Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 1 of 16
`
`Juanita R. Brooks (CA SBN 75934) brooks@fr.com
`Roger A. Denning (CA SBN 228998) denning@fr.com
`Jason W. Wolff (CA SBN 215819) wolff@fr.com
`John-Paul Fryckman (CA SBN 317591) fryckman@fr.com
`K. Nicole Williams (CA291900) nwilliams@fr.com
`FISH & RICHARDSON P.C.
`12860 El Camino Real, Suite 400
`San Diego, CA 92130
`Telephone: (858) 678-5070 / Fax: (858) 678-5099
`
`Proshanto Mukherji (Pro Hac Vice) mukherji@fr.com
`FISH & RICHARDSON P.C.
`One Marina Park Drive
`Boston, MA 02210
`Phone: (617) 542-5070/ Fax: (617) 542-5906
`
`Robert Courtney (CA SNB 248392) courtney@fr.com
`FISH & RICHARDSON P.C.
`3200 RBC Plaza
`60 South Sixth Street
`Minneapolis, MN 55402
`Phone: (612) 335-5070 / Fax: (612) 288-9696
`
`Attorneys for Plaintiff
`FINJAN LLC
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`(SAN JOSE DIVISION)
`
`FINJAN LLC, a Delaware Limited Liability
`Company,
`
`Case No. 5:17-cv-04467-BLF (VKD)
`
`Plaintiff,
`
`v.
`
`PLAINTIFF FINJAN LLC’S MOTION TO
`PRECLUDE TRIAL TESTIMONY FROM
`STEPHEN BECKER, PH.D.
`
`SONICWALL INC., a Delaware Corporation,
`
`Defendant.
`
`Date: June 24, 2021
`Time: 9:00 a.m.
`Judge: Hon. Beth Labson Freeman
`Dept: Courtroom 3, Fifth Floor
`
`REDACTED VERSION OF DOCUMENT FILED
`UNDER SEAL
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 2 of 16
`
`
`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`NOTICE OF MOTION ..................................................................................................... 1
`
`STATEMENT OF RELIEF BEING SOUGHT AND THE ISSUE TO BE
`
`DECIDED ........................................................................................................................ 1
`
`III.
`
`STATEMENT OF THE RELEVANT FACTS .................................................................. 1
`
`A.
`
`B.
`
`Nature and Stage of the Case ................................................................................. 1
`
`The Damages Period for Each Asserted Patent Begins No Earlier
`
`Than September 2014, and Ends as Late as December 2025 .................................. 1
`
`C.
`
`SonicWall’s Damages Expert Computed Damages Based Primarily
`
`on Pre-Notice Revenues, While Excluding Years of Later
`
`Infringement .......................................................................................................... 2
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`IV.
`
`ARGUMENT.................................................................................................................... 4
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`V.
`
`
`
`
`
`
`
`
`A.
`
`B.
`
`Legal Standards ..................................................................................................... 5
`
`Because It Bases Damages on Pre-Notice Acts for All Asserted
`
`Patents, Dr. Becker’s Model Contravenes the Patent Act and Clear
`
`Appellate Authority ............................................................................................... 6
`
`C.
`
`Because It Accords Zero Value to Late-Term Infringement for the
`
`’780, ’968, ’305, ’408, and ’154 Patents, Dr. Becker’s Model is
`
`Doubly Improper ................................................................................................... 8
`
`D.
`
`No Part of Georgia-Pacific Justifies Dr. Becker Including Pre-
`
`Notice Revenues in, and Excluding Later Revenues From, the
`
`Royalty Base ......................................................................................................... 9
`
`E.
