Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 1 of 20
`
`
`
`PAUL ANDRE (State Bar No. 196585)
`pandre@kramerlevin.com
`LISA KOBIALKA (State Bar No. 191404)
`lkobialka@kramerlevin.com
`JAMES HANNAH (State Bar No. 237978)
`jhannah@kramerlevin.com
`KRISTOPHER KASTENS (State Bar No. 254797)
`kkastens@kramerlevin.com
`KRAMER LEVIN NAFTALIS & FRANKEL LLP
`990 Marsh Road
`Menlo Park, CA 94025
`Telephone: (650) 752-1700
`Facsimile: (650) 752-1800
`
`Attorneys for Plaintiff
`FINJAN, INC.
`
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`SAN FRANCISCO DIVISION
`
`FINJAN, INC., a Delaware Corporation,
`
`
`
`
`
`
`Plaintiff,
`
`v.
`
`
`JUNIPER NETWORKS, INC., a Delaware
`Corporation,
`
`
`Defendant.
`
`
`
`Case No.: 3:17-cv-05659-WHA
`
`
`PLAINTIFF FINJAN, INC.’S OPPOSITION
`TO DEFENDANT JUNIPER NETWORKS,
`INC.’S MOTION TO EXCLUDE THE
`TESTIMONY OF MR. KEVIN M. ARST
`
`November 29, 2018
`Date:
`8:00 a.m.
`Time:
`Courtroom: 12 - 19th Floor
`Judge:
`Hon. William H. Alsup
`
`
`
`
`
`
`REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED
`
`
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
`
` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 2 of 20
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`
`
`TABLE OF CONTENTS
`
`Page
`
`.I.
`
`II.
`
`STATEMENT OF ISSUE TO BE DECIDED............................................................................. 1
`
`INTRODUCTION ....................................................................................................................... 1
`
`III.
`
`SUMMARY OF ARST OPINION AND RELEVANT FACTS ................................................. 1
`
`IV. ARGUMENT ............................................................................................................................... 3
`
`A.
`
`Mr. Arst’s Opinion Is Grounded Upon Reliable Economic Principles ........................... 3
`
`1.
`
`2.
`
`Juniper’s Motion Is Premised On the Wrong Revenues ...................................... 3
`
`Juniper’s Arguments Amount to Factual Disputes .............................................. 4
`
`B.
`
`Mr. Arst’s Opinion Is Grounded Upon Substantial Facts ................................................ 7
`
`1.
`
`Juniper’s Costs Are Represented In The
`
` Invoices ..................................... 7
`
`Mr. Arst’s Opinions Regarding Revenues of Juniper’s Accused Products Is
`Factual and Not Prejudicial ............................................................................................ 11
`
`1.
`
`Juniper’s Reliance On Platform Guides is Misplaced ....................................... 13
`
`Juniper’s Premature Request to Prelude Mr. Arst from Amending His Opinion,
`if Necessary, is Without Justification and Should be Rejected ..................................... 14
`
`C.
`
`D.
`
`V.
