Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 1 of 24 PageID #: 12118
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`LG ELECTRONICS, INC.,
`LG ELECTRONICS USA, INC. and
`LG ELECTRONICS MOBILECOMM U.S.A.,
`INC.,
`
`C.A. No. 12-1595-LPS
`
`Original Version Filed: April 6, 2021
`
`Public Version Filed: April 13, 2021
`
`Defendants.
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`APPLE INC.,
`
`Defendant.
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`BLACKBERRY LIMITED and
`BLACKBERRY CORPORATION,
`
`Defendants.
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`MOTOROLA MOBILITY LLC
`f/k/a MOTOROLA MOBILITY, INC.,
`
`Defendant.
`
`C.A. No. 12-1596-LPS
`
`Original Version Filed: April 6, 2021
`
`Public Version Filed: April 13, 2021
`
`C.A. No. 12-1597-LPS
`
`Original Version Filed: April 6, 2021
`
`Public Version Filed: April 13, 2021
`
`C.A. No. 12-1601-LPS
`
`Original Version Filed: April 6, 2021
`
`Public Version Filed: April 13, 2021
`
`

`

`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 2 of 24 PageID #: 12119
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`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,
`
`C.A. No. 12-1602-LPS
`
`Original Version Filed: April 6, 2021
`
`Public Version Filed: April 13, 2021
`
`Defendants.
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`GOOGLE LLC,
`
`Defendant.
`ARENDI S.A.R.L.,
`
`Plaintiff,
`
`v.
`
`OATH HOLDINGS INC., and
`OATH INC.,
`
`Defendants.
`
`C.A. No. 13-919-LPS F
`
`Original Version Filed: April 6, 2021
`
`Public Version Filed: April 13, 2021
`
`C.A. No. 13-920-LPS
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`Original Version Filed: April 6, 2021
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`Public Version Filed: April 13, 2021
`
`ARENDI’S ANSWERING BRIEF IN OPPOSITION TO DEFENDANTS’ JOINT
`MOTION TO EXCLUDE ROY WEINSTEIN’S OPINIONS AND TESTIMONY UNDER
`FED. R. EVID. 702 AND DAUBERT1
`
`1 Plaintiff has filed an identical Answering Brief in Opposition to Defendants’ Joint Motion to
`Exclude Roy Weinstein’s Opinions and Testimony Under Fed. R. Evid. 702 and Daubert in each
`of the respective cases. Only Exhibit A differs. It is the expert report filed by each defendant’s
`respective damages expert.
`
`

`

`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 3 of 24 PageID #: 12120
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`
`
`
`
`
`Of Counsel:
`SUSMAN GODFREY LLP
`
`Seth Ard (pro hac vice)
`Max Straus (pro hac vice)
`1301 Avenue of the Americas, 32nd Floor
`New York, NY 10019
`sard@susmangodfrey.com
`mstraus@susmangodfrey.com
`
`John Lahad (pro hac vice)
`Emi Lawson (pro hac vice)
`1000 Louisiana Street, Suite 5100
`Houston, TX 77002-5096
`jlahad@susmangodfrey.com
`elawson@susmangodfrey.com
`
`Kalpana Srinivasan (pro hac vice)
`1900 Avenue of the Stars, Suite 1400
`Los Angeles, CA 90067
`ksrinivasan@susmangodfrey.com
`
`Kemper Diehl (pro hac vice)
`1201 Third Avenue, Suite 3800
`Seattle, WA 98101
` kdiehl@susmangodfrey.com
`
`
`
`
`
`SMITH, KATZENSTEIN & JENKINS LLP
`Neal C. Belgam (No. 2721)
`Eve H. Ormerod (No. 5369)
`Julie O’Dell (No. 6191)
`1000 West Street, Suite 1501
`Wilmington, DE 19801
`Tel: (302) 652-8400
`nbelgam@skjlaw.com
`eormerod@skjlaw.com
`jdodell@skjlaw.com
`
`Attorneys for Plaintiff Arendi S.A.R.L.
`
`Dated: April 6, 2021
`
`
`
`
`
`
`
`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 4 of 24 PageID #: 12121
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`
`
`TABLE OF CONTENTS
`
`Page
`NATURE AND STAGE OF PROCEEDINGS ...............................................................................1 
`
`SUMMARY OF THE ARGUMENT ..............................................................................................2 
`
`STATEMENT OF FACTS ..............................................................................................................3 
`
`ARGUMENT ...................................................................................................................................6 
`
`I. 
