Case 1:16-cv-00453-RGA Document 658 Filed 03/28/19 Page 1 of 19 PageID #: 51510
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`ACCELERATION BAY LLC,
`
`Plaintiff,
`
`v.
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`ACTIVISION BLIZZARD, INC.,
`
`Defendant.
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`C.A. No. 16-453 (RGA)
`
`REDACTED
`PUBLIC VERSION
`
`DEFENDANT ACTIVISION BLIZZARD INC.’S OPENING BRIEF IN SUPPORT OF ITS
`MOTION TO STRIKE PLAINTIFF’S SUPPLEMENTAL EXPERT DAMAGES REPORT
`
`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
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`

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`Case 1:16-cv-00453-RGA Document 658 Filed 03/28/19 Page 2 of 19 PageID #: 51511
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` 
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`TABLE OF CONTENTS
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`Page
`
`NATURE AND STAGE OF THE PROCEEDINGS ......................................................... 1
`I.
`SUMMARY OF ARGUMENT .......................................................................................... 1
`II.
`STATEMENT OF FACTS ................................................................................................. 2
`III.
`ARGUMENT ...................................................................................................................... 3
`IV.
`A. Mr. Parr’s Report Violates the Federal Rules of Civil Procedure and Third Circuit
`Law. .....................................................................................................................................3
`i.
`Acceleration Has Already Fully Disclosed Its Damages Case And Now
`Seeks To Present An Entirely New and Undisclosed Damages Case. .......................4
`ii. Mr. Parr’s Report Does Not Supplement Dr. Meyer’s Report; Rather It
`Offers New, Previously Undisclosed Damages Opinions. .........................................6
`iii. Acceleration Never Disclosed Any Damages Opinion Based On The
`Boeing-Panthesis License. ..........................................................................................8
`iv. Mr. Parr’s Departures From Acceleration’s Damages Disclosures
`Significantly Prejudice Activision And Warrant Exclusion Under
`Pennypack. ..................................................................................................................9
`B. The Boeing-Panthesis License Is Inadmissible Under the Federal Rules of
`Evidence. ............................................................................................................................11
`i.
`Acceleration Does Not Meet Its Burden To Make A Threshold Showing
`That An Exception to the Best Evidence Rule Applies. ...........................................11
`ii. Mr. Parr’s
` Royalty Rate Is Based On Inadmissible Hearsay. ...........................12
`CONCLUSION ................................................................................................................. 14
`
`V.
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`
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`i
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`

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`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases 
`Bridgestone Sports Co. Ltd. v. Acushnet Co.,
`No. 05-132 JJF, 2007 WL 5218944 (D. Del. Feb. 15, 2007) ................................................... 9, 10
`Goodman v. Lukens Steel Co.,
`777 F.2d 113 (3d Cir. 1985)............................................................................................................ 9
`Inline Connection Corp. v. AOL Time Warner Inc.,
`470 F. Supp. 2d 435 (D. Del. 2007) .............................................................................................. 13
`Intellectual Ventures I LLC v. AT&T Mobility LLC,
`No. 12-193-LPS, 2017 WL 478565, at *1 (D. Del. Jan. 31, 2017) ............................................ 3, 4
`Meyers v. Pennypack Woods Home Ownership Ass’n,
` 559 F.2d 894 (3d Cir. 1977)........................................................................................................... 9
`Remington Arms Co. v. Liberty Mut. Ins. Co.,
`810 F. Supp. 1420 (D. Del. 1992) ................................................................................................. 12
`Robocast, Inc. v. Apple Inc.,
`No. 11-235-RGA, 2014 WL 334199 (D. Del. Jan. 28, 2014) ................................................. 6, 8, 9
`Uniloc USA, Inc. v. EA,
`No. 6:13-cv-00259-RWA (E.D. Tex. Dec. 15, 2014) ............................................................. 2, 5, 6
`
`Rules
`FED. R. CIV. P. 37(c)(1) ................................................................................................................... 4
`FED. R. EVID. 1002 ........................................................................................................................ 15
`FED. R. EVID. 1004(a) ................................................................................................................... 15
`FED. R. EVID. 1008 ........................................................................................................................ 15
`FED. R. EVID. 801(c) ..................................................................................................................... 17
`
`ii
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`I.
