Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 1 of 31
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`DUANE MORRIS LLP
`Matthew C. Gaudet (GA SBN 287789)
`Admitted Pro Hac Vice
`mcgaudet@duanemorris.com
`Robin L. McGrath (GA SBN 493115)
`Admitted Pro Hac Vice
`rlmcgrath@duanemorris.com
`David C. Dotson (GA SBN 138040)
`Admitted Pro Hac Vice
`dcdotson@duanemorris.com
`Jennifer H. Forte (GA SBN 940650)
`Admitted Pro Hac Vice
`jhforte@duanemorris.com
`1075 Peachtree NE, Suite 2000
`Atlanta, GA 30309
`Telephone: 404.253.6900
`Facsimile: 404.253.6901
`
`DUANE MORRIS LLP
`D. Stuart Bartow (CA SBN 233107)
`dsbartow@duanemorris.com
`Nicole E. Grigg (CA SBN 307733)
`negrigg@duanemorris.com
`2475 Hanover Street
`Palo Alto, CA 94304-1194
`Telephone: 650.847.4150
`Facsimile: 650.847.4151
`DUANE MORRIS LLP
`Joseph A. Powers (PA SBN 84590)
`Admitted Pro Hac Vice
`japowers@duanemorris.com
`Jarrad M. Gunther (PA SBN 207038)
`Admitted Pro Hac Vice
`jmgunther@duanemorris.com
`30 South 17th Street
`Philadelphia, PA 19103
`Telephone: 215.979.1000
`Facsimile: 215.979.1020
`Attorneys for Defendant
`SONICWALL INC.
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`
`FINJAN, LLC, a Delaware Limited Liability
`Company,
`
`Plaintiff,
`
`v.
`
`SONICWALL INC., a Delaware Corporation,
`
`Defendant.
`
`Case No.: 5:17-cv-04467-BLF-VKD
`
`DEFENDANT SONICWALL INC.’S
`MOTION TO EXCLUDE THE
`TESTIMONY OF FINJAN’S EXPERTS
`DR. MCDUFF, DR. STRIEGEL, DR.
`COLE, DR. MITZENMACHER, AND DR.
`MEDVIDOVIC
`Date:
`February 18, 2021
`Time:
`9:00 AM
`Courtroom: 3, 5th Floor
`Judge:
`Hon. Beth Labson Freeman
`
`REDACTED
`
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
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`Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 2 of 31
`
`TABLE OF CONTENTS
`
`Page
`Legal Standard .....................................................................................................................1
`The Opinions of Finjan’s Damages Expert, Dr. McDuff, Are Methodologically
`Flawed ..................................................................................................................................1
`A.
`Dr. McDuff’s Overarching Failure to Discount for the Time Value of Money ..... 2
`B.
`Each of Dr. McDuff’s Individual Methodologies Is Methodologically Flawed ..... 4
`1.
`Dr. McDuff’s Method No. 1 is Methodologically Flawed ......................... 4
`2.
`Dr. McDuff’s Method No. 2 is Methodologically Flawed ......................... 7
`3.
`Dr. McDuff’s Method No. 3 Is Methodologically Flawed ......................... 8
`Dr. Striegel’s “Technical Apportionment” Opinions Are Flawed and Render Dr.
`McDuff’s Apportioned Royalty Bases Unreliable .............................................................11
`A.
`Overview of Dr. Striegel’s Analysis ..................................................................... 11
`B.
`Legal Standard ...................................................................................................... 13
`C.
`Dr. Striegel Admits He Did Not Attempt To Identify the Incremental Value
`That the Patented Invention Adds to the Accused Products ................................. 14
`Dr. Striegel’s Determination of When “Overlap” Exists is Completely
`Arbitrary and Fails to Undertake the Necessary Further Apportionment ............. 17
`1.
`Dr. Striegel’s Identification of “Top-Level Functions” Is Flawed ........... 17
`2.
`Dr. Striegel’s Identification of “Top-Level Functions” Ignores Non-
`Accused Functionality .............................................................................. 19
`Dr. Striegel Identified “Overlap” If the Patent Provided Merely More
