Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 1 of 37 PageID #: 51473
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`ACCELERATION BAY LLC,
`
`Plaintiff,
`
`v.
`
`ACTIVISION BLIZZARD, INC.,
`
`Defendant.
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`C.A. No. 16-453 (RGA)
`
`REDACTED
`PUBLIC VERSION
`
`DEFENDANT ACTIVISION BLIZZARD, INC.’S RESPONSE TO
`ACCELERATION BAY’S DAMAGES PROFFER
`
`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
`Jack B. Blumenfeld (#1014)
`Stephen J. Kraftschik (#5623)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899
`(302) 658-9200
`jblumenfeld@mnat.com
`skraftschik@mnat.com
`
`Attorneys for Defendant
`
`OF COUNSEL:
`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
`
`Tanya Chaney
`SHOOK HARDY & BACON LLP
`600 Travis Street, Suite 3400
`Houston, TX 77002
`(713) 227-8008
`
`Original Filing Date: March 15, 2019
`Redacted Filing Date: March 28, 2019
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 2 of 37 PageID #: 51474
`
`TABLE OF CONTENTS
`
`Page
`
`I.
`II.
`III.
`IV.
`V.
`
`c.
`
`d.
`
`INTRODUCTION ...............................................................................................................1 
`STAGE OF THE PROCEEDINGS .....................................................................................1 
`SUMMARY OF OBJECTIONS TO ACCELERATION’S PROFFER ..............................2 
`STATEMENT OF FACTS ..................................................................................................4 
`ARGUMENT .......................................................................................................................6 
`a.
`Legal Standard .........................................................................................................6 
`b.
`None of Mr. Parr’s Opinions Try to Apportion Beyond “Networking” and
`“Multiplayer”—Broad Concepts Undisputedly Predating the Inventions ...............6 
`i.
`Mr. Parr Never Tries to Apportion Beyond the Entire Value of the
`“Multiplayer Mode” or the “Network Functionality” of the
`Accused Games ............................................................................................8 
`It is Undisputed that “Multiplayer” and “Networked” Games
`Predate the Patents, that These Modes Do Not Always Infringe;
`and that these Modes Include Valuable Unpatented Aspects ......................9 
`None of Mr. Parr’s Opinions Value or Even Identify Any
`Improvement Over Prior, Non-Infringing Games, Including
`Activision’s Non-Infringing Predecessors to the Accused Games ............12 
`The Purported Boeing-Panthesis License is Not Comparable, and Has
`Unreliable Terms Because it Was Never Disclosed and Even Now Has
`Not Been Produced in Final Form .........................................................................15 
`i.
`Mr. Parr Does Not Even Assess the Substantial Technological
`Differences Between the Purported Boeing-Panthesis License and
`this Case .....................................................................................................16 
`Mr. Parr Ignores Important Economic Differences Destroying
`Comparability ............................................................................................18 
`Acceleration’s Failure to Timely Disclose, or to Ever Produce, the
`Purported Boeing-Panthesis License Unfairly Prejudices
`Activision and Renders it Unreliable .........................................................20 
`Mr. Parr Now Directly Relies on Dr. Valerdi’s “Cost Savings” to Avoid an
`Undisclosed Alternative, With Insufficient Connection to the Facts of the
`Case ........................................................................................................................21 
`i.
`Mr. Parr’s Report Uses Dr. Valerdi’s Results In His Calculations
`Even Though They Are Increasingly Unconnected From the Facts
`of This Case ...............................................................................................22 
`Dr. Valerdi Violates the Requirement of Testability Because He
`Does Not Identify What Alternative He is Estimating or How .................24 
`Dr. Valerdi Unreliably Estimates the Cost of Developing the
`Underlying WoW Game, Which Is Already in the Record .......................25 
`Acceleration’s Use of Dr. Valerdi’s Calculations to Determine Pre-
`Suit “Cost Savings” Should Be Excluded Because Acceleration
`Represented that it Would Not Seek Pre-Suit Damages ............................26 
`
`ii.
