Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 1 of 20 PageID #: 49800
`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 1 of 20 PagelD #: 49800
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`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF DELAWARE
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`ACCELERATION BAYLLC,
`
`Plaintiff,
`
`V.
`
`ACTIVISION BLIZZARD INC.,
`
`Defendant.
`
`eeOSaSsaS’
`
`C.A. No. 16-453 (RGA)
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`REDACTED
`
`PUBLIC VERSION
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`DEFENDANT’S MOTION TO PRECLUDE THE NEW DAMAGESTHEORIES
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`PLAINTIFF RAISED AT THE PRETRIAL CONFERENCE
`
`Morris, NICHOLS, ARSHT & TUNNELL LLP
`Jack B. Blumenfeld (41014)
`Stephen J. Kraftschik (#5623)
`1201 North MarketStreet
`P.O. Box 1347
`Wilmington, DE 19899
`(302) 658-9200
`jblumenfeld@mnat.com
`skraftschik@munat.com
`
`Attorneysfor Defendants
`
`OF COUNSEL:
`
`Michael A. Tomasulo
`Gino Cheng
`David K. Lin
`Joe S. Netikosol
`WINSTON & STRAWN LLP
`333 South Grand Avenue, 38th Floor
`Los Angeles, CA 90071
`(213) 615-1700
`
`David P. Enzminger
`Louis L. Campbell
`WINSTON & STRAWN LLP
`275 Middlefield Road, Suite 205
`Menlo Park, CA 94025
`(650) 858-6500
`
`Dan K. Webb
`Kathleen B. Barry
`Sean H. Suber
`WINSTON & STRAWN LLP
`35 West Wacker Drive
`Chicago, IL 60601
`(312) 558-5600
`
`

`

`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 2 of 20 PageID #: 49801
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`Krista M. Enns
`WINSTON & STRAWN LLP
`101 California Street, 35th Floor
`San Francisco, CA 94111
`(415) 591-1000
`Michael M. Murray
`Anup K. Misra
`WINSTON & STRAWN LLP
`200 Park Avenue,
`New York, NY 10166
`(212) 294-6700
`Andrew R. Sommer
`Thomas M. Dunham
`Joseph C. Masullo
`Paul N. Harold
`WINSTON & STRAWN LLP
`1700 K Street, N.W.
`Washington, DC 20006
`(202) 282-5000
`
`B. Trent Webb
`Aaron E. Hankel
`Jordan T. Bergsten
`Maxwell C. McGraw
`SHOOK HARDY & BACON LLP
`2555 Grand Boulevard
`Kansas City, MO 64108
`(816) 474-6550
`Original Filing Date: October 22, 2018
`Redacted Filing Date: October 29, 2018
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`

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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 3 of 20 PageID #: 49802
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`
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`That a prevailing patentee is entitled to no less than a reasonable royalty “does not mean that
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`the rules of evidence do not apply.” AVM Techs., LLC v. Intel Corp., 927 F. Supp. 2d 139, 146 (D.
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`Del. 2013). Acceleration “cannot introduce a damages theory to the jury without establishing its
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`reliability.” Id. at 147. After the Court excluded Acceleration’s two attempts to state an admissible
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`claim for a reasonable royalty, Acceleration now intends to present to the jury two “fact-based”
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`approaches it described at the pretrial conference – (1) the cost to write the entire code base for the
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`accused products, including code having nothing to do with accused networking functions and (2)
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`the revenue for the accused products based on product sales.1 These are nothing more than the bases
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`for the royalty rates that the Court previously excluded because plaintiff could not identify
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`admissible evidence to support its proposed rate. D.I. 600. Now that both of its proposed rates have
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`been excluded, these untethered proposed royalty bases cannot become admissible when recast as
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`“fact-based” theories.
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`To be clear, what Acceleration is proposing is to put
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` numbers before the jury
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`with no reasonable royalty calculation, and to ask the jury to award a large verdict. That is legally
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`impermissible. Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1315 (Fed. Cir. 2011).
