Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 1 of 28 PageID #: 34205
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWWARE
`
`C.A. No. 12-1595-LPS
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`PUBLIC VERSION OF D.I. 272
`FILED: MARCH 12, 2021
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`C.A. No. 12-1596-LPS
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`PUBLIC VERSION OF D.I. 292
`FILED: MARCH 12, 2021
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`C.A. No. 12-1597-LPS
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`PUBLIC VERSION OF D.I. 204
`FILED: MARCH 12, 2021
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`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`LG ELECTRONICS, INC.,
`LG ELECTRONICS USA, INC. and
`LG ELECTRONICS MOBILECOMM U.S.A.,
`INC.,
`
`Defendants.
`
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`APPLE INC.,
`
`Defendant.
`
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`BLACKBERRY LIMITED and
`BLACKBERRY CORPORATION,
`
`Defendants.
`
`WEST/293411859
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 2 of 28 PageID #: 34206
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`C.A. No. 12-1601-LPS
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`PUBLIC VERSION OF D.I. 284
`FILED: MARCH 12, 2021
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`C.A. No. 12-1602-LPS
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`PUBLIC VERSION OF D.I. 237
`FILED: MARCH 12, 2021
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`
`C.A. No. 13-919-LPS
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`PUBLIC VERSION OF D.I. 288
`FILED: MARCH 12, 2021
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`
`C.A. No. 13-920-LPS
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`PUBLIC VERSION OF D.I. 247
`FILED: MARCH 12, 2021
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`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`MOTOROLA MOBILITY LLC
`f/k/a MOTOROLA MOBILITY, INC.,
`
`Defendant.
`
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`SONY MOBILE COMMUNICATIONS (USA)
`INC. f/k/a SONY ERICSSON MOBILE
`COMMUNICATIONS (USA) INC.,
`SONY CORPORATION and
`SONY CORPORATION OF AMERICA,
`
`Defendants.
`
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`GOOGLE INC.
`
`Defendant.
`
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`OATH HOLDINGS INC. and OATH INC.,
`
`Defendants.
`
`WEST/293411859
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 3 of 28 PageID #: 34207
`
`DEFENDANTS’ MOTION TO EXCLUDE ROY WEINSTEIN’S OPINIONS AND
`TESTIMONY UNDER FED. R. EVID. 702 AND DAUBERT1
`
`1 Defendants have filed an identical Motion to Exclude Roy Weinstein’s Opinions and Testimony Under Fed. R.
`Evid 702 and Daubert in each of their respective cases. The only difference is Exhibit A, which is the Roy
`Weinstein expert report served in each respective case.
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 4 of 28 PageID #: 34208
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`TABLE OF CONTENTS
`
`I.
`II.
`III.
`IV.
`V.
`
`VI.
`
`NATURE AND STAGE OF THE PROCEEDINGS ..........................................................1
`SUMMARY OF ARGUMENT ...........................................................................................1
`STATEMENT OF FACTS ..................................................................................................3
`LEGAL STANDARDS .......................................................................................................9
`Mr. Weinstein’s Testimony Should Be Excluded Because His Expert Opinions Are
`Improper, Unsupported and Unreliable ...............................................................................9
`A.
`Step One: Mr. Weinstein’s Analysis of the Microsoft License Lacks a Factual
`Basis .......................................................................................................................10
`Step Two: Mr. Weinstein Applies an Arbitrary Multiplier ...................................13
`B.
`CONCLUSION ..................................................................................................................16
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 5 of 28 PageID #: 34209
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`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Daubert v. Merrell Dow Pharms. Inc.,
`509 U.S. 579 (1993) ......................................................................................................... passim
`
`Kumho Tire Co. v. Carmichael,
`526 U.S. 137 (1999) .............................................................................................................9, 12
`
`LaserDynamics, Inc. v. Quanta Comp., Inc.,
`694 F.3d 51 (Fed. Cir. 2012)..........................................................................................9, 14, 16
`
`UGI Sunbury LLC v. A Permanent Easement for 1.7575 Acres,
`949 F.3d 825 (3d Cir. 2020).................................................................................................9, 14
`
`Uniloc USA Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)......................................................................................9, 14, 16
`
`Virnetx, Inc. v. Cisco Sys., Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)..........................................................................................14, 15
`
`Other Authorities
`
`Fed. R. Evid. 702 ................................................................................................................... passim
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 6 of 28 PageID #: 34210
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`I.
