opine on whether or not due diligence was completed in this case by
Marleau Lemire. As an expert in financing, Dr. Jurkowitz is qualified to
analyze the steps taken by Marleau Lemire and compare those steps to the
generally accepted practices and standards relied upon by investment
bankers for conducting due diligence. He may thus offer an opinion as to
whether the investigation undertaken by Marleau Lemire in regard to ID
Security constituted a full and complete due diligence analysis.
Finally, Dr. Jurkowitz may opine on whether, if Marleau Lemire had
completed due diligence, ID Security would have qualified to receive the
financing outlined in the letter of December 16, 1996, excluding the
information contained in the Checkpoint press release.*fn15 Dr.
Jurkowitz may evaluate the factors relied upon by investment banking
firms and opine on whether ID Security would have qualified to receive
the financing it requested excluding the information contained in the
Checkpoint press release.*fn16 Dr. Jurkowitz is an expert in finance and
his opinion will assist the jury in determining whether ID Security was a
qualified candidate for financing. Unlike the testimony of Dr. Kursh, who
sought to assist the jury by opining on a matter of basic economic
principles, Dr. Jurkowitz's testimony implicates complex and technical
questions as to which the average juror lacks familiarity and
understanding. Thus, Dr. Jurkowitz's testimony would assist the jury in
reaching a determination as whether, if Marleau Lemire had completed due
diligence, ID Security would have qualified for financing but for
Checkpoint's press release.
G. Expert Testimony of John A. Olah, Esq.
Checkpoint seeks to preclude the expert testimony of John A. Olah,
Esq., on the grounds that his opinions do not meet the standard for
expert testimony set forth in Daubert. Olab's expert report renders an
opinion on the substantive law of Ontario and then applies law to a set of
facts in this case. In doing so, Olab concludes that based on Ontario
law, the contract between ID Security and Tokai was in effect when
Checkpoint entered into the exclusive agreement with Tokai in February
1997, the oral modification of ID Security's contract with Tokai in
Holland in 1997 was valid and that the amount of damages awarded against
Checkpoint shall be reduced only by the amount Tokai paid in settlement
with ID Security. ID Security notes that Olab will not be called to
testify as an expert witness before the jury at trial, but instead, that
his report and testimony shall be offered to the court to assist
in the determination of Ontario law. See Fed.R.Civ.P. 44.1.
Federal Rule of Civil Procedure 44.1 provides:
A party who intends to raise an issue concerning the
law of a foreign country shall give notice by
pleadings or other reasonable written notice. The
court, in determining foreign law, may consider any
relevant material or source, including testimony,
whether or not submitted by a party or admissible
under the Federal Rules of Evidence. The court's
determination shall be treated as a ruling on a
question of law.
Fed.R.Civ.P. 44.1. The rule provides the framework for the court to
determine the law of foreign jurisdictions, should issues of foreign law
arise. Prior to the enactment of this rule, the determination of foreign
law was a question of fact. See 9 Wright and Miller, Federal Practice and
Procedure, § 2441. The rule sought "to abandon the fact
characterization of foreign law and to make the process of determining
alien law identical with the method of ascertaining domestic law to the
extent that it is possible to do so." Id. at § 2444. Thus, when a
district court is called upon to determine foreign law, the court need
not be bound by the Federal Rules of Evidence and may look to any
relevant material or source, including expert testimony. See Reebok
Int'l, Ltd. v. McLaughlin, 49 F.3d 1387, 1392 n. 4 (9th Cir. 1995).
To the extent that Olab opines on the substantive provisions of Ontario
contract law, and provided, of course, that Ontario contract law applies
in this case, Olah's report may assist the court in making a
determination as to the substance of Ontario law. See Fed.R.Civ.P. 44.1.
Olah's report, however, extends beyond providing an analysis of Ontario
law, as it also offers to assist the fact finder as to which facts to
find largely based upon the testimony by ID Security President Peter
Murdoch. To the extent that Olab seeks to find or assist the court in
finding the facts of this case, Olab's testimony invades the province of
the fact-finder and it is not an appropriate function of expert testimony
under Rule 44.1.
In Lithuanian Commerce Corp., Ltd. v. Sara Lee Hosiery,
177 F.R.D. 245, 264 (D.N.J. 1997), vacated in part on other grounds, 179 F.R.D. 450
(D.N.J. 1998), the court was confronted with a similar situation, in
which the plaintiff sought to introduce an expert report on foreign law
pursuant to Rule 44.1. As in this case, the expert also sought to assist
the fact-finder as to which facts to find in the case. The court
recognized "that use of an expert report to assist the court in its
determination of foreign law is entirely different from use of an expert
report, pursuant to Rule 702, Fed.R.Evid., to aid the jury in determining
facts." Id. The court noted that if it were to introduce the report to
the jury, "this report will subvert the jury's function in that it is the
responsibility of the jury, not [the expert], to determine what the facts
are in light of the applicable law." Id. Therefore, the court refused to
admit the report into evidence, but did not preclude the plaintiff from
presenting the report to the court to assist in the determination of
foreign law, pursuant to Rule 44.1. See id.