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`Damages must be based on admissible facts. Contrary to Acceleration’s arguments, Apple Inc. v.
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`Motorola, Inc., does not support a different rule. In that case, the plaintiff’s damages expert actually
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`put forward an admissible calculation of reasonable royalty damages. 757 F.3d 1286, 1329 (Fed.
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`Cir. 2014). Acceleration’s failure to propose any admissible evidence requires exclusion of its new
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`damages theories and related facts.
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`1 At the pretrial conference, Acceleration also described a revenue approach based on the number
`of users. Yesterday afternoon, Acceleration advised that it would not rely on the number of users
`as a separate royalty base, but maintains it will present that information to the jury. Ex. 2.
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`

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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 4 of 20 PageID #: 49803
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`I. Background
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`On August 29, 2018, the Court excluded Acceleration’s only expert opinion on a reasonable
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`royalty calculation. D.I. 578. Acceleration proposed a new reasonable royalty of 15.5% applied to
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`three royalty bases. On October 17, 2018, the Court precluded this royalty rate and its associated
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`royalty bases as unsupported by admissible evidence. D.I. 600.
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`At the pretrial conference, Acceleration for the first time stated that it would present a “fact-
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`based damages theory” to the jury. In truth, this “fact-based damages theory” is nothing more than
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`the same royalty bases excluded by the Court’s October 17 Order but now with no royalty rate or
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`damages calculation whatsoever attached to them. Stated simply, Acceleration plans to present
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`billion-dollar figures that supposedly constitute a “fact-based damages theory” together with a
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`purported apportionment and a Georgia-Pacific analysis that is not tied to any royalty analysis or
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`damages calculation, and then leave it to the jury to speculate on a damages award.
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`Acceleration’s first theory is a purported “cost savings” model based on Dr. Valerdi’s
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`estimate that re-architecting the accused games would have cost
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`. Ex. 1 (Pretrial Conf. Tr.)
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`at 4:9–11. Dr. Valerdi did not provide a “cost savings” analysis for purposes of determining
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`damages. Rather, Dr. Valerdi provided a cost estimate for writing and maintaining the entire code
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`base for the accused products.2 To do this, Dr. Valerdi used a computer model to estimate the
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`amount the accused games should have cost in total to develop, and declared that estimate to be the
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`same as a redesign cost. Ex. 3, Valerdi Dep. Tr. 100:6–11. He input into this model an estimate of
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`the total lines of compiled code in the accused products. Valerdi Report (D.I. 444, Ex. C-2) at 4, 12–
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`13; Ex. 5 (Valerdi errata). He did not confine his cost analysis to the code related to the accused
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`2 “I further relied on their opinions that there are no viable non-infringing alternatives to the Asserted
`Claims, but that, if there were such an alternative, it would require rearchitecting the game to
`develop a new network architecture and associated functionality. I set forth to estimate the cost to do
`so.” Valerdi Report (D.I. 444, Ex. C-2) at 3.
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`2
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`

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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 5 of 20 PageID #: 49804
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`
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`functionality in this case. Id.; see also Ex. 3, Valerdi Dep. Tr. 97:19–98:15. His analysis has
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`nothing to do with the patented technology, and he testified (a) he did not know what is accused of
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`infringement in the games, (b) he did not consider the patents at all in his analysis. Ex. 3, Valerdi
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`Dep. Tr. 97:19–98:15. He also did not consider the actual cost to design the games. Ex. 3, Valerdi
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`Dep. Tr. 100:12–20.
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`Dr. Meyer stated that Dr. Valerdi’s estimates were not an “indicator of value” for the patents
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`that would have been used by the parties in a hypothetical negotiation:
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`“The conservative estimates by Dr. Valerdi, taking into account only a portion of the
`necessary costs and not accounting for the risk of delay or failure, further reinforce that an
`NIA [non-infringing alternative], even if one were to be technologically feasible, would have
`been unlikely to be economically viable at the time of the hypothetical negotiation. Hence,
`while the maximum willingness of the Defendants to pay a royalty is likely to have been
`quite high, it is necessary to rely on other indicators of value available in the
`marketplace to determine a reasonable royalty in this matter.”
