The opinion
DivX, LLC v Harman Intl. Indus., Inc.
2025 NY Slip Op 30465(U)
February 3, 2025
Supreme Court, New York County
Docket Number: Index No. 656816/2021
Judge: Andrew Borrok
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
Op 30001(U), are republished from various New York
State and local government sources, including the New
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This opinion is uncorrected and not selected for official
publication.
INDEX NO. 656816/2021
NYSCEF DOC. NO. 715 RECEIVED NYSCEF: 02/03/2025
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 53
-----------------------------------------------------------------------------------X
DIVX, LLC INDEX NO. 656816/2021
Plaintiff, 11/05/2024,
11/05/2024,
-v- 11/05/2024,
11/05/2024,
HARMAN INTERNATIONAL INDUSTRIES, INC., 11/05/2024,
11/05/2024,
Defendant. 11/05/2024,
11/06/2024,
11/06/2024,
11/06/2024,
11/06/2024,
11/06/2024,
MOTION DATE 11/06/2024
017 018 019
020 021 022
023 024 025
026 027 028
MOTION SEQ. NO. 029
DECISION + ORDER ON
MOTION
-----------------------------------------------------------------------------------X
HON. ANDREW BORROK:
The following e-filed documents, listed by NYSCEF document number (Motion 017) 493, 494, 495, 496,
497, 498, 499, 500, 501, 502, 503, 504, 505, 506, 507, 508, 509, 510, 511, 512, 513, 514, 515, 516,
517, 518, 519, 520, 521, 522, 523, 524, 525, 526, 527, 596, 625, 626, 687, 688, 689, 690
were read on this motion to/for PRECLUDE .
The following e-filed documents, listed by NYSCEF document number (Motion 018) 528, 529, 530, 531,
532, 533, 597, 613, 627, 653, 654, 655
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 019) 534, 535, 536, 537,
538, 539, 598, 614, 628, 651, 652
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 020) 540, 541, 542, 543,
599, 615, 629, 685, 686
were read on this motion to/for MISCELLANEOUS .
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The following e-filed documents, listed by NYSCEF document number (Motion 021) 544, 545, 546, 547,
548, 600, 616, 630, 656, 657, 658, 659
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 022) 549, 550, 551, 552,
553, 554, 555, 556, 601, 617, 631, 644, 645, 646, 647, 648, 649, 650
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 023) 557, 558, 559, 560,
561, 562, 602, 618, 632, 666, 667, 668, 669, 670, 671, 672, 673, 674, 675, 676
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 024) 563, 564, 565, 566,
567, 603, 619, 633, 679, 680
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 025) 568, 569, 570, 571,
604, 620, 634, 660, 661, 662
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 026) 572, 573, 574, 575,
576, 605, 621, 635, 663, 664, 665
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 027) 577, 578, 579, 580,
606, 622, 636, 681, 682
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 028) 581, 582, 583, 584,
585, 586, 587, 588, 607, 623, 637, 683, 684
were read on this motion to/for MISCELLANEOUS .
The following e-filed documents, listed by NYSCEF document number (Motion 029) 589, 590, 591, 592,
593, 594, 595, 608, 624, 638, 677, 678
were read on this motion to/for MISCELLANEOUS .
Upon the foregoing documents and for the reasons set forth on the record (tr. 1.30.25), the
motions (Mtn. Seq. Nos. 017-029) are decided as set forth below.
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THE RELEVANT FACTS AND CIRCUMSTANCES
Reference is made to a prior Decision and Order of this Court, dated July 8, 2024 (the Prior
Decision; NYSCEF Doc. No. 481) pursuant to which the Court held that (i) whether the license
applies to on-car units sold to car manufacturers other than Hyundai depends in large part on
what is meant by the words “under a Licensee Brand” and the use of the phrase “and/or” in the
revised Section 2.2 of the Consumer Electronics License Agreement for Branded Devices (the
Agreement; NYSCEF Doc. Nos. 159, 222-226), (ii) the expert report of Dr. Mangione-Smith
raises issues of fact as to whether DivX, LLC (DivX)’s Intellectual Property Rights (as broadly
defined in the Agreement) in “packed B-frame technology” is present in Harman International
Industries, Inc. (Harman)’s head units, which can play back the CTKs, (iii) whether the in-car
units “decode” DivX Files in violation of Section 3.7 of the Agreement depends on whether
partial or full playback is required to cause a breach of Section 3.7, and (iv) issues of fact exist as
to whether the video portion of DivX Files contain any “DXN intellectual property or [] DXN
proprietary features” not contained in the standard MPEG-4 format (in particular, DivX’s packed
B-frame technology) such that even the mere playback of the video portion of a DivX File may
constitute a decoding of DivX proprietary information.