`
`iii.
`
`ii.
`
`iii.
`
`ii.
`
`iii.
`
`iv.
`
`i
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 3 of 37 PageID #: 51475
`
`f.
`
`e.
`
`Acceleration Seeks Damages for CoD and Destiny Only for Game Sales,
`Which Cannot Infringe the Method Claims Asserted Against Those
`Games ....................................................................................................................27 
`Mr. Parr’s Opinions, All of Which are in the
` Should Be Excluded Because they Fail to Explain Away Boeing’s
`Attempts to Sell the Asserted Patents for
`............................................28 
`CONCLUSION ..................................................................................................................30 
`
`VI.
`
`ii
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 4 of 37 PageID #: 51476
`
`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Bayer HealthCare LLC v. Baxalta Inc.,
`No. 16-1122-RGA, 2019 WL 330149 (D. Del. Jan. 25, 2019) ................................................18
`
`Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc.,
`809 F.3d 1295 (Fed. Cir. 2015)............................................................................................7, 22
`
`Cryovac Inc. v. Pechiney Plastic Packaging, Inc.,
`430 F. Supp. 2d 346 (D. Del. 2006) ...........................................................................................6
`
`Daubert v. Merrell Dow Pharm., Inc.,
`509 U.S. 579 (1993) .........................................................................................................6, 7, 24
`
`Fractus, S.A. v. Samsung,
`No. 6:09-CV-203, 2011 WL 7563820 (E.D. Tex. Apr. 29, 2011) .........................................7, 8
`
`Garretson v. Clark,
`111 U.S. 120 (1884) ...................................................................................................................7
`
`Innis Arden Golf Club v. Pitney Bowes, Inc.,
`629 F. Supp. 2d 175 (D. Conn. 2009) ......................................................................................24
`
`Intellectual Ventures I LLC v. Xilinx, Inc.,
`No. 10-1065-LPS, 2014 WL 1814384 (D. Del. Apr. 14, 2014) ....................................4, 29, 30
`
`Limelight Networks, Inc. v. XO Commc'ns, LLC,
`No. 3:15-CV-720-JAG, 2018 WL 1460703 (E.D. Va. Mar. 23, 2018) .....................................7
`
`Lucent Technologies, Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009)....................................................................................14, 18, 30
`
`M2M Solutions LLC v. Enfora, Inc.,
`167 F. Supp. 3d 665 (D. Del. 2016) ...................................................................................16, 18
`
`McMenamin v. M & P Trucking Co.,
`No. CIV. A. 93-6888, 1994 WL 724980 (E.D. Pa. Dec. 29, 1994) .........................................21
`
`Moba, B.V. v. Diamond Auto., Inc.,
`325 F.3d 1306 (Fed. Cir. 2003)............................................................................................3, 28
`
`NetAirus Techs., LLC v. Apple, Inc.,
`No. LACV1003257JAKEX, 2013 WL 11237200 (C.D. Cal. Oct. 23, 2013) .....................7, 11
`
`iii
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 5 of 37 PageID #: 51477
`
`Oddi v. Ford Motor Co.,
`234 F.3d 136 (3d Cir. 2000).................................................................................................3, 22
`
`Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc.,
`711 F.3d 1348 (Fed. Cir. 2013)................................................................................................21
`
`Ricoh Co., Ltd. v. Quanta Comput. Inc.,
`550 F.3d 1325 (Fed. Cir. 2008)................................................................................................28
`
`Ryan Operations G.P. v. Santiam-Midwest Lumber Co.,
`81 F.3d 355 (3d Cir. 1996).......................................................................................................26
`
`Sprint Commc'ns Co. L.P. v. Comcast IP Holdings,
`LLC, No. 12-1013-RGA, 2015 WL 410342 (D. Del. Jan. 29, 2015) ................................10, 15
`
`Transocean Offshore Deepwater Drilling, Inc. v. GlobalSantaFe Corp.,
`No. 03-2910, 2006 WL 3227315 (S.D. Tex. Nov. 6, 2006) ....................................................27
`
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)................................................................................................15
`
`Virnetx, Inc. v. Cisco Sys., Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)..................................................................................2, 7, 11, 12
`
`Whitserve, LLC v. Computer Packages, Inc.,
`694 F.3d 10 (Fed. Cir. 2012)..................................................................................11, 28, 29, 30
`
`Wordtech Sys., Inc. v. Integrated Network Sols., Inc.,
`609 F.3d 1308 (Fed. Cir. 2010)......................................................................................3, 15, 18
`
`Statutes
`
`35 U.S.C. § 271(a) .....................................................................................................................3, 28
`
`35 U.S.C. § 287 ..............................................................................................................................27
`
`iv
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 6 of 37 PageID #: 51478
`
`
`
`I.