`
`Because Dr. Becker’s Damages Computations Contravene Damages
`
`Law , the Court Should Preclude Testimony Thereon ...........................................10
`
`CONCLUSION................................................................................................................10
`
`
`
`i
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 3 of 16
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Arctic Cat Inc. v. Bombardier Recreational Products Inc.,
`876 F.3d 1350 (Fed. Cir. 2017) ................................................................................................ 5
`
`AstraZeneca AB v. Apotex Corp.,
`782 F.3d 1324 (Fed. Cir. 2015) ............................................................................................ 6, 7
`
`Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc.,
`809 F.3d 1294 (Fed. Cir. 2015) ................................................................................................ 5
`
`Daubert v. Merrell Dow Pharm., Inc.,
`509 U.S. 579 (1993)................................................................................................................. 5
`
`Dow Chem. Co. v. Mee Indus., Inc.,
`341 F.3d 1370 (Fed. Cir. 2003) ................................................................................................ 8
`
`Exmark Mfg. Co. v. Briggs & Stratton Power Prods. Grp.,
`879 F.3d 1332 (Fed. Cir. 2018) ................................................................................................ 5
`
`Finjan, Inc. v. Blue Coat Systems, Inc.,
`No. 13-cv-03999-BLF, 2015 WL 427280 (N.D. Cal. July 14, 2015) .................................... 7, 8
`
`Fromson v. W. Litho Plate & Supply Co.,
`853 F.2d 1568 (Fed. Cir. 1988), overruled on other grounds by Knorr-Bremse
`Systeme fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir.
`2004) ..................................................................................................................................... 10
`
`Kumho Tire Co. v. Carmichael,
`526 U.S. 137 (1999)................................................................................................................. 5
`
`Lindemann Maschinenfabrik GmbH v. Am. Hoist & Derrick Co.,
`895 F.2d 1403 (Fed. Cir. 1990) ............................................................................................ 5, 9
`
`Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,
`711 F.3d 1348 (Fed. Cir. 2013) ................................................................................................ 9
`
`VirnetX, Inc. v. Cisco Sys., Inc.,
`767 F.3d 1308 (Fed. Cir. 2014) ................................................................................................ 5
`
`Statutes
`
`35 U.S.C. § 284 ................................................................................................................. 6, 7, 8, 9
`
`35 U.S.C. § 287(a) ................................................................................................................. 5, 6, 7
`
`
`
`ii
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 4 of 16
`
`
`
`Other Authorities
`
`Fed. R. Evid. 702 ........................................................................................................................... 5
`
`
`
`
`
`
`
`iii
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 5 of 16
`
`
`
`I.
`
`NOTICE OF MOTION
`
`NOTICE IS HEREBY GIVEN that on June 24, 2021, at 9:00 a.m. or as soon as counsel
`
`may be heard by the Honorable Beth Labson Freeman, Plaintiff Finjan, LLC will and hereby does
`
`move for an order precluding certain testimony from Stephen Becker, Ph.D.
`
`II.
`
`STATEMENT OF RELIEF BEING SOUGHT AND THE ISSUE TO BE DECIDED
`
`Finjan seeks an order precluding Dr. Becker from presenting at trial any computation of
`
`damages for this case. The issue to be decided is whether Dr. Becker’s damages model comports
`
`with controlling law requiring that an infringement award must include redress for infringement
`
`during the damages period, and must not include redress for acts outside the damages period.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`III.
`
`STATEMENT OF THE RELEVANT FACTS
`
`11
`
`12
`
`A.
`
`Nature and Stage of the Case
`
`This is a patent case. Plaintiff Finjan LLC accuses Defendant SonicWall Inc. with
`
`13
`
`infringing eight Finjan patents. Discovery in this case closed in September 2020, and the Court
`
`14
`
`has scheduled trial to begin on May 3, 2021.
`
`15
`
`16
`
`17
`
`B.
`
`The Damages Period for Each Asserted Patent Begins No Earlier Than
`
`September 2014, and Ends as Late as December 2025
`
`At trial, Finjan plans to present the damages opinions of economist DeForest McDuff,
`
`18
`
`Ph.D. In September 2020 Finjan served a report by Dr. McDuff, containing his opinions. See
`
`19
`
`generally Exh. D.1 The McDuff Report included, among other things, recitations of the
`
`20
`
`“appropriate damages start date” and “end date” for each asserted patent, as follows:
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`Patent No.