`
`NATURE AND STAGE OF THE PROCEEDINGS
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`Activision moves to strike Acceleration’s “supplemental” damages report submitted by
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`Russell Parr. Mr. Parr’s report introduces new, contradictory, and undisclosed damages theories
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`resulting in far increased damages numbers. His report is based on facts withheld during
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`discovery (despite multiple orders compelling disclosure) and his theories squarely contradict
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`Acceleration’s original damages expert, Dr. Meyer. The Court gave Acceleration a chance to
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`supplement, not supplant. Acceleration’s last-minute facts, opinions, and theories should be
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`stricken and excluded.
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`II.
`
`SUMMARY OF ARGUMENT
`
`Acceleration has been given multiple chances to make its case. It has failed to do so at
`
`every turn, which is the only consistency Acceleration has provided thus far. Seizing on this
`
`Court’s latitude for one “final opportunity” to “supplement” its case, Acceleration abused this
`
`Court’s leave by hiring a new expert to render new and contradictory opinions predicated on
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`withheld and undisclosed facts. Mr. Parr’s opinions do not simply deviate from Acceleration’s
`
`earlier theories, they are flatly contrary to the entire record developed during fact and expert
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`discovery. These new theories are do not “supplement” any fairly and timely disclosed position.
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`Instead, they assault the record, attack the discovery process, and ambush Activision at the
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`eleventh hour. Exclusion is warranted,
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`Mr. Parr’s report relies on facts withheld during discovery, despite Activision’s extensive
`
`efforts to learn about Acceleration’s theories. Mr. Parr’s expert report opines on a single royalty
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`rate of
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` that is based entirely on a purported Boeing-Panthesis license agreement. The
`
`Special Master compelled full disclosure of Acceleration’s damages case, but Acceleration never
`
`even identified this agreement as relevant to its damages case, let alone a basis for its requested
`
`1
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`

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`compensation. Nor was the final, executed version of the agreement ever produced. As a result,
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`Activision never had a chance to explore—let alone test—the veracity of Mr. Parr’s assumptions
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`or his off-the-record sources, such as an inventor’s recollection of an almost two-decade old
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`agreement.
`
`The Court should not excuse Acceleration’s irresponsible advocacy and should hold
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`Acceleration accountable for its own its strategic decisions in developing its damages case in this
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`matter. This is particularly true where, as here, Acceleration’s approach to damages deprived
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`Activision of any meaningful opportunity to vet its newly-proffered trial theories during fact and
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`expert discovery.
`
`At the end of the day, discovery and the Federal Rules serve a vital role in every
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`litigation. So do deadlines. For these reasons, as detailed below, Activision respectfully request
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`the Court to strike and exclude the new opinions and theories stated in Mr. Parr’s “supplemental”
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`report pursuant to Rules 26 and 37, as well as this Court’s inherent discretion in its application of
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`the Third Circuit’s Pennypack factors.
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`III.
`
`STATEMENT OF FACTS
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`Two months prior to the start of trial, this Court struck Acceleration’s expert damages
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`opinion offered by Dr. Meyer for improperly relying upon the Uniloc jury verdict. D.I. 578 at
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`27–28.
`
`Following this ruling, Activision sought clarification from Acceleration as to what
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`damages evidence it intended to present at trial. In response, Acceleration pivoted and said it
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`would then rely upon a royalty rate of
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` which it derived from a random website. On
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`September 28, 2018, one month before trial, Activision filed a Motion to Preclude Acceleration’s
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`“revised” damages case. See D.I. 581. This Court granted Activision’s motion in-part and
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`2
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`

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`precluded evidence of the
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` royalty rate and damages bases, but stated that it was not
`
`appropriate at that point to entirely preclude Acceleration from presenting a damages case at
`
`trial. D.I. 600 at 7.