DISCUSSION
The purpose of an in limine motion is prevent the use of “inadmissible, immaterial or prejudicial
evidence” at trial (State v Metz, 241 AD2d 192, 198 [1st Dept 1998]; Drago v Tishman Constr.
Corp. of N.Y., 4 Misc3d 354, 359-60 [Sup Ct, NY Cnty 2004]).
I. DivX’s Motion in Limine (Mtn. Seq. No. 017)
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A. Testimony and Documents as to the Validity of DivX’s Patents and Mark Lorne
Milhench’s Proposed Expert Testimony
DivX argues, among other things, that the Court should exclude all testimony and documents
relating to the validity of DivX’s patents because while a licensee can challenge a patent’s
validity as a basis to avoid royalty payments under a patent license, the Agreement at issue is not
a patent license.
In their opposition papers, Harman argues that not all DivX technology is “DXN Technology.”
DXN Technology is limited to certain patent rights in the Deliverables (i.e., the Certification
Test Kits [CTKs]):
DXN Intellectual Property Rights: all inventions and proprietary rights owned
or controlled by DXN, including without limitation all copyrights, copyright
registration rights, patents, patent registration rights, business processes, mask
works, data rights, trade secrets, know-how, moral rights and specifications,
arising or enforceable under U.S, law, the laws of any other jurisdiction, or
international treaty regime but excluding all trademark rights and associated
goodwill.
DXN Technology: the Deliverables and Intellectual Property Rights in the
Deliverables, including any subdecimal upgrades or derivatives thereof, but not
including new releases.
(NYSCEF Doc. No. 159 at 1-2). Harman also argues that DivX’s European patent is a critical
basis for the royalties sought by DivX, as it is the only patent with a claim directed to a media
file like those in the CTKs.
As an initial matter, the Court notes that DXN Intellectual Property Rights means “all inventions
and proprietary rights owned or controlled by DXN” not merely patent rights. In addition,
whether DivX had proprietary rights “arising or enforceable under US law or the laws of any
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other jurisdiction or international treaty” presents a legal issue for the Court, not an issue of fact
for the jury.
The issue of when DXN had Intellectual Property Rights “arising or enforceable under US law
or the laws of any other jurisdiction or international treaty” requires additional briefing. For one
thing, it is not clear from Harman’s proffered expert opinion whether he is opining as to that or
whether he is offering a much more limited opinion particularly given that he has testified that he
is not an expert in German law and may not have a basis to opine as to DivX’s “proprietary
rights” given the provisional patent filing in Germany in 2015. In other words, although Harman
can introduce evidence that DivX did not have a patent or provisional patent rights (if this is the
case as a legal matter) or expert testimony within the scope of the expert’s expertise, what they
can not do is mislead the jury either with an incorrect or incomplete statement of DivX’s
“proprietary rights…arising or enforceable under U.S. law, the laws of any other jurisdiction or
international treaty.”