`
`INTRODUCTION
`
`In Plaintiff Acceleration Bay’s fourth bite at a submissible damages case, Acceleration
`
`strays further than ever from important Federal Circuit safeguards, resulting in its largest
`
`damages theory yet. Having exhausted all facts and theories that it disclosed during discovery,
`
`Acceleration now introduces entirely new facts and theories to further inflate its damages
`
`numbers.
`
`Acceleration now sets forth seven different damages calculations. Acceleration fails to
`
`properly apportion any of these calculations, attributing all purported value of online gameplay
`
`in the accused products to the claimed invention. Further, each damages calculation is based on
`
`one of two inadmissible inputs. Four of the seven damages calculations are predicated on a
`
`newly conjured 12% royalty rate that fails multiple Federal Circuit standards on admissibility,
`
`again leaving Acceleration with no admissible damages case. The remaining damages
`
`calculations are based on Acceleration now attempting to convert Dr. Valerdi’s purported “cost
`
`savings” estimates into an independent damages theory, despite Acceleration’s previous damages
`
`expert disavowing such an approach.
`
`Acceleration has been given plenty of chances to present a submissible damages case,
`
`and every time has moved further in the wrong direction. It would be severely prejudicial to
`
`require Activision to continue to litigate this or any other of Acceleration’s rogue damages
`
`theories. Activision respectfully requests that the Court exclude all seven of Acceleration’s
`
`damages calculations and strike Acceleration’s damages proffer in its entirety.
`
`II.
`
`STAGE OF THE PROCEEDINGS
`
`Acceleration accuses Activision of infringing four patents through three video games:
`
`World of Warcraft (“WoW”), Call of Duty (“CoD”), and Destiny. The Court has continued trial
`
`in this case indefinitely pending resolution of this, Activision’s challenge to Acceleration’s
`
`1
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 7 of 37 PageID #: 51479
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`
`
`“proffer of the case it intends to submit to the jury on damages” (D.I. 619 at 2; see also D.I. 630).
`
`The Court has already excluded two rounds of damages theories offered by Acceleration (D.I.
`
`578 at 27-28, D.I. 600 at 7), and this proffer is Acceleration’s “final opportunity to present [the
`
`Court] with an admissible damages case” (D.I. 619 at 2).
`
`III.
`
`SUMMARY OF OBJECTIONS TO ACCELERATION’S PROFFER
`
`1.
`
`Acceleration does not apportion any of its seven proposed royalties beyond the
`
`entire value of “multiplayer” and “networked” games in general. But it is undisputed that the
`
`patents-in-suit relate to only specific networking functionality for only certain multiplayer modes
`
`in the accused games. And online games have existed since the 1970s and predate the patents,
`
`including Activision’s own multiplayer games. Acceleration does the opposite of what is
`
`required by the Federal Circuit on apportionment: it does not even identify, let alone value, the
`
`functionality that the patents allegedly add to the accused games over the prior, unaccused
`
`networked multiplayer games. Instead, Acceleration seeks to capture the entire value of
`
`networked, multiplayer games, including the valuable unpatented features. This failure to
`
`apportion requires exclusion. Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1328 (Fed. Cir.