`
`II. 
`
`Mr. Weinstein’s effective royalty rate approach is well-accepted. ..........................7 
`
`Mr. Weinstein reasonably relied on Mr. Hedløy’s estimate of future
`Microsoft unit sales. .................................................................................................8 
`
`III.  Mr. Weinstein’s litigation risk adjustments are sufficiently tied to the
`facts. .......................................................................................................................12 
`
`CONCLUSION ..............................................................................................................................17 
`
`
`
`
`
`
`
`
`
`i
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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 5 of 24 PageID #: 12122
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`
`
`
`
`Cases
`
`
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Apple Inc. v. Motorola, Inc.,
`757 F.3d 1286 (Fed. Cir. 2014)..................................................................................................7
`
`Arendi v. LG Elecs., Inc.,
`No. 12-01595 .............................................................................................................................2
`
`Commonw. Sci. & Indus. Research Org. v. Cisco Sys., Inc.,
`809 F.3d 1295 (Fed. Cir. 2015)..................................................................................................7
`
`Daubert v. Merrell Dow Pharms., Inc.,
`509 U.S. 579 (1993) ......................................................................................................... passim
`
`Del. Display Grp. LLC v. Lenovo Grp. Ltd.,
`No. 13-2108-RGA, 2017 WL 214079 (D. Del. Jan. 18, 2017) ..................................................8
`
`Evolved Wireless, LLC v. Apple Inc.,
`No. 15-542-JFB-SRF, 2019 WL 1178517 (D. Del. Mar. 13, 2019) ..................................10, 11
`
`i4i Ltd. P’ship v. Microsoft Corp.,
`598 F.3d 831 (Fed. Cir. 2010), aff’d, 564 U.S. 91 (2011) .....................................................6, 8
`
`Image Processing Techs. v. Samsung,
`No. 2:20-50-JRG-RSP, 2020 WL 2499736 (E.D. Tex. May 14, 2020) ....................................7
`
`Image Processing Techs., LLC v. Samsung Elecs. Co.,
`No. 2:20-50-JRG-RSP, 2020 WL 3414675 (E.D. Tex. June 22, 2020) ....................................8
`
`Inline Connection Corp. v. AOL Time Warner Inc.,
`470 F. Supp. 2d 435 (D. Del. 2007) .........................................................................................12
`
`Intel Corp. v. Future Link Sys., LLC,
`2017 WL 2482881 (D. Del. June 1, 2017) .............................................................................2, 7
`
`Interactive Pictures Corp. v. Infinite Pictures, Inc.,
`274 F.3d 1371 (Fed. Cir. 2001)..................................................................................2, 6, 10, 11
`
`LaserDynamics, Inc. v. Quanta Computer, Inc.,
`694 F.3d 51 (Fed. Cir. 2012)....................................................................................................17
`
`ii
`
`
`
`

`

`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 6 of 24 PageID #: 12123
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`
`
`Micro Chem., Inc. v. Lextron, Inc.,
`317 F.3d 1387 (Fed. Cir. 2003)..................................................................................................6
`
`Mondis Tech., Ltd. v. LG Elecs., Inc.,
`No. 2:07-565-TJW, 2011 WL 2417367 (E.D. Tex. June 14, 2011) ........................3, 13, 14, 16
`
`Multimedia Patent Trust v. Apple,
`No. 10-2618-H, 2012 WL 5873711 (S.D. Cal. 2012)................................................................7
`
`Robocast, Inc. v. Microsoft Corp.,
`No. 10-1055-RGA, 2014 WL 202399 (D. Del. Jan. 16, 2014) ................................................13
`
`Saint Lawrence Commc’ns LLC v. ZTE Corp.,
`No. 2:15-349-JRG, 2017 WL 679623 (E.D. Tex. Feb. 21, 2017) ...............................13, 14, 16
`
`Spectralytics, Inc. v. Cordis Corp.,
`649 F.3d 1336 (Fed. Cir. 2011)................................................................................................13
`
`Summit 6, LLC v. Samsung Elecs. Co.,
`802 F.3d 1283 (Fed. Cir. 2015)..............................................................................................6, 7
`
`UGI Sunbury LLC v. A Permanent Easement for 1.7575 Acres,
`949 F.3d 825 (3d Cir. 2020).....................................................................................................17
`