`
`At the pre-trial conference, Acceleration maintained that it had an admissible damages
`
`case (or would eventually “come up” with one), and so this Court requested briefing on
`
`Acceleration’s remaining damages theories. See D.I. 601, 603, 609. Ultimately, this Court
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`found that it was not possible to decide the issue in time for trial, and thereafter continued trial
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`“pending resolution on the admissibility of Acceleration’s damages case.” D.I. 619 at 2.
`
`In its Order, this Court stated that “Plaintiff may supplement its expert reports,” and had
`
`to provide a proffer of the damages case it intends to submit to the jury. Id. Acceleration hired a
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`new damages expert, Russell Parr, and served a “supplemental” report on December 7, 2018.
`
`Acceleration filed its damages proffer on February 15, 2019 (D.I. 641–42, 644–45).
`
`IV.
`
`ARGUMENT
`
`This Court permitted Acceleration to “supplement its expert reports” in one final attempt
`
`to present an admissible damages case. D.I. 619, at 2. Unfortunately, Mr. Parr’s report grossly
`
`oversteps the boundaries reasonably anticipated in the Court’s Order, and threatens to vitiate
`
`years of litigation and discovery efforts. If left unchecked, it will cause substantial and
`
`irreparable prejudice to Activision. Mr. Parr’s report should be stricken in its entirety.
`
`A. Mr. Parr’s Report Violates the Federal Rules of Civil Procedure and Third
`Circuit Law.
`
`“Supplementation” is not an ill-defined concept in Federal Court. It is a term of art
`
`representing a specific zone of permissible conduct. See FED. R. CIV. P. 26(e); Intellectual
`
`Ventures I LLC v. AT&T Mobility LLC, No. 12-193-LPS, 2017 WL 478565, at *5 (D. Del. Jan.
`
`31, 2017) (striking supplemental exhibits to plaintiff’s expert damages report as untimely where
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`3
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`

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` 
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`the supplemental exhibits “more than double[d] the damages figure” and were served “almost ten
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`months after the deadline for [plaintiff’s] damages-related expert reports”).
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`When a party fails to comply with its disclosure obligations under the Federal Rules of
`
`Civil Procedure, courts have the power to exclude evidence as a sanction. Id. Rule 37(c)(1)
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`provides that “[i]f a party fails to provide information . . . as required by Rule 26(a) or (e), the
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`party is not allowed to use that information . . . at trial, unless the failure was substantially
`
`justified or is harmless. . . .” FED. R. CIV. P. 37(c)(1).1
`
`i. Acceleration Has Already Fully Disclosed Its Damages Case And Now Seeks
`To Present An Entirely New and Undisclosed Damages Case.
`
`Mr. Parr’s report is Acceleration’s attempt to recreate its damages case from scratch
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`despite years of discovery and disclosures. Activision’s first interrogatory sought discovery as to
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`Acceleration’s damages theories and all facts upon which Acceleration intended to rely to
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`support each of its theories. Acceleration refused to provide a full response, forcing Activision
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`to move to compel on April 28, 2017. D.I. 139. The Special Master granted Activision’s motion
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`noting that “plaintiffs have an ‘obligation to provide their good faith bases for electing their
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`theories of recovery.’” D.I. 155, Special Master Order No. 3, at 8. Acceleration eventually
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`provided its first supplemental responses to Interrogatory No. 1, which incorporated its
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`forthcoming “expert report it [would] serve on damages.” Ex. 24, Pl.’s Suppl. Resp. to Interrog.
`
`No. 1, at 4–10 (June 2, 2017).
`
`On July 5, 2017, Activision moved to preclude Acceleration from relying upon additional
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`damages evidence and theories that had not been previously disclosed by Acceleration in its
`
`interrogatory response. D.I. 210. Activision emphasized that Acceleration’s supplemental
`
`                                                            
`1 In its proffer, Acceleration does not even suggest that its failure was justified or harmless even
`though this Court’s Order stated that “[t]he proffer shall contain . . . citations to Federal Circuit
`precedent supporting [the evidence’s] admissibility and sufficiency.” D.I. 619, at 2–3.