`Than a “Miniscule” Benefit to a “Top-Level Function” And Failed To
`Undertake the Necessary Further Apportionment .................................... 20
`Drs. Cole, Mitzenmacher, Medvidovic, and Striegel’s “Opinions” Regarding the
`Historical Relationship Between Finjan and SonicWall ....................................................22
`A.
`Factual Background .............................................................................................. 23
`B.
`Expert Testimony on the Finjan-SonicWall Relations is Improper ...................... 23
`
`D.
`
`3.
`
`
`
`i
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
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`
`I.
`II.
`
`III.
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`IV.
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`Federal Cases
`
`TABLE OF AUTHORITIES
`
`Arista Networks, Inc. v. Cisco Systems, Inc., No. 16-cv-00923-BLF, 2018 U.S. Dist.
`LEXIS 228820 (N.D. Cal. June 15, 2018) ...............................................................................24
`
`Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961) ......................................5
`
`Commonwealth Sci. & Indus. Research Organisation v. Cisco Sys., Inc., 809 F.3d
`1295 (Fed. Cir. 2015) ....................................................................................................... Passim
`
`Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) ................................1, 14, 17
`
`Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972) .....................................................5
`
`Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201 (Fed. Cir. 2014) ..............................................13
`
`Exmark Mfg. Co. v. Briggs & Stratton Power Products Grp., Inc., 879 F.3d 1332
`(Fed. Cir. 2018) ........................................................................................................................22
`
`Finjan, Inc. v. Blue Coat Sys., 879 F.3d 1299 (Fed. Cir. 2018)............................................. Passim
`
`Garretson v. Clark, 111 U.S. 120 (1884) ......................................................................................14
`
`General Elec. C. v. Joiner, 522 U.S. 136 (1997) ...........................................................................17
`
`GPNE Corp. v. Apple, Inc., 2014 WL 1494247 (N.D. Cal. Ap. 16, 2014)....................................17
`
`Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) ............................................3
`
`Mag Aero. Indus. v. B/E Aero., Inc., 816 F.3d 1374 (Fed. Cir. 2016) ...........................................19
`
`PharmaStem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342 (Fed. Cir. 2007) ........................13
`
`Prime Media Group, LLC. v. Acer Am. Corp., No. 12-cv-05020-BLF, 2015 U.S. Dist.
`LEXIS 7515 (N.D. Cal. Jan. 22, 2015) ....................................................................................24
`
`Regents of the Univ. of Minn. v. AGA Med. Corp., 717 F.3d 929 (Fed. Cir. 2013) .......................19
`
`VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308 (Fed. Cir. 2014) ............................................14, 20
`
`Federal Statutes
`
`35 U.S.C. §271(a) ............................................................................................................................5
`
`Rules
`
`FRE 702 ...........................................................................................................................................1
`
`
`
`ii
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
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`