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)................................................................................................16
`
`Virnetx, Inc. v. Cisco Sys., Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)................................................................................................16
`
`Yodlee, Inc. v. Plaid Techs. Inc.,
`No. 14-1445-LPS-CJB, 2017 WL 466358 (D. Del. Jan. 27, 2017) .........................................10
`
`Ziilabs Inc., Ltd. v. Samsung Elecs. Co.,
`No. 2:14-203-JRG-RSP, 2015 WL 11110651 (E.D. Tex. Dec. 4, 2015) ..........................13, 14
`
`Rules
`
`Federal Rule of Evidence 702 ................................................................................................ passim
`
`Other Authorities
`
`Federal Bar Circuit Association, B.6.6, Model Patent Jury Instructions (2016)...........................12
`
`
`
`iii
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`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 7 of 24 PageID #: 12124
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`
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`Defendants’ motion to exclude the testimony of Arendi’s damages expert, Roy Weinstein,
`
`fails to identify any methodological shortcomings warranting exclusion under Daubert or Federal
`
`Rule of Evidence 702. Defendants’ complaints are two-fold. First, they criticize the effective
`
`royalty rate that Mr. Weinstein calculates from Arendi’s prior licensing deal with Microsoft
`
`because Mr. Weinstein relied, in part, on the projections of licensed sales that Arendi used to
`
`negotiate that license. Mr. Weinstein’s approach is not only appropriate, but Defendants do not
`
`challenge his core methodology of determining an effective royalty rate. Indeed, a number of
`
`Defendants’ experts use the same approach in arriving at their rebuttal damages figures: they
`
`extract an implied royalty rate from Arendi’s license agreements and apply that rate to the number
`
`of units sold of the accused products at issue here.
`
`
`
`
`
` This is a classic dispute as to the proper inputs of a calculation and
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`goes to weight rather than admissibility.
`
`Second, Defendants attack the adjustments that Mr. Weinstein made to account for the
`
`litigation risks and uncertainty that influenced Arendi’s negotiation of past agreements but would
`
`be absent from a hypothetical negotiation during which validity and infringement are assumed.
`
`Accounting for risk as part of the reconstructed hypothetical negotiation is an accepted
`
`methodological consideration, and Mr. Weinstein ties his adjustments to the particular facts of
`
`these cases. Defendants’ attacks again go to disagreement over the appropriate amount of these
`
`adjustments (i.e., weight) rather than their propriety (i.e., admissibility). The jury should consider
`
`and weigh Mr. Weinstein’s testimony.
`
`NATURE AND STAGE OF PROCEEDINGS
`Arendi filed suits against Defendants for infringing claims 1, 8, 23, and 30 of U.S. Patent
`
`No. 7,917,843 (the “’843 Patent”) in 2012 and 2013. Following a stay for inter partes review, the
`
`
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`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 8 of 24 PageID #: 12125
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`
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`parties completed fact discovery in December 2019 and expert discovery in January 2021. D.I.
`
`155, 197. 2
`
`SUMMARY OF THE ARGUMENT
`Defendants first contend Mr. Weinstein’s effective royalty rate calculation based on the
`
`Arendi-Microsoft license is unreliable because Mr. Weinstein adopts Arendi founder and CEO
`
`Atle Hedløy’s projections from the time of licensing to calculate a per-unit royalty rate for that
`
`license. Second, Defendants argue Mr. Weinstein’s adjustment to his royalty rate calculations to
`
`account for litigation risk is unsupported by the facts of these cases. The arguments Defendants
`
`advance on both fronts are contrary to law and ignore the facts which Mr. Weinstein cites as the
`
`bases for his opinions.
`
`1.
`
`Defendants do not contest that Mr. Weinstein’s use of effective royalty rates to
`
`determine the royalty that would have been reached at the hypothetical negotiation is proper. They
`
`cannot, because Mr. Weinstein’s methodology has been repeatedly accepted by courts. E.g. Intel
`
`Corp. v. Future Link Sys., LLC, No. 14-377-LPS, 2017 WL 2482881, at *2 (D. Del. June 1, 2017)
`
`(denying motion to exclude expert testimony relying on comparable licenses).