`
`2014).
`
`2.
`
`The
`
` royalty Acceleration now advances is based solely on a supposed 2002
`
`agreement between Boeing and Panthesis that to this day has not been produced in its final
`
`executed form, but is unreliably pieced together from old emails, draft agreements, and one
`
`inventor’s recollection of events from seventeen years ago. Acceleration seeks to apply this
`
`supposed royalty rate to a hypothetical negotiation Acceleration contends occurred a decade
`
`later, while ignoring all events relating to the licensing and sale of the patents and Panthesis
`
`products during that time. Worse, Acceleration does not even discuss the technical
`
`comparability of that purported agreement, which would have been executed (if at all) before the
`
`2
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 8 of 37 PageID #: 51480
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`
`
`patents issued and before the patent applications added the “m-regular” component that
`
`Acceleration acknowledges as central to the issued patents. Acceleration also ignores important
`
`economic differences, including that under any such agreement Boeing would only receive
`
`
`
`of a one-time,
`
` fee per game title—not
`
` of game revenue, or number of users, or
`
`alleged cost savings, as Acceleration now calculates. This failure to account for technical and
`
`economic differences is fatal. Wordtech Sys., Inc. v. Integrated Network Sols., Inc., 609 F.3d
`
`1308, 1320 (Fed. Cir. 2010).
`
`3.
`
`For its other damages calculations, Acceleration now changes course to rely on
`
`Dr. Valerdi’s purported “cost savings” estimate, further underscoring the defects in that opinion.
`
`Most notably, Dr. Valerdi does not provide a “cost savings” estimate at all. Rather, Dr. Valerdi
`
`inexplicably assumes that every line of code in the accused products would need to be re-written
`
`to avoid infringement, even code having nothing to do with the accused functionality. In doing
`
`so, Dr. Valerdi yields a “cost estimate” that is many multiples higher than the cost of actually
`
`developing the accused games from scratch as calculated by Acceleration’s previous damages
`
`expert. Acceleration now plugs Dr. Valerdi’s numbers directly into its damages calculations
`
`without any reduction or accounting for the reduced number of patents and narrowed
`
`functionality now remaining in the case. Oddi v. Ford Motor Co., 234 F.3d 136, 146 (3d Cir.
`
`2000).
`
`4.
`
`Acceleration also only seeks damages on CoD and Destiny for sales of these
`
`video games, but only asserts method claims against those games, and the “sale or manufacture
`
`of equipment to perform a claimed method is not direct infringement within the meaning of 35
`
`U.S.C. § 271(a).” Moba, B.V. v. Diamond Auto., Inc., 325 F.3d 1306, 1313 (Fed. Cir. 2003).
`
`3
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 9 of 37 PageID #: 51481
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`5.
`
`Finally, Acceleration ignores that in the years leading up to the 2012 hypothetical
`
`negotiation, (1) Panthesis failed to make a single sale of its software, (2) Boeing unsuccessfully
`
`failed for years to sell this patent for its “expectation” of
`
`, and (3) in 2010, Boeing
`
`made a (rejected) offer to sell off all of the asserted patents for
`
`. Acceleration cannot,
`
`while ignoring such facts, provide a reliable basis for a jury to consider its seven royalty models
`
`ranging from
`
` to
`
`. See Intellectual Ventures I LLC v. Xilinx, Inc., No. 10-1065-
`
`LPS, 2014 WL 1814384, at *4 (D. Del. Apr. 14, 2014).
`
`IV.
`
`STATEMENT OF FACTS
`
`On April 13, 2018, this Court allowed Acceleration to supplement its first set of
`
`damages theories, presented through Dr. Christine Meyer, Acceleration’s damages expert at the
`
`time, to analyze a different hypothetical negotiation date between the parties. (D.I. 521). The
`
`Court noted that “the law is clear” that Dr. Meyer opined on the wrong date, and gave
`
`Acceleration a chance to substitute with “a lawful analysis.” (Id.).