Thus, and to the extent that Harman intends to proffer a legal opinion at trial that DivX does not
have “proprietary rights…arising or enforceable under U.S. law, the laws of any other
jurisdiction or international treaty,” Harman may file on NYSCEF an up to three-page letter brief
as to (I) whether (a) its proffered expert who testified at his deposition that he is not an expert in
German law can offer an opinion on whether DivX had “proprietary rights arising or enforceable
under U.S. law, the laws of any other jurisdiction or international treaty” and if so when they had
such rights given the 2015 provisional patent filing in Germany and how “proprietary
rights…arising or enforceable under U.S. law, the laws of any other jurisdiction or international
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treaty” are challenged under the laws of the United Kingdom and under the laws of the United
States and (b) the basis for such opinion, and (II) (a) a more limited opinion that it proposes that
its expert is qualified to propound (if that is the case) and the basis for such opinion (i.e., taking
into account U.S. law and foreign law and how patent rights are challenged under U.S. law and
foreign law)1 and (b) an appropriate potential jury instruction for the Court to consider in
ensuring that the jury understands the opinion and its limits and is not confused or misled by the
expert’s proffered opinion. The letter shall be served and filed no later than February 14, 2025.
DivX may offer a rebuttal expert report in response. The rebuttal expert report shall be
completed within 60 days of this Decision and Order and the rebuttal expert shall appear at a
deposition within two weeks following the service of such report. Following the deposition, the
parties shall meet and confer. To the extent that the legal issue remains unresolved, the parties
shall email Part 53 (sfc-part53@nycourts.gov) to arrange a conference following which the Court
shall issue a supplemental order addressing the legal issue.
B. DivX is Not Entitled to Exclusion of Documents Relating to Negotiations
Between DivX and Cinemo GmbH
DivX argues that the Court should exclude all testimony and documents relating to DivX’s
ultimately unsuccessful licensing negotiations in early 2014 and between late 2015 and 2016
with Cinemo GmbH (Cinemo), a German company which provides software in Harman’s
products rendering the products capable of decoding DivX Files. DivX claims that (i) Harman
remains responsible for license fees irrespective of whether Cinemo has a license from DivX,
1
If a patent is presumptively valid under U.S. law unless challenged in a particular manner, if this was not done, it
would be improper to suggest to the fact finder that DivX does not have DXN Intellectual Property Rights before
January 22, 2020 if Harman knows that they did.
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and (ii) references to failed negotiations prejudicially imply that DivX did not take necessary
steps to protect its technology from Cinemo’s misuse.
As discussed, although true that Harman remains responsible under the Agreement to pay license
fees it owes (if any) and Harman may not imply that the negotiations were unsuccessful based on
any failure of DivX, the negotiations with Cinemo are admissible for the purpose of
demonstrating DivX’s knowledge that Harman’s products use Cinemo software in implementing
the MPEG-4 standard to play any video compliant with that standard, including the video portion
of DivX Files, which DivX designed to be backward-compatible with MPEG-4 to the exclusion
of any DXN Intellectual Property Rights.
Per the discussion at oral argument and inasmuch as DivX does not dispute this fact, to avoid any
improper understanding, the parties are to provide the Court with a proposed stipulation of fact to
be read to the Court to the fact finder at trial. If the parties are unable to agree upon a stipulation
of fact on this point, Harman may introduce into evidence an agreed-upon redacted document
showing the relevant portions relating to Cinemo technology and the MPEG-4 standard.
C. Exclusion of Testimony and Documents Relating to Other Negotiations and
Agreements Between DivX and Third Parties is Improper
DivX argues that the Court should exclude as irrelevant all references and testimony relating to
the definitions of “Third Party In-Car Brand” in DivX’s licensing agreements with third parties
from 2007 to 2011, including Mitsubishi (DTX227 and DTX228), Audiovox (DTX229), Denso
(DTX230), Clarion (DTX231), Fujitsu (DTX232), and Visteon (DTX233). DivX contends that
the third-party agreements contain confidential information of DivX’s customers, and the
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contracting parties’ interest in maintaining confidential terms is not outweighed by the minimal
probative value of their disclosure in open court. They are not right.
Any sensitive information can be addressed by agreed upon redaction. The Agreement in this
case is ambiguous as to whether infotainment systems sold to automakers other than Hyundai are
outside the scope of the license. Provided that a proper foundation is established (see Herman v
Seaworld Parks & Entm’t, Inc., 2016 WL 3746421 (MD Fla July 13, 2016]; United States v
Kellogg Brown & Root Servs., Inc., 284 FRD 22 [DDC 2012]), Harman can introduce these
agreements as evidence of what the parties meant by the term “Third Party In-Car Brand.” This
will require a foundation that changes were made to the form agreement in a similar manner and
for similar purpose.