`
`Start of Damages
`
`End of Damages
`
`USPN 6,804,780 (“the ’780 patent”)
`
`September 2014
`
`November 6, 2017
`
`USPN 6,154,844 (“the ’844 patent”)
`
`November 25, 2014
`
`January 29, 2017
`
`USPN 8,677,494 (“the ’494 patent”)
`
`June 2016
`
`January 29, 2017
`
`USPN 7,613,926 (“the ’926 patent”)
`
`June 10, 2014
`
`January 29, 2017
`
`
`
`1 Exhibits (“Exh”) are attached to the Declaration of Robert Courtney in support of Finjan, LLC’s
`
`Motion to Preclude Trial Testimony from Stephen Becker, Ph.D.
`
`1
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 6 of 16
`
`
`
`USPN 6,965,968 (“the ’968 patent”)
`
`November 25, 2014
`
`September 5, 2023
`
`USPN 7,975,305 (“the ’305 patent”)
`
`August 4, 2017
`
`August 18, 2020
`
`USPN 8,224,408 (“the ’408 patent”)
`
`August 4, 2017
`
`May 27, 2021
`
`USPN 8,141,154 (“the ’154 patent”) March 2017
`
`December 12, 2025
`
`See generally Exh. D ¶¶ 105–07.
`
`For the ’305 and ’408 patents, the “Start of Damages” is the date on which Finjan filed the
`
`Complaint in this case. Id. ¶ 106; see also Compl. (D.I. 1.). For the others, damages begin on
`
`when Finjan gave notice of infringement. Exh. D ¶ 105; see also Exh. E. For all patents, the “End
`
`of Damages” is the date of expiration, not disputed by any party.
`
`As the Court knows, SonicWall contends that some of the “Start” dates should be later
`
`than those in the table above; Finjan disagrees. See, e.g., SonicWall Mot. Summ. J. (D.I. 319). In
`
`any event SonicWall has never urged an earlier start date, for any patent. See, e.g., Exh. C at
`
`143:17–24 (confirming no contention of earlier notice). It is thus undisputed among the parties
`
`that SonicWall received notice of infringement no earlier than the dates recited above.
`
`C.
`
`SonicWall’s Damages Expert Computed Damages Based Primarily on Pre-
`
`Notice Revenues, While Excluding Years of Later Infringement
`
`SonicWall’s damages expert is Stephen Becker, Ph.D. On October 9, 2020, Finjan
`
`received Dr. Becker’s expert report. Exh. A. On October 28, 2020, SonicWall’s counsel served
`
`“Errata” by Dr. Becker. Exh. B. Finjan subsequently took Dr. Becker’s deposition concerning his
`
`damages theories and the bases therefor. Exh. C. Dr. Becker served a further supplementation on
`
`December 22, 2020.2 Exh. F.
`
`Dr. Becker’s report includes his computation of the royalties SonicWall owes if found to
`
`infringe. See Exh. A, ¶¶ 107–12, 339–40. It opines that SonicWall and Finjan would have agreed
`
`to a royalty on each patent, computed by applying a per-patent rate to a “base of relevant
`
`revenues.” Id. ¶¶ 421, 429.
`
`
`
`2 Though Dr. Becker’s October 28 and December 22 revisions reworked some calculations, they
`
`did not address any of the analytical problems discussed herein.