`

`Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 4 of 31
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`FRE 702(a) .....................................................................................................................................23
`
`FRE 702(b).....................................................................................................................................23
`
`
`
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`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
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`Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 5 of 31
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`NOTICE OF MOTION
`PLEASE TAKE NOTICE that on February 18, 2021 at 9:00 a.m., or on another date
`determined by the Court, in Courtroom 3, 5th Floor, in the United States District Court for the Northern
`District of California, San Jose Courthouse, located at 280 S. 1st St, San Jose, CA 95113, Defendant
`SonicWall Inc. (“SonicWall”) will and does move for an order granting this Motion to Exclude the
`Testimony of Plaintiff Finjan, LLC’s (“Finjan”) Experts Dr. McDuff, Dr. Striegel, Dr. Cole, Dr.
`Mitzenmacher, and Dr. Medvidovic.
`For the reasons explained below, this Court should exclude the expert opinions and testimony
`of Dr. McDuff, Dr. Striegel, Dr. Cole, Dr. Mitzenmacher, and Dr. Medvidovic for failure to meet the
`admissibility requirements of Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) and Fed. R.
`Evid. 702.
`
`
`
`
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
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`Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 6 of 31
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`By this Motion, SonicWall seeks to exclude certain opinions of Finjan’s experts pursuant to
`Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579
`(1993). Specifically, SonicWall moves to exclude the opinions of Finjan’s damages expert, Dr.
`McDuff, and the opinions of Dr. Striegel on the issue if apportionment. SonicWall further moves to
`exclude certain opinions of Finjan’s technical experts Drs. Cole, Mitzenmacher, and Medvidovic.
`
`I.
`
`Legal Standard
`The Court is well-familiar with the general legal standard governing admission of expert
`opinion and, therefore, SonicWall will not repeat it here. See, e.g., Ex. 11 (Cisco Daubert Order), at
`1-2. Instead, SonicWall cites the case law most applicable to the specific issues presented by
`SonicWall’s motion as it pertains to each methodological failure of Finjan’s experts.
`
`II.
`
`The Opinions of Finjan’s Damages Expert, Dr. McDuff, Are Methodologically Flawed
`Finjan accuses SonicWall of infringing eight of its web security patents: U.S. Patent Nos.
`6,804,780 (“’780 Patent”), 8,141,154 (“’154 Patent”), 6,154,844 (“’844 Patent”), 8,677,494 (“’494
`Patent”), 7,613,926 (“’926 Patent”), 7,975,305 (“’305 Patent”), 8,225,408 (“’408 Patent”), 6,965,968
`(“’968 Patent”). The products, or combinations thereof, that Finjan’s technical experts accuse of
`infringing each asserted patent are as follows:
`
`Accused Product(s)
`Patent
`’844/ ’494 Gateways; Capture ATP; Gateways + Capture ATP; ESA + Capture ATP
`’408
`’305
`’154
`’780
`‘968
`’926
`
`Capture ATP; Gateways + Capture ATP
`
`Capture ATP; Gateways + Capture ATP; ESA + Capture ATP
`
`Gateways + Capture ATP; ESA + Capture ATP; Capture Client + Capture ATP
`
`Gateways; Capture ATP; Gateways + Capture ATP; ESA + Capture ATP
`
`Gateways + WXA
`
`Capture ATP; Gateways + Capture ATP; ESA + Capture ATP
`
`
`1 All exhibits are attached to the Declaration of Jarrad M. Gunther.
`
`1
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
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`Finjan’s main damages expert (Dr. McDuff) uses three methods to calculate a reasonable
`royalty for this alleged infringement: (1) Rate x Base, where the rate is 8% for hardware and 16% for
`software, and the base is SonicWall’s allegedly infringing revenue apportioned according to Dr.
`Striegel’s technical analysis; (2) per-unit royalty, where the “unit” is alleged to be those units accused
`of infringement; and (3) per-scan royalty, where the rate is $0.32 and the base is the number of “scans”
`allegedly performed by Capture ATP. Ex. 2 (McDuff Report) ¶ 8(c). SonicWall first challenges all
`three of the methods to the extent Dr. McDuff intends to present figures that are not discounted to
`reflect the time value of money. SonicWall next challenges each of Dr. McDuff’s individual
`methodologies based on specific failings unique to each method. Finally, SonicWall separately
`moves to exclude Dr. Striegel’s technical apportionment opinions, which provide the technical basis
`for Dr. McDuff’s apportioned royalty base in Method No. 1.
`
`A.
`Dr. McDuff’s Overarching Failure to Discount for the Time Value of Money
`For each of his three methods, Dr. McDuff provides “[t]wo separate sets of calculations … to
`give the finder of fact flexibility in determining the appropriate amount of compensation for the value
`of alleged infringement: (a) discounting projected sales to the date of this report … (b) discounting
`past and projected sales to the start of the damages period.” Ex. 2 ¶ 116. According to Dr. McDuff,
`however, “an economically reasonable assessment of the reasonable royalty is calculated by treating
`the past sales without discounting and applying a discount factor to projected sales to discount the
`value to the present day.” Id. ¶114.
`Dr. McDuff offers several explanations as to why it is appropriate to treat “the past sales
`without discounting and applying a discount factor to projected sales to discount the value to the
`present day” (id. at ¶114), but none has merit. Just as Dr. Layne-Farrar did in Cisco—which this
`Court held was improper—Dr. McDuff appears to be crediting Finjan’s willfulness allegations in his
`decision not to discount past sales. Id. at ¶114 (opining that no discount for past sales is appropriate
`because “it reflects that SonicWall has earned revenue and profits through ongoing infringement over
`time via Finjan’s technology without compensating Finjan”); Ex. 1 at 10 (“The Court agrees with
`Cisco that Dr. Layne-Farrar’s justifications for not applying the time value of money discount is based
`
`
`
`2
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
`
`

