Case 5:17-cv-04467-BLF Document 406 Filed 03/11/21 Page 1 of 9
`
`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.
`
`DUANE MORRIS LLP
`Matthew C. Gaudet (GA SBN 287789)
`Admitted Pro Hac Vice
`mcgaudet@duanemorris.com
`John R. Gibson (GA SBN 454507)
`Admitted Pro Hac Vice
`jrgibson@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
`
`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
`
`SONICWALL INC.’S RESPONSE TO
`FINJAN’S MOTION IN LIMINE NO. 2 TO
`PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER
`Date:
`March 18, 2021
`Time:
`1:30 PM
`Courtroom: 3, 5th Floor
`Judge:
`Hon. Beth Labson Freeman
`
` REDACTED
`
`SONICWALL’S RESPONSE TO FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER, CASE NO. 5:17-CV-04467-BLF-VKD
`
`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 406 Filed 03/11/21 Page 2 of 9
`
`TABLE OF REFERENCED EXHIBITS1
`
`September 4, 2020 Expert Report of DeForest McDuff, Ph.D.
`October 9, 2020 Expert Report of Stephen L. Becker, Ph.D. on Behalf of
`Defendant
`Errata to Expert Report of Stephen L. Becker, Ph.D. on Behalf of
`Defendant, SLB-1A and SLB-1B
`November 2, 2020 deposition of DeForest McDuff, Ph.D
`
`Ex. 37
`
`Ex. 38
`
`Ex. 39
`Ex. 41
`
`
`1 All exhibits are attached to the Declaration of Jarrad M. Gunther.
`
`i
`SONICWALL’S RESPONSE TO FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER, CASE NO. 5:17-CV-04467-BLF-VKD
`
`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 406 Filed 03/11/21 Page 3 of 9
`
`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
`
`Dr. Becker correctly applied the governing damages law to the evidence in this case. Each
`of Finjan’s challenges is separately addressed below, and each fails.
`I.
`ARGUMENT AND CITATIONS TO AUTHORITY
`
`A.
`
`Dr. Becker’s Methodology Appropriately Captures Damages From the Date of
`First Infringement, and Then Limits Those Damages Based Upon Finjan’s
`Failure to Comply with the Marking Statute
`Finjan’s first argument appears to be that Dr. Becker’s opinion is too generous to Finjan,
`suggesting that Dr. Becker includes damages prior to Finjan’s actual notice. While this would be an
`odd objection, the premise is (unsurprisingly) incorrect: Dr. Becker’s ultimate reasonable royalty
`opinion only includes damages to compensate for the alleged infringement occurring from the date
`of actual notice through patent expiration.
`To reach his ultimate opinions, Dr. Becker first determined the date of the hypothetical
`negotiation, which would have occurred on the dates of alleged first infringement for each patent.
`This is exactly what the law requires. See, e.g., Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d
`1075, 1079 (Fed. Cir. 1983) (“The key element in setting a reasonable royalty ... is the necessity for
`return to the date when the infringement began.”); Fromson v. W. Litho Plate & Supply Co., 853
`F.2d 1568, 1575 (Fed. Cir. 1988) (hypothetical royalty negotiation methodology speaks of
`“negotiations as of the time infringement began”), overruled on other grounds by Knorr-Bremse
`Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004). Here, Finjan’s
`damages expert, Dr. McDuff, opined that
`
`
`.” Ex. 37 ¶ 35; see also McDuff
`Table 1. Dr. Becker adopted these same dates for his analysis. Ex. 38 ¶ 12(A)
`
`
`.”).
`Next, Dr. Becker correctly opined that damages for SonicWall’s alleged infringement
`ordinarily would begin as of the date of first infringement, not the date of actual notice. Again, this
`is what the law directs. Wang Lab’ys, Inc. v. Toshiba Corp., 993 F.2d 858, 870 (Fed. Cir. 1993)
`(“[T]he court confused limitation on damages due to lack of notice with determination of the time
`
`1
`SONICWALL’S RESPONSE TO FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER, CASE NO. 5:17-CV-04467-BLF-VKD
`
`

`

`Case 5:17-cv-04467-BLF Document 406 Filed 03/11/21 Page 4 of 9
`
`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
`
`when damages first began to accrue, and it is the latter which is controlling in a hypothetical royalty
`determination.”). Indeed, it would have been error to adopt the date of notice as the hypothetical
`negotiation date (and the beginning of damages), as opposed to the date of first infringement. Id.