`
`CONCLUSION .......................................................................................................................... 15
`
`
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`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
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` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 3 of 20
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`
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc.,
`694 F.3d 1312 (Fed. Cir. 2012).........................................................................................................11
`
`Apple, Inc. v. Samsung Elecs. Co.,
`No. 11-cv-01846-LHK, 2012 WL 2571332 (N.D. Cal. June 30, 2012) ...........................................13
`
`Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd.,
`807 F.3d 1283 (Fed. Cir. 2015)...........................................................................................................5
`
`Coloplast A/S v. Generic Med. Devices Inc.,
`No. C10-227BHS, 2011 WL 6330064 (W.D. Wash. Dec. 19, 2011) .................................................8
`
`Douglas Dynamics, LLC v. Buyers Prods. Co.,
`717 F.3d 1336 (Fed. Cir. 2013)...........................................................................................................5
`
`Finjan, Inc. v. Blue Coat Sys., Inc.,
`No. 13-cv-03999-BLF, 2015 WL 4272870 (N.D. Cal. July 24, 2015) .............................................12
`
`Finjan, Inc. v. Secure Computing Corp.,
`626 F.3d 1197 (Fed. Cir. 2010).........................................................................................................12
`
`Finjan, Inc. v. Sophos, Inc.,
`No. 14-cv-01197-WHO, 2016 WL 4268659 (N.D. Cal. Aug. 15, 2016) .........................................12
`
`Finjan, Inc. v. Sophos, Inc.,
`No. 14-cv-01197-WHO, 2016 WL 4702651 (N.D. Cal. Sept. 8, 2016) ...........................................14
`
`i4i Ltd. P’ship v. Microsoft Corp.,
`598 F.3d 831 (Fed. Cir. 2010), aff’d, 564 U.S. 91 (2011) ......................................................3, 11, 14
`
`Micro Chem., Inc. v. Lextron, Inc.,
`317 F.3d 1387 (Fed. Cir. 2003).........................................................................................................11
`
`Monolithic Power Sys., Inc. v. O2 Micro Int'l Ltd.,
`476 F. Supp. 2d 1143 (N.D. Cal. 2007) ..............................................................................................6
`
`Monsanto Co. v. Ralph,
`382 F.3d 1374 (Fed. Cir. 2004)...........................................................................................................5
`
`Network Prot. Sci., LLC v. Fortinet, Inc.,
`No. C 12-01106 WHA, 2013 WL 5402089 (N.D. Cal. Sept. 26, 2013) ...........................................15
`
`i
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 4 of 20
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`
`
`Nickson Indus. Inc. v. Rol Mfg. Co.,
`847 F.2d 795 (Fed. Cir. 1988).............................................................................................................7
`
`Prism Techs. LLC v. Sprint Spectrum L.P.,
`849 F.3d 1360 (Fed. Cir. 2017)...........................................................................................................3
`
`ResQNet.com, Inc. v. Lansa, Inc.,
`No. 01 Civ. 3578, Dkt. 335, Slip Opinion (S.D.N.Y. Dec. 6, 2011) ..................................................7
`
`Telcordia Techs., Inc. v. Lucent Techs., Inc.,
`No. CIVA 04-875 GMS, 2007 WL 7076662 (D. Del. Apr. 27, 2007) .............................................12
`
`Tights, Inc. v. Kayser-Roth Corp.,
`442 F. Supp. 159 (M.D.N.C. 1977) ....................................................................................................7
`
`VirnetX Inc. v. Cisco Sys., Inc.,
`No. 6:10-cv-417, 2013 WL 789288 (E.D. Tex. Mar. 1, 2013) .........................................................14
`
`XpertUniverse, Inc. v. Cisco Sys., Inc.,
`No. CIV.A. 09-157-RGA, 2013 WL 936449 (D. Del. Mar. 11, 2013) ...............................................6
`
`
`
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`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
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` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 5 of 20
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`I.
`
`STATEMENT OF ISSUE TO BE DECIDED
`
`Plaintiff Finjan, Inc. (”Finjan”) requests the denial of Juniper Networks, Inc.’s (“Juniper”)
`
`Motion To Exclude the Testimony of Mr. Kevin M. Arst (Dkt. No. 230 (“Motion”)), who presented
`
`reliable and well-founded opinions regarding the reasonable royalty for Juniper’s infringement of
`
`Claim 10 of Finjan’s U.S. Patent No. 8,677,494 (the “‘494 Patent”).
`II.
`
`INTRODUCTION
`
`The Court should deny Juniper’s Motion to exclude the testimony of Mr. Arst because
`
`Juniper’s criticisms of Mr. Arst’s opinion relate to factual issues, not methodological flaws. There is
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`no challenge to his cost savings approach, which is rooted in Federal Circuit law, but rather that the
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`“results” of Mr. Arst’s analysis is wrong. This criticism, however, is predicated on a false fact about
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`the amount of accused revenues at issue, which is about
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` in the United States. These
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`revenues do not even address the significant benefits that Juniper received from its infringement.
`
`Juniper’s issues, when viewed in light of his actual opinion, reveal that Juniper is merely raising
`
`factual issues that can be properly addressed on cross examination.
`III.