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`Meyer Report (D.I. 444, Ex. C-3) at ¶57 (emphasis added).
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`Acceleration’s second proposed royalty theory is a “revenue model” based on “revenue and
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`the profits of the infringing technology over the relevant time period.”3 Ex. 1 (Pretrial Conf. Tr.) at
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`4:14–17. Acceleration also stated that it plans to introduce evidence of the number of users and units
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`of the games as an additional data point.
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`Acceleration stated that Dr. Meyer would apportion one or more of these royalty bases in the
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`manner set forth in her expert report. With respect to World of Warcraft, Dr. Meyer did not provide
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`any apportionment—she opined that one hundred percent of World of Warcraft revenues (from both
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`product sales and user subscriptions) are attributable to the alleged infringement. At the pretrial
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`conference, Acceleration confirmed that the alleged infringement claim for World of Warcraft was
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`3 Acceleration has not indicated what a “revenue-based model” based on “revenue and profits of the
`infringing technology” actually is. It is unclear whether Acceleration plans to use both revenue or
`profits or both. In any event, Acceleration has no witness who can explain such a model.
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`3
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`

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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 6 of 20 PageID #: 49805
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`limited to “cross realm functionality” that was added to the game by an upgrade in 2013 or 2014.
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`Ex. 1 (Pretrial Conf. Tr.) at 45:13–18, 49:17–21, 60:3–23. Yet Dr. Meyer provided no
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`apportionment opinion for this cross-realm functionality.
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`With respect to Call of Duty and Destiny, Dr. Meyer similarly assumed that one hundred
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`percent of the “multiplayer” functionality is attributable to accused functionality without any
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`analysis of other multiplayer and networking functionality not accused of infringement.4
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`Absent from Acceleration’s theories is any expert opinion that the parties to the hypothetical
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`negotiation would have used any of these facts in reaching a reasonable royalty. Dr. Meyer’s sole
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`opinion relied exclusively on a per unit/user royalty based on the Uniloc jury verdict, which has now
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`been excluded. See Meyer Report (D.I. 444, Ex. C-3) at ¶149. The new proposed theories are
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`different and further removed from the required analysis, and Acceleration has no witness who can
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`connect them to a hypothetical negotiation between Boeing and Activision at the relevant time.
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`Because Acceleration has no evidence of a royalty rate, it proposes to simply present the
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`bases as “raw data” and ask the jury, without any calculation or guidance, to use these enormous
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`numbers to determine a “lump sum royalty on the life of the sales of those patents” in a vacuum. Ex.
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`1 (Pretrial Conf. Tr.) at 5:5–8, 14:22–15:10, 18:3–5.
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`II. A reasonable royalty must be tethered to the patented technology and based on
`sound economic principles.
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`Neither the theories nor the evidence Acceleration seeks to advance are admissible.
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`Acceleration sought previously to introduce these theories as royalty bases for a 15.5% royalty. The
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`Court held that “the 15.5% royalty and the bases associated with it are effectively precluded as
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`well.” D.I. 600 at 7. Acceleration’s new plan to present these same royalty bases without any
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`4 Multiplayer games just mean they involve more than one player. The ‘069 and ‘147 patents
`asserted against Call of Duty and Destiny require a minimum of six players to form an allegedly
`infringing network.
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`4
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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 7 of 20 PageID #: 49806
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`royalty rate is equally inadmissible. Exmark Mfg. Co. Inc. v. Briggs & Stratton Power Prod. Grp.,
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`LLC, 879 F.3d 1332, 1350 (Fed. Cir. 2018).