`
`On August 29, 2018, this Court excluded Acceleration’s second set of damages theories
`
`presented through Dr. Meyer, because they all relied on a jury verdict in a case that did not
`
`involve any of the same parties or patents in this case. (D.I. 578 at 27-28).
`
`On September 21, 2018, less than six weeks before the then-scheduled trial in this case,
`
`Acceleration disclosed for the first time a third set of damages theories consisting of “three
`
`royalty bases and a royalty rate of 15.5%” from an un-authenticated online advertisement, which
`
`it proposed to support through four different avenues of evidence (D.I. 600 at 1-2). On October
`
`17, 2018, this Court struck all four avenues of evidence, and held that “the 15.5% royalty rate
`
`and bases associated with it are effectively precluded as well.” (Id. p. 7).
`
`At the pre-trial conference on October 19, 2018, less than two weeks before the then-
`
`scheduled trial, Acceleration disclosed for the first time a new, fourth set of damages theories it
`
`4
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 10 of 37 PageID #: 51482
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`
`
`intended to present at trial. (See D.I. 619 at 1). Activision moved to strike, arguing “that Plaintiff
`
`did not properly disclose its theories and that the theories failed to meets the standards set by the
`
`Federal Circuit.” (D.I. 619 at 1-2 (citing D.I. 601, 603).
`
`Because there was not sufficient time before the scheduled trial to resolve on the merits
`
`Activision’s challenge to this third set of damages theories, this Court continued trial indefinitely
`
`to allow Acceleration to make a “proffer of the case it intends to submit to the jury on damages,”
`
`explaining that “Plaintiff may supplement its expert reports if it wishes to do so.” (D.I. 619 at 2).
`
`Acceleration filed its proffer on February 15, 2019 (D.I. 641). Acceleration claims that
`
`the damages report of Mr. Parr, its new expert on damages, “is incorporated into this proffer in
`
`its entirety,” and, after some preliminary remarks and citations to case law, Acceleration’s
`
`proffer merely presents “a summary of [Mr. Parr’s] reasonable royalty opinions.” (D.I. 641 at 3-
`
`4). This summary is followed by a list of “Additional Supporting Opinions and Testimony,”
`
`without any analysis or explanation of how any of the listed items might be used to support a
`
`royalty other than the ones presented by Mr. Parr. (D.I. 641 at 22-27).
`
`Mr. Parr opines on seven royalties, across three “Approaches” (“Cost-Savings,”
`
`“Revenue-Based,” and “User-Based”) all between around
`
` to
`
`, as
`
`summarized in the below table:1
`
`
`
`1 The
` in Royalty No. 2 is not calculated or explained anywhere in Dr. Parr’s
`report or errata, but it appears to use Dr. Valerdi’s
` calculation as an input.
`
`5
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 11 of 37 PageID #: 51483
`
`
`
` No.
`
`Title
`
`Equation
`
`Cost Savings: 
`Licensing History
`Cost Savings: Rate 
`of Return
`Cost Savings: 
`Replacement Cost 
`of Capital
`[Alt.] Cost‐Savings: 
`Replacement Cost 
`of Capital
`Cost Savings: 
`Maintenance Costs
`Revenue‐Based
`User‐Based
`
`1
`
`2
`
`3
`
`4
`
`5
`6
`7
`
`Amount 
`(millions) 
`
`Inputs:
`Valerdi Purported 
`License
`Y
`
`Y
`
` 
`
` 
`
` 
`
` 
`
`Y
`
`Y
`
`Y
`
`Y
`N
`N
`
`Y
`
`N
`
`N
`
`N
`Y
`Y
`
`Survey
`
`N
`
`N
`
`N
`
`N
`
`N
`Y
`Y
`
`
`
`Activision timely files this response (D.I. 630 at 2-3), which respectfully asks the Court
`
`to exclude all seven opinions and to strike Acceleration’s damages proffer.
