excluded.
Accordingly, the Court finds that Defendants’ Motion should be and hereby is DENIED
in seeking to exclude Mr. Blok’s use of the Innolux Agreement in his calculation of a reasonable
royalty.
B. Mr. Blok’s Importation Opinions Relying on Market Data Research
Defendants next argue that Mr. Blok’s failure “to apportion his market research data to
account for customer U.S. sales that use AUO products versus other” manufacturers’ products
renders his importation opinions unreliable. See Dkt. No. 251 at 10–13. Specifically, Defendants
take issue with Mr. Blok’s method of estimating the importation rate of accused AUO products
into the United States through AUO’s customers, wherein he relies on third party market research
firms’ estimates of market share related to the customers’ products generally, as reported in the
Grand View Report and the Statista TV Market Report. See id. Defendants argue this method of
estimating importation is unreliable because it is “not specific to AUO” and “include[s] televisions
containing components from suppliers other than AUO.” See id. at 12–13.
Having considered these arguments and reviewed Mr. Blok’s report, the Court finds that
his analysis estimating what percentage of AUO’s allegedly infringing products are imported into
the United States to be sufficiently reliable. He is not using the market share estimates (or
revenues) as a base for apportionment generally. See Uniloc USA, Inc. v. Microsoft Corp., 632
F.3d 1292, 1320–21 (Fed. Cir. 2011) (clarifying Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d
1301, 1338–39 (Fed. Cir. 2009)); Roland Corp. v. inMusic Brands, Inc., No. 2023-1327, 2025 WL
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926703, at *15 (Fed. Cir. Mar. 27, 2025). Instead, he only uses them to estimate importation rates
for each customer of AUO.
Although Defendants take issue with the fact that Mr. Blok “admits that the reports notify
users that they are provided on a best effort basis and are subject to data availability,” see Dkt. No.
251 at 12 n.7 (citing Dkt. No. 251-5 at 149:2–24), and that he “would have preferred the customers’
actual sales data [to the market research reports],” see id. at 12 (citing Dkt. No. 251-4 at 57:21–
58:3), the Court finds these disclaimers to be indicia of reliability—he explicitly discloses the
limitations of his importation estimate. Moreover, as Plaintiff points out, Mr. Blok “narrow[ed]
his inquiry to the LCD TVs that incorporate the accused products and customers that purchased
accused products from AUO and sold LCD TVs into the United States.” See Dkt. No. 294 at 11
(citing Dkt. No. 251-2 ¶¶ 143–53). Crucially, Defendants have pointed to no other better evidence
of volume of products sold in the United States that Mr. Blok could have more properly relied
upon.
Accordingly, the Court finds that Defendants’ Motion should be and hereby is DENIED
in attempting to exclude Mr. Blok’s reliance on the Grand View and the Statista TV Market
Reports to estimate AUO’s customers’ importation of allegedly infringing products into the United
States.
C. Mr. Blok’s Reliance on Hearsay
Defendants next argue that Mr. Blok “has no personal knowledge of the facts concerning
Alta’s discussion with AUO in the early 2000s or the financial position of Alta at or around the
time of the hypothetical negotiation in 2011,” and therefore cannot establish these facts without
his reliance on “conversations with Mr. Orlando and his reading of unauthenticated [and] hearsay
documents.” See Dkt. No. 251 at 13. However, Defendants concede that Mr. Blok “may be able to
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base his opinions on these facts if already introduced in evidence at trial,” and “experts may rely
on hearsay to form their opinions.” See id.
Defendants Motion is DENIED to the extent it seeks to exclude Mr. Blok’s reliance on
hearsay and unauthenticated evidence related to Alta’s discussion with AUO in the early 2000s
and the financial position of Alta at or around the time of the hypothetical negotiation.
D. Mr. Blok’s Use of the Untimely RosettiStarr Report
The arguments made here for excluding Mr. Blok’s use of the allegedly untimely
RosettiStar report to support new damages theories are identical to Defendants’ Response in
Opposition, Dkt. No. 278, to Plaintiff’s Motion for Leave to Supplement the Opening Damages
Report of Justin Blok, Dkt. No. 236. However, Plaintiff’s Motion for Leave is co-pending and has
not yet been granted, making the arguments Defendants made here premature. Accordingly, and
for judicial efficiency and clarity, Defendants’ Motion is DENIED to the extent it seeks to exclude
Mr. Blok’s use of the RosettiStarr Report. However, the Court carries the arguments made here
for exclusion to be addressed in its forthcoming order on Plaintiff’s co-pending motion.
III. 	CONCLUSION
For the reasons and to the extent provided above, Defendants’ Motion to Exclude Opinions
of Justin R. Blok is DENIED.
.
____________________________________
ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE
SIGNED this 3rd day of January, 2012.
SIGNED this 13th day of January, 2026.
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