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`The patentee bears the burden of proving damages. Lucent Techs., Inc. v. Gateway, Inc., 580
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`F.3d 1301, 1324 (Fed.Cir.2009). To properly carry this burden, the patentee must “sufficiently tie
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`the expert testimony on damages to the facts of the case.” Uniloc USA, Inc. v. Microsoft Corp., 632
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`F.3d at 1315. If the patentee fails to tie the theory to the facts of the case, the evidence must be
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`excluded. Id. A damages award may not be based on “speculation or guesswork.” Lucent Techs,
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`580 F.3d at 1309.
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`In Exmark, the Federal Circuit held that expert testimony regarding the Georgia Pacific
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`factors is admissible only if it is tied to a specific proposed royalty rate. Id. at 1349–51. The expert
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`there discussed “each of the Georgia-Pacific factors, including the benefits of the patented
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`technology, sales and profitability, and the competitive relationship of the parties” and “concluded
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`with little explanation that Exmark and Briggs would have agreed to a 5% reasonable royalty rate on
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`the sales of the accused [products].” Id. at 1349. Her opinions were inadmissible because she did
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`not “tie the relevant Georgia-Pacific factors to the 5% royalty rate or explain how she calculated a
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`5% royalty rate using these factors.” Id. The Court noted that a “superficial recitation of the
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`Georgia-Pacific factors, followed by conclusory remarks, [cannot] support the jury’s verdict” and
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`held that when “performing a Georgia-Pacific analysis, damages experts must not only analyze the
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`applicable factors, but also carefully tie those factors to the proposed royalty rate.” Id. at 1350.
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`Here, Acceleration plans to offer a Georgia Pacific analysis without any rate or royalty at
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`all. Because Acceleration proposes no rate or royalty, there is no “reasonable royalty analysis” that
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`“carefully” ties the “proof of damages to the claimed invention’s footprint in the market place.”
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`ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010). The analysis must be
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`5
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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 8 of 20 PageID #: 49807
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`carefully tied to the evidence of alleged infringement because “the ultimate combination of royalty
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`base and royalty rate must reflect the value attributable to the infringing features of the product, and
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`no more.” Ericsson, Inc. v. D– Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014). Without such
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`evidence, Acceleration’s latest theories must be excluded. Uniloc, 632 F.3d at 1315 (royalty must be
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`tied to facts of the case).
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`Just as Acceleration’s experts cannot speculate, Acceleration cannot “urg[e] jurors to rely on
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`[their own] speculation.” Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1327 (Fed. Cir.
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`2009). If Acceleration cannot identify an admissible royalty rate, it cannot ask the jury to “pluck[]
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`[one] from thin air.” Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1312 (Fed. Cir. 2018).
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`Apple, the principal case upon which Acceleration relies, states that if there is no “evidence on which
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`to base a damages award, the record may well support a zero royalty award.” 757 F.3d at 1328. “A
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`factfinder cannot be asked to speculate,” so Acceleration must “present competent evidence
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`regarding how the factfinder should perform the reasonable royalty calculation.” Unicom
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`Monitoring, LLC v. Cencom, Inc., 2013 WL 1704300, at *8 (D.N.J. Apr. 19, 2013). Its “failure to
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`present competent evidence … is fatal to [its] claim for reasonable royalty damages.” Id.
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`III. Dr. Valerdi’s opinion is not admissible because it is not apportioned to the patented
`technology and is not about cost saving.
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`Dr. Valerdi’s expert report does not provide an admissible cost savings damages analysis.
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`Dr. Valerdi provides an opinion that the cost to write and maintain the entire code base for the
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`accused products totals approximately
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`. He did not estimate the cost for changing only the
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`code directed to the accused functionality. Nor did he estimate any savings Activision may have
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`achieved by using the allegedly infringing functionality over a non-infringing alternative.
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`Accordingly, Dr. Valerdi’s opinion is not admissible to support a damages finding.
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`6
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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 9 of 20 PageID #: 49808
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`A. Dr. Valerdi’s opinion is not apportioned or tied to the patented technology.