`
`NATURE AND STAGE OF THE PROCEEDINGS
`
`Plaintiff Arendi S.A.R.L. (“Arendi”) filed its complaints against Defendants in 2012 and
`
`2013, alleging infringement of U.S. Patent No. 7,917,843 (“the ’843 patent”), among others, by
`
`Defendants’ smartphones and, in some instances, smartphone applications and/or computers (the
`
`“Accused Products”). Defendants filed petitions for inter partes review (“IPR”) of the ’843
`
`patent and other asserted patents before the Patent Trial and Appeal Board (“PTAB”), and the
`
`Court stayed these litigations pending the outcomes of the IPR proceedings. During the IPRs,
`
`the PTAB found two patents asserted against Defendants Apple Inc. (“Apple”), Google, LLC
`
`(“Google”), Motorola Mobility LLC (“Motorola”), Oath Holdings, Inc. (“Oath”), Sony Mobile
`
`Communications (USA) Inc.(“Sony”); BlackBerry Limited and BlackBerry Corporation
`
`(collectively, “BlackBerry”), and LG Electronics Inc., LG Electronics U.S.A., Inc., and LG
`
`Electronics Mobilecomm U.S.A., Inc. (collectively, “LG”) to be unpatentable, which the Federal
`
`Circuit affirmed.2 After the Court lifted the IPR stays and resumed these litigations, Defendants
`
`moved for judgment of invalidity on the pleadings for the remaining patents asserted against
`
`them, including the ’843 patent. D.I. 122. The Court granted the motion as to all asserted
`
`patents except the ’843 patent; therefore, the ’843 patent is the lone patent presently asserted
`
`against Defendants. D.I. 220.
`II.
`
`SUMMARY OF ARGUMENT
`
`The Court should exclude the royalty rate opinion of Mr. Weinstein because it is (a)
`
`premised on unsupported factual assertions – provided solely by Mr. Hedløy, owner and CEO of
`
`Arendi and the sole named inventor of the ’843 patent, who stands to gain significantly from a
`
`2 The PTAB also found the asserted claims of the ’843 patent invalid as obvious in light of a
`single prior art reference (U.S. Patent No. 5,859,636), but the Federal Circuit ultimately reversed
`because it concluded the PTAB had improperly relied on “common sense” to supply the sole
`claim element missing from that prior art reference.
`1
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 7 of 28 PageID #: 34211
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`large damages award – that Mr. Weinstein failed to investigate or validate in any way, and (b)
`
`applies an arbitrary 4X multiplier to account for alleged litigation “risks.” Indeed, Mr.
`
`Weinstein’s damages analysis is improper from beginning to end.
`
`He begins by calculating a royalty rate based on a 2011 settlement agreement between
`
`Arendi and Microsoft Corporation (“Microsoft”) using baseless factual suppositions of Mr.
`
`Hedløy. Specifically, Mr. Weinstein relies on Mr. Hedløy’s self-serving and unsupported
`
`statements about Mr. Hedløy’s beliefs concerning Microsoft’s expected amount of licensed
`
`“unit” sales in 2011-2018 to determine a per-unit royalty rate for the Microsoft license. Mr.
`
`Weinstein admits that he performed no analysis of Mr. Hedløy’s stated beliefs, but instead,
`
`simply adopted them without any concern for their reasonableness, and without even possessing
`
`a full understanding of what exactly Mr. Hedløy was counting as “licensed units.” This is
`
`inexcusable, especially given that Mr. Hedløy’s statements to Mr. Weinstein directly
`
`contradicted Mr. Hedløy’s own sworn deposition testimony—but still, Mr. Weinstein relied on
`
`them for his calculations.
`
`Mr. Weinstein then compounds his fundamental error by applying an arbitrary 4X
`
`multiplier to the royalty rates for Arendi’s licenses with Microsoft, Samsung Electronics Co.,
`
`Ltd. (“Samsung”), and Microsoft Mobile, Inc. (“MMI”) to account for alleged litigation “risks”
`
`described by Mr. Hedløy during two conversations. Mr. Hedløy’s beliefs were again
`
`uncorroborated, but Mr. Weinstein again relied on them alone. After applying his made-up 4X
`
`multiplier to the royalty rates for Arendi’s licenses with Microsoft, Samsung, and MMI, Mr.
`
`Weinstein calculated a simple average of the quadrupled royalty rates, and claimed that the
`
`resulting average represented a reasonable royalty rate for the Accused Products. Mr. Weinstein
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 8 of 28 PageID #: 34212
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`uses this flawed average rate as the cornerstone of his Georgia Pacific reasonable royalty
`
`opinions.
`
`Mr. Weinstein’s flawed analysis of the Microsoft license and the 4X multiplier infects his
`
`entire royalty analysis, such that allowing Arendi to present Mr. Weinstein’s opinions at trial
`
`risks severely misleading the jury. This cannot be remedied merely by subjecting Mr.