`
`SUMMARY OF ARST OPINION AND RELEVANT FACTS
`
`Mr. Arst’s methodologically sound cost-savings opinion for Juniper’s infringement for the
`
`technology Juniper used, sold and offered for sale in (1) SkyATP and (2) SRX with SkyATP products
`
`is founded upon the relevant facts specific to this case. Key facts that Juniper ignores include, but are
`
`not limited to, (1) Juniper’s essential need for the patented technology, (2) the extensive benefits
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`Juniper received across Juniper’s entire network from its infringement, and (3) how the negotiations
`
`taking place during the hypothetical negotiation were against the backdrop of widespread industry
`infringement, all analyzed within view of Finjan’s historical licensing practices. Dkt. No. 228-7, 1 Arst
`Rpt. at 45; see also Dkt. No. 97-4, Finjan’s MSJ at 24-25. Mr. Arst relies upon Dr. Cole’s, Finjan’s
`
`technical expert, explanation regarding how Juniper and Juniper’s customers enjoyed many technical
`
`and economic benefits from Juniper’s infringement. Dkt. No. 228-7, Arst Rpt. at p. 23-27, 30-32, 49;
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`1 A copy of Mr. Arst’s Report is attached as Exhibit 1 to Juniper’s Motion to Exclude Mr. Arst, filed
`on November 12, 2018.
`
`1
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
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` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 6 of 20
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`
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`see also Ex. 12, Dr. Cole Rpt. at ¶¶ 25-37. These include a shared environment where Juniper and its
`customers benefit from
`
`
`identifies the benefits specific to Juniper, including
`
`
`
`
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`. Id. Also, he
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`, which Juniper’s
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`customers require at a minimum, and do so at a dramatically reduced total cost to Juniper. Dkt. No.
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`228-7, Arst Rpt. at 23-27; see also Ex. 1, Cole Rpt. at ¶¶ 30-37. These benefits result from Juniper’s
`
`infringement of
`
` in the
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`infringing database. See, e.g., Ex. 1, Cole Rpt. at ¶ 43. Without the infringing database, Juniper would
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`need to re-analyze incoming files, irrespective of whether that file had already been analyzed
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`thousands of times previously, because that file’s analysis results would not be stored. Id. at ¶ 37.
`
`Juniper would need to spend significantly more resources and time to analyze its customers’ files,
`
` that Mr. Arst calls the “cost-savings factor,” to achieve the same
`which is the
`protection and benefits without infringing. 3 Id. at ¶¶ 35-37.
`Mr. Arst first identified the world-wide costs to Juniper associated with
`
`
`
`
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`Significantly, Juniper represented in discovery that its production of
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` invoice summaries was
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`limited “to servers that host or directly interface with specifically accused features of the deployed or
`sold products at issue in this litigation.” Ex. 2, Juniper Response RFP No. 95, 97. He multiplied
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`these costs by the cost-savings factor based on the additional time it would take Juniper to process the
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`files versus looking it up in the database, to identify the value attributed to the actual benefits to
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`Juniper, including to its entire network, due to Juniper’s infringement. Dkt. No. 228-7, Arst Rpt. at 31,
`
`
`2 Unless otherwise noted, all exhibits are attached to the Declaration of Kristopher Kastens filed
`herewith.
`3 Juniper never identified any non-infringing alternatives during fact discovery. Ex. 3 at 33-35
`(Juniper’s interrogatory response failing to identify any alternatives). It only asserted one after service
`of Finjan’s reports.
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`2
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
`
` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 7 of 20
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`
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`FN 100, Exh. 1.1-1.2; see also id., Errata of K. Arst at 7. Mr. Arst also identified three different
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`approaches for apportionment (each referred to as an “Apportionment Factor”) based upon: (1)
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`Juniper's volume and dollar sales of all accused products, (2) Juniper's volume and dollar sales of Sky
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`ATP (i.e., excluding accused SRX products), and (3) geographic Availability Zone classifications of
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`the
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` servers. Dkt. No. 228-7, Arst Rpt. at 31, FN 100; see also id., Errata of K. Arst at 7. Mr.
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`Arst applied the most conservative apportionment factor of
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`, which is based on the number of
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`units sold that included the infringing technology. Id., Errata of K. Arst at 7.
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`Notably, the majority of information Juniper relies upon for its Motion is based upon the
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`declaration of Mr. Icasiano and unsupported references to information that Juniper never produced
`
`during discovery, such as alleged non-infringing alternatives, costs of the
`
`
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`identification of accounts related to ATP in
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`, and alleged number of free Sky ATP
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`licenses. See Motion at 5-14 (Arguments A-C). As such, Juniper’s Motion is not supported with
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`evidence disclosed during fact discovery.