`
`2.
`
`Defendants ignore that the Federal Circuit has approved the use of sales projections
`
`to estimate a future royalty base. Mr. Weinstein appropriately relies on Mr. Hedløy’s sales
`
`projections because Arendi entered the Microsoft agreement before U.S. Patent No. 7,917,843
`
`(“the ’843 Patent”) expired. As a forward-looking licensing negotiation, the parties necessarily
`
`projected future sales to negotiate an appropriate lump-sum payment. See Interactive Pictures
`
`
`2 All docket citations are to Arendi v. LG Electronics, Inc., No. 12-1595, unless otherwise
`specified. Throughout this brief, Arendi cites D.I 271-1, which is the version of Mr. Weinstein’s
`Opening Report served in Arendi v. LG, C.A. No. 12-1595. Materially identical passages to those
`cited can be found in Dr. Weinstein’s expert reports served in each of the related cases and are
`applicable to their respective actions.
`
`2
`
`
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`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 9 of 24 PageID #: 12126
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`
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`Corp. v. Infinite Pictures, Inc., 274 F.3d 1371, 1384 (Fed. Cir. 2001) (affirming reasonable royalty
`
`award based on defendant’s pre-infringement sales projections for the royalty base). Mr. Hedløy’s
`
`projections at the time of licensing evidence Arendi’s belief as to the number of units the license
`
`would cover and, in part, Arendi’s expectations as to the value of the patent-in-suit.
`
`3.
`
`Defendants do not contest that experts may make adjustments in royalty rate
`
`calculations to account for uncertainty and litigation risk. Courts recognize there are differences
`
`between real-world licenses and the hypothetical licenses experts must construct, and find that
`
`experts may adjust prior license rates to account for those differences. See, e.g., Mondis Tech., Ltd.
`
`v. LG Elecs., Inc., No. 2:07-565-TJW, 2011 WL 2417367, at *5 (E.D. Tex. June 14, 2011).
`
`STATEMENT OF FACTS
`Roy Weinstein is an economist and recognized expert in the valuation of intellectual
`
`property and calculation of patent infringement damages. D.I. 271-1. Defendants do not challenge
`
`his qualifications. See generally D.I. 272. Arendi’s counsel engaged Mr. Weinstein to calculate
`
`damages adequate to compensate Arendi for infringement of the ’843 Patent by Defendants.
`
`To determine a reasonable royalty, Mr. Weinstein begins by examining prior agreements
`
`produced by both parties as potentially comparable to the license that would result from the
`
`hypothetical negotiation. Based on his evaluation of those agreements, Mr. Weinstein identifies
`
`three license agreements as comparable: Arendi’s prior license agreements with Microsoft
`
`3
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`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 10 of 24 PageID #: 12127
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`
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`Corporation (“Microsoft”), Samsung Electronics (“Samsung”), and Microsoft Mobility3
`
`(“MMI”).4 Id., at ¶¶53, 75.
`
`Arendi entered into a settlement and patent license agreement with Microsoft on November
`
`28, 2011 for
`
`. Lawson Decl., Ex. 2 [Arendi-Microsoft 2011 License Agreement], at
`
`1-4. On April 11, 2019, Arendi entered into a settlement and patent license agreement with
`
`Samsung for
`
`. Lawson Decl., Ex. 3 [Arendi-Samsung 2019 License Agreement], at 13.
`
`On March 16, 2020, Arendi entered into a settlement and license agreement with Microsoft, on
`
`behalf of MMI, for
`
`. Lawson Decl., Ex. 4 [Arendi-MMI 2020 License Agreement], at 37.
`
`These agreements are comparable to the license agreement that would be agreed upon at
`
`the hypothetical negotiation because each provided a license to the ’843 Patent and all share Arendi
`
`as a common party. E.g., D.I. 271-1 at ¶¶48, 52, 55.5 To determine what the outcome of the
`
`hypothetical negotiations would have been here, Mr. Weinstein takes the royalty rates implied by
`
`these licenses and performs straight-forward adjustments based on applicable facts. Mr. Weinstein
`
`calculates that a reasonable royalty rate at the hypothetical negotiations with Defendants would be
`
`no less than
`
` per unit.