Accordingly, Olab's testimony and report will be admitted to the extent
that it assists the court in determining the substantive law of Ontario.
The testimony and report will be disallowed, however, to the extent that
it seeks to guide the court in determining the facts of this case.
III. Other Evidentiary Motions
In addition to the motions in limine seeking to preclude the
introduction of expert
witnesses pursuant to Daubert, the parties have also filed several other
motions seeking to preclude the introduction of certain evidence.
Specifically, ID Security seeks to preclude the affidavits of Tadayoshi
Haneda. Checkpoint seeks to preclude any evidence of Checkpoint's
enforcement of its patents, the affidavit of Lukas A. Geiges and the
testimony of Messrs. Angel and de Nood.
A. Affidavits of Tadayoshi Haneda
ID Security seeks to exclude the affidavits of Tadayoshi Haneda, a
former Checkpoint officer and previous president of Tokai. The affidavits
were filed in 1997 during litigation in Canada between ID Security and
Tokai for alleged breach of Tokai's obligations under an exclusivity
agreement. ID Security notes that the case settled prior to ID Security
being able to cross-examine Haneda on the statements made in the
affidavits. Haneda, who is now in Japan and, according to the parties, is
beyond the reach of compulsory process, refuses to testify in this
matter. The parties agree that they have gone to lengths to secure his
testimony but there are no available court processes to compel his
appearance. See Hr'g Tr., 3/8/02, at 173. Because the court finds that the
affidavits do not have the equivalent circumstantial guarantees of
trustworthiness as statements covered in Federal Rules of Evidence 803
and 804, the affidavits of Haneda are not admissible and ID Security's
motion will be granted.
The statements in Haneda's affidavits are hearsay and not subject to
any of the specific exceptions to the hearsay rule. Checkpoint contends,
however, that the statements are admissible under Federal Rule of
Evidence 807, the residual exception to the hearsay rule.
Rule 807 provides:
A statement not specifically covered by Rule 803 or
804 but having equivalent circumstantial guarantees of
trustworthiness, is not excluded by the hearsay rule,
if the court determines that (A) the statement is
offered as evidence of a material fact; (B) the
statement is more probative on the point for which it
is offered than any other evidence which the proponent
can procure through reasonable efforts; and (C) the
general purposes of these rules and the interests of
justice will best be served by admission of the
statement into evidence.
Fed.R.Evid. 807. In order to satisfy this rule, the purported evidence
must meet five requirements: trustworthiness, materiality, probative
importance, interest of justice and notice. See Coyle v. Kristjan
Palusalu Maritime Co., Ltd., 83 F. Supp.2d 535, 545 (E.D.Pa. 2000),
aff'd 254 F.3d 1077 (3d Cir. 2001). Nevertheless, Congress intended this
exception to "be used very rarely, and only in exceptional
circumstances." Id. Indeed, as Judge Pollak has instructed, "[a]
catch-all rule such as Rule 807 must be sparingly invoked, lest its
potential breadth swallow the carefully crafted narrowness of the
enumerated exceptions." Russo v. Abington Mem. Hospital Healthcare Plan,
Civ.A. No. 940195, U.S. Dist. LEXIS 18595, at *9, 1998 WL 967568 at *3
(E.D.Pa. Nov. 16, 1998).
The dispute over Haneda's affidavits implicates, primarily, the
interest of justice and trustworthiness prongs of the
Rule 807 requirements.*fn17 With respect to the
interest of justice prong, both sides advance persuasive arguments as to
why the affidavits should or should not be admitted. Checkpoint contends
that the affidavits of Haneda provide the only opportunity for Checkpoint
to present its side of the story concerning the relationship between ID
Security and Tokai. The affidavits address not only what occurred at the
meeting in Amsterdam in early 1997, where Haneda was the only participant
who was present other than representatives of ID Security, but also what
transpired throughout the course of the relationship between the two
parties, including the obligations and performance of the original
two-year contract and whether the contract was ever extended to include a
third year. Checkpoint pleads that to exclude these affidavits would
result in a trial based upon half-truths.