`IV. ARGUMENT
`A. Mr. Arst’s Opinion Is Grounded Upon Reliable Economic Principles
`
`Juniper’s Motion Is Premised On the Wrong Revenues
` 1.
`Juniper agrees that a reasonable royalty can be based upon the cost savings an infringer enjoys
`
`
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`as a result of its infringement. Motion at 8 (citing Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d
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`1360, 1376 (Fed. Cir. 2017)). Juniper does not challenge Mr. Arst’s methodology but rather disagrees
`
`with the facts upon which he relies, which is not a ground for exclusion. i4i Ltd. P'ship v. Microsoft
`
`Corp., 598 F.3d 831, 852 (Fed. Cir. 2010), aff'd, 564 U.S. 91 (2011) (“When the methodology is
`
`sound, and the evidence relied upon sufficiently related to the case at hand, disputes about the degree
`
`of relevance or accuracy … may go to the testimony's weight, but not its admissibility.”). Juniper’s
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`Motion is premised on Juniper’s factually incorrect claim that only
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` in revenues and
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` in profits are at issue. The revenues at issue, however, are about
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` and
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`3
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
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` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 8 of 20
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` of dollars of profits based on Juniper’s infringement of Claim 10 of the ‘494 Patent. 4
`Revenues of products that incorporate the infringing technology, however, do not capture the value of
`
`the significant benefits Juniper received, including to its entire network, based upon its infringement.
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`Ultimately, Juniper’s disagreement with the results of Mr. Arst’s sound methodology (i.e., the
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`reasonable royalty amount) does not create a methodological issue where Juniper agrees that the cost
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`savings method is a proper basis for damages. And Juniper’s attempts to undervalue its infringement,
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`seeking to force the parties to only view a reasonable royalty from a revenue perspective while
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`ignoring the significant non-revenue related benefits Juniper receives from its infringement, is a factual
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`dispute about Finjan’s infringement claims, and the scope and extent of Juniper’s infringement.
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`Ultimately, this factual dispute does not create a Daubert issue.
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`Juniper’s Arguments Amount to Factual Disputes
` 2.
`Juniper’s arguments regarding profits (Motion at 6) and the alleged “economically obvious next
`
`
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`best alternative” at the time of the hypothetical negotiation (Motion at 8-9) are factual disputes. Key to
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`this factual dispute is the significant benefits Juniper receives as a result of its extensive and pervasive
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`use of the infringing system, including the
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`
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` and ultimately the ability to protect and defend its network and customers from destructive
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`malware threats. Ex. 1, Cole Rpt. ¶¶ 30-34, 37; Dkt. No. 228-7, Arst Rpt. at 23-27. Mr. Arst also
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`considered Juniper’s documents highlighting the importance of network security to Juniper and its
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`customers. See, e.g., Dkt. No. 228-7, Arst Rpt. at 19-22. These benefits would be particularly
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`important to Juniper, a company that originally was focused on routing internet traffic and later
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`introduced security in its offerings. He considered Juniper’s extensive and pervasive use of the
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`malware data identified in Sky ATP across Juniper’s entire network, the importance to Juniper and its
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`customers of preventing malware, and the synergies between Sky ATP and SRX gateways with
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`Juniper’s other networking and security products. Dkt. No. 228-7, Arst Rpt. at 22-27. Thus, Mr. Arst
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`4 A further detailed explanation of the infringing revenues at issue is set forth in Finjan’s Daubert
`Motion in connection with Dr. Ugone. Dkt. No. 229-4 at 9-12; Dkt.229-6, Ugone Rpt. at ¶ 45, Table 5.
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`4
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
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` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 9 of 20
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`explained why the
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` of revenues and associated profits do not capture the value of
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`Juniper’s infringement.
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`In recognizing that revenue cannot cap the amount of a reasonable royalty, Juniper implicitly
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`acknowledges that whether the reasonable royalty can exceed Juniper’s alleged (incorrect) amount of
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`revenues is a factual dispute. See Monsanto Co. v. Ralph, 382 F.3d 1374, 1384 (Fed. Cir. 2004) (“the
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`law does not require that an infringer be permitted to make a profit”); Douglas Dynamics, LLC v.