`
`V.
`
`ARGUMENT
`a. Legal Standard
`
`“[T]he Rules of Evidence—especially Rule 702— . . . assign to the trial judge the task of
`
`ensuring that an expert’s testimony both rests on a reliable foundation and is relevant to the task
`
`at hand.” Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993). “The party offering
`
`the expert testimony bears the burden of proving admissibility.” Id.. at 592. “The expert must
`
`explain how and why he or she has reached the conclusion being proffered and must have as a
`
`basis more than a subjective belief or speculation.” Cryovac Inc. v. Pechiney Plastic Packaging,
`
`Inc., 430 F. Supp. 2d 346, 362 (D. Del. 2006).
`
`b. None of Mr. Parr’s Opinions Try to Apportion Beyond “Networking” and
`“Multiplayer”—Broad Concepts Undisputedly Predating the Inventions
`
`Acceleration’s proffer falls far short of the requirement to tie its damages to the asserted
`
`patents; in fact, any patentee could submit this very same proffer so long as it alleged that its
`
`6
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 12 of 37 PageID #: 51484
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`
`
`patent was infringed by Activision’s “multiplayer” games, or games with a “networking aspect.”
`
`Because it is undisputed that such games have existed since the 1970s, can be played without
`
`infringing, and owe their success to scores of features not patented by Acceleration, this proffer
`
`falls far short of what is required to tie damages evidence to the asserted patents.
`
`For over one hundred years, the law has been that a patentee “must” provide evidence
`
`apportioning between “the patented feature and unpatented features.” Garretson v. Clark, 111
`
`U.S. 120, 121 (1884). Apportionment is an “‘essential requirement’ for reliability under
`
`Daubert.” Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc., 809 F.3d 1295, 1301
`
`(Fed. Cir. 2015); see also Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1328 (Fed. Cir. 2014)
`
`(“[T]he district court should have exercised its gatekeeping authority to ensure that only theories
`
`comporting with settled principles of apportionment were allowed to reach the jury.”).
`
`Courts thus routinely exclude damages opinions that only apportion down to a broader
`
`technology that the patentee admittedly did not invent, or that admittedly can be used in ways
`
`that do not infringe. E.g. Fractus, S.A. v. Samsung, No. 6:09-CV-203, 2011 WL 7563820, at *1
`
`(E.D. Tex. Apr. 29, 2011) (excluding expert testimony on surveys because the “surveys attempt
`
`to quantify the estimated value of consumer preference for internal antennas in cell phones”
`
`where the “Plaintiff concedes that it did not invent, and the patents-in-suit do not cover, all
`
`internal cell phone antenna designs”).2 This Court should follow that lead here to exclude all of
`
`Mr. Parr’s opinions and strike Acceleration’s proffer.
`
`
`
`2 See also NetAirus Techs., LLC v. Apple, Inc., No. LACV1003257JAKEX, 2013 WL
`11237200, at *5 (C.D. Cal. Oct. 23, 2013) (excluding damages opinion where the patentee “did
`not invent FaceTime or video calling,” and the patentee’s damages expert “ma[de] no attempt to
`value the contribution of Claim 7 to FaceTime, a feature that requires a substantial amount of
`engineering not provided by the '380 Patent”); Limelight Networks, Inc. v. XO Commc'ns, LLC,
`No. 3:15-CV-720-JAG, 2018 WL 1460703, at *3 (E.D. Va. Mar. 23, 2018) (granting motion to
`
`7
`
`

`

`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 13 of 37 PageID #: 51485
`
`
`
`i. Mr. Parr Never Tries to Apportion Beyond the Entire Value of the
`“Multiplayer Mode” or the “Network Functionality” of the Accused
`Games
`
`Mr. Parr does not even try to apportion any of his calculations beyond the “multiplayer
`
`mode” or the “network functionality” of the accused games, even though the inventors only
`
`claimed to make a modest improvement to these long-existing aspects of video games.