`
`Weinstein’s opinions to cross-examination, because his analysis is fundamentally flawed and
`
`does not pass basic muster as an “expert” opinion. The Court therefore should exercise its basic
`
`gatekeeping function under Rule 702 and Daubert and exclude Mr. Weinstein’s opinions in their
`
`entirety.
`III.
`
`STATEMENT OF FACTS
`
`Mr. Weinstein opines that this sole remaining ’843 patent demands: (1) a royalty rate of
`
` with respect to
`
`Apple (Ex. A, Weinstein Rep. (Apple), ¶ 163), (2) a royalty rate of
`
`respect to Google (Ex. A, Weinstein Rep. (Google), ¶¶ 165-166), (3) a royalty rate of
`
` with
`
`
`
`
`
` with respect to Motorola
`
`(Ex. A, Weinstein Rep. (Motorola), ¶ 163), (4) a royalty rate of
`
` with respect to Oath (Ex. A,
`
`Weinstein Rep. (Oath), ¶¶ 140-141), (5) a royalty rate of
`
`
`
`
`
` with respect to Sony (Ex. A, Weinstein Rep. (Sony),
`
`¶¶ 140-150), (6) a royalty rate of
`
`
`
` with respect to BlackBerry (Ex. A, Weinstein Rep. (BlackBerry), ¶¶ 153-157),
`
`and (7) a royalty rate of
`
`
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 9 of 28 PageID #: 34213
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` with respect to LG (Ex. A, Weinstein Rep. (LG), ¶¶ 146-150; Weinstein Reply Rep.
`
`(LG), ¶ 25.).3
`
`In his report, Mr. Weinstein relied on previous settlement agreements Arendi entered into
`
`with Samsung, Microsoft, and MMI, in which Arendi licensed its patent portfolio to each entity
`
`for payments of $
`
`, respectively. Ex. A, Weinstein Rep.
`
`(Apple), ¶¶ 54-62.4 Mr. Weinstein calculated a per-unit royalty for each agreement based on the
`
`settlement amount divided by the numbers of units sold or allegedly expected to be sold. He
`
`ultimately calculated base per-unit royalties of
`
` for Samsung,
`
` for Microsoft, and
`
` for MMI. Id.5 6
`
`Specifically, to arrive at the royalty rate for the agreement with Microsoft, Mr. Weinstein
`
`relied solely on a conversation with Mr. Hedløy to learn the number of units allegedly covered
`
`by the settlement license. On February 4, 2020, Mr. Hedløy supposedly informed Mr. Weinstein
`
`that he “understood that Microsoft would sell 60 million units worldwide in the first year of the
`
`agreement and 40 percent of those sales would occur in the U.S.,” that “the Microsoft license
`
`would cover 9.5 years of sales, and that Microsoft would have at least approximately consistent
`
`future sales.” Ex. A, Weinstein Rep. (Apple), ¶ 56, n.79.7 Mr. Weinstein therefore calculated
`
`3 Mr. Weinstein’s Report for a particular case is submitted as an exhibit to this brief as filed in
`that case only.
`4 See also Weinstein Rep. (Google), ¶¶ 49-57; Weinstein Rep. (Motorola), ¶¶ 48-56; Weinstein
`Rep. (BlackBerry), ¶¶ 48-56; Weinstein Rep. (LG), ¶¶ 48-56; Weinstein Rep. (Oath) ¶¶ 47-55;
`Weinstein Rep. (Sony), ¶¶ 48-56.
`5 See also Weinstein Rep. (Google), ¶¶ 49-57; Weinstein Rep. (Motorola), ¶¶ 48-56; Weinstein
`Rep. (BlackBerry), ¶¶ 48-56; Weinstein Rep. (LG), ¶¶ 48-56; Weinstein Rep. (Oath) ¶¶ 47-55;
`Weinstein Rep. (Sony), ¶¶ 48-56.
`6 Mr. Weinstein’s analysis of the agreements is the same for each case. Sony and Oath Dep. of
`Weinstein Ex. F, 31:1-12; Ex. G, LG Dep. of Weinstein, 19:18-20:20.
`7 See also Ex. A, Weinstein Rep. (Google), ¶ 51 n.68; Weinstein Rep. (Motorola), ¶ 50 n.65;
`Weinstein Report (BlackBerry), ¶ 50 n. 66; Weinstein Rep. (LG), ¶ 50 n.66; Weinstein Rep.
`(Oath) ¶ 49 n.65; Weinstein Rep. (Sony) ¶ 50 n.64.