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`solely on the assumption that Cisco willfully infringed Finjan’s patents.”). Curiously, Dr. McDuff
`also opines that not discounting past sales “
`
`
`
`” Ex. 2 at ¶ 114. Yet, the question with respect to a reasonable royalty is what the parties
`would have agreed to at the hypothetical negotiation—which the parties agree would have occurred
`between 2012-2014—not what they would have agreed to in 2021. See Lucent Techs., Inc. v.
`Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009) (“The hypothetical negotiation tries, as best as
`possible, to create the ex ante licensing negotiation scenario and to describe the resulting agreement.
`In other words, if infringement had not occurred, willing parties would have executed a license
`agreement specifying a certain royalty payment scheme.”). Moreover, Finjan’s other damages
`experts have explicitly acknowledged that Finjan’s negotiations applied “discounts … for the time
`value of money.” Ex. 1 at 11 (citing Dr. Layne-Farrar’s Report).
`Because Dr. McDuff’s justifications for not applying a discount to past sales lack merit, this
`Court should find—as it did in Cisco—that his damages “opinion lacks proper foundation for
`concluding that time value of money discount would not have been applied” to the hypothetical
`negotiations and exclude Dr. McDuff’s damages figures that do not apply the time value of money
`discount to past sales. Ex. 1 at 11. Granting SonicWall’s motion on this issue would reduce Dr.
`McDuff’s worldwide damages figures as follows: Method 1: $160 million down to $119 million;
`Method 2: $30.8 million down to $22.9 million; Method 3: $114 million down to $90.8 million. To
`be sure, these figures were based on Dr. McDuff’s assumption that all ten originally asserted patents
`are valid and infringed and that Finjan is entitled to a royalty on SonicWall’s worldwide sales. Since
`he filed his report, the parties have stipulated to dismissal of the ’633 and ’822 Patents. Dkt. 324.
`Despite calculating per-patent figures for each method, one cannot simply subtract the per-patent
`damages numbers for the two now-dismissed patents to determine Dr. McDuff’s new royalty figure.
`That is because, as he states, “the royalties for each patent are not entirely additive,” “[g]iven that
`some of the infringing products, specific accused functionality, infringement dates, and expiration
`
`
`
`3
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
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`

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`dates may overlap.” Ex. 2 ¶ 8(c). Thus, it is not evident from the face of Dr. McDuff’s Report what
`impact Finjan’s dismissal of these two patents has on his damages figures. Moreover, SonicWall has
`separately moved for summary judgment as to Dr. McDuff’s worldwide figures. Dkt. 320.
`
`B.
`
`Each of Dr. McDuff’s Individual Methodologies Is Methodologically Flawed
`1.
`Dr. McDuff’s Method No. 1 is Methodologically Flawed
`Dr. McDuff’s Method 1 “considers the infringing sale and associated revenues using Finjan’s
`historical royalty rates of 8 and 16 percent, applied to a royalty base that is apportioned based on
`discussion and consideration of the technical expert opinions.” Ex. 2 ¶ 8(c). This method results in
`a worldwide, undiscounted damages opinion of “approximately $160 million,” which Dr. McDuff
`considers to be the “most reasonable royalty.” Id. Dr. McDuff’s unapportioned royalty base is
`methodologically flawed for the reasons set forth below and should be excluded on this basis alone.
`To apportion this royalty base, Dr. McDuff adopts wholesale the technical opinions of Dr. Striegel.
`Ex. 3 (McDuff Dep.) at 223:25-224:13; see also id. at 267:11-19 (confirming that “Dr. Striegel has
`analyzed the apportionment side of things and I’ve analyzed the sales data side [of] things”). As
`discussed separately below, however, Dr. Striegel’s apportionment opinions are not tied to the facts
`of this case and exhibit numerous methodological failings. Dr. McDuff’s apportioned royalty base is
`thus flawed itself. Because Dr. McDuff’s royalty base (unapportioned and apportioned) is
`methodologically flawed, the Court should exclude in their entirety his opinions under Method 1.
`
`a.
`
`Dr. McDuff’s Unapportioned Royalty Base Is Not Tied to Finjan’s
`Actual Infringement Theories
`
`For each patent, Dr. McDuff’s unapportioned royalty base contains much more than “the
`infringing sale and associated revenues,” because it fails to take into account that Finjan’s
`infringement allegations largely relate to a specific combination of products, not the individual
`products themselves.
`For example, the only system alleged to infringe the ’968 Patent is the combination of a
`SonicWall WXA with a SonicWall Gateway.
` (Mitz. Report) ¶ 18;
` (Mitz. Dep.) at 72:25-
`73:14. According to Dr. McDuff’s own calculations, SonicWall has sold
`
`
`
`
`
`4
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
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`