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`Dr. Valerdi purported to present the cost of rewriting the source code base for the accused
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`products to become non-infringing. In reality, Dr. Valerdi estimated the cost of rewriting the entire
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`code base for the accused products, including all files that fall outside the accused networking
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`functions. See Valerdi Report (D.I. 444, Ex. C-2) at 1. Nothing in his report suggests which features
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`would have to be rewritten to avoid infringement, let alone the costs of rewriting just those portions
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`of the code. In fact, he testified he did not know what features are associated with the patented
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`technology, see, e.g., Ex. 3, Valerdi Dep. Tr. 119:3–9, 133:3–16, and he did not know and “was not
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`interested in how [the developers] would re-architect or what part of the game would need to be re-
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`architected,” id. at 97:19–98:15.
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`For example, for World of Warcraft, counsel for Acceleration stated at the pretrial conference
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`that the functionality accused of infringement is limited to the “cross-realm” features introduced in
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`2013. Ex. 1 (Pretrial Conf. Tr.) at 45:13–18. Dr. Valerdi did not provide any opinion on the cost of
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`removing or altering these “cross-realm” functions. Rather, he provided an estimated cost for
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`writing the entire World of Warcraft game code, of which “cross-realm” functionality is only a
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`miniscule portion.
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`Similarly, for Call of Duty and Destiny, Dr. Valerdi estimated the cost of writing the entire
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`code base, including third party tools, graphics and other code having nothing to do with networking.
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`Because Dr. Valerdi addressed the cost of writing the entire code base for the accused products,
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`without any limitation or apportionment to the specific features accused of infringement, his opinion
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`is not admissible to support a damages theory. In addition, although most claims against Call or
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`Duty and Destiny “dropped out … on summary judgment,” Dr. Valerdi’s estimate did not change—
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`“suggesting that [it] was never tied to the specific patents at issue.” Apple, 757 F.3d at 1325 n.5.
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`7
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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 10 of 20 PageID #: 49809
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`B. Dr. Meyer acknowledged that Dr. Valerdi’s report does not support a damages
`theory.
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`Acceleration’s own damages expert expressly confirms that Dr. Valerdi’s estimates were not
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`a reliable indicator of the value of the patented technology. Meyer Report (D.I. 444, Ex. C-3) at ¶57.
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`She used his estimates simply to argue that non-infringing alternatives would not have been
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`“economically viable” and that, accordingly, Activision would have been willing to pay a high
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`royalty. She did not calculate a royalty based on his estimates and expressly stated that it was
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`“necessary to rely on other indicators of value ... to determine a reasonable royalty in this
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`matter.” Id. Thus, this case is very different than Prism, where the expert “testified that the parties
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`would have valued the [] patents based on Sprint’s expected cost savings.” Prism Techs. LLC v.
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`Sprint Spectrum L.P., 849 F.3d 1360, 1378 (Fed. Cir. 2017) (emphasis added). Here, Dr. Meyer’s
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`opinion is the exact opposite.
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`C. Dr. Valerdi’s estimate is not a cost savings analysis.
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`But even more fundamentally, Dr. Valerdi’s opinion is not a “cost savings” analysis at all.
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`Even Dr. Meyer testified “there is no basis upon which to do a cost analysis or cost savings
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`analysis.” Ex. 4, Meyer (Take-Two) Dep. Tr. 118:24–120:2. Dr. Valerdi’s analysis is an estimate of
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`the cost to build the accused games, not a modification or alternative to them. See Ex. 3, Valerdi
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`Dep. Tr. 100:6–11 (“[Q.] So what were you trying to estimate, then? A. [I]n the case of the
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`Activision report, the cost of developing the software as is[.]”) (emphasis added); see also id. at
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`83:10–19, 97:16–98:11, 99:7–19, 100:5–11, 103:17–20. When Dr. Valerdi used the estimated
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`number of lines of code from the existing accused games as the input to his model, he was actually
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`generating an estimate of the cost to develop the existing accused games, not an alternative game.