`4
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 10 of 28 PageID #: 34214
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`that Microsoft would sell 24 million units per year for 9.5 years, for a total licensed unit count of
`
`228 million units, which based on Microsoft’s
`
` settlement payment yielded a
`
`
`
`per-unit royalty rate. Id.8
`
`Mr. Weinstein’s description of what Mr. Hedløy recounted differs from Mr. Hedløy’s
`
`own testimony. Mr. Hedløy instead testified at his deposition that he did not know “
`
`
`
`with Arendi and that
`
`” at the time of its settlement agreement
`
`.
`
`Ex. B, 11/5/2019 Dep. of Atle Hedløy, 137:10-15, 145:7-23. Mr. Weinstein also admitted at
`
`deposition that he did not conduct any research or perform any analysis to substantiate Mr.
`
`Hedløy’s statements that Microsoft was expected to sell 60 million licensed units per year
`
`consistently, 40% of which would be in the United States, for 9.5 years. Ex. C, Apple Dep. of
`
`Weinstein, 54:23-55:9.9 Nor did Mr. Weinstein even attempt to consider Microsoft’s actual sales
`
`numbers for the time period covered by the settlement agreement or before that period to see if
`
`Mr. Hedløy’s alleged sales expectations were reasonable. Instead, he “
`
`
`
`8 See also Ex. A, Weinstein Rep. (Google), ¶ 51 n.68; Weinstein Rep. (Motorola), ¶ 50 n.65;
`Weinstein Rep. (BlackBerry), ¶ 50 n.66; Weinstein Rep. (LG), ¶ ¶ 50 n.66; Weinstein Rep.
`(Oath) ¶ 49 n.65; Weinstein Rep. (Sony) ¶ 50 n.64.
`9 See also Ex. D, Google Dep. of Weinstein, 130:23-131:13; Ex. E, Motorola Dep. of Weinstein,
`80:21-81:10; Ex. F, Sony and Oath Dep. of Weinstein, 69:15-70:9. In fact, Mr. Weinstein was
`not even sure about what Mr. Hedløy was counting as relevant “units” for the Microsoft license,
`though Mr. Weinstein admitted that particular, possible unit identifications could reduce his
`calculated per-unit royalty for the Microsoft license by 80%. See Ex. D, Google Dep. of
`Weinstein, 128:21-129:9, 135:25-136:10, 142:18-24, 147:4-148:9, 153:23-154:5; Ex. E,
`Motorola Dep. of Weinstein, 78:23-79:7, 90:16-92:18. Mr. Weinstein further admitted that he
`inexplicably omitted units of Microsoft’s Internet Explorer program that were covered by the
`license, further inflating his calculated per-unit royalty. See Ex. D, Google Dep. of Weinstein,
`130:14-21, 135:25-136:10; Ex. E, Motorola Dep. of Weinstein, 78:23-79:7, 90:16-92:18.
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 11 of 28 PageID #: 34215
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`,”10 Ex. D, Google Dep. of Weinstein, 131:3–13,11 and settled on a
`
` per-unit
`
`royalty rate with respect to the Microsoft agreement. This calculation is not based on any
`
`reliable facts or methodology concerning the number of units at issue, but rather on Mr. Hedløy’s
`
`controverted statements. Id., 124:1–8 (Mr. Weinstein testifying that he had no other “
`
`
`
`”).12
`
`Next, Mr. Weinstein applied a 4X multiplier to each of the royalty rates he calculated for
`
`the Samsung, Microsoft, and MMI settlement agreements, to arrive at “adjusted [per-unit]
`
`royalty rates” of
`
`. Ex. A, Weinstein Rep. (Apple), ¶¶ 65–69.13 This
`
`multiplier is again based on isolated conversations Mr. Weinstein had with Mr. Hedløy on
`
`December 4, 2019 and February 4, 2020, in which Mr. Hedløy evidently claimed that (1) “[a]t
`
`the time of the Microsoft settlement, Arendi believed it faced three distinct instances of a 50
`
`10 Mr. Weinstein admittedly ignored several other obvious factors from his analysis of the
`Microsoft license, including:
`(1) that some portion of Microsoft’s
`
`
` (Ex. D, Google Dep. of Weinstein, 116:19-23, 117:16-
`23, 128:4-10, 132:16-20, 154:11-16, 195:16-20; 255:24-256:5; Ex. E, Motorola Dep. of
`Weinstein, 73:17-21, 76:7-17, 94:22-95:18);
` (Ex. D, Google
`(2) that the license included
`Dep. of Weinstein, 111:6-112:2, 117:24-118:23; Ex. E, Motorola Dep. of Weinstein,
`67:21-20, 70:23-71:22; Ex. C, Apple Dep. of Weinstein, 46:11-24);
`(3) that the license included
` (Ex. D, Google Dep. of Weinstein,
`118:25-119:10, 120:13-18, 122:2-10; Ex. E, Motorola Dep. of Weinstein, 68:11-12; Ex.