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` Ex. 3 at 212:14-214:2. Dr.
` units have actually been combined with a
`McDuff has no opinion as to how many of these
`Gateway into an allegedly infringing system. Ex. 3 at 211:17-22. He thus has no opinion as to the
`revenues earned by SonicWall as to the actual system alleged to infringe the ’968 Patent, and the
`mere sale of components needed to form an infringing combination does not prove direct
`infringement under §271(a). See Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 528 (1972);
`see also Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 344 (1961) (“[I]f anything
`is settled in the patent law, it is that the combination patent covers only the totality of the elements in
`the claim and that no element, separately viewed, is within the grant.”). Because Dr. McDuff’s
`opinions do not fit what is actually alleged to infringe, Dr. McDuff should not be permitted to offer
`his opinion that SonicWall would agree to pay Finjan a royalty of $104.7 million ($57.3 million in
`past royalties plus $47.4 million in projected royalties) just to license the ’968 Patent. See CSIRO,
`809 F.3d at 1302 (“‘Where the data used is not sufficiently tied to the facts of the case,’ a damages
`model cannot meet the ‘substantive statutory requirement of apportionment of royalty damages to the
`invention’s value.’”) (quoting Summit 6, 802 F.3d at 1296)). Indeed, Dr. McDuff conceded it would
`not be economically rational to pay such a high royalty for such minimal sales. Ex. 3 at 216:15-
`217:10.
`Similar methodological failings exist for each of the other Patents-in-Suit, for which at least
`a portion of Finjan’s infringement assertions require a combination of products. For each of these
`patents, Finjan accuses, inter alia, Capture ATP in combination with certain other products. For these
`patents, Dr. McDuff has not provided any opinions as to the revenues associated with the actual
`combinations accused of infringement, as opposed to the individual constituent products (which are
`not individually accused of infringement and which cannot form a claim for infringement). For
`example, Dr. McDuff admits that his analysis of the ’926 Patent assumed (wrongly) that the “Gateway
`products sold by themselves are alleged to infringe.” Ex. 3 at 200:1-6.
`Separately, Dr. McDuff’s analysis as to the combinations that require Capture ATP is
`obviously wrong to the extent it includes revenues generated before Capture ATP was commercially
`
`
`
`5
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
`
`