`
`Mr. Weinstein first converted the lump sums paid in each agreement into a per-unit royalty
`
`rate by dividing the lump sum payment in each agreement by the estimated number of units sold
`
`
`3 Microsoft Mobility, Inc., formerly Nokia Inc., is a wholly owned subsidiary of Microsoft acquired
`after Arendi’s 2011 agreement with Microsoft. The MMI agreement resolved litigation brought by
`Arendi against Microsoft Mobility, but was ultimately settled by its parent Microsoft Corporation.
`The agreement is referred to herein as the “MMI” license.
`4 See Def. Apple’s Decl., Ex. A, at ¶¶59, 80; Def. Blackberry’s Decl., Ex. A, at ¶¶53, 75; Def.
`Google’s Decl., Ex. A, at ¶¶54, 76; Def. Motorola’s Decl., Ex. A, at ¶¶53, 74; Def. Oath’s Decl.,
`Ex. A, at ¶¶52, 74; Def. Oath’s Decl., Ex. A, at ¶¶53, 74.
`5 See also Def. Apple’s Decl., Ex. A, at ¶¶54, 58, 61; Def. Blackberry’s Decl., Ex. A, at ¶¶48, 52,
`55; Def. Google’s Decl., Ex. A, at ¶¶49, 53, 56; Def. Motorola’s Decl., Ex. A, at ¶¶48, 52, 55; Def.
`Oath’s Decl., Ex. A, at ¶¶47, 51, 54; Def. Sony’s Decl., Ex. A, at ¶¶48, 52, 55.
`4
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`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 11 of 24 PageID #: 12128
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`
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`during the license’s term. Doing so, he found that Arendi licensed the ’843 Patent’s technology to
`
`MMI for the equivalent of
`
`, Samsung for $
`
`, and Microsoft for $
`
`
`
`. Id. at ¶¶54-62.
`
`Mr. Weinstein took two approaches to identifying the number of units each agreement
`
`covered. Because Arendi entered into the Samsung and MMI agreements after the ’843 Patent
`
`expired, Mr. Weinstein relied on Samsung’s and MMI’s reported unit sales numbers as the
`
`denominator to calculate the per-unit royalty rates. In contrast, Arendi entered into the agreement
`
`with Microsoft in November 2011, eight years before the ’843 Patent expired. Id. at ¶54. Mr.
`
`Weinstein, therefore, used Mr. Hedløy’s estimate of future Microsoft sales as of the time of
`
`licensing6 to arrive at the denominator in his per-unit royalty calculation. Mr. Weinstein began
`
`with Mr. Hedløy’s expectation that Microsoft would sell 60 million units worldwide in the first
`
`year of the agreement, then estimated that “40 percent of those sales would occur in the U.S.,” that
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`“Microsoft would have at least approximately consistent future sales,” and that “the Microsoft
`
`license would cover 9.5 years of sales.” Id.
`
`Next, Mr. Weinstein considered the uncertainty and risk Arendi faced at the time of each
`
`prior license agreement. Because each prior license agreement was reached amidst active
`
`litigation, proceeding with each lawsuit rather than entering into a license agreement presented the
`
`risk that Arendi would not ultimately secure a recovery. Taking into account Mr. Hedløy’s
`
`perception of the risk that Arendi would lose its lawsuits pending against Microsoft, Samsung, and
`
`MMI at each of the pre-trial, trial, or the appellate phases, Mr. Weinstein conducted an independent
`
`analysis of Arendi’s litigation history and found Mr. Hedløy’s perceptions of litigation risk were
`
`justified. Based on the risks Mr. Weinstein identified, he applied a risk adjustment to each license
`
`
`6 Mr. Hedløy acted as a primary negotiator for Arendi in all of its licensing negotiations.
`5
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`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 12 of 24 PageID #: 12129
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`
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`rate to arrive at an effective royalty rate of
`
` for MMI,
`
` for Samsung,
`
`and
`
` for Microsoft. Id. at ¶¶71-74. Averaged, these prior licenses indicate a
`
`
`
` royalty at the hypothetical negotiation. Id. at ¶74.7
`
`Last, Mr. Weinstein applies the
`
` royalty rate to the number of accused units
`
`each Defendant sold in the relevant damages period.