`F, Sony and Oath Dep. of Weinstein, 57:2-58:17); and
`(4) that Mr. Weinstein’s royalty calculation was based solely on Mr. Hedløy’s self-serving
`statements (Ex. D, Google Dep. of Weinstein, 120:19-121:21, 123:22-125:24, 130:23-
`131:13, 132:3-9, 138:25-139:16, 141:16-142:12, 180:20-24, 253:24-254:15, 256:23-
`257:2; Ex. E, Motorola Dep. of Weinstein, 76:18-77:2, 80:3-83:9, 84:5-85:16, 90:7-15,
`95:11-18; Ex. F, Sony and Oath Dep. of Weinstein, 62:10-2).
`11 See also Ex. E, Motorola Dep. of Weinstein, 80:21-81:10; Ex., G, LG Dep. of Weinstein,
`54:11-19 (“I relied on Mr. Hedløy.”); Ex. F, Sony and Oath Dep. of Weinstein, 69:15-70:18.
`12 See also Ex. E, Motorola Dep. of Weinstein, 80:10-20; Ex. G, LG Dep. of Weinstein, 51:17-
`21; Ex. F, Sony and Oath Dep. of Weinstein, 69:15-70:18.
`13 See also Ex. A, Weinstein Rep. (Google), ¶¶ 66-69; Weinstein Rep. (Motorola), ¶¶ 65-68;
`Weinstein Rep. (BlackBerry), ¶¶ 65-68; Weinstein Rep. (LG), ¶¶ 65-68.
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 12 of 28 PageID #: 34216
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`percent probability of a loss: claim construction, trial, and on appeal”; (2) “Mr. Hedløy assigned
`
`a 50 percent chance of losing at trial and a 50 percent chance of losing on appeal against
`
`Samsung”; and (3) “Mr. Hedløy expected the probability of losing to MMI at trial and on appeal
`
`to be 50 percent at each stage.” Ex. A, Weinstein Rep. (Apple), ¶¶ 66 n.100, 67–68.14 Mr.
`
`Weinstein relies solely on these statements from Mr. Hedløy to conclude that each of the three
`
`settlement agreements were discounted by a factor of four due to these litigation risks for
`
`purposes of calculating a reasonable royalty in Arendi’s cases against Defendants. Mr.
`
`Weinstein reiterated at his depositions that his 4X multiple resulted because “
`
`” and that Mr. Hedløy
`
`
`
`
`
`
`
`.” Ex. D,
`
`Google Dep. of Weinstein, 196:17-197:10.15 These “
`
`,” according to Mr. Hedløy,
`
`were not even constrained to the Microsoft, Samsung, and MMI litigations that Mr. Hedløy was
`
`intimately familiar with, but were “
`
`.” Ex. G, LG Dep. of Weinstein, 117:16-19.
`
`Mr. Weinstein explained that “[
`
`
`
`Mr. Weinstein then testified that he accepted Mr. Hedløy’s purported risk factors, but
`
`claimed to have “
`
`.” Id., 197:17-20.16 But this ‘testing’
`
`.” Id., 117:19-22.
`
`14 See also Ex. A, Weinstein Rep. (Google), ¶¶ 66 n.100, 67-68; Weinstein Rep. (Motorola), ¶¶
`65 n.97, 66-67; Weinstein Rep. (BlackBerry), ¶¶ 65, n.98, 66-67; Weinstein Rep. (LG), ¶¶ 65,
`n.98, 66-67; Weinstein Rep. (Oath) ¶¶ 65 n.98, 66-67; Weinstein Rep. (Sony), ¶¶ 66 n.97, 67-68.
`15 See also Ex. C, Apple Dep. of Weinstein, 96:20-98:17; Ex. E, Motorola Dep. of Weinstein,
`59:20-61:17; Ex. G, LG Dep. Weinstein, 98:5-99:20, 107:12-15, 111:15-112:19, 117:16-22; Ex.
`F, Sony and Oath Dep. of Weinstein, 114:1-20.
`16 See also Ex. E, Motorola Dep. of Weinstein, 61:24-62:2; Ex. G, LG Dep. of Weinstein,
`115:18-116:5; Ex. F, Sony and Oath Dep. of Weinstein, 106:25-107:23.
`7
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 13 of 28 PageID #: 34217
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`included a sample size of only one other Arendi litigation, in which Mr. Weinstein found that
`
`Mr. Hedløy “
`
`
`
`.”