`
`Buyers Prods. Co., 717 F.3d 1336, 1346 (Fed. Cir. 2013) (finding district court committed clear error
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`by “limiting the ongoing royalty rate based on [defendant’s] profit margin.”). The reasoning
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`underlying this principle that revenues and profits cannot cap the amount of the reasonable royalty is
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`because revenues and profits do not always capture the value at issue, particularly where an infringer
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`does not charge for its use and sale of the infringing technology. Here, Juniper did give the infringing
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`technology away for free, and for the first time, Juniper claims that it maintains such information,
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`despite having taken a contrary position on whether such information existed previously. Motion at 6
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`(identifying
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` customers who activated a free license); see also Dkt No. 126-2, Nagarajan Decl. at ¶
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`6 (representing that Juniper “
`
`
`
`”). 5 Juniper gave it for free because there was significant other non-
`monetary value to Juniper. Thus, revenues and profits do not capture the economic footprint of the
`
`‘494 Patent. Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd., 807 F.3d 1283, 1304 (Fed. Cir. 2015)
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`(“key inquiry” in reasonable royalty analysis includes consideration of “benefits [Juniper] would
`
`expect to receive from using the technology”).
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`As Dr. Cole and Mr. Arst identified, there were significant benefits and non-revenue value
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`Juniper reaped from its infringement, which was calculated and quantified. Thus, Juniper’s
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`contentions that it could delay launch of Sky ATP (Motion at 8-9) without suffering adverse economic
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`consequences on its networking and security products, reputation, and business and that profits
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`5 Mr. Icasiano statements are irreconcilable with the previously submitted declaration of Mr.
`Nagarajan, Juniper’s Senior Director in the Security Business, who claimed that Juniper
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`Compare Dkt. No. 228-6 (Icasiano Decl.) at ¶ 4 with Dkt No. 126-2 (Nagarajan Decl.) at ¶ 6.
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`
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`.”
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`5
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
`
` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 10 of 20
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`represent the value of its infringement is not credible in light of these benefits and non-revenue value.
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`Ultimately, these contentions are ultimately a factual dispute to be addressed on cross-examination.
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`
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`Finally, Juniper’s claim regarding Finjan’s prior use of applying 8 and 16% to total,
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`unapportioned revenues is unsupported and factually incorrect. Finjan has used public information
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`regarding total revenues by product category, such as security products, and applied these rates to
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`those revenues for a royalty. Ex. 4, Hartstein Tr. at 52:14-24 (rates used “
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`); id. at 81:15-82:12 (rates applied to public data about “
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`also Ex. 5, Garland Nov. Tr. at 30:22-31:14 (use of public market research and “
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`”); see
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`
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`”); id. at 92:25-93:17. Juniper’s citations confirm how these royalty rates have been applied to
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`“total revenue.” Motion at 6-7. That approach here would result in Finjan applying 8% on hardware
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`sales and 16% on software sales (for example,
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` x 16%), which undervalues Juniper’s
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`infringement, as explained above. That is a far cry from Juniper’s manufactured 4,000% royalty rate.
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`Motion at 1, 7. Juniper is only able to concoct this number by comparing its expert’s deflated revenues
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`to Mr. Arst’s identification of the cost savings that Juniper realized. Juniper’s attempts to compare
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`revenues to cost savings to create 4,000% rate is mixing apples and oranges to create outrageous
`numbers that are factually unsupported and does not create a basis for exclusion on Daubert. 6
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`Moreover, Mr. Arst confirmed that his analysis is based on a hypothetical negotiation wherein
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`Finjan and Juniper would have been willing to enter a license and not based on what Juniper would
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`have liked to pay or what Finjan would have liked to receive. Dkt. No. 228-7, Arst Rpt. at 27-29. As
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`6 Juniper cites inapposite cases in which expert’s advanced revenue-based theories that did not
`comport with a party’s actual revenues. Motion at 7. For example, in XpertUniverse, Inc. v. Cisco
`Sys., Inc., the district court excluded the damages expert’s opinion because he failed to explain how the
`running royalty rates applied to ongoing revenues in two licenses he relied upon justified his lump sum
`royalty opinion. No. CIV.A. 09-157-RGA, 2013 WL 936449, at *3 (D. Del. Mar. 11, 2013). And in
`Monolithic Power Sys., Inc. v. O2 Micro Int'l Ltd., the damages expert used a royalty rate based on a
`portion of the retail price of the product, but his reasonable royalty amount exceeded product sales.