`
`ARGUMENT
`Under Rule 702, expert testimony must “help the trier of fact to understand the evidence
`
`or to determine a fact in issue,” and is admissible only if “the testimony is based on sufficient facts
`
`or data,” “the testimony is the product of reliable principles and methods,” and “the expert has
`
`reliably applied the principles and methods to the facts of the case.” Fed. R. Evid. 702. Daubert
`
`further instructs that determinations of the admissibility of expert opinions “must be solely on
`
`principles and methodology, not on the conclusions that they generate.” Daubert v. Merrell Dow
`
`Pharms., Inc., 509 U.S. 579, 595 (1993). The admissibility assessment is flexible and may consider
`
`any of the following factors which may indicate a reliable methodology: (1) the methodology is
`
`scientific knowledge that will assist the trier of fact; (2) the methodology has been tested; (3) the
`
`methodology has been published in peer-reviewed journals; (4) there is a known, potential rate of
`
`error; and (5) the methodology is generally accepted. Summit 6, LLC v. Samsung Elecs. Co., 802
`
`F.3d 1283, 1295 (Fed. Cir. 2015) (emphasis added).
`
`In short, Daubert and Rule 702 operate as “safeguards against unreliable or irrelevant
`
`opinions,” not to resolve every factual dispute. i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831,
`
`
`7 Mr. Weinstein follows essentially the same process, with a few additional steps, to find per-app
`reasonable royalty rates in the Oath and Google cases. See Def. Oath’s Ex. A [Weinstein Oath
`Report], at ¶138; Def. Google’s Ex. A [Weinstein Google Report], at ¶¶163–64. Arendi’s response
`to Defendants’ motion is equally applicable to Mr. Weinstein’s per-unit and per-app royalty rate
`calculations.
`
`6
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`
`
`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 13 of 24 PageID #: 12130
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`
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`854 (Fed. Cir. 2010), aff’d, 564 U.S. 91 (2011). “The jury [is] entitled to hear the expert testimony
`
`and decide for itself what to accept or reject.” Id., at 856; see also Micro Chem., Inc. v. Lextron,
`
`Inc., 317 F.3d 1387, 1393 (Fed. Cir. 2003); Interactive Pictures, 274 F.3d. at 1384.
`
`I.
`Mr. Weinstein’s effective royalty rate approach is well-accepted.
`There is no single correct way to determine a reasonable royalty. Apple Inc. v. Motorola,
`
`Inc., 757 F.3d 1286, 1319 (Fed. Cir. 2014), abrogated on other grounds by Williamson v. Citrix
`
`Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015) (“[T]here are multiple reasonable methods for
`
`calculating a royalty.”). Several courts have endorsed Mr. Weinstein’s approach of deriving an
`
`effective royalty rate from comparable prior licenses as a well-accepted method. See Summit 6,
`
`802 F.3d at 1295 (finding a generally accepted methodology is reliable). For example, in
`
`Commonwealth Science v. Cisco, the Federal Circuit affirmed the district court’s approval of a
`
`damages model that began “with rates from comparable licenses [and] then account[ed] for
`
`differences in the technologies and economic circumstances of the contracting parties.” Commonw.
`
`Sci. & Indus. Research Org. v. Cisco Sys., Inc. (“CSIRO”), 809 F.3d 1295, 1300–03 (Fed. Cir.
`
`2015). In accord with CSIRO, this court, and other district courts, have routinely admitted expert
`
`damages testimony in patent infringement cases where the expert derived a reasonable royalty rate
`
`from prior licenses. E.g., Intel, 2017 WL 2482881, at *2 (denying motion to exclude where expert
`
`relies on comparable licenses as starting point for Georgia-Pacific analysis); Multimedia Patent
`
`Trust v. Apple, No. 10-2618-H, 2012 WL 5873711, at *6 (S.D. Cal. 2012) (finding “expert’s use
`
`of the per unit royalty rate is acceptable because it was reached based on past license agreements”);
`
`Image Processing Techs. v. Samsung, 2020 WL 2499736, at *3 (E.D. Tex. May 14, 2020) (“A
`
`party may use the royalty rate from sufficiently comparable licenses.”).