`
`4
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`

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`interrogatory response merely listed several categories of documents that could have relevant
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`information, and argued that Acceleration was withholding its true damages theories. See Ex.
`
`25, Def.’s Br. to Preclude Regarding Party Specific Interrog. No. 1 (July 5, 2017). Although the
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`Special Master denied Activision’s motion, he noted that “the test of whether Plaintiff [was]
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`withholding information that should have been disclosed in interrogatory No. 1 [would] be better
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`known when Plaintiff submit[ted] its expert reports.” D.I. 227, Special Master Order No. 6, at 7.
`
`Acceleration next supplemented its damages interrogatory response on August 18, 2017 to
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`include general citations to deposition transcripts and documents under Rule 33(d) while again
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`“incorporat[ing] its forthcoming expert reports in this matter.” Ex. 26, Pl.’s Second Suppl. Resp.
`
`to Interrog. No. 1 at 10–12 (Aug. 18, 2017). Finally, on September 25, 2017, Acceleration
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`served its damages expert report authored by Dr. Christine Meyer, fully disclosing its damages
`
`theories. Ex. 9, Meyer Opening Report.
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`On October 20, 2017, Activision filed its renewed motion for sanctions and motion to
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`strike Acceleration’s infringement reports. D.I. 329. In its motion, Activision pointed to
`
`multiple factual bases, infringement arguments, and exhibits that were not previously identified
`
`in Acceleration’s interrogatory responses. See Ex. 27, Def.’s Br. for Sanctions and to Strike, at
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`2. In his order, the Special Master noted that he “wishe[d] Plaintiff’s interrogatory responses, as
`
`to its contentions, would have been more complete at an earlier stage of litigation.” D.I. 347 at
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`5. But, “[w]hile the Plaintiff’s expert reports could have been more clearly written,” the Special
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`Master found that because additional discovery was yet to be conducted as to the expert reports,
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`the prejudicial effect on Activision would be lessened. Id. at 5–6.
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`After conducting expert discovery, Activision moved to exclude Dr. Meyer’s damages
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`opinion for choosing an incorrect hypothetical negotiation date and improperly relying upon the
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`5
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` 
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`Uniloc jury verdict. D.I. 441, Activision’s Mtn. to Exclude (Feb. 2, 2018). Although finding
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`that Acceleration’s supplementation of Dr. Meyer’s report addressed the hypothetical negotiation
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`issue, this Court excluded Dr. Meyer’s royalty because the Uniloc jury verdict did “not represent
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`evidence from which a hypothetical negotiation [could] be reasonably determined.” D.I. 578, at
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`27–28. Following this Court’s ruling, Activision sought clarification from Acceleration
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`regarding what damages case it intended to present at trial.
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`Five weeks before trial, Acceleration disclosed that it intended to offer a
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` royalty
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`rate applied to three different damages bases. Because none of these damages theories identified
`
`by Acceleration were disclosed in its expert reports, Activision moved to preclude Acceleration
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`from presenting these new damages theories at trial. D.I. 581. This Court again excluded Dr.
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`Meyer’s opinions regarding the
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` royalty rate, but did not believe at that point it was
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`“appropriate . . . entirely to preclude Plaintiff from presenting a damages case.” D.I. 600, at 7.
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`Critically, Acceleration affirmed that its disclosures “fully disclosed each damages claims it
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`[would] assert at trial and the supporting evidence.” D.I. 583, Pl.’s Opp’n to Mtn. to Preclude, at
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`2–3, 5–7 (emphasis added).
`
`For over two years, Activision has repeatedly sought clarification from Acceleration
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`regarding damages facts and theories that it would present at trial. Acceleration should be bound
`
`by its earlier discovery disclosures, and damages opinions presented in Dr. Meyer’s report.
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`ii. Mr. Parr’s Report Does Not Supplement Dr. Meyer’s Report; Rather It
`Offers New, Previously Undisclosed Damages Opinions.
`
`It is an unremarkable proposition that a supplemental expert report must not include new,
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`
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`previously undisclosed theories “that could have been contained in the original report.”