`476 F. Supp. 2d 1143, 1155 (N.D. Cal. 2007). Here, Mr. Arst is not relying on Finjan’s historical
`licensing practices and licenses for the reasonable royalty in this case, and explained that revenues do
`not capture the value of the extensive benefits Juniper enjoys from its infringement of the ‘494 Patent.
`Thus, Juniper’s comparison of Mr. Arst’s cost savings opinion to Juniper’s revenues that do not
`capture the value of the invention is meaningless and improper.
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`6
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
`
` CASE NO. 3:17-cv-05659-WHA
`
`

`

`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 11 of 20
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`
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`part of that analysis, Mr. Arst properly considered Finjan’s historical licensing practices and royalty
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`rates and explained why such rates could not be used and are not indicative of how to calculate a
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`reasonable royalty in this case. Id., Arst Rpt. at p. 28, 33-34, 45, 46; see also Ex. 11, ResQNet.com,
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`Inc. v. Lansa, Inc., No. 01 Civ. 3578, Dkt. 335, Slip Opinion at *4-5 (S.D.N.Y. Dec. 6, 2011),
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`referencing, e.g., Nickson Indus. Inc. v. Rol Mfg. Co., 847 F.2d 795, 798 (Fed. Cir. 1988). He
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`accounted for differences between Finjan’s historical licensing practices and the hypothetical
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`negotiation to conclude that Finjan’s prior licenses are not informative of the reasonable royalty in this
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`matter, particularly given that Finjan’s historical licenses were generally negotiated in the context of
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`litigation, against the backdrop of widespread infringement. See, e.g., Tights, Inc. v. Kayser-Roth
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`Corp., 442 F. Supp. 159, 165-66 (M.D.N.C. 1977) (finding the value of an existing license may be
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`dramatically reduced if it was negotiated against a backdrop of industry-wide infringement). Mr. Arst
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`also considered that Finjan’s historical licenses were generally negotiated amidst extensive third-party
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`challenges to the validity of Finjan’s patents, and in consideration of the costs and risks associated with
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`enforcing its patents against infringers. Dkt. No. 228-7, Arst Rpt. at 33. Based on these considerations
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`Mr. Arst concluded the parties would not look to Finjan’s historical licensing practices and royalty
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`rates to determine a reasonable royalty in this matter. Thus, Mr. Arst presented a complete and
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`thorough analysis that is methodologically sound.
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`B. Mr. Arst’s Opinion Is Grounded Upon Substantial Facts
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` Invoices
`Juniper’s Costs Are Represented In The
` 1.
`Juniper’s contention that Mr. Arst should have based his analysis on the
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` invoices rather
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`than
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` invoices, is wholly unsupported. First, Juniper uses
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`, to
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`
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`. Ex. 1, Cole Rpt. ¶ 36; Ex. 6 (Juniper’s Response to Interrogatory No. 11); Ex. 2
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`(Juniper’s Response RFP No. 95). Juniper’s discovery responses affirmatively stated that its
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`production of
` invoices were limited “to servers that host or directly interface with specifically
`accused features of the deployed or sold products at issue in this litigation” and no
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` invoices
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`7
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
`
` CASE NO. 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 12 of 20
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`were produced. Ex. 2, Juniper Responses RFP Nos. 95, 97.7 Consistent with that representation was
`Dr. Cole’s evaluation of Juniper’s cost savings by reference to Juniper’s
` actual cost and
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`determining how much costlier it would be to analyze those files using a sandboxing process. Id. Dr.
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`Cole’s opinion that
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` and therefore
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` costs serve as a useful reference point for evaluating Juniper’s cost
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`savings (Ex. 1, Cole Rpt. ¶ 36) is well within the scope of Dr. Cole’s knowledge as an industry expert.