D. Testimony and Evidence that DivX is Not the Original DivX or as to Fortress
Investment Group, or Attempts at Smearing DivX as a Litigation Funder, are
Inadmissible
DivX owns the assets of the original company that entered the Agreement at issue with Harman
and has succeeded to its rights. Harman is not permitted to introduce evidence about Fortress
Investment Group (Fortress) as an owner of DivX or Fortress’s ownership by the Mubadala
Investment Company, a state-owned global investment firm that acts as one of the sovereign
wealth funds of the government of Abu Dhabi. The ownership of DivX is not an issue in this
case. Nor is Harman permitted to use such ownership or any purported change in strategy to
disparage DivX as a serial litigant, “troll,” or a “litigation shop.” All such references are
irrelevant and improper. None of this has anything to do with this case.
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II. Harman’s Motion to Exclude Todd Schoettelkotte’s Testimony Regarding
Liquidated Damages Under Section 3.3 is Denied (Mtn. Seq. No. 018)
Harman argues that the Court should exclude the testimony of DivX’s damages expert witness,
Mr. Schoettelkotte, regarding the “penalty” royalty rate doubling under Section 3.3 of the
Agreement because, in sum and substance, (i) the Court has already addressed the penalty rate
and determined it is unenforceable, (ii) Section 3.3 requires Harman to submit the alleged
Licensee Products for certification before the penalty rate is available, and (iii) the penalty does
not apply to alleged breaches of Section 3.7, which do not involve Licensee Products.
In opposition, DivX argues, in sum and substance, that (i) Section 3.3 does not require a
condition precedent, but rather, merely states that DivX may at its discretion terminate the
Agreement or require Harman to submit Licensee Products for certification, (ii) Section 3.3 is
not an unenforceable penalty under California law, and (iii) Section 3.3 does, in fact, apply to a
Section 3.7 violation.
As an initial matter, Harman previously moved for summary judgment to have this Court hold
that Section 5.7 of the Agreement is not enforceable. They did not however move to have the
Court hold that Section 3.3 is unenforceable. Nothing prevented them from doing so. This is
improper for consideration on a motion in limine. As such, it is denied.
For completeness the Court notes that the basis on which the Court held that Section 5.7 was
unenforceable was that under California law, a liquidated damages clause in a non-consumer
contract will be found invalid “if it bears no reasonable relationship to the range of actual
damages that the parties could have anticipated would flow from a breach” (Ridgley v Topa
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Thrift & Loan Ass'n, 17 Cal 4th 970, 977 [1998]). As the Court previously explained, in Section
5.7, the parties negotiated for DivX to have the right to audit once per year to ensure that DivX
was not underpaid. As a result, the Court held that inasmuch as the costs and fees associated
with the audit and any underpayments were addressed by the Agreement, the additional penalty
bore no relationship to any actual damages that the parties could have anticipated that flowed
from the breach.
Section 3.3 is a different provision. It provides that if Harman fails to obtain certification for a
Licensee Product prior to distribution, it is a material breach of the Agreement, and that DivX
may at its discretion either (i) terminate the Agreement or (ii) require Harman to pay the penalty
rate. The provision goes on to explain that Licensee Products shall only be marketed and
promised for the DivX Certification Profile for which they have been DivX Certified. In other
words, breach of this provision suggests damages other than a mere missed royalty payment. As
such, this penalty provision appears to be valid under California law. Thus, the motion is denied.
III. Harman’s Motion to Exclude Mr. Schoettelkotte’s Testimony Regarding the
Measure of Damages for Alleged Breaches of Section 3.7 is Denied (Mtn. Seq. No.
019)
Harman argues that the Court should exclude the testimony of Mr. Schoettelkotte regarding the
measure of damages for Harman’s alleged breaches of Section 3.7 of the Agreement because,
among other things, in Harman’s view, Mr. Schoettelkotte’s expert report fails to adequately set
forth the basis upon which he “used” a $1.00 per-unit royalty as reasonable damages for the
alleged Section 3.7 breach and royalties are not actual damages. Simply put, Harman is not
correct.