`(“[T]his case is governed by the rule in Fromson, in which hypothetical negotiations were
`determined to have occurred when the infringement began . . . even though, under 35 U.S.C. § 286,
`the infringer was only liable for damages for the six years prior to the filing of the infringement
`action.”). To show how he complied with the law, Dr. Becker “showed his work” and determined
`what the reasonable royalty would be as of the date of first infringement, absent any “limitation on
`damages due to lack of notice.” Id. These calculations are set forth in the column titled “Total
`Discounted Royalties (prior to limitations)” in each of SLB-1A (Errata) and SLB-1B (Errata). Ex.
`39. Had Finjan complied with the marking statute, Dr. Becker’s analysis would have ended there.
`But Finjan did not comply with the marking statute, and therefore Dr. Becker undertook
`additional analysis to determine Finjan’s “recoverable damages” in light Section 287’s “temporal
`limitation on damages for infringement.” Power Integrations, Inc. v. Fairchild Semiconductor Int'l,
`Inc., 711 F.3d 1348, 1379 (Fed. Cir. 2013) (emphasis in original); see also id. (“While the marking
`statute limits recovery of damages for infringement occurring before the ‘infringer was notified of
`the infringement,’ the statute refers to the pre-notice infringing activity as ‘infringement.’ 35 U.S.C.
`§ 287(a). Indeed, pre-notice infringement is still infringement. What differs is that a patentee may
`not recover damages for such pre-notice infringement.”) (emphasis in original)). Dr. Becker set forth
`these calculations in the column titled “Total Discounted Royalties (after limitations)” in each of
`SLB-1A (Errata) and SLB-1B (Errata), to account for the parties’ differing views on when actual
`notice was provided. Ex. 39. These columns represent Dr. Becker’s ultimate damages opinions.
`AstraZeneca does not suggest a different result. Dkt. 370, at 2-3 (citing AstraZeneca AB v.
`Apotex Corp., 782 F.3d 1324, 1343 (Fed. Cir. 2015)). The issue in that case was the inclusion of
`revenues in a royalty base that were earned after patent expiration. Because “there can be no
`infringement once the patent expires,” this was improper. Id. None of Dr. Becker’s opinions—his
`interim “prior to limitations” opinions or his final “after limitations” opinions—suffer this defect
`
`
`
`2
`SONICWALL’S RESPONSE TO FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER, CASE NO. 5:17-CV-04467-BLF-VKD
`
`

`

`Case 5:17-cv-04467-BLF Document 406 Filed 03/11/21 Page 5 of 9
`
`because “pre-notice infringement is still infringement.” Power Integrations, 711 F.3d at 1379.
`“What differs is that a patentee may not recover damages for such pre-notice infringement.” Id.
`Put simply, Dr. Becker’s methodology for first determining when infringement began (and
`thus damages started to accrue), and then (second) limiting the damages based on the date of actual
`notice, is in full compliance with the relevant damages law, and Finjan has cited no authority to
`suggest otherwise. Accordingly, this portion of Finjan’s motion should be denied.
`
`B.
`
`Dr. Becker’s Methodology for Determining the Appropriate Royalty Base Gives
`Full Effect to Finjan’s Own Licensing Policies and Practices
`Finjan’s second complaint—that Dr. Becker’s model “ignores years of accused SonicWall
`revenue” (Dkt. 370, at 2)—is also without merit. Finjan’s complaint seems to assume that Dr. Becker
`was using exactly the same model as Finjan’s expert, which (although nominally couched as a lump
`sum) is essentially a running royalty that has SonicWall paying Finjan a royalty on every sale of the
`accused products, projected out to expiration (as necessary). However, Dr. Becker opined that the
`hypothetical negotiation(s) would have resulted in a different methodology for calculating a
`reasonable royalty: a fully paid-up lump sum amount calculated using Finjan’s own “lump sum”
`licensing policies and practices. Specifically, Dr. Becker noted that
`
`
`
` Ex. 38 ¶ 298 & n. 547; see also
`
`
`
`
`
`
`
`”). Finjan does not challenge these conclusions.