`
`Id., 197:17-198:17.17 This is Mr. Weinstein’s basis to multiply each of the calculated per-unit
`
`royalty rates from the Microsoft, Samsung, and MMI settlement licenses by four to arrive at
`
`adjusted royalty rates.
`
`To arrive at a per-unit royalty rate for the Accused Products in the instant cases, Mr.
`
`Weinstein then simply averages his quadrupled
`
` per-unit royalty rate for the Microsoft
`
`license with the quadrupled
`
` per-unit royalty rates for the Samsung and MMI
`
`settlement licenses, to arrive at
`
` per unit of the Accused Products. Ex. A, Weinstein Rep.
`
`(Google), ¶¶ 156, n.175 (“$
`
`.”).18
`
`Mr. Weinstein accordingly did not calculate his royalty rate based on any facts tied to the present
`
`case, or indeed on any independent evidence. Instead, Mr. Weinstein’s royalty rate is based on
`
`Mr. Hedløy’s estimated litigation risks and the outcome of an unrelated litigation, multiplied on
`
`top of Mr. Hedløy’s uncorroborated beliefs about the Microsoft license and per-unit royalty
`
`calculations for the Samsung and MMI settlement licenses. This was the entire basis and
`
`analysis of Arendi’s other licenses for Mr. Weinstein’s opinion that a “conservative” per-unit
`
`royalty rate would be
`
`, amounting to hundreds of millions of dollars in alleged damages
`
`against the Defendants. Mr. Weinstein further does not consider what a reasonable royalty
`
`would be if his analysis of the Microsoft license or his 4X multiplier is incorrect.
`
`17 See also Ex. E, Motorola Dep. of Weinstein, 62:3-11, 65:1-4, 65:22-66:7; Ex. G, LG Dep. of
`Weinstein, 116:6-117:3; Ex. F, Sony and Oath Dep. of Weinstein, 106:25-107:23.
`18 See also, Ex. A, Apple Weinstein Rep. (Apple), ¶159, n. 175; Weinstein Rep. (Motorola), ¶¶
`145, 145 n.152; Weinstein Rep. (BlackBerry), ¶¶ 145. 145, n.160; Weinstein Rep. (LG), ¶¶ 146,
`146 n.154; Weinstein Rep. (Oath), ¶¶ 133, 133 n.15; Weinstein Rep. (Sony), ¶¶ 145, 145 n. 152.
`8
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 14 of 28 PageID #: 34218
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`IV.
`
`LEGAL STANDARDS
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`Federal Rule of Evidence 702 allows expert testimony if the testimony (1) “will help the
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`trier of fact to understand the evidence or to determine a fact in issue,” (2) “is based on sufficient
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`facts or data,” (3) “is the product of reliable principles and methods,” and (4) if “the expert has
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`reliably applied the principles and methods to the facts of the case.” Fed. R. Evid. 702. Rule
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`702 imposes a “special obligation upon a trial judge” to “ensure the reliability and relevancy of
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`expert testimony” by precluding expert opinions that are neither reliable nor tied to the facts and
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`circumstances of this case. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147, 152 (1999);
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`Daubert v. Merrell Dow Pharms. Inc., 509 U.S. 579, 598 (1993); Uniloc USA Inc. v. Microsoft
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`Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011). Expert testimony must be “more than subjective
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`belief or unsupported speculation,” Daubert, 509 U.S. at 590, and must be based on “sound
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`economic and factual predicates,” LaserDynamics, Inc. v. Quanta Comp., Inc., 694 F.3d 51, 67
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`(Fed. Cir. 2012). “Courts look for rigor, not mere ‘haphazard, intuitive inquiry.’” UGI Sunbury
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`LLC v. A Permanent Easement for 1.7575 Acres, 949 F.3d 825, 834 (3d Cir. 2020) (quoting Oddi
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`v. Ford Motor Co., 234 F.3d 136, 156 (3d Cir. 2000)).
`V. MR. WEINSTEIN’S TESTIMONY SHOULD BE EXCLUDED BECAUSE HIS
`EXPERT OPINIONS ARE IMPROPER, UNSUPPORTED AND UNRELIABLE
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`Mr. Weinstein’s opinions should be excluded for two reasons. First, his starting position
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`for calculating a per-unit royalty rate, based on the Microsoft license, is irreparably flawed.
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`Second, Mr. Weinstein applied an entirely arbitrary, unsupported 4X multiplier to his flawed
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`royalty rates based on Mr. Hedløy’s uncorroborated, post-hoc, and self-interested estimates of
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`litigation risk. As such, the methodology Mr. Weinstein used is defective at every step, yielding
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`inflated and unreliable final results.
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 15 of 28 PageID #: 34219
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`A.