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Mr. Schoettelkotte like any expert is permitted to make assumptions as it relates to his opinion
on damages. He has used the parties’ Agreement as to the royalty rate as an assumption as to
what the parties expected DivX’s actual damages to be. To the extent that Harman seeks to
challenge Mr. Schoettelkotte’s assumption, he will be subject to cross examination and there
simply is no surprise. As such, the motion is denied.
IV. Harman’s Motion to Exclude Fact Witness Testimony Beyond Personal Knowledge
is Denied (Mtn. Seq. No. 020)
Harman argues that the Court should exclude testimony by several fact witnesses, including
DivX’s current CEO and General Counsel, Noel Egnatios, DivX’s current Vice President of
Licensing Compliance, Brian Satterley, and DivX’s former General Counsel, Dan Schatz,
regarding an array of subjects for which they have no personal knowledge in an attempt to
support DivX’s claim that Harman breached the Agreement.
In their opposition papers, DivX argues that Harman’s motion is premature and lacks a proper
basis for exclusion because Harman is seeking to preemptively prevent witnesses from being
able to discuss exhibits that are harmful to Harman’s case but are in and of themselves
admissible at trial.
Harman is not entitled to a blanket order from the Court that fact witnesses should only be
entitled to testify as to matters for which they have personal knowledge. The relevant inquiry is
whether a proper foundation has been laid for the testimony. Among other things, and with the
proper foundation, business records are admissible and witnesses are permitted to testify as to
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their companies’ business records. For clarity, if appropriate, Harman may object to any
testimony or evidence that is not admissible under New York law. Harman may not, however,
limit testimony in the manner in which it seeks to do here. As such, the motion is denied.
V. Harman’s Motion to Limit Evidence Regarding DivX Technology and DXN
Intellectual Property Rights is Denied (Mtn. Seq. No. 021)
Harman argues that the Court should exclude testimony and references regarding DivX
technology or DXN Intellectual Property Rights that is in the public domain due to patent
expiration because, in sum and substance, (i) the Agreement says nothing about what happens if
Harman uses DivX technology or DXN Intellectual Property Rights that are not in the
Deliverables, and (ii) Harman has an absolute right to use any DivX patented intellectual
property that is not in the Deliverables pursuant to the license between DivX and Samsung (the
Samsung Agreement), for which rights DivX has already been paid by Samsung. They are not
correct.
Harman is not entitled to exclude any evidence of DXN Intellectual Property Rights that could
form the basis upon which DivX could recover. As discussed above, DXN Intellectual Property
Rights are not limited to patents or patented inventions. The definition is much broader than
that. In addition, Dr. William Mangione-Smith indicates in his expert report that DivX’s
innovations were included in DivX decoders up to version 6, such that references to products
supporting DivX up to version 6 are evidence of incorporation of DXN Intellectual Property
Rights, and evidence regarding DivX packaged B-frame technology is also at the heart of DivX’s
claims in this case. Lastly, the Court notes that the Court already addressed Harman’s argument
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based on the Samsung Agreement and rejected it for the reasons set forth in the Prior Decision.
As such, the motion is denied.
VI. Harman’s Motion to Exclude Undisclosed Opinions and Documents of Dr. William
Mangione-Smith is Denied (Mtn. Seq. No. 022)
Harman argues that the Court should exclude the certain opinions of Dr. Mangione-Smith that
Harman argues were not disclosed in his expert report and that they only learned of during his
deposition and in his post discovery affidavit which they argue veer wildly from his original
disclosed opinions and are based solely on anonymous blog posts and Wikipedia articles that are
inadmissible hearsay. The argument fails.
The opinions that Harman are concerned about were in fact disclosed in his expert report. He
discussed MPEG-4 Part 2 decoders and packaged B frames and he was deposed about his
opinions at length. The opinions are not based on "Wikipedia” or blogs. Those references appear
to be included merely to show that people have complained about exactly that which he has said
would in fact occur – disruption. They are not relied upon for the truth of the matter asserted in
forming his opinion.