`
`id. ¶¶ 415 (the
`
`”) (emphasis added), 422 (“
`
`”) & nn. 666 – 669, 423 (“
`
`
`
`3
`SONICWALL’S RESPONSE TO FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER, CASE NO. 5:17-CV-04467-BLF-VKD
`
`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 406 Filed 03/11/21 Page 6 of 9
`
`In other words, Dr. Becker applied Finjan’s own licensing practices,
`
`
`
`
`12 (“
`Becker’s lump sum analysis, therefore, appropriately looked at
`
` as Dr. McDuff himself conceded. See also Ex. 41 at 64:7-
`.”). Dr.
`
` (and execution of the
`hypothetical license). This methodology does not, as Finjan accuses, preclude Finjan from “§ 284’s
`requirement of a remedy for infringement.” (Dkt. 370, at 4). Rather, it faithfully applies Finjan’s
`actual licensing policies and the real-world negotiation of a lump sum agreement.
`Finjan’s real complaint appears to be that Dr. Becker
`
`
`
`
`. Both parties’ experts agree that Finjan consistently negotiates lump sum
`licenses, which differ significantly from running royalty licenses. Lucent Techns., Inc. v. Gateway,
`Inc., 580 F.3d 1301, 1326 (Fed. Cir. 2009) (explaining the pros and cons of a lump sum license
`compared to a running royalty structure). Dr. Becker’s analysis is faithful to the lump sum structure.
`Finally, even if Finjan’s criticisms had some merit (which they do not), these criticisms would
`not justify excluding Dr. Becker’s opinions. Finjan does not even challenge Dr. Becker’s opinions
`on the ’844 and ’494 Patents on this basis. For the other three remaining patents – the ’780, ’968,
`and ’408 Patents – Dr. Becker’s opinions clearly meet the reliability and relevance requires of
`Daubert, and Finjan is free to cross examine him on how consideration of SonicWall’s revenues
`through patent expiration would affect his lump sum reasonable royalty. See, e.g., Icon-IP Pty Ltd.
`v. Specialized Bicycle Components, Inc., 87 F. Supp. 3d 928, 940 (N.D. Cal. 2015) (“the Daubert test
`‘is not the correctness of the expert's conclusions but the soundness of his methodology.’ …
`Harrigan’s testimony will be open to attack on cross-examination, and it will be up to the jury to
`decide the appropriate weight to give this evidence.”).
`C.
`Dr. Becker’s Opinions Regarding the Sale of the Patents-in-Suit Are Relevant
`Lastly, Finjan asks the Court to strike Dr. Becker’s opinions related to Finjan’s sale of the
`4
`SONICWALL’S RESPONSE TO FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER, CASE NO. 5:17-CV-04467-BLF-VKD
`
`
`
`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 406 Filed 03/11/21 Page 7 of 9
`
`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
`
`Patents-in-Suit to Fortress, arguing that “[e]ven Dr. Becker’s own analysis does not deem the
`acquisition to be a consideration at the hypothetical negotiation.” Dkt. 370, at 5. It is not clear how
`Finjan reached this conclusion, as Dr. Becker repeatedly points to the Fortress acquisition as
`supportive of his reasonable royalty opinions (which are, as set forth above, based upon what the
`parties would have agreed to at the hypothetical negotiation), and emblematic of the over-reaching
`of Dr. McDuff’s opinions. See, e.g., Ex. 38 ¶ 447(G) (“
`
`
`
`
`
`
`.”).