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`Second, Juniper’s arguments are premised on a reversal of position and dubious information
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`that, if relevant, were never disclosed during discovery, and which ultimately do not support Juniper’s
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`Motion. Juniper, for example, attempts to now suggest that Juniper’s
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`invoices include costs for
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`products and services other than Sky ATP
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` is a better measure of costs is based upon the
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`Icasiano declaration (Motion at 10), which contains questionable information never disclosed during
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`fact discovery. Dkt. No. 228-6 (Icasiano Decl.) at ¶ 5. If such information existed, it was responsive
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`to multiple discovery requests and should have been produced during discovery, particularly as Juniper
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`knew cost savings was at issue in this case. See, e.g., Ex. 2, RFP Nos. 95-97 (requesting all
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`information on costs and processing of servers); Ex. 6 at Interrogatory No. 11 (requesting information
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`on Juniper’s hosting of servers); Ex. 7 at 4-5 (Finjan’s patent damages disclosures identifying cost
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`savings and the nature and amount of costs as being relevant). Juniper also never disclosed Mr.
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`Icasiano as a fact witness with relevant information during fact discovery, identifying him for the first
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`time in its untimely November 5, 2018, supplemental Initial Disclosures served months after Finjan
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`issued its expert reports. Ex. 8 at 4.
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`Mr. Icasiano’s statements regarding costs of the
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` identification of
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`accounts related to ATP in
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` server invoices, alleged non-infringing alternatives and alleged
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`number of free Sky ATP licenses which Juniper previously represented does not exist, amount to a
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`7 Juniper’s attempts to alter facts just before trial to suggest that the
` invoices represent the costs
`is improper and cannot be a basis for Daubert. Coloplast A/S v. Generic Med. Devices Inc., No. C10-
`227BHS, 2011 WL 6330064, at *5 (W.D. Wash. Dec. 19, 2011)(failure to disclose information during
`discovery precludes use at trial as a party should not “represent one position during discovery, then
`advantageously switch positions after discovery has closed.”).
`
`8
`FINJAN’S OPP.TO DEF.’S MOTION TO EXCLUDE
`THE TESTIMONY OF MR. KEVIN M. ARST
`
` CASE NO. 3:17-cv-05659-WHA
`
`

`

`Case 3:17-cv-05659-WHA Document 239 Filed 11/19/18 Page 13 of 20
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`
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`change or reversal of Juniper’s previous positions and a sandbag that does not support Juniper’s
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`Motion. For example, Juniper incredibly argues that Dr. Cole should have reviewed the
`invoices 8 (Motion at 9-10) that Juniper never produced during fact discovery. 9 Juniper also raised
`various challenges to the factual sufficiency of Mr. Arst’s “cost factor.” Motion at 10-11. This “cost
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`factor” is based upon Dr. Cole’s detailed analysis of Juniper’s information that demonstrates the cost
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`savings value attributable to the invention of the ‘494 Patent, i.e., the patented technology permits the
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`ability of Sky ATP to process a file from a database of results (which takes
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`), as
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`opposed to
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` perform its analysis on a new file. Ex. 1,
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`Cole Rpt. ¶ 35. Dr. Cole relied on Juniper specific information establishing each input to his analysis.
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`Id. (citing FINJAN-JN044844; FINJAN-JN044744 at 4763-764; JNPR_FNJN_29008_00514106 at
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`137, 514174). Juniper points to the Icasiano self-serving declaration to claim that
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`, which is contrary to its previous discovery responses. Motion at
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`11. This is a factual dispute, evident from Dr. Cole’s testimony that, even if Juniper currently enjoys a
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` agreement, the increased costs associated with processing required for the only viable non-
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`infringing alternative presented during fact discovery in the case of having to reanalyze every file
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`would necessarily require renegotiation of those agreements, such that the
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` do not present a
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`meaningful change to the analysis. Ex. 9, Cole Tr. at 158:13-159:1. And this comparison of
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`processing time is meaningful because the increased processing “time would be directly proportional
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`to increased computational power that would be needed by the servers.” Id. at 173:8-18.
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`Juniper’s suggestion that it is better to analyze Juniper’s cost savings by assessing Juniper’s
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`historical sandbox costs from its
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` servers also boils down to a factual dispute about Juniper’s
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`savings that can be addressed on cross-examination. Motion at 9. Once a Juniper customer file is
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`8 At deposition, Dr. Cole testified that, based on his experience as CTO, the pricing structure of
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`Ex. 1, Cole Rpt. at Appendix A; see also Ex. 9, Cole Tr. at 146:4-151:1.
`9 Finjan’s motion in limine addresses Juniper’s failure to produce this information during fact
`discovery and belated, questionable productions nearly two months after Finjan’s