`
`For two of Mr. Parr’s approaches (“Revenue-Based” and “User-Based”), Mr. Parr
`
`recognizes the need to apportion beyond the accused games themselves, but to do so relies solely
`
`on survey questions asking about “the multiplayer version of the game” generally. For these two
`
`approaches, Mr. Parr admits that he is valuing the entire “highly responsive multiplayer version
`
`of the game, which I understand from conversation with Dr. Medvidovic is tied to the patented
`
`technology.” (Ex. 1, Parr Report, ¶18(b); see also id., ¶¶ 208, 210-211, 226). To do so, Mr. Parr
`
`took the results from a survey as showing that
`
` of gamers picked “Multiplayer” over two
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`other forced choices as the “Main reason…for buying COD Title.” (Ex. 1, Parr Report, ¶ 208;
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`Ex. 5, Kostich Depo. Ex. 5, pp. 2, 13). For his “Revenue-Based” and “User-Based” approaches,
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`Mr. Parr made no attempt to apportion other than to apply that
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` number to his calculations
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`for every accused game. See Fractus, S.A. v. Samsung, No. 6:09-CV-203, 2011 WL 7563820, at
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`*1 (E.D. Tex. Apr. 29, 2011) (excluding expert testimony on surveys for failure to apportion to
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`the invented technology).
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`
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`strike damages proffer: “Limelight's proffer still fails to explain how the 8% rate and the newly
`proposed base actually show the incremental value that the '002 Patent adds to Akamai's product
`offerings… Reducing the royalty base to 45% of Akamai's revenues based on the fact that 45%
`of network traffic uses the patented feature ignores the fact that the system depends on many
`other patents.”); Ex. 28, Apple Inc. v. Wi-LAN, Inc., 14cv2235, p. 9 (S.D. Cal. Jan. 3, 2019)
`(excluding damages opinion relying on a “test of voice call quality using VOLTE compared to
`voice call quality using Skype” where the inventors “did not invent VOLTE”).
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`8
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`For the royalties calculated in Mr. Parr’s third, “Cost Savings,” approach, Mr. Parr does
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`not discuss apportionment at all. The only number in these calculations that even purports to tie
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`this approach to the asserted patents are Dr. Valerdi’s calculations. In short, Dr. Valerdi’s
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`opinion merely plugs a number for the total lines of code for WoW (regardless of whether it
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`relates to the accused functionality) into a model to produce an estimated cost to “re-architect”
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`each line of code. Dr. Valerdi’s report provides no discussion tying his opinions to the patented
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`invention, except to say that “based on my conversation with Dr. Medvidovic, I included as a
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`percentage the estimated amount of code related to the networking functionality that is built into
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`the application.” (Ex. 6, Valerdi Report, p. 12). At his deposition, Dr. Valerdi clarified that he
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`used every line of code produced in this case because “a hundred percent of the code that we
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`talked about was related to network functionality or impacted by network functionality.” (Ex. 7,
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`Valerdi Depo. Tr. at 109:3-12). Other than using Dr. Valerdi’s untethered conclusions in his
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`calculations, Mr. Parr made no further adjustments to tie his “Cost Savings” approach to the
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`patented invention.
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`ii. It is Undisputed that “Multiplayer” and “Networked” Games Predate the
`Patents, that These Modes Do Not Always Infringe; and that these Modes
`Include Valuable Unpatented Aspects
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`Apportioning down only to the value of “multiplayer modes” or “networking
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`functionality” is not enough for several reasons. First, it is undisputed that the inventors of the
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`asserted patents did not invent “multiplayer modes” or “networking functionality” for games.