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`Step One: Mr. Weinstein’s Analysis of the Microsoft License Lacks a Factual
`Basis
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`To calculate the per-unit royalty rates Mr. Weinstein contends are appropriate for the
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`Accused Products, he first relies on settlement agreements Arendi previously entered into with
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`Microsoft, Samsung, and MMI. Ex. A, Weinstein Rep. (Apple), ¶¶ 54-62.19 To arrive at the
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`royalty rate for the Microsoft agreement, however, he relies on unsupported and unreliable sales
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`information for Microsoft products, which undermines his purported calculation for per-unit
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`royalties for the Microsoft license and, accordingly, for his calculated damages in these cases.
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`This is exactly the sort of opinion that Rule 702 and Daubert do not allow to be presented to a
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`jury.
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`Mr. Weinstein contends the royalty rate for the Microsoft Agreement amounted to
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`per unit. Id. at ¶ 56.20 To arrive at this number, Mr. Weinstein had a conversation with Mr.
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`Hedløy during which Mr. Hedløy stated he “understood that Microsoft would sell 60 million
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`units worldwide in the first year of the agreement and 40 percent of those sales would occur in
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`the U.S,” and the “license would cover 9.5 years of sales,” with Mr. Hedløy allegedly assuming
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`that the Microsoft products would have no sales growth each year. Id. at ¶ 56, n.79.21 Mr.
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`Weinstein then calculated a per-unit royalty by dividing the settlement amount of
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` by
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`Mr. Hedløy’s belief regarding 228 million units Arendi believed Microsoft would sell during the
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`9.5-year license window. Id. Mr. Weinstein did not rely on any other evidence other than Mr.
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`19 See also Ex. A, Weinstein Rep. (Google), ¶¶ 49-57, Weinstein Rep. (Motorola), ¶¶ 48-56;
`Weinstein Rep. (BlackBerry), ¶¶ 48-56; Weinstein Rep. (LG), ¶¶ 48-56; Weinstein Rep. (Oath)
`¶¶ 47-55; Weinstein Rep. (Sony), ¶¶ 48-56.
`20 See also Ex. A, Weinstein Rep. (Google), ¶ 51; Weinstein Rep. (Motorola), ¶ 50; Weinstein
`Rep. (BlackBerry), ¶ 50; Weinstein Rep. (LG), ¶ 50; Weinstein Rep. (Oath), ¶ 49; Weinstein
`Rep. (Sony), ¶ 50.
`21 See also Ex. A, Weinstein Rep. (Google), ¶ 51 n.68; Weinstein Rep. (Motorola), ¶ 50 n.65;
`Weinstein Rep. (BlackBerry), ¶ 50, n.66; Weinstein Rep. (LG), ¶ 50 n.66; Weinstein Rep.
`(Oath), ¶ 49 n.65; Weinstein Rep. (Sony), ¶ 50 n.64.
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 16 of 28 PageID #: 34220
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`Hedløy’s unsupported “understanding.” In fact, Mr. Hedløy’s deposition testimony directly
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`contradicted Mr. Weinstein’s unit calculation. Mr. Hedløy testified that he did not “
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`performed
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`,” and that Arendi
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`
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`.” Ex. B, 11/5/2019 Dep. of
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`Atle Hedløy, 137:10-15, 143:8-13, 145:7-23.
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`The reason for settling the Microsoft matter, according to Mr. Hedløy, was because “
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`
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`.” Ex. B, 11/5/2019 Dep. of
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`Atle Hedløy, 137:16-24. It was not based at all on the amount of Microsoft sales—indeed, Mr.
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`Hedløy testified that
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`. Id., 137:10-15.
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`Mr. Weinstein acknowledged this at his deposition when he testified that Mr. Hedløy “
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`,” yet he still illogically relied on this self-serving
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`conversation with Mr. Hedløy to anchor his damages analysis. Ex. D, Google Dep. of
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`Weinstein, 125:5-17.22 Indeed, Mr. Weinstein admitted during deposition that he relied solely on
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`Mr. Hedløy’s belief to arrive at
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` royalty rate for the Microsoft agreement and “
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`.” Ex. C, Apple Dep. of Weinstein, 54:33-55:9.23 Further, Mr.
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`Weinstein admitted that he knew Mr. Hedløy testified that
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`. Id. at 52:4-22.24
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`22 See also Ex. E, Motorola Dep. of Weinstein, 89:7-25; Ex. F, Sony and Oath Dep. of
`Weinstein, 71:24-72:12.
`23 See also Ex. D, Google Dep. of Weinstein, 123:22-125:24, 130:23-131:13, 132:3-9, 141:16-
`142:12, 180:20-24, 256:23-257:2; Ex. E, Motorola Dep. of Weinstein, 80:3-83:9, 84:5-85:16,
`95:11-18.