`
`2
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 7 of 16
`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 7 of 16
`
`Dr. Becker’s “base ofrelevant revenues,” however, is inconsistent with the damages start
`
`dates. For each of the eight patents-at-issue, Dr. Becker computed his royalty using SonicWall’s
`
`revenues from long before Finjan notified SonicWall of of infringement, even under Finjan’s
`
`earliest notice contentions. Dr. Becker’s “base of relevant revenues” is also inconsistent with the
`
`undisputed damages end dates. The following table summarizes Dr. Becker’s revenue base:
`
`Earliest
`
`Earliest
`
`Latest
`
`End of
`
`Proposed
`
`Revenues in
`
`Revenues in
`
`Damages
`
`Notice Date
`
`Becker Base
`
`Becker Base
`
`(Undisputed) Citation3
`
`
`
`’780 patent
`
`Sept. 2014
`
`Feb. 1, 2010
`
`Jan. 31, 2015
`
`Nov. 6, 2017
`
`Ex. SLB-2A
`
`’844 patent Nov. 25, 2014 Feb. 1, 2012
`
`Jan. 31, 2017
`
`Jan 29 2017
`
`Ex. SLB-2B
`
`’494 patent
`
`June 2016
`
`Feb. 1, 2014
`
`Jan. 31, 2017
`
`Jan. 29 2017
`
`Ex. SLB—ZC
`
`’926 patent
`
`June 10, 2014
`
`Feb. 1, 2014
`
`Jan. 31, 2017
`
`Jan. 29 2017
`
`Ex. SLB—ZD
`
`’968 patent Nov. 25, 2014 Feb. 1, 2014
`
`Jan. 31, 2017
`
`Sept. 5, 2023
`
`Ex. SLB-2G
`
`’305 patent Aug. 4, 2017
`
`Feb. 1, 2014
`
`Jan. 31, 2019
`
`Aug 18 2020 Ex. SLB-2H
`
`’408 patent Aug. 4, 2017
`
`Feb. 1, 2014
`
`Jan. 31, 2019
`
`May 27 2021
`
`Ex. SLB-2I
`
`’154 patent March 2017
`
`Feb. 1, 2014
`
`Jan. 31, 2019
`
`Dec 12, 2025
`
`Ex. SLB-ZJ
`
`Exhibits SLB-2A through SLB-2J to Dr. Becker’s report include these computations on a
`
`patent-by—patent basis. They expressly rely on pre-notice revenue while not taking into account
`
`significant revenue later in the damages period for some patents. Other tables within Dr. Becker’s
`
`report also employ the same dates, and the same relevant approach. See Becker Exs. SLB—3, SLB-
`
`4A through SLB—4J. Dr. Becker used these revenues to compute ‘
`
`—
`
`Exh. A, 1] 433
`
`(describing reliance on Exs SLB-2A through SLB-2J). He then‘—
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`— ’ (and applied various “alternative limitations scenarios”) in Exhibits SLB-lA
`
`and SLB-lB of his report. See Exh. A, 1] 433; see also id. Exs. SLB-lA through SLB-lB.
`
`3 The “SLB” exhibits were part of Dr. Becker’s report, revised in errata and in his supplement.
`
`They are part of Exhs. A, B, and F.
`
`3
`
`Case No. 5:17-cv-04467—BLF (VKD)
`FlNJAN’S DAUBERT MOTION RE S. BECKER
`
`25
`
`26
`
`27
`
`28
`
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 8 of 16
`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 8 of 16
`
`1
`
`Dr. Becker also relied on the revenues above to compute an alternative damages model addressing
`
`an alternative View of infringement. See id. 1“] 434—39 (describing alternative model); id. Exs.
`
`SLB—3A through 3B (relied on for same); id. Exs. SLB-4A through 4J (relied on for same).
`
`At deposition, Dr. Becker expressly acknowledged that his model relied on pre-notice
`
`revenue. Exh. C at 11325—16. He went on to acknowledge that, because of this, the damages he
`
`computed were mostly attributable to pre-notice revenue. Id. at 13427—12. He also acknowledged
`
`that his “lump sum” computations for patent royalties (in Exhibits SLB-lA and SLB—lB) were
`
`similarly based on pre-notice revenues. Id. at 141:7—13. And he confirmed that all his damages
`
`computationsreliedonpre—noticerevenues. Id. at 142222—143:15a
`
`IV.
`
`ARGUMENT
`
`Dr. Becker’s opinion that damages should principally derive from SonicWall’s pre—notice
`
`revenues rather than on revenues during the damages period is incompatible with controlling law.
`
`Absent constructive notice (not alleged here), the Patent Act and Federal Circuit authority squarely
`
`proscribe awarding damages for the pre-notice period. Dr. Becker has adopted a distorted
`
`economic View, both over— and under-inclusive in ways that the law does not permit. Dr. Becker’s
`
`model is over-inclusive because it proposes to award damages for acts prior to the date of notice,
`
`which Congress expressly barred. It is under-inclusive because it simply ignores infringement in
`
`much of the damages period—Dr. Becker’s model would award zero recovery for over six years
`
`of infringement for some patents—and damages law does not permit that, either.