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`Dr. Valerdi only says that his estimate also applies to a re-architected alternative game
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`because he assumed that the existing game and a re-architected hypothetical non-infringing
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`8
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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 11 of 20 PageID #: 49810
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`alternative would both require writing the same number of lines of code. But with that assumption,
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`Dr. Valerdi’s computer model will always generate the same cost estimate for the existing games as
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`it does for the alternative. “[T]he same inputs (project characteristics) would generate the same
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`outputs (cost and schedule).” Valerdi Report (D.I. 444, Ex. C-2) at 4; Ex. 3, Valerdi Dep. Tr. 68:25–
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`69:13 (“The SEER model, like other cost models, are what’s considered to be a deterministic model
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`– same inputs always create the same outputs…”). If the existing games and the alternative
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`technology each required the same number of lines of code (input), there can be no “cost savings.”
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`D. Dr. Valerdi’s opinion is inadmissible under FRE 403.
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`Even if Dr. Valerdi’s opinions were otherwise admissible, they should be excluded under
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`Fed. R. Evid. 403. By using the number of code lines of the existing accused games as his starting
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`point, Dr. Valerdi’s computer model estimated that it should have cost Activision and Bungie Inc.
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`more than
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` to write and maintain the source code of the existing accused products. See Ex.
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`3, Valerdi Dep. Tr. 100:6–11. Because Dr. Valerdi’s estimate is not tailored to the cost of changing
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`the specific accused functionality, it has no relevance or probative value to a reasonable royalty.
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`Further, Dr. Valerdi’s cost estimate for rewriting the entirety of the accused games dwarfs the actual
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`development costs of the accused games, which further demonstrates its lack of probative value.
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`Given that the actual costs were produced; what relevance is Dr. Valerdi’s litigation-inspired
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`estimate of those costs?
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`Further, the prejudice to Activision from allowing Dr. Valerdi’s opinion to be presented to
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`the jury greatly outweighs its probative value. Its sole purpose is to put a huge, irrelevant number
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`before the jury. Hynix Semiconductor Inc. v. Rambus Inc., 2008 WL 504101, at *1 (N.D. Cal. Feb.
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`20, 2008) (excluding a “dollar figure” estimate). “[E]ven with a limiting instruction, the probative
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`value of the dollar amounts [would be] substantially outweighed by the risk of unfair prejudice.”
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`9
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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 12 of 20 PageID #: 49811
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`EMC Corp. v. Pure Storage, Inc., 2016 WL 775742, at *3 (D. Del. Feb. 25, 2016). If Acceleration is
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`allowed to do this, the damage cannot be undone. It should be excluded.
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`IV. Total revenues and profits, without proper apportionment, are inadmissible.
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`A reasonable royalty award “must be based on the incremental value that the patented
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`invention adds to the end product.” Ericsson, 773 F.3d at 1226. Nowhere does Acceleration
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`disclose any quantifiable value of the patented inventions. Royalty bases reflecting a product’s
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`entire value are inadmissible because they “cannot help but skew the damages horizon for the jury.”
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`Uniloc, 632 F.3d at 1320. Acceleration cannot rely on revenues because basing damages on a
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`product’s total value violates the rules of evidence and the patent damages statute. “Admission of
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`such overall revenues, which have no demonstrated correlation to the value of the patented feature
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`alone, only serve to make a patentee’s proffered damages amount appear modest by comparison, and
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`to artificially inflate the jury’s damages calculation beyond that which is ‘adequate to compensate
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`for the infringement.’” LaserDynamics, 694 F.3d at 68. As an “evidentiary” matter, it risks
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`“misleading the jury by placing undue emphasis on the value of the entire product.” Commonwealth
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`Sci. & Indus. Research Organisation v. Cisco Sys., Inc., 809 F.3d 1295, 1302 (Fed. Cir. 2015).