`
`That Mr. Weinstein’s methodology is both acceptable and widely utilized is confirmed by
`
`some Defendants’ experts, who use the same approach: looking to prior lump-sum license
`
`7
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`

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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 14 of 24 PageID #: 12131
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`agreements and then estimating an effective royalty rate for each to form the basis of a final
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`reasonable-royalty opinion.8 When denying similar Daubert motions, courts have highlighted
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`when adverse experts adopt similar methodologies. For example, in Delaware Display Group, the
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`Court denied the defendants’ motion to exclude the plaintiff’s expert’s damages opinions noting
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`that “[d]efendants’ own experts do not appear to adopt a substantially different approach.” Del.
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`Display Grp. LLC v. Lenovo Grp. Ltd., No. 13-2108-RGA, 2017 WL 214079, at *2-3 (D. Del. Jan.
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`18, 2017); see also Image Processing Techs., LLC v. Samsung Elecs. Co., No. 20-cv-00050-JRG-
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`RSP, 2020 WL 3414675, at *4 (E.D. Tex. June 22, 2020) (denying a motion to exclude where
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`“[t]he two experts are using the same analytical technique, but with different assumptions and
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`conclusions”). The same is true here.
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`In sum, Mr. Weinstein applies a reliable, generally accepted methodology to find a
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`reasonable royalty as demonstrated by the prevailing legal authority and defense experts.
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`Defendants’ disagreement boils down to a factual dispute over inputs.
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`II. Mr. Weinstein reasonably relied on Mr. Hedløy’s estimate of future
`Microsoft unit sales.
`Defendants argue that Mr. Weinstein’s calculation of an effective royalty rate from the
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`Microsoft agreement is unreliable because he uses Mr. Hedløy’s sales projections for Microsoft at
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`the time of licensing.9 Defendants contend that because Mr. Weinstein did not check Mr. Hedløy’s
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`8 See Lawson LG Decl., ¶6; Lawson BlackBerry Decl., ¶6, Lawson Oath Decl., ¶6; Lawson Sony
`Decl. ¶6.
`9 Defendants also incorrectly assert that “Mr. Weinstein admittedly ignored several other obvious
`factors from his analysis of the Microsoft license.” D.I. 272, at n. 10. Mr. Weinstein does not
`“ignore” the factors stated in Defendants’ brief—he addresses each issue in his reports.
`(1) Mr. Weinstein understood that the Microsoft Agreement provided a release but concluded
`that the Microsoft Agreement had a face value that exceeded
`. See e.g. Defs.’
`Ex. E [Weinstein Motorola Depo. Tr.], at 73:17– 25.
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`8
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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 15 of 24 PageID #: 12132
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`projections against sales data available after the license’s effective date, Mr. Weinstein’s effective
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`royalty rate is not “based on sufficient facts” and bound to confuse the jury. D.I. 272 at 5, 12. This
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`argument—which is unsupported by a single case on point—fails because it ignores relevant
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`economic and temporal characteristics of the Microsoft license agreement that justify Mr.
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`Weinstein’s reliance on Mr. Hedløy’s projections.
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`First, courts have found it appropriate for damages experts to use sales projections to
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`calculate a reasonable royalty when a license agreement would be structured as a lump sum
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`payment—even when actual sales figures are available. In Interactive Pictures, the Federal Circuit
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`affirmed a jury’s damages award where the plaintiff presented the jury with a lump sum reasonable
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`royalty using the defendant’s pre-infringement sales projections as the royalty base and an
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`estimated reasonable royalty rate of 10% of revenue.10 Interactive Pictures, 274 F.3d at 1385.
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`Critically, the Court found it irrelevant that the licensee did not actually meet those projections in
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`the time following the date of the hypothetical negotiation:
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`The fact that Infinite did not subsequently meet those projections is irrelevant to
`Infinite’s state of mind at the time of the hypothetical negotiation. Nor does
`Infinite’s subsequent failure to meet its projections imply that they were grossly
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`(2) Mr. Weinstein acknowledged that the prior license agreements included other patents but
`determined the ’843 Patent is the strongest in the portfolio. See e.g. Def. Apple Supp. Ex.