`
`As a whole, Dr. Becker’s theory of damages is untethered from core principles of damages
`
`law: no damages before notice, and an entitlement to recovery for all post-notice infringement.
`
`Because Dr. Becker used this defective methodology for his entire damages model, the Court
`
`should preclude Dr. Becker from providing to the jury any estimate of the amount of damages
`
`SonicWall should pay in this case upon a finding of liability.
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`4
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FlNJAN‘S DAUBERT MOTION RE S. BECKER
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 9 of 16
`
`
`
`A.
`
`Legal Standards
`
`“Expert evidence can be both powerful and quite misleading because of the difficulty of
`
`evaluating it.” Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 595 (1993). Rule 702 bars
`
`the testimony of an expert witness unless “(1) the testimony is based upon sufficient facts or data,
`
`(2) the testimony is the product of reliable principles and methods, and (3) the witness has applied
`
`the principles and methods reliable t the facts of the case.” Fed. R. Evid. 702. Trial courts serve a
`
`“gatekeeping” role “to ensure the reliability and relevancy of expert testimony.” Kumho Tire Co.
`
`v. Carmichael, 526 U.S. 137, 152 (1999) (citing generally Daubert). Gatekeeping for patent
`
`damages is particularly important “given the great financial incentive parties have to exploit the
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`inherent imprecision in patent valuation.” Commonwealth Sci. & Indus. Research Org. v. Cisco
`
`11
`
`Sys., Inc., 809 F.3d 1294, 1301 (Fed. Cir. 2015). “To be admissible, expert testimony opining on a
`
`12
`
`reasonable royalty must sufficiently tie the expert testimony on damages to the facts of the case. If
`
`13
`
`the [proffering party] fails to tie the theory to the facts of the case, the testimony must be
`
`14
`
`excluded.” Exmark Mfg. Co. v. Briggs & Stratton Power Prods. Grp., 879 F.3d 1332, 1349–51
`
`15
`
`(Fed. Cir. 2018). Courts have full discretion to exclude opinions that do not comport with “settled
`
`16
`
`principles” of the law. VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1328–29 (Fed. Cir. 2014).
`
`17
`
`Where, as here, a patentee relies on actual notice to the infringer to support its
`
`18
`
`infringement charge, the Patent Act makes clear that any damages must be limited to
`
`19
`
`“infringement occurring after such notice.” 35 U.S.C. § 287(a). The Federal Circuit expressly
`
`20
`
`held that this provision of § 287 is a “limitation on damages, and not an affirmative defense.”
`
`21
`
`Arctic Cat Inc. v. Bombardier Recreational Products Inc., 876 F.3d 1350, 1366 (Fed. Cir. 2017)
`
`22
`
`(emphasis added). However, once the notice requirement has been satisfied, a patentee who
`
`23
`
`proves infringement has an absolute right to appropriate damages for infringing post-notice acts.
`
`24
`
`Lindemann Maschinenfabrik GmbH v. Am. Hoist & Derrick Co., 895 F.2d 1403, 1406 (Fed. Cir.
`
`25
`
`1990) (“In patent law, the fact of infringement establishes the fact of damage because the
`
`26
`
`patentee’s right to exclude has been violated.”). These considerations are central to determination
`
`27
`
`of the “royalty base” (the corpus of value to which the royalty rate is applied) for damages
`
`28
`
`purposes. “The royalty base for reasonable royalty damages cannot include activities that do not
`
`
`
`
`
`
`
`5
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 10 of 16
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`constitute patent infringement, as patent damages are limited to those ‘adequate to compensate
`
`for the infringement.’” AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1343 (Fed. Cir. 2015)
`
`(quoting 35 U.S.C. § 284, emphasis added).
`
`B.
`
`Because It Bases Damages on Pre-Notice Acts for All Asserted Patents, Dr.
`
`Becker’s Model Contravenes the Patent Act and Clear Appellate Authority
`
`For each of the asserted patents, Dr. Becker’s damages model is expressly based on
`
`revenues that, under § 287(a) of the Patent Act, may not lawfully be part of any damages award.