`Finjan has also not identified any facts that would differentiate Dr. Becker’s opinions as to
`the relevancy of the Fortress acquisition to the hypothetical negotiation in this case, from his opinions
`as to the relevancy of the same to the Cisco negotiation. As this Court previously held, “Finjan’s
`acquisition is relevant as both it and the hypothetical negotiation concern ‘some interest’ in the []
`patents-in-suit.” Order Granting motion for Leave to Supplement Expert Report on Damages, Finjan
`LLC v. Cisco Sys., Inc., Case No. 17-cv-00072-BLF, Dkt. 713 (N.D. Cal. Sept. 21, 2020) (“Cisco
`Order”) (citing Comcast Cable Commc’ns LLC v. Spring Commc’ns Co., LP, 262 F. Supp. 3d 118,
`146 (E.D. Pa. 2017), Spectralytics, Inc. v. Cordis Corp., 650 F. Supp. 2d 900, 914 (D. Minn. 2009),
`aff'd in part, vacated in part, 649 F.3d 1336 (Fed. Cir. 2011) (finding 2003 sale of plaintiff was
`“unquestionably relevant” to hypothetical license negotiation in 1998 and weighing this evidence
`was “a task for the jury”); Pers. Audio, LLC v. Apple, Inc., 2011 WL 3269330, at *10 (E.D. Tex.
`July 29, 2011) (“the jury could, and should, have given substantial weight” to patentee’s “2008 offer
`to sell, not merely to license, the actual patents-in-suit, not merely comparable technology” when
`evaluating the 2001 hypothetical negotiation)). Finjan cites no new authority or arguments that
`would alter this well-reasoned analysis and, therefore, the Court should deny Finjan’s request to
`strike Dr. Becker’s opinions as to the Fortress acquisition.
`
`
`
`5
`SONICWALL’S RESPONSE TO FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER, CASE NO. 5:17-CV-04467-BLF-VKD
`
`

`

`Case 5:17-cv-04467-BLF Document 406 Filed 03/11/21 Page 8 of 9
`
`Dated: March 11, 2021
`
`
`
`Respectfully Submitted,
`
`
`/s/ Nicole E. Grigg
`
`Nicole E. Grigg (formerly Johnson)
`Email: NEGrigg@duanemorris.com
`DUANE MORRIS LLP
`2475 Hanover Street
`Palo Alto, CA 94304-1194
`
`Matthew C. Gaudet (Pro Hac Vice)
`Email: mcgaudet@duanemorris.com
`John R. Gibson (Pro Hac Vice)
`Email: jrgibson@duanemorris.com
`Robin L. McGrath (Pro Hac Vice)
`Email: rlmcgrath@duanemorris.com
`David C. Dotson (Pro Hac Vice)
`Email: dcdotson@duanemorris.com
`Jennifer H. Forte (Pro Hac Vice)
`Email: jhforte@duanemorris.com
`1075 Peachtree Street, Ste. 2000
`Atlanta, GA 30309
`
`Joseph A. Powers (Pro Hac Vice)
`Email: japowers@duanemorris.com
`Jarrad M. Gunther (Pro Hac Vice)
`Email: jmgunther@duanemorris.com
`30 South 17th Street
`Philadelphia, PA 19103
`
`Attorneys for Defendant
`SONICWALL INC.
`
`6
`SONICWALL’S RESPONSE TO FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER, CASE NO. 5:17-CV-04467-BLF-VKD
`
`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 406 Filed 03/11/21 Page 9 of 9
`
`CERTIFICATE OF SERVICE
`This is to certify that a true and correct copy of SONICWALL INC.’S RESPONSE TO
`FINJAN’S MOTION IN LIMINE NO. 2 TO PRECLUDE CERTAIN DAMAGES
`TESTIMONY BY DR. BECKER was served by ECF on all counsel of record on March 11, 2021.
`
`
`
`
`
`
`
`/s/ Nicole E. Grigg
`Nicole E. Grigg
`
`
`
`
`1
`DEFENDANT SONICWALL INC.’S CERTIFICATE OF SERVICE, CASE NO. 5:17-CV-04467-BLF-VKD
`
`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
`
`