To be clear, expert testimony based on scientific principles or procedures is admissible only after
a principle or procedure has “gained general acceptance” in its specified field (People v Wesley,
83 NY2d 417, 422 [1994] [citing to Frye v US, 293 F 1013 [App DC 1923]). But as discussed
above, Dr. Mangione-Smith’s opinion is not based on the blogs. It’s based on his considered
analysis of the technology all of which was disclosed and all of which he was deposed about and
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his proffered testimony is within the scope of his field of expertise. His affidavit merely
amplifies and clarifies the opinions he has given. Nothing more. The fact that Harman wants to
suggest an inconsistency is for cross-examination. Thus, the motion is denied.
VII. Harman’s Motion to Exclude Evidence Regarding Products That Did Not Play Back
CTK or DivX Files is Denied (Mtn. Seq. No. 023)
Harman argues that the Court should exclude evidence regarding products that did not play back
video or any other portions of any DivX Files or CTK files during DivX’s product testing on the
basis that DivX’s own evidence conclusively establishes that such products do not pass DivX’s
test criteria for incorporating “DXN Technology” or “decoding DivX Files.” The argument fails.
In its opposition papers, DivX argues that it has adduced voluminous documentary and
deposition testimony evidence to support its position that eight Harman programs incorporate
DXN Technology and decode DivX Files, including Harman’s own internal documents showing
that its products support DivX playback.
Harman’s internal documents are evidence that Harman’s products were capable of playing back
the DivX Files. To the extent that Harman disagrees with what those documents mean, or they
otherwise indicate that they have contrary evidence or that their expert disagrees with what the
documents suggest, Harman may cross-examine witnesses and/or put into evidence their own
substantive evidence. They may not however prevent DivX from the introduction of evidence
which they say they can factually controvert or prevent the introduction of certain evidence
based on the fact that the documents do not explicitly use the words “B-frames” on the basis that
because the documents do not use those words they could not be referring to or otherwise apply
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to B-frames or packed B-frames. This is all for the witnesses to explain at trial. Thus, the
motion is denied.
VIII. Harman’s Motion to Exclude Evidence Regarding Alleged Licensee Products Before
Issuance of DivX’s Patent on Files with Packed B-Frames is Denied (Mtn. Seq. No.
024)
Harman argues that the Court should exclude evidence regarding alleged Licensee Products sales
prior to January 22, 2020, which was when the only patent that DivX contends to be embodied
by the Deliverables was issued. Harman contends that, before January 22, 2020, none of
Harman’s products could have incorporated any asserted “DXN Technology” as defined under
the Agreement and would not meet the requirements of “Licensee Products,” and thus, DivX has
no evidence that any of Harman’s products sold before January 22, 2020 were royalty-bearing
Licensee Products. The argument fails.
As discussed above, the definition of DXN Intellectual Property Rights is not limited to patents
and Harman has not established as a matter of law that DivX did not have DXN Intellectual
Property Rights prior to January 22, 2020. In addition, DivX’s Licensee Product basis claims are
not predicated merely on patent breach as of the date of the patents’ issuance (they had provision
rights and other proprietary rights before that) and the claims are predicated on Harman’s
incorporation of DXN Intellectual Property Rights in DivX’s CTKs, and they additionally have
claims based on violations of Section 3.7 of the Agreement which this motion would improperly
seek to exclude. Thus, the motion is denied.
IX. Harman’s Motion to Exclude Opinions Regarding Products Not Shown to
Physically Include DivX Products is Denied (Mtn. Seq. No. 025)
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Harman argues that the Court should exclude evidence regarding Harman products that DivX
contends are “Licensee Products” where DivX has no evidence showing that the Harman product
physically includes a DivX Product, as defined in the Samsung Agreement, by including a DivX
CTK (the Deliverable under the Agreement). Harman contends that the Court’s decision to deny
its motion for summary judgment was based on DivX’s representation that DivX is only seeking
royalties from DivX Products sold by Harman, not for Harman products. The argument fails.