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`For instance, Acceleration’s prior damages expert Dr. Meyer acknowledged that “for personal
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`computer, games with multiplayer capabilities were first released over 20 years ago,” and cited
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`to a magazine article discussing several games released in the 1970s that were both “multiplayer”
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`and “networked.” (Ex. 9, Meyer Opening Report, ¶ 28, citing Ex. 10, “Infographic: A Massive
`
`9
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`

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`Case 1:16-cv-00453-RGA Document 657 Filed 03/28/19 Page 15 of 37 PageID #: 51487
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`
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`History of Multiplayer Online Gaming”). At his deposition, Mr. Parr agreed with that statement.
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`(Ex. 3, Parr Depo. Tr. p. 63:25-64:14; see also Ex. 1, Parr Report Ex. 2 p. 142).
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`Likewise, inventor Fred Holt acknowledged at his deposition that online, multiplayer
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`games existed at the time the inventors were developing the patented inventions. (Ex. 11,
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`05/31/17 Holt Depo. Tr. at 57:09-60:11). These inventors merely sought to reduce the number of
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`“server crash[es]” and the “business cost problem of supporting server farms” that were
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`“happening to people in the gaming industry” before their invention (Id.). Thus, this case is like
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`Sprint Commc'ns Co. L.P. v. Comcast IP Holdings, LLC, where this Court excluded
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`“apportionment methodology” that “measures the portion of the IMS network that is made up of
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`the entire billing functionality,” where the asserted “patent does not purport to cover billing
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`functionality generally” but only “claim[ed] to increase ‘flexibility.’” No. 12-1013-RGA, 2015
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`WL 410342, at *2 (D. Del. Jan. 29, 2015); see also supra, n. 2.
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`Second, Mr. Parr freely admits that the “multiplayer” and “networked” versions of the
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`accused games can be played without infringing under Acceleration’s theories. But he does
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`nothing to estimate the frequency or popularity of the allegedly infringing uses. Specifically,
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`Mr. Parr acknowledges that infringement of the ‘069 Patent requires “at least four participants,”
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`and the remaining patents require “at least five participants.” (Ex. 1, Parr Report n. 63). Mr.
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`Parr also acknowledges that, for WoW, Acceleration’s infringement theories do not even turn on
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`the number of players, but depend on a “large number of servers” being involved in the
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`broadcast and re-broadcast of a particular message. (Ex. 1, Parr Report ¶ 39).3 Mr. Parr does
`
`
`
`3 Mr. Parr provides no evidence or discussion to show how the fact that WoW “is always
`a multiplayer game” (Ex. 1, Parr ¶ 211), or any other fact he discusses, has anything to do with
`how often the WoW servers send messages in a way that allegedly infringes the ‘344 and ‘966
`patents. And despite acknowledging that certain messages are not broadcasted at all, he does
`
`10
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`nothing to estimate the frequency with which the “multiplayer” or “networked” versions of the
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`game involve enough players or servers for infringement to even be possible. And he does not
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`identify any value from these instances over the other, admittedly non-infringing, instances that
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`he sweeps up in his calculations. As such, this case is also like NetAirus Techs., LLC v. Apple,
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`Inc., No. LACV1003257JAKEX, 2013 WL 11237200, at *5 (C.D. Cal. Oct. 23, 2013), which
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`excluded damages opinions in part because they “simply assume[d] that claim 7 is always
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`infringed when FaceTime is used,” even though there was an additional “limitation of the claim
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`that must be met for infringement to occur.”
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`Third, Mr. Parr specifically acknowledges valuable unpatented aspects of the accused
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`games but does nothing to account for them in his calculations. Specifically, Mr. Parr explains
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`that Activision “considers the story and the characters to be features that ‘increase demand,” and
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`states that “some of the ‘main competitive factors for World of Warcraft include game quality,
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`compatibility of products with popular platforms, ease of use, and quality of customer service.”
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`(Ex. 1, Parr Report ¶ 145) (internal quotes omitted). Mr. Parr merely claims that he “take[s] this
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`Georgia-Pacific factor into account in my