On the other hand, ID Security contends that to introduce the
affidavits of Haneda would result in the admission of a one-sided view
that, in contrast to the deposition and trial testimony of Peter
Murdoch, has never been tested on the crucible of cross examination. To
let these documents into evidence, contends ID Security, would allow
Checkpoint to present uncontested and untested statements, against which
neither ID Security nor any other party has had an opportunity to
The crux of this argument, then, is whether the documents are
sufficiently trustworthy. If they are, then ID Security would be able to
counter the assertions contained within the affidavits by introducing its
own evidence, such as the testimony of Murdoch. The jury would determine
which version of events to credit. If the affidavits are not
trustworthy, however, then to allow them into evidence would not provide
the "other half' of the truth, but merely place before the jury
self-serving and likely untruthful statements that do not reflect the
actual circumstances and events which they purport to describe.
The Third Circuit has discussed the application of Rule 807 in
circumstances that resemble the situation in the case at hand. In
Bohler — Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79,
111-13 (3d Cir. 2001), the Third Circuit upheld the admission under
Rule 807 of an affidavit made by the plaintiffs former president, who had died
prior to trial. Id. The plaintiff in that case sought the introduction of
the affidavit in an effort to counter the defendant's assertions of what
had transpired at meetings that were attended by the former president.
Id. at 111-12. In addressing the trustworthiness prong of Rule 807, the
trial court in Bohler—Uddeholrn pointed to seven factors that made
the affidavits in that case trustworthy:
(1) the declarant was known and named, (2) the
statement was made under oath and penalty of perjury,
(3) the declarant "was aware of the pending litigation
at the time he made the declaration and thus knew that
his assertions were subject to cross examination," (4)
the statements were based on personal observation, (5)
the declarant was not employed by the plaintiff at the
time of the statements, and thus had no financial
interest in the litigation's outcome, (6) the
affidavit was corroborated, partially, but minutes of
directors meetings (some statements [the declarant]
said were made match others' notations), and (7) his
position and background qualified him to make the
Id. at 113. The Third Circuit determined that the district court did not
discretion in permitting the introduction of the affidavit. See id.
In the case at bar, Haneda executed the statements under oath and
penalty of perjury. Furthermore, to the extent that the affidavits note
Haneda's reflection of the events at the Amsterdam meeting and the
ongoing relationship between ID Security and Tokai, the affidavits also
are based on his personal knowledge of those events and circumstances.*fn18
Nevertheless, Bohler—Uddeholm is distinguishable, primarily based
on the fifth factor annunciated by the trial court: that the declarant
"was not employed by the plaintiff at the time of the statements, and
thus had no financial interest in the litigation's outcome." Id. at 113.
In this case, Haneda was Tokai's president and a member of Tokai's board
of directors at the time he took the affidavits. As such, at the very
moment that he swore the affidavits, he was employed by the party on
whose behalf he filed the affidavits and therefore had a "financial
interest" in the outcome of the case. Id.
Also troubling is Haneda's refusal to cooperate in this case and the
reason advanced for not cooperating. Haneda's refusal to cooperate with
the parties in the instant case, apparently as a result of an employment
dispute with Checkpoint, does not speak well of Haneda's regard for legal
proceedings.*fn19 This apparent willingness to withhold testimony to fit
his purpose is probative of the trustworthiness of his earlier
testimony. To put it another way, if Haneda is now willing to thumb his
nose at the legal system to fit his purpose (i.e. to withhold testimony
to punish a party who terminated his employment), the court may
legitimately question the trustworthiness of his testimony in an earlier
proceeding where he also had an incentive to shape his testimony to fit
Accordingly, the court concludes that the affidavits do not provide
circumstantial guarantees of trustworthiness and are subject to the very
risks that the hearsay rule is designed to prevent. Mr. Haneda's
affidavits are not admissible and ID Security's motion will be granted.
B. Checkpoint's Enforcement of its
Checkpoint seeks to prevent ID Security from introducing evidence that
Checkpoint had enforced its patents. II) Security suggests that by
enforcing its patents, Checkpoint engaged in anticompetitive conduct.
Under ordinary circumstances, a patent holder who brings an infringement
action to enforce its patent rights is "exempt from the antitrust laws,
even though such a suit may have an anticompetitive effect." In re
Independent Serv. Org., 203 F.3d 1322, 1325 (Fed.Cir. 2000). There are
two exceptions: (1) a patent owner seeking to enforce a patent may be
liable under the antitrust laws if it can be shown that the asserted
patent was obtained through fraud, see Nobelpharma v. Implant
Innovations, 141 F.3d 1059, 1068-69 (Fed.Cir. 1998); and (2) the patent
infringement suit falls within the "sham" exception, see In re
Independent, 203 F.3d at 1325. To fall within that second exception, the
antitrust plaintiff must prove that the suit was both "objectively
baseless and subjectively motivated by a desire to impose collateral,
anti-competitive injury rather than to obtain a justifiable legal
There is no evidence in the record that Checkpoint or anyone else
committed fraud on the Patent and Trademark Office. Nor has ID Security
demonstrated that Checkpoint's patent lawsuits constituted "sham"
litigation. Since neither of the exceptions applies, Checkpoint's conduct
in bringing infringement actions to enforce its patents is exempt from
the antitrust laws, and any evidence of its infringement actions is
irrelevant and therefore must be excluded.*fn20 Checkpoint's motion to
exclude any evidence of Checkpoint's enforcement of its patents therefore
will be granted.
