Free Response in Opposition to Motion - District Court of Arizona - Arizona

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David P. Irmscher (Indiana State Bar No. 15026-02) John K. Henning (Indiana State Bar No. 25203 49) Baker & Daniels LLP 111 East Wayne Street, Suite 800 Fort Wayne, IN 46802 Telephone: 260 424 8000 Facsimile: 260 460 1700 Ray Harris (Arizona State Bar No. 007408) Paul Moore (Arizona State Bar No. 019912) Fennemore Craig 3003 North Central Avenue Suite 2600 Phoenix, AZ 85012 2913 Telephone: 602 916 5000 Facsimile: 602 916 5999 Attorneys for the defendant, Omron Corporation

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ENNEMORE CRAIG , P.C. P HOENIX

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Hypercom Corporation, Plaintiff, v. Omron Corporation, Defendant. CAUSE NO. CV04-0400 PHX PGR DEFENDANT OMRON CORPORATION' OPPOSITION TO S MOTION TO STRIKE INADMISSIBLE EVIDENCE AND TO PRECLUDE TESTIMONY OF JAMES DUNLOP

I.

INTRODUCTION

Hypercom Corporation ("Hypercom") has moved to strike from the summary judgment record, and to exclude from trial, testimony by James Dunlop because Omron Corporation ("Omron") failed to timely disclose his "expert opinions." Dunlop, however, has not given any. In nine pages of briefing, Hypercom fails to identify any specific testimony by Dunlop, much less any expert testimony within the scope of Rule 702 of the
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Federal Rules of Evidence. And while Hypercom concludes "[i]t would be prejudicial and unfair to allow Dunlop to testify that Hypercom' product infringed upon the ` s 077 Patent," Dunlop has given no opinion about infringement. infringement at trial. To the contrary, Omron has offered James Dunlop as a percipient witness. Dunlop has simply described what he observed when using a credit and debit card in a Hypercom terminal in Colorado. And while Dunlop has been trained as an engineer, anyone who knows how to use a credit card could do the same. Dunlop' testimony, in short, requires s no scientific, technical, or other specialized knowledge within the scope of Evidence Rule 702. Accordingly, it is admissible under Evidence 701, and Hypercom' motion should s be denied. II. A. ARGUMENT Nor will he opine on

Dunlop' Testimony Does Not Rest on Specialized Knowledge s

Hypercom has challenged Dunlop' testimony 1 as an untimely expert report. s Federal Rule of Evidence 701, however, provides that: If the witness is not testifying as an expert, the witness' testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness, (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue, and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702. (Emphasis added). Evidence Rule 701 thus specifically addresses Hypercom' concerns s that the "requirements set forth in Rule 702" ­ and the disclosure requirements of Rules 16 and 26 of the Federal Rules of Civil Procedure ­ "will be evaded through the simple expedient of proffering an expert in lay witness clothing." Advisory Committee Notes to Rule 701, Federal Rules of Evidence. As explained in the Committee Notes to the 2000
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While Dunlop' testimony is styled a "report," its recitations are properly authenticated by affidavit and s remain substantively indistinguishable from the affidavit of a lay witness.
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Amendment, the addition of subsection "c" prevents such evasions. Regardless of a witness' designation as lay or expert, Evidence Rule 702 will govern "to the extent [he] s is providing testimony based on scientific, technical, or other specialized knowledge." Id. (Emphasis added). Evidence Rule 702 does not govern here. Dunlop relied on no "specialized"

knowledge to report the successful use of credit and debit cards without telling the Hypercom machine which was which. As set out in Omron' second statement of facts: s 114. Dunlop' investigation included making two purchases of s goods at PetCo and paying for one with a credit card and the other with a debit card. Id. at p. 3. 115. During the credit and debit card transactions, Dunlop swiped each card through the ICE6000 without providing any information to the cashier about the type of card being used. Id. at pp. 3, 5, 10. 116. With the credit card purchase, the [Hypercom] ICE6000 terminal processed the transaction and requested a signature without requiring any input from the cashier or Dunlop as to credit or debit. Conversely, after swiping a debit card, the ICE6000 proceeds to ask for the card owner' pin number, again without requesting any additional s information from the card owner regarding the type of card being used. Id. at pp. 10-12. 117. Therefore, Dunlop' investigation showed that "no s identification had to be given to the cashier or machine to identify the use of a debit or credit card. The displays shown on the Hypercom ICE6000 prompted the consumer to either enter their PIN or signature depending on the card used." Id. at p. 3. 118. Dunlop recorded both of the debit and credit card transactions on a video recorder, and a copy of the recordings was disclosed as an attachment to his report. See Exhibit 9 to Omron' SOF s In Support Of Second MSJ. See Statement Of Facts In Support Of Omron Corporation' Second Motion For Summary s Judgment ("Omron' Second Statement Of Facts") at ¶¶ 114-118, filed July 24, 2006. s These facts, like the testimony that supports them, consist of visual observations.2
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And the authentication of a video-tape reproducing those observations.