`
`The precise amount of Dr. Becker’s reliance on such revenues varies from patent to patent, but for
`
`six of the eight asserted patents the pre-notice period comprises more than 50% of the entire
`
`10
`
`revenue period considered by Dr. Becker. At the high end (the ’780 patent), over 92% of the
`
`11
`
`revenue period relied on by Dr. Becker was before damages could lawfully begin under § 287(a)
`
`12
`
`of the Patent Act:
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`Damages Start
`
`Patent
`
`Per § 287(a)
`
`Dr. Becker’s Revenue Period
`
`’780 patent Sept. 2014
`
`Feb. 1, 2010 through Jan. 31, 2015
`
`’844 patent Nov. 25, 2014
`
`Feb. 1, 2012 through Jan. 31, 2017
`
`’494 patent
`
`June 2016
`
`Feb. 1, 2014 through Jan. 31, 2017
`
`’926 patent
`
`June 10, 2014
`
`Feb. 1, 2014 through Jan. 31, 2017
`
`’968 patent Nov. 25, 2014
`
`Feb. 1, 2014 through Jan. 31, 2017
`
`’305 patent Aug. 4, 2017
`
`Feb. 1, 2014 through Jan. 31, 2019
`
`’408 patent Aug. 4, 2017
`
`Feb. 1, 2014 through Jan. 31, 2019
`
`’154 patent March 2017
`
`Feb. 1, 2014 through Jan. 31, 2019
`
`23
`
`See generally Exh. B at Exs. SLB-2A through 2J.
`
`Portion Before
`
`§ 287(a) Date4
`
`92%
`
`56%
`
`78%
`
`12%
`
`27%
`
`70%
`
`70%
`
`62%
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`To Finjan’s knowledge, no authority from the Federal Circuit or from any other tribunal
`
`authorizes a jury or a court to award damages via a royalty on revenues outside the limits set by
`
`
`
`4 I.e., the ratio between the number of days in Dr. Becker’s revenue period before the § 287(a) date
`
`and the number of days in Dr. Becker’s revenue period as a whole.
`
`Case No. 5:17-cv-04467-BLF (VKD)
`6
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 11 of 16
`
`
`
`§ 287(a). Indeed, § 287(a) says the opposite:
`
`[Absent constructive notice,] no damages shall be recovered . . . ,
`
`except on proof that the infringer was notified of the infringement and
`
`continued to infringe thereafter, in which event damages may be
`
`recovered only for infringement occurring after such notice.
`
`35 U.S.C. § 287(a) (emphasis added). The Federal Circuit has reminded courts and litigants to
`
`take care when computing a royalty base for damages purposes. “The royalty base for reasonable
`
`royalty damages cannot include activities that do not constitute patent infringement, as patent
`
`damages are limited to those ‘adequate to compensate for the infringement.’” AstraZeneca, 782
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`F.3d at 1343 (Fed. Cir. 2015) (quoting 35 U.S.C. § 284).
`
`11
`
`AstraZeneca’s logic should control here. There, the Federal Circuit reversed a district
`
`12
`
`court’s determination that the royalty base for patent damages should include revenues during a
`
`13
`
`“pediatric exclusivity period” that ran past the expiration of the patent. Id. at 1343. Reversing,
`
`14
`
`AstraZeneca pointed out the “familiar principle that the royalty due for patent infringement should
`
`15
`
`be the value of what was taken—the value of the use of the patented technology.” Id. at 1344
`
`16
`
`(quote marks omitted). Under that principle, it was improper to include post-expiration in an
`
`17
`
`infringement revenue base because those revenues took nothing from the patentee attributable to
`
`18
`
`the patent due to the patent’s expiration. Here, the presentation is different but the outcome
`
`19
`
`should be the same. By operation of § 287, Finjan has no right under any patent to pre-notice
`
`20
`
`damages, and has never sought pre-notice damages. Dr. Becker’s model, by including pre-notice
`
`21
`
`revenues (to the exclusion of post-notice revenues, as discussed below) in his royalty base is
`
`22
`
`improper here, just the similarly deficient royalty base was in AstraZeneca.