DivX’s position has always been that Harman breached the Agreement both because Harman’s
licensing products incorporate DivX’s Intellectual Property Rights and because Harman
breached Section 3.7 of the Agreement. The argument was never predicated on the assumption
that CTK files are physically present. As discussed in the Prior Decision, the Court rejected
Harman’s argument that the Samsung Agreement precluded DivX’s contractual claims because
among other things: (i) the position is irreconcilably at odds with the Samsung Agreement’s
carve-out provision to preserve contractual claims relating to licensing agreements and to
prohibit the use of the Samsung Agreement as a defense to any such claims, (ii) the Samsung
Agreement explicitly provides that DivX’s CTKs are “DivX Products,” and (iii) if the Samsung
Agreement was intended to terminate DivX’s ability to collect on the Agreement, DivX would
have simply terminated the Agreement and other similarly affected licensing agreements
(NYSCEF Doc. No. 481 at 16-17). Thus, the motion is denied.
X. Harman’s Motion to Exclude Evidence Regarding Software or Software
Development Kits is Denied (Mtn. Seq. No. 026)
Harman argues that the Court should exclude all testimony and purported evidence alleging that
Harman received Software Development Kits (SDKs) and software related to such SDKs from
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DivX because DivX is relying on an amendment to a 2006 agreement that has expired in order to
speculate that DivX’s SDKs might be in Harman’s products (PEX010). The argument fails.
Ms. Egnatios, DivX’s CEO and corporate designee (and potentially other DivX employees) is
competent to testify that DivX’s business records reveal that Harman’s communications to DivX
which included software, source code, and SDKs, provide evidence relevant to its claim that
Section 3.7 of the Agreement was breached, which does not rely on the definition of Licensee
Product or the incorporation of DXN Intellectual Property Rights in the CTKs. Thus, the motion
is denied.
XI. Harman’s Motion to Exclude Mr. Schoettelkotte’s Testimony Regarding
Contractual Interest for Alleged Breaches of Section 3.7 is Granted to the Extent Set
Forth Below (Mtn. Seq. No. 027)
Harman argues that the Court should exclude testimony by Mr. Schoettelkotte regarding
contractual interest, as well as statutory interest before December 6, 2021, for Harman’s alleged
breaches of Section 3.7 of the Agreement. Harman contends that the interest clause of Section
5.5 clearly does not apply to reasonable royalty damages for alleged breaches of Section 3.7 and,
as such, (i) interest is not due for devices that decode DivX Files under the Agreement, and (ii)
Mr. Schoettelkotte has not laid any foundation for his opinion that Harman would have incurred
late payment interest for such devices under a hypothetical license.
Section 5.5 of the Agreement provides:
5.5 Payment Details. All amounts due under this Agreement are exclusive of any
tariffs, duties or taxes imposed or levied, and all such tariffs, duties or taxes, with
the exception of income taxes accrued by DXN, are the sole responsibility of
Licensee. All payments shall be made in United States Dollars in immediately
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available funds. DXN may, in its sole discretion, charge Licensee interest for late
payments at the lesser of one and one half percent (1 ½%) per month or the
highest rate permitted by applicable law.
(NYSCEF Doc. No. 159 at 5). This by its terms is a payment provision and permits DXN to
charge interest on late payments.
Section 3.7 by contrast does not call for payment. It is a provision which prohibits certain
conduct and contemplates damages not payment:
3.7 To prevent damage to DXN’s trademarks and goodwill as a result of the
inconsistent, incomplete or non-playback of DivX Files by devices claiming DivX
playback, compatibility or support, Licensee shall not manufacture, enable, use,
distribute, market or sell devices that encode or decode DivX Files unless such
devices are DivX Certified in accordance with this Agreement
(id. at 3).
Thus, although arguably this should have been brought as part of the motion for summary
judgment, evidence of application of Section 5.5’s interest provision to Section 3.7 breaches is
not appropriate. It is also not for the jury to decide what prejudgment interest would be
appropriate in the event of a breach. This would be addressed in any post-trial judgment and any
briefing the Court would then deem appropriate to address the issue. However, the expert is
entitled to make assumptions in his testimony to the jury and if necessary, the Court shall instruct
the jury what if anything is not for their consideration.