`24 See also Ex. D, Google Dep. of Weinstein, 125:5-17; Ex. E, Motorola Dep. of Weinstein,
`90:7-15; Ex. F, Sony and Oath Dep. of Weinstein, 66:18-67:3.
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 17 of 28 PageID #: 34221
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`Therefore, neither Mr. Weinstein nor Mr. Hedløy performed any analysis regarding the
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`settlement amount or any analysis on the amount of units Microsoft sold at the time of
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`settlement. The basis for Mr. Weinstein’s royalty rate therefore has no grounding in fact or
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`evidence whatsoever, and instead serves merely as a regurgitation of Mr. Hedløy’s privately
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`communicated and unsupported beliefs, under the imprimatur of an expert opinion. Indeed,
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`simply serving as a mouthpiece for Mr. Hedløy’s speculation will not and does not help the trier
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`of fact understand the evidence or determine a fact in issue. Instead of performing any reliable
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`expert analysis, Mr. Weinstein chose to base his opinions on Mr. Hedløy’s self-serving (and
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`contradictory) suppositions – all of which is not based on sufficient facts or data. Indeed, there
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`are no contemporaneous documents supporting Mr. Hedløy’s belief regarding Microsoft’s sales
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`numbers, thereby allowing unfettered speculation.
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`Presenting Mr. Weinstein’s baseless opinions at trial poses a special and inevitable
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`danger of confusion or misimpression by the jury because it might grant Mr. Weinstein’s empty
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`opinions, and Mr. Hedløy’s unsubstantiated underlying statements, authority or reputability to
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`which they are not entitled. This danger cannot be remedied merely through cross-
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`examination—Mr. Weinstein’s opinions fundamentally are not “based on sufficient facts” and
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`are unreliable, rather than simply subject to honest critique. Fed. R. Evid. 702. The Court’s
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`“basic gatekeeping obligation” to “ensure that any and all [expert] testimony . . . is not only
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`relevant, but reliable” serves to remedy this exact circumstance, so that fundamentally flawed
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`opinions may not be offered to the jury. Kumho Tire, 526 U.S. at 147 (quoting Daubert, 509
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`U.S. at 589). The Court therefore should exercise its gatekeeping role to ensure that only reliable
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`expert testimony is presented at trial and accordingly exclude Mr. Weinstein’s royalty rate
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`determination under Rule 702.
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`Case 1:13-cv-00919-LPS Document 325 Filed 03/12/21 Page 18 of 28 PageID #: 34222
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`This necessarily requires the exclusion of Mr. Weinstein’s entire report, because Mr.
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`Weinstein arrives at his proposed
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` per-unit royalty rate for the Accused Products by simply
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`multiplying his improperly calculated Microsoft per-unit royalty by four and then averaging the
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`result with the quadrupled per-unit royalty rates he calculates for the Samsung and MMI
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`settlement licenses in order to generate an estimated reasonable royalty in these cases. Ex. A,
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`Weinstein Rep. (Apple), ¶ 156.25 Mr. Weinstein’s errors for his Microsoft analysis thus infect
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`his ultimate opinions on a reasonable royalty for the Accused Products.
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`B.
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`Step Two: Mr. Weinstein Applies an Arbitrary Multiplier
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`Using the flawed Microsoft royalty rate, Mr. Weinstein next applies an entirely arbitrary
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`4X multiplier to arrive at his adjusted royalty rate for each settlement license, and ultimately at
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`his proposed
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` per-unit royalty for the present cases. Mr. Weinstein’s justification for this
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`multiplier is to account for litigation “risks” Arendi faced when it entered into the Microsoft,
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`Samsung, and MMI agreements. Id. at ¶ 70.26 He opines, without any support, that “[l]icense
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`payments that emerge from settlement agreements entered into before validity and infringement
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`are established typically reflect discounts to deal with this certainty. Such discounts routinely
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`exceed 50 to 75 percent.” Id. He then references one study that showed “plaintiffs in patent
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`infringement matters prevail at the trial court level in less than 50 percent of the matters resolved
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`by pretrial motions or by a trial verdict.” Id. Finally, he claims that Mr. Hedløy told him that
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`Arendi assigned up to a 25% probability of prevailing in each of the Microsoft, Samsung, and
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`MMI litigations, but acknowledges that Mr. Hedløy provided absolutely no documentary support
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`25 See also Ex. A, Weinstein Rep. (LG) ¶ 146; Weinstein Rep. (Oath) ¶ 133; Weinstein Rep.
`(Sony) ¶ 145.
`26 See a