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`Indeed, “disclosure of the end product’s total revenue ‘cannot help but skew the damages horizon for
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`the jury, regardless of the contribution of the patented component to this revenue.’” Id. (quoting
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`Uniloc, 632 at 1320). Juries are “less equipped to understand the extent to which the royalty rate
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`would need to do the work in such instances,” and need “a more realistic starting point for the
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`royalty calculations.” Ericsson, 773 F.3d at 1227. Legally, it “carries a considerable risk that the
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`patentee will be improperly compensated for non-infringing components”—violating Section 284.
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`Commonwealth Sci., 809 F.3d at 1302.
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`World of Warcraft. Dr. Meyer’s discussion regarding apportionment appears at paragraphs
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`169-176 of her report. Dr. Meyer attributed “100 percent” of World of Warcraft’s value to “the
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`10
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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 13 of 20 PageID #: 49812
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`Patents-in-Suit” based on her assumption that the game is “always infringing the Patents-in-Suit.”
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`Meyer Report (D.I. 444, Ex. C-3) at 90. But that is not the correct test. A royalty base of total
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`revenues is permissible only where the patentee can “establish that its patented technology drove
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`demand for the entire product.” Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1329 (Fed. Cir.
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`2014). It “is not enough to merely show that the [patented feature] is viewed as valuable, important,
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`or even essential to the use of the [infringing product],” it must be “the sole driver of customer
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`demand.” Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 904 F.3d 965, 979 (Fed.
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`Cir. 2018) (quoting LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 68 (Fed. Cir.
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`2012)). Acceleration has no such evidence.
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` “Merely concluding that other components do not affect the value of the accused [product]
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`amounts to nothing more than speculation.” Exmark, 879 F.3d at 1350. At the Pretrial Conference,
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`counsel admitted that its infringement theory relates to a “particular patch” added to the game in
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`2013 – nearly ten years after World of Warcraft had already become one of the most successful
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`online multiplayer video games of all time. Ex. 1 at 45:13–18. There is no evidence that the
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`topology of a purported broadcast channel in the server-to-server network and alleged to be part of
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`that “particular patch” was “the sole driver of customer demand.” Power Integrations, 904 F.3d at
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`979. In fact, there is no evidence that customers care at all how World of Warcraft servers are
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`connected, let alone whether they ever use an m-regular broadcast channel with six or more
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`participants.
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`Dr. Meyer even attributed 100% of sales of the World of Warcraft game applications that are
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`not accused of infringement of the patents-in-suit. See Medvidovic Report (D.I. 443 Ex. A-1) ¶2
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`(accusing only the back-end “World of Warcraft Server-to-Server” network that does not include the
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`game applications). There is no evidence that the volume of unit sales of non-infringing game
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`applications has any technical or economic relationship with the accused patch of the World of
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`Warcraft Server-to-Server Communications Network added in 2013.
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`Call of Duty/Destiny. Dr. Meyer failed to do any apportionment of the patented
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`technology’s contribution to Call of Duty or Destiny. Meyer Report (D.I. 444, Ex. C-3) at 88–90.
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`Instead, as the sole basis for her purported apportionment, Dr. Meyer referenced a single internal
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` Moreover, although
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` did not address
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`Destiny, Dr. Meyer used the same figures for her alleged apportionment of that game as well. Id. at
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`89. The basis of her conclusion was her belief that “multiplayer” was the “main purchase driver” for
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` of Call of Duty purchasers. Again, this is not the right test. Even though Dr. Meyer
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`admitted that “all multiplayer functionality is not accused or at issue,” she made no effort to
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`apportion them out. Meyer Reply Report (D.I. 444, Ex. C-5) at 15. When relying on
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`
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` “the patented feature must be separated” (Virnetx, 767 F.3d at 1333), and multiplayer is a
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`“broad term [that] undoubtedly incorporates consumers’ value for other non-patented … features.”