`
`23
`
`Finjan is unaware of any authority, anywhere, suggesting that a damages expert may
`
`24
`
`advise a jury to compute damages by applying a rate to the infringer’s pre-notice revenue. Of the
`
`25
`
`few opinions coming near the issue, the nearest is Finjan, Inc. v. Blue Coat Systems, Inc., No. 13-
`
`26
`
`cv-03999-BLF, 2015 WL 427280 (N.D. Cal. July 14, 2015). Issued by this Court four years ago,
`
`27
`
`Blue Coat squarely rejected an accused infringer’s attempt to reach into the pre-notice period.
`
`28
`
`Blue Coat’s damage expert proposed to testify about the amount Blue Coat would owe “in past-
`
`
`
`
`
`
`
`7
`
`Case No. 5:17-cv-04467-BLF (VKD)
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 12 of 16
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`valued dollars, as opposed to today’s dollars.” 2015 WL 427280, at *7. Specifically, the expert
`
`proposed to discount damages back to a pre-notice date (the date of the “hypothetical
`
`negotiation”). Blue Coat provided “no persuasive authority” to support reaching so far back, and
`
`the Court precluded Blue Coat’s expert from presenting the jury with such testimony. Id. The
`
`situation here, of course, is more fraught. Dr. Becker’s proposed testimony concerns not a mere
`
`discount rate, but his fundamental decision to preference his model towards pre-notice revenues.
`
`But Blue Coat’s skepticism about reach back to the pre-notice period was well founded.
`
`C.
`
`Because It Accords Zero Value to Late-Term Infringement for the ’780, ’968,
`
`’305, ’408, and ’154 Patents, Dr. Becker’s Model is Doubly Improper
`
`10
`
`For five patents, Dr. Becker’s model suffers a further defect.5 None of its computations
`
`11
`
`includes more than five years of revenue in the royalty base. Because the model’s royalty bases
`
`12
`
`begin long before notice of infringement, this means that for these patents the model fails to reach
`
`13
`
`years of accused revenues, and so provides zero recovery for SonicWall’s infringement during
`
`14
`
`that period. Again, the effect varies from patent to patent:
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`End of Damages
`
`Unaddressed Pre-
`
`Patent
`
`(Patent Expiration) Dr. Becker’s Revenue Period
`
`Expiration Term
`
`’780 patent November 6, 2017
`
`Feb. 1, 2010 through Jan. 31, 2015
`
`2 years, 280 days
`
`’968 patent September 5, 2023
`
`Feb. 1, 2014 through Jan. 31, 2017
`
`6 years, 218 days
`
`’305 patent August 18, 2020
`
`Feb. 1, 2014 through Jan. 31, 2019
`
`1 year, 145 days
`
`’408 patent May 27, 2021
`
`Feb. 1, 2014 through Jan. 31, 2019
`
`2 years, 119 days
`
`’154 patent December 12, 2025
`
`Feb. 1, 2014 through Jan. 31, 2019
`
`6 years, 317 days
`
`22
`
`See generally Exh. B at Exs. SLB-2A through 2J.
`
`23
`
`Again, Dr. Becker’s approach is irreconcilable with the law of damages. The Federal
`
`24
`
`Circuit has repeatedly held that, upon proving liability, a patentee is entitled by the Patent Act to a
`
`25
`
`reasonable royalty for all infringement, not just a fraction convenient to the infringer. See, e.g.,
`
`26
`
`35 U.S.C. § 284; see also Dow Chem. Co. v. Mee Indus., Inc., 341 F.3d 1370, 1381–82 (Fed. Cir.
`
`27
`
`28
`
`
`
`
`
`5 The ’844, ’494, and ’926 patents are unaffected; they expired within Dr. Becker’s revenue term.
`
`Case No. 5:17-cv-04467-BLF (VKD)
`8
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 13 of 16
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`2003) (“The statute [§ 284] is unequivocal that the distict court must award damages in an
`
`amount no less than a reasonable royalty.”) (emphasis added); Lindemann Maschinenfabrik GmbH
`
`v. Am. Hoist & Derrick Co., 895 F.2d 1403, 1406 (Fed. Cir. 1990) (“In patent law, the fact of
`
`infringement establishes the fact of damage because the patentee’s right to exclude has been
`
`violated.”) (emphasis added). The Court should not permit Dr. Becker to present to the jury a
`
`damages model under which Finjan would be wholly uncompensated—and SonicWall would
`
`receive a corollary windfall—for nearly seven years of infringement.