C. Lukas A. Geiges Affidavit
Checkpoint seeks to preclude the introduction of an affidavit by Lukas
A. Geiges, Checkpoint's Senior Vice President of International Business
Development from 1994 to 1998. Checkpoint seeks to preclude the
introduction of his affidavit on the grounds that it is not based on
personal knowledge, is hearsay that does not fall under any exception and
is unfairly prejudicial. This motion, however, is premature because it is
uncertain whether or not Mr. Geiges will attend trial. If Mr. Geiges
attends trial, then this motion is moot. Accordingly, the court denies
this motion without prejudice, and Checkpoint may reassert this motion at
trial, in the event Mr. Geiges is not a witness in this case.
D. Trial Testimony of Messrs. Angel
and de Nood
Checkpoint also seeks to exclude the trial testimony of Messrs. Angel
and de Nood. This motion is likewise premature, because Messrs. Angel and
de Nood are located in the Netherlands and have continually expressed no
interest in this litigation and are likely not to appear at trial.
This motion is denied without prejudice. Checkpoint may reassert this
motion at trial if either Mr. Angel or Mr. de Nood appear for trial.
For the reasons stated above, the court finds that Martin A. Asher,
Ph.D., and Mr. Peter R. Greenhalgh, the parties' liability experts, both
may testify as to Checkpoint's alleged antitrust liability. Mr.
Greenhalgh may also testify to damages incurred by ID Security as a
result of Checkpoint's alleged conduct. Samuel J. Kursh, D.B.A., may
testify to ID Security's lost profits stemming from lost sales of
Laserfuse tags but may not testify as to lost profits as a result of lost
hardware sales. With regard to lost Tokai tag sales, Dr. Kursh may
testify as to EAS industry practices, including the parties' business
practices, Tokai's economic incentive to extend the contract and whether
extending the contract with ID Security would have been more profitable
than the alternatives available to Tokai. Dr. Kursh, however, may not
testify that the economic incentive to Tokai would have resulted in ID
Security and Tokai extending the contract and that the extension would
have been until 2008.
The court further finds that Checkpoint may not introduce evidence
contesting the validity of the Laserfuse tag patent but may introduce
evidence, including the testimony of Leslie L. Kasten, Jr., as to whether
the Laserfuse tag would have infringed upon United States Patent No.
5,367,290. This testimony, however, is subject to the court's
determination, following a Markman hearing, of the term "breakdown
point." Dr. E.L. Jurkowitz may testify to the generally accepted practices
and standards relied upon by investment bankers in the conduct of due
diligence, whether Marleau Lemire's conduct constituted a full and
complete due diligence analysis and whether, if due diligence had been
completed, ID Security would have qualified to receive the financing it
requested but for the information contained in the Checkpoint press
Moreover, the testimony and report of John A. Olab, Esq., will be
admitted to the extent that it assists the court in determining the
substantive law of Ontario. The testimony and report of Mr. Olah will be
disallowed, however, to the extent that it seeks to guide the court in
determining the facts of the case. The court will exclude the affidavits
of Tadayoshi Haneda and any evidence relating to Checkpoint's enforcement
of its patents. Finally, the court will defer its ruling on whether to
exclude the affidavit of Lukas A. Geiges and the trial testimony of
Mssrs. Angel and de Nood until the time of trial.
An appropriate order follows.
AND NOW, this 24th day of April, 2002, for the reasons stated in the
court's memorandum dated April 24, 2002, it is hereby ORDERED that:
1. Defendant's motion in limine to exclude the expert testimony of John
A. Olah, Esquire (doc. no. 99) is GRANTED IN PART and DENIED IN PART.
2. Defendant's motion in limine to preclude expert testimony of Martin
A. Asher, Ph.D., (doc. no. 100) is DENIED.
3. Defendant's motion in limine to preclude expert testimony of Samuel
J. Kursh, D.B.A., (doc. no. 101) is GRANTED IN PART and DENIED IN PART.
4. Plaintiffs motion in limine to preclude testimony by Dr. E.L.
Jurkowitz (doc. no. 102) is DENIED.
5. Plaintiffs motion in limine to preclude expert testimony by Peter