`

`Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 11 of 31
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`available and thus able to be combined with the Gateways and ESAs. Consistent with Finjan’s
`counsel’s statement at the summary judgment hearing admitting that there was no evidence that
`Capture ATP was available for use with an ESA prior to February 2017, Dr. McDuff conceded that
`the relevant documentation confirms that Capture ATP was not available to be combined into a
`commercially available system with the Gateways and ESAs until at least August 1, 2016 and
`February 2017, respectively. Ex. 3 at 201:5-9, see also id. 131:11-133:23; Ex. 6 (gateways); Ex. 3 at
`201:10-203:8; Ex. 7 (ESAs). It is axiomatic that sales of gateways and ESAs prior to these dates
`cannot infringe, given that Finjan’s infringement allegations require these products be combined.
`Nevertheless, Dr. McDuff’s unapportioned royalty base for each of these patents includes tens of
`millions of dollars of individual Gateway and ESA sales revenues prior to these dates. See, e.g., Ex.
`2 at Attachment D-1 – D-17. Moreover, even after the release of Capture ATP, because Dr. McDuff
`assumed that the Gateways and ESAs themselves separately infringed each patent, he has not
`provided any opinion as to which (or how many) Gateways or ESAs have actually been combined
`with Capture ATP into an allegedly infringing system. Therefore, his royalty base, which includes
`revenues for individual gateways and ESA sales (as well as various software bundles, such as
`GAV/IPS, CGSS, and AGSS), is not tied to the combination actually alleged to infringe.
`For at least these reasons, Dr. McDuff’s unapportioned royalty base is not tied to the facts of
`this case. This flaw alone warrants exclusion of Dr. McDuff’s Method 1 opinions.
`
`b.
`
`Dr. McDuff’s Wholesale Adoption of Dr. Striegel’s Apportionment
`Opinions Renders His Apportioned Royalty
`Base
`Methodologically Flawed
`While Dr. Striegel’s analysis suffers from multiple, independently disqualifying flaws (as
`discussed below), it is also the case that Dr. McDuff’s wholesale adoption of those opinions
`introduces additional flaws that separately warrant exclusion of Dr. McDuff’s damages opinions. For
`example, Dr. Striegel admitted that in many instances the top-level functions that he identified are
`actually only available if a customer purchases a separate, optional add-on subscription. As to the
`Gateways, for example, 7 of Dr. Striegel’s 12 top-level functions are not present on the Gateways at
`the time of sale, but rather require the purchase of additional, separate add-on software subscriptions,
`
`
`
`6
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
`
`

`

`Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 12 of 31
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`such as GAV/IPS, CGSS, AGSS, or Capture ATP. Ex. 8 (Striegel Dep.) at 178:2-184:18. Indeed, of
`the 6 of 12 top-level functions that Dr. Striegel identified as overlapping with the Patents-in-Suit for
`the Gateways, only the “RFDPI Engine” heading does not indicate the need for an added subscription.
`Id.; see also Ex. 9; Ex. 10. That many of his “top-level functions” require separate, add-on
`subscriptions was not noted anywhere in Dr. Striegel’s report and, indeed, it appeared that this fact
`only became known to him under questioning at his deposition. Ex. 8 at 178:2-184:18. Thus, Dr.
`Striegel did not note the subscription issue anywhere in his Report, and at his deposition instead
`punted how this might affect damages to Dr. McDuff. Id. at 186:7-22. Dr. McDuff, however, did
`not take this fact into account at all. Instead, he adopted wholesale Dr. Striegel’s apportionment
`factors, which results in a severe and improper inflation of his apportioned royalty base, as it double
`counts these features. This wholesale adoption of Dr. Striegel’s apportionment opinions—which are
`themselves methodologically flawed—renders Dr. McDuff’s own opinions methodologically flawed
`and subject to exclusion.
`
`2.
`Dr. McDuff’s Method No. 2 is Methodologically Flawed
`Method 2 is “based on the per-unit royalty according to the number of units sold by SonicWall
`and comparable SonicWall licenses relating to the claimed subject matter.” Ex. 2 ¶ 8(c). To
`determine the royalty base for this method, Dr. McDuff looked to “the data that SonicWall produced
`on units sold of each of the accused SKUs during each year of the damages period.” Ex. 2 ¶ 141 &
`Table 9. In doing so, however, Dr. McDuff engages in a severe case of double-counting. Specifically,
`Dr. McDuff counts as a separate “unit” a customer’s purchase of optional, add-on software
`subscriptions for CGSS, AGSS, and GAV/IPS. Id. at Table 9. These subscriptions account for over
` of Dr. McDuff’s
`. Id. But there is no dispute that these subscriptions each
`correspond to (and each must be used with) an already-counted Gateway/ESA, and thus allow a user
`to access certain additional features and functionality via the Gateway/ESA that they purchased. By
`way of example only, and as further discussed below, the data sheet for one of the Gateway products
`identifies several features, but Dr. Striegel admitted that many of those features require the purchase
`of a separate, add-on subscription, such as GAV/IPS or CGSS. Ex. 8 at 178:2-184:18. Dr. McDuff
`
`
`
`7
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
`
`