XII. Harman’s Motion to Exclude Evidence and Statements Suggesting DivX was the
Original Party to the Agreement is Denied (Mtn. Seq. No. 028)
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As discussed above, DivX has acquired the assets of the original DivX entity. The ownership
structure and whether this DivX is the entity that invented technology or bought it from another
company is simply not relevant to any issue in this case. As discussed above, Harman is not
permitted to explore DivX’s ownership for the purpose of smearing it as a litigation funder and
prejudicing its rights in this case with irrelevant information that has no probative value
whatsoever. Accordingly, the motion is denied and as set forth above, Harman is not permitted
to smear DivX without purpose.
XIII. Harman’s Motion to Exclude Evidence Regarding the Audit is Denied (Mtn. Seq.
No. 029)
Harman argues that the Court should exclude evidence regarding the partial audit of Harman
commissioned by DivX in advance of filing this action because (i) the audit was never
completed, and the auditor only provided preliminary findings on alleged improper uses of DivX
Trademarks, (ii) DivX has abandoned the theory that any of Harman’s products are “Licensee
Products” because Harman uses DivX Trademarks, and (iii) neither of DivX’s experts rely on the
audit at all.
In their opposition papers, DivX argues that evidence obtained during the audit, particularly
Harman’s internal communications admitting that its products incorporate DXN Technology and
decode DivX, is relevant to demonstrate that (i) Harman did in fact breach the Agreement by
failing to report royalty-bearing Licensee Products, (ii) Harman sold uncertified products that
decode DivX Files in breach of Section 3.7, and (iii) Harman did not cooperate with the audit in
breach of Section 5.7.
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Harman is not entitled to the exclusion of the partial audit evidence which DivX indicates relied
on Harman’s own internal communications for its compilation. The fact that it was not
concluded does not mandate its inadmissibility. Indeed, DivX indicates that the audit was not
completed because it was Harman who refused to participate in the audit’s completion. In any
event, the fact that Harman disagrees with what the audit purports to show is a matter to be
addressed through cross-examination and introduction of Harman’s own substantive evidence
rather than a basis for exclusion. As such, the motion is denied.
The Court has considered the parties’ remaining arguments and finds them unavailing.
Accordingly, it is hereby
ORDERED that DivX’s motion in limine (Mtn. Seq. No. 017) is GRANTED solely to the extent
set forth herein; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 018) to exclude Mr. Schoettelkotte’s
testimony regarding liquidated damages under Section 3.3 is DENIED; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 019) to exclude Mr. Schoettelkotte’s
testimony regarding the measure of damages for alleged breaches of Section 3.7 is DENIED; and
it is further
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ORDERED that Harman’s motion (Mtn. Seq. No. 020) to exclude fact witness testimony beyond
personal knowledge is DENIED; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 021) to limit evidence regarding DivX
Technology and DXN Intellectual Property Rights is DENIED; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 022) to exclude undisclosed opinions and
documents of Dr. Mangione-Smith is DENIED; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 023) to exclude evidence regarding products
that did not play back CTK or DivX Files is DENIED; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 024) to exclude evidence regarding alleged
licensee products before issuance of DivX’s patent on files with packed B-frames is DENIED;
and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 025) to exclude opinions regarding products
not shown to include DivX products is DENIED; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 026) to exclude evidence regarding software
or software development kits is DENIED; and it is further
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ORDERED that Harman’s motion (Mtn. Seq. No. 027) exclude Mr. Schoettelkotte’s testimony
regarding contractual interest for alleged breaches of Section 3.7 is GRANTED solely to the
extent set forth herein; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 028) to exclude evidence and statements
referring to DivX as the original DivX entity is DENIED; and it is further
ORDERED that Harman’s motion (Mtn. Seq. No. 029) to exclude evidence regarding the audit is
DENIED.
2/3/2025
DATE ANDREW BORROK, J.S.C.
CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION
□
GRANTED DENIED X GRANTED IN PART OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER
□
CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE
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