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And even if Dunlop has offered inferences, they rest squarely and rationally on his perceptions. Thus having watched a Hypercom terminal process his debit card transaction without pressing a "debit button" (or seeing the clerk do so), Dunlop could rationally conclude "no identification had to be given to the cashier to identify the use of a debit or credit card." Notwithstanding his training as an engineer, Dunlop has offered testimony that any credit cardholder could provide. His testimony is thus plainly admissible under Rule 701. See United States v. Figueroa-Lopez, 125 F.3d 1241, 1246 (9th Cir. 1997) (allowing law enforcement agents to give lay testimony that defendant was acting suspiciously, but applying Evidence Rule 702 to proposed testimony, based on extensive experience, about defendants' use of code words related to drugs); United States v. SotoBenizquez, 356 F.3d 1 (1st Cir. 2004) ("[w]itnesses who testify only about their perceptions of an event, or about lay opinions arising out of those perceptions, see Fed R. Evid. 701, are not experts under Rule 702 regardless of any specialized training or experience they may possess"). B. Dunlop' Testimony Is Not Prejudicial And Relates To Facts At Issue s

As a final basis for its motion, Hypercom argues that Dunlop' testimony should be s excluded from trial under Evidence Rule 403 as more prejudicial than probative. Hypercom writes: "It would be prejudicial and unfair to allow Dunlop to testify that Hypercom' product infringed upon the ` s 077 Patent merely because he claims to have ` observed' the terminal ` automatically discriminating' between one type of card and another, when such conclusion is not based on any analysis as to any programming that might have enabled the terminal to discriminate automatically." See Hypercom

Corporation' Motion To Strike Inadmissible Evidence And To Preclude Testimony Of s James Dunlop ("Hypercom Motion") at 8-9, filed September 14, 2006. There are two problems with this position. First, Dunlop has not offered, and does not intend to offer, an opinion on infringement. Rather, Dunlop affirms that: (1) "no
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identification had to be given to the cashier or [Hypercom ICE6000 terminal at a certain Petco retail store in Colorado Springs, Colorado] to identify the use of a debit or credit card," and (2) the "displays shown on the Hypercom ICE6000 prompted the consumer to either enter their PIN or signature depending on the card used." See Report Of James Dunlop at 3, attached as Exhibit 9 to Omron' Second Statement Of Facts. Thus, while s Omron' experts may rely on these observations to opine on infringement, Dunlop does s not do so. Hypercom has wholly failed to articulate any source of prejudice against it. Second, Dunlop' testimony is highly probative. s The claim that Hypercom' s

ICE6000 terminal cannot be configured to discriminate between credit and debit cards without human intervention lies at the heart of Hypercom' case against Omron. s Hypercom has consistently recited this claim as evidence both that Verve' infringements s claims lack merit, and that Omron knew it. Thus, for example, Hypercom repeatedly cites its purported assertion to Omron on September 16, 2004, that "only manual input of credit/debit card-type is provided for by T8 and ICE 6000 terminals" as proof that Omron knew the ICE6000 could not infringe the ` 077 Patent. See Hypercom Corporation' s Statement Of Facts In Opposition To Omron' Motion For Summary Judgment, at ¶¶ 6 & s 41, and Exhibit 18 at p. 6, filed December 23, 2005; Hypercom' Second Amended s Complaint at ¶¶ 28-29 3 ; Hypercom Corporation' Response To Omron Corporation' s s Second Motion For Summary Judgment ("Hypercom' Response"), pp. 11 and 16.4 And s
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Paragraph 28 of the Second Amended Complaint states: "On September 16, 2004, Hypercom' s representatives met with representatives of Omron, including Herbert V. Kerner, concerning the patent infringement claims that Verve had asserted against Hypercom in Michigan, Texas, California, and the ITC proceeding in Washington, D.C. Hypercom' representatives demonstrated the operation of s Hypercom' accused products, and showed why the Hypercom products clearly did not infringe the s Omron patents asserted against Hypercom." Paragraph 29 of the Second Amended Complaint states: "With knowledge of Verve' meritless patent s infringement charges against Hypercom in Michigan, Texas, California, and the ITC proceeding in Washington, D.C., Omron aided Verve in its efforts to extort money from Hypercom."
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Hypercom argued in its response brief that: "On September 16, 2004, less than two weeks after the commencement of the ITC Action, Hypercom met with Mr. Nakano and Omron' attorney Herb Kerner s
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Hypercom has cited its terminals' need for manual input as proof on non-infringement to this court: Hypercom' accused products do not meet this requirement of the ` s 077 patent. All of Hypercom' accused products require the user to press a s button to indicate that the card is a debit card, and the accused products do not automatically discriminate between credit cards and debit cards. Exhibit 19; Exhibit 20; Exhibit 59. Hypercom' Statement Of Facts, ¶ 112. s There simply is no justification for barring eye-witness testimony proving one of Hypercom' central contentions wrong. s III. CONCLUSION

The testimony of James Dunlop amounts to nothing more than his visual observations and common sense. Notwithstanding his training as an engineer, Dunlop relies on no scientific, technical, or other specialized knowledge in describing credit and debit card transactions at a Petco store in Colorado. Accordingly, Hypercom' motion to s strike evidence and exclude the testimony of James Dunlop should be denied. Respectfully submitted on October 2, 2006. FENNEMORE CRAIG

By s/Ray K. Harris Ray Harris Paul Moore BAKER & DANIELS LLP David P. Irmscher John K. Henning Attorneys for Defendant Omron Corp.

and demonstrated why none of Hypercom' accused products infringed any of the asserted Omron patents, s including the patent involved in the ITC Action." Hypercom' Response at p. 11. Hypercom further s argued: "In this case Omron undisputedly knew that Verve' lawsuits were baseless after the meeting with s Hypercom on September 16, 2004." Id. at p. 16.
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CERTIFICATE OF SERVICE

I hereby certify that on October 2, 2006, I electronically transmitted the attached documents to the Clerk' Office using the CM/ECF System for filing and transmittal of a s Notice of Electronic Filing to the following CM/ECF registrants: Sid Leach Michael K. Kelly Andy Halaby Monica Limon-Wynn SNELL & WILMER L.L.P. One Arizona Center 400 East Van Buren Phoenix, AZ 85004-2202

s/Melody Tolliver

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