`A [Weinstein Expert Rpt.], at ¶63
`(3) Mr. Weinstein recognized that the Arendi portfolio contained non-US patents and
`considered the relevant geographic scope with respect to each prior license agreement. See
`e.g. Defs.’ Ex. F, [Weinstein Sony and Oath Dep. Tr.], at 57:2-15); Def. Apple Supp. Decl.,
`Ex. A [Weinstein Expert Rpt.], at ¶¶55, 59, 62–63.
`(4) Mr. Weinstein understood that there were no available sales numbers at the time of the
`Microsoft Agreement and adopted Mr. Hedløy’s projections to account for Arendi’s
`expectations of a reasonable royalty. See e.g. Defs.’ Ex. D [Weinstein Google Depo. Tr.],
`at 80:12–20..
`Defendants simply disagree with his conclusions.
`10 It does not matter that in this case, Arendi rather than Defendants supplied the projections. See
`e.g., Yodlee, Inc. v. Plaid Techs. Inc., No. 14-1445-LPS-CJB, 2017 WL 466358, at *1 (D. Del.
`Jan. 27, 2017) (finding expert’s reliance on revenue estimates generated by Plaintiffs for the
`purposes of litigation went to weight, not admissibility).
`9
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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 16 of 24 PageID #: 12133
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`excessive or based only on speculation and guesswork. Instead, Infinite’s
`subsequent failure to meet its projections may simply illustrate the “element of
`approximation and uncertainty” inherent in future projections.
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`Id. (emphasis added). Similarly, the court in Evolved Wireless denied the defendants’
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`motion to exclude expert testimony that estimated future product sales where defendants had stated
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`preferences for lump sum agreements. Evolved Wireless, LLC v. Apple Inc., No. 15-542-JFB-SRF,
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`2019 WL 1178517, at *3 (D. Del. Mar. 13, 2019). The Court denied the defendants’ motion,
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`finding “[a]ny alleged flaws in the expert’s damages theory concern the weight to be afforded the
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`testimony, not its admissibility. Effective cross-examination and the presentation of contrary
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`evidence should be adequate to prevent the jury from being misled.” Id.
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`The same principles from Interactive Pictures and Evolved Wireless apply here. There is
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`no dispute that both Arendi and Defendants would have agreed to a lump sum royalty at the
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`hypothetical negotiation. Accordingly, Mr. Weinstein reliably used Mr. Hedløy’s sales projections
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`because they reflected his “state of mind,” Interactive Pictures, 274 F.3d at 1385, as to the value
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`of the claimed invention at the time of the Microsoft agreement in 2011–eight years before the end
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`of the license term. See Lawson Decl. Ex. 2 [2011 Arendi-Microsoft license], at 1. To the extent
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`that Defendants dispute whether Mr. Weinstein ought to have relied on Mr. Hedløy’s sales
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`projections or tested the subsequent accuracy of those projections, that is a fact question about the
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`weight to be given to Mr. Weinstein’s opinion regarding the Microsoft effective royalty rate, not
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`its admissibility. Interactive Pictures, 274 F.3d at 1385.
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`Second, Mr. Weinstein reasonably relied on Mr. Hedløy’s projections for Microsoft sales
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`because Arendi entered the Microsoft agreement near in time to the hypothetical negotiations with
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`Defendants. Arendi and Microsoft entered into their agreement on November 28, 2011, and
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`depending on the Defendant, the hypothetical negotiation took place sometime between March
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`Case 1:13-cv-00920-LPS Document 289 Filed 04/13/21 Page 17 of 24 PageID #: 12134
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`2011 and August 2012. Thus, at most, the Microsoft agreement was executed within eight months
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`of the hypothetical negotiations here. Therefore, by applying Arendi’s ex ante unit sales
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`projections, Mr. Weinstein’s Microsoft effective royalty rate calculation captures Arendi’s
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`expectations of the value of the invention near the time of the hypothetical negotiation. This
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`information is helpful to the trier of fact because when determining a reasonable royalty, the Model
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`Patent Jury Instructions specifically instruct the jury to consider the parties’ expectations at the
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`time of the hypothetical negotiation. Federal Bar Circuit Association, B.6.6, Model Patent Jury
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`Instructions (2016) (when considering the hypothetical negotiation, “you should focus on what the
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`expectations of the patent holder and the alleged infringer would have been had they entered into
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`an agreement at that time, and had they acted reasonably in their negotiations”).
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`Defendants als