`

`Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 13 of 31
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`did not account for this fact in his analysis (either via apportionment or in his count of the allegedly
`infringing “units”) and, therefore, there is no basis to count these software subscriptions as separately
`infringing “units” for which SonicWall would agree to pay an additional royalty. Moreover, as
`discussed above, the majority of Finjan’s infringement allegations require multiple products be
`combined into an infringing system. But Dr. McDuff has no opinion as to the number of such
`combination systems, i.e., the “units” that are actually accused of infringement. Indeed, Dr. McDuff
`conceded that he did not “focus[] on that level of detail in [his] report” but instead simply assumed
`that each product itself infringed, by itself, contrary to Finjan’s actual infringement allegations. Ex.
`3 at 199:7-200:21.
`Because Dr. McDuff’s calculation of “units” is not tied to the facts of the case, and specifically
`Finjan’s actual infringement allegations, the entirety of his “per unit” royalty calculation—i.e., Method
`2—should be excluded.
`
`3.
`Dr. McDuff’s Method No. 3 Is Methodologically Flawed
`“‘Where the data used is not sufficiently tied to the facts of the case,’ a damages model cannot
`meet the ‘substantive statutory requirement of apportionment of royalty damages to the invention’s
`value.’” Commonwealth Sci. & Indus. Research Organisation v. Cisco Sys., Inc., 809 F.3d 1295, 1302
`(Fed. Cir. 2015) (“CSIRO”) (quoting Summit 6, 802 F.3d at 1296). For Method 3—a royalty based
`on a “per-scan” royalty—Dr. McDuff looked to “the number of accused scans multiplied by an
`appropriate royalty per scan.” Ex. 2 ¶150. But because both his “royalty per scan” and the “number
`of accused scans” opinions are methodologically flawed, this entire damages methodology should be
`excluded.
`
`a.
`
`Dr. McDuff’s Royalty Rate of
`Striegel’s Flawed Analysis of the
`
` Per Scan Relies On Dr.
` Agreements
`
`” and claims
`Dr. McDuff opines that “the appropriate royalty rate is the price per scan of
`that this amount is supported by the “ranges of pricing for
`services that have been paid by
`Finjan and SonicWall” and “represents evidence of pricing for scans in the cybersecurity industry
`which both SonicWall and Finjan have used.” Ex. 2 ¶154. These conclusions are factually
`
`
`
`8
`DEFENDANT SONICWALL, INC.’S MOTION TO EXCLUDE THE TESTIMONY OF DRS. MCDUFF , STRIEGEL COLE,
`MITZENMACHER AND MEDVIDOVIC
`CASE NO. 5:17-CV-04467-BLF-VKD
`
`

`

`Case 5:17-cv-04467-BLF Document 347 Filed 01/21/21 Page 14 of 31
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`unsupported and instead are based upon Dr. Striegel’s flawed analysis of Finjan and SonicWall’s
` licenses. Ex. 3 at 147:1-6. Specifically, Dr. Striegel opined that “
`
`
`/scan
`” Ex. 11 (Striegel Report) ¶126. Dr. McDuff’s
`calculation is based on this purported pricing for
`. Ex. 2 ¶ 154 n. 347. But
`the actual record evidence shows that neither SonicWall nor Finjan ever paid for, or even obtained a
`license to,
`. Instead, they purchased and obtained a license to the separate
`“
`,” which both Drs. Striegel and McDuff admitted was priced at
`/scan figure that Dr. McDuff uses). Ex. 8 at 33:23-
` or less per scan (i.e.,
`40:18, 41:20-22; Ex. 12; Ex. 13; Ex. 3 at 159:9-163:17. Dr. Striegel was simply wrong in opining
`that Finjan and SonicWall had a license to
`. By relying on
`
` pricing (instead of the pricing for
`, which SonicWall and
`Finjan actually licensed), Dr. McDuff calculated a royalty rate that was over- inflated by at least
`16X, improperly