`
`D.
`
`No Part of Georgia-Pacific Justifies Dr. Becker Including Pre-Notice Revenues
`
`in, and Excluding Later Revenues From, the Royalty Base
`
`10
`
`Dr. Becker’s report attempted to support his decision to include pre-notice revenues, and
`
`11
`
`exclude later ones, by pointing to Georgia-Pacific’s hypothetical negotiation framework. E.g.,
`
`12
`
`Exh. B ¶¶ 423–24 (as part of Georgia-Pacific factor 15 analysis, reasoning that in a hypothetical
`
`13
`
`negotiation Finjan and SonicWall would consider only revenues (1) beginning at the alleged date
`
`14
`
`of first infringement, irrespective of notice, and (2) ending on the date that is the earlier of five
`
`15
`
`years after first infringement, or expiration of the patent). But to the extent Dr. Becker, or
`
`16
`
`SonicWall, believes that any aspect of Georgia-Pacific overwhelms § 287’s bar on pre-notice
`
`17
`
`damages, or § 284’s requirement of a remedy for confirmed infringement, that belief is incorrect.
`
`18
`
`While Georgia-Pacific’s hypothetical negotiation framework imagines the parties seated at
`
`19
`
`the bargaining table months or years before litigation, it does not permit an accused infringer to
`
`20
`
`propose that the jury blind itself to core concepts of patent law. The point of the hypothetical
`
`21
`
`negotiation construct is to help the jury “assess damages for post-notice infringement relative to
`
`22
`
`market conditions at the point in time when infringement began.” Power Integrations, Inc. v.
`
`23
`
`Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348, 1379 (Fed. Cir. 2013) (emphasis added).6
`
`24
`
`That objective would be wholly frustrated if, as is the case under Dr. Becker’s analysis, juries
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`6 Though specifically considering lost profits, Power Integrations is on point because it
`
`specifically adresses how the date of first infringement (used for the hypothetical negotiation)
`
`should interact with recovery for post-notice infringement. 711 F.3d at 1379.
`
`Case No. 5:17-cv-04467-BLF (VKD)
`9
`FINJAN’S DAUBERT MOTION RE S. BECKER
`
`
`
`
`

`

`Case 5:17-cv-04467-BLF Document 350 Filed 01/21/21 Page 14 of 16
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`were presented with damages theories where the hypothetical negotiation construct was used both
`
`to award royalties for pre-notice infringement (which § 287 forecloses), and withhold royalties for
`
`infringement in the years after notice (leaving Finjan without the remedy required by § 284).
`
`For precisely this reason, the Federal Circuit has reminded courts overseeing damages that
`
`they are “not at liberty, in conducting the [hypothetical negotiation] methodology, to abandon
`
`entirely the statutory standard of damages ‘adequate to compensate’ for the infringement.”
`
`Fromson v. W. Litho Plate & Supply Co., 853 F.2d 1568, 1575 (Fed. Cir. 1988), overruled on
`
`other grounds by Knorr-Bremse Systeme fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337
`
`(Fed. Cir. 2004). A properly formed damages model will “look to events and facts that occurred
`
`10
`
`thereafter,” such as, in this case, the dates of notice and SonicWall’s continued infringement deep
`
`11
`
`into the patent term. See id. Dr. Becker’s damages model fails that requirement. By blinding
`
`12
`
`itself to the actual damages periods in this case—periods beginning as early as 2014 and extending
`
`13
`
`as late as 2023—Dr. Becker’s analysis contravenes deep-rooted damages concepts. The Court
`
`14
`
`should enter an order precluding Dr. Becker from presenting such analysis to the jury.
`
`15
`
`16
`
`17
`
`E.
`
`Because Dr. Becker’s Damages Computations Contravene Damages Law , the
`
`Court Should Preclude Testimony Thereon
`
`The appropriate remedy is an order that Dr. Becker may not provide to the jury testimony
`
`18
`
`about or based on his flawed damages model. This would include, for example,