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`Blue Spike, LLC v. Huawei Techs. Co., 2016 WL 9286102, at *4 (E.D. Tex. Oct. 14, 2016)
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`(excluding an apportionment theory based on a survey). Because multiplayer functionality “contains
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`non-infringing features, additional apportionment [was] still required.” Finjan, 879 F.3d at 1311.
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`After summary judgment, the only remaining asserted claims against Call of Duty and
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`Destiny concern methods for joining and departing an m-regular broadcast channel. See D.I. 578 at
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`3 (dismissing, for Call of Duty, all claims of the ’344, ’966, ’634, and ’497 patents and claims 11,
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`15, and 16 of the ’147 patent). Joining or leaving an m-regular broadcast channel is not the same as
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`broad multiplayer functionality. Dr. Meyer’s apportionment includes claims that “dropped out … on
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`summary judgment,” “suggesting that [it] was never tied to the specific patents at issue.” Apple, 757
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`Case 1:16-cv-00453-RGA Document 618 Filed 10/29/18 Page 15 of 20 PageID #: 49814
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`F.3d at 1325 n.5. There is no evidence that some consumers’ preference for “multiplayer” has
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`anything to do with the asserted functionality related to joining and departing an m-regular broadcast
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`channel with six or more participants. There is no admissible evidence that the remaining method
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`claims asserted against Call of Duty and Destiny account for two-thirds of their value, after four
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`asserted patents were rejected on summary judgment.
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`V. There should be a judgment of no damages.
`A. Because Acceleration has strategically and repeatedly chosen to rely on
`inadmissible evidence for its royalty, an award of no royalty is appropriate.
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`Acceleration has chosen to advance a series of inadmissible damages theories based on its
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`position that Section 284 requires an award of damages. Not so. Even though infringement
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`establishes the “fact of damages,” the patentee still must “prov[e] an amount to be awarded.”
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`Unicom, 2013 WL 1704300 at *5. Acceleration must point to evidence sufficient “to formulate a
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`royalty,” and because it does not, “[it is] not entitled to collect any royalty.” Devex Corp. v. Gen.
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`Motors Corp., 667 F.2d 347, 363 (3d Cir. 1981) (affirming an “award of no damages”); see also
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`Gustafson, Inc. v. Intersystems Indus. Prod., Inc., 897 F.2d 508, 509 (Fed. Cir. 1990) (affirming
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`award of “no damages” because “none were proven”). “A factfinder cannot be asked to speculate
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`from numbers unsupported by law and divorced from expert guidance, but rather the factfinder needs
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`either clear guidance from an expert about how to apply complex calculations or simple factual
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`proofs about what this patentee has previously accepted in factually analogous licensing situations.”
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`Unicom, 2013 WL 1704300 at *8. Acceleration does not rely on “expert guidance” or “simple
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`factual proofs.” Id. Without the ‘tools to arrive at a reasonable royalty, the Court cannot invent one
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`out of thin air, particularly given that the Federal Circuit requires ‘sound economic proof of the
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`nature of the market and likely outcomes’ in order ‘to prevent the hypothetical from lapsing into
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`pure speculation.’” Hollister Inc. v. Zassi Holdings, Inc., 2016 WL 1238025, at *16 (M.D. Fla. Mar.
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`30, 2016) (awarding “zero dollars in damages”). Acceleration has not proffered admissible evidence
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`from which any factfinder could determine a royalty. The Federal Circuit’s opinion in Apple v.
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`Motorola is not to the contrary. The court observed there: “For example, in a case completely
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`lacking any evidence on which to base a damages award, the record may well support a zero royalty
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`award.” Apple, 757 F.3d at 1328.
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`B. Acceleration should be precluded from offering a damages case.
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`This Court is not required to give Acceleration yet another bite at the apple. In circumstances
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`such as these, the Federal Circuit has expressly approved district courts’ “prevent[ing] [patentees]
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`from presenting evidence of damages.” ePlus, Inc. v. Law