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`Robocast, Inc. v. Apple Inc., No. 11-235-RGA, 2014 WL 334199, at *1 (D. Del. Jan. 28, 2014).
`
`This commonsense approach recognizes that “[s]upplementation of an expert report permits a
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`6
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`party to correct inadvertent errors or omissions . . . [it] does not give license to sandbag one’s
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`opponent with claims and issues which should have been included in the expert witness’ [sic]
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`report.” Id. at *1 (internal quotations omitted).
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`Although Mr. Parr states that he “adopted portions of Dr. Meyer’s report,” he fails to
`
`identify what portions of Dr. Meyer’s report he actually adopts. This vagueness is intentional, as
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`a cursory review of Mr. Parr’s report shows that his analyses and opinions differ from Dr.
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`Meyer’s report in every critical way. See Ex. 2 Lawton Report at ¶¶ 20–26. To this point, two
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`of Mr. Parr’s three damages methodologies—“cost savings reasonable royalty” and “revenue-
`
`based reasonable royalty”—are entirely new as compared to Dr. Meyer’s report and
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`Acceleration’s disclosures in discovery. Further, although both Dr. Meyer and Mr. Parr
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`employed a “user-based reasonable royalty” approach, Mr. Parr does not utilize any of Dr.
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`Meyer’s disclosed analysis but instead substitutes novel inputs for his calculations. As a result,
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`Mr. Parr’s “supplemental” calculations of reasonable royalty damages are significantly higher
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`than Dr. Meyer’s. This is surprising when one considers that Mr. Parr’s opinions are based on
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`fewer Patents-in-Suit, fewer patents asserted against each Accused Product, and fewer asserted
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`claims.2
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`Although a direct comparison of the two reports plainly demonstrates a wholesale
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`reworking of Acceleration’s damages case, Mr. Parr confirmed in his deposition that
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`Acceleration’s counsel never intended for him to supplement Dr. Meyer’s report:
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`Q. And so your revenue-based royalty approach is something that you did yourself, is
`that right, or is that something that you adopted from Dr. Meyer’s report?
`A. I would say I did all of them by myself and adopted none of her approaches.
`Q. Okay.
`
`2 If Acceleration’s original expert report had not been stricken, its damages demand would have
`been approximately
`. Mr. Parr’s “supplemental” report calculates damages to be
`between
`.
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` to
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`7
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`A. Even though I do have a per unit royalty, I don’t believe it reflects what she did, but
`I didn’t focus on what she did very much because my idea was that I was hired to
`provide my own opinion, so I didn’t care what she did.
`
`Ex. 3, Depo. Tr. of Mr. Parr at 78:13-24 (emphasis added).
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`Mr. Parr never spoke with Dr. Meyer or obtained any understanding of Dr. Meyer’s
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`methodologies to prepare his “supplemental” report. Id. at 60:24-61:6. Rather than
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`appropriately instruct Mr. Parr to construct his damages opinions within the bounds of
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`Acceleration’s disclosures, Acceleration’s counsel took advantage of this Court’s latitude to
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`advance new arguments and opinions that could have been, but never were, disclosed during
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`discovery or when Dr. Meyer filed her first expert damages report.
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`iii.
`
`Acceleration Never Disclosed Any Damages Opinion Based On The Boeing-
`Panthesis License.
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`All of Mr. Parr’s opinions are admittedly new and not supplemental. Id. at 78:13-24.
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`But, perhaps the clearest deviation from Acceleration’s disclosures and Dr. Meyer’s report is his
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`reliance upon a purported license agreement between Boeing and Panthesis to arrive at a baseline
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`royalty rate of
`
`. Ex. 1, Parr Report at ¶¶ 63–71. Acceleration’s previous discovery
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`disclosures and Dr. Meyer’s reports are entirely devoid of any mention of the Boeing-Panthesis
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`license as an input into Acceleration’s damages case. In fact, Mr. Parr admits that “an executed
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`copy of the license to Panthesis was not obtained.” Id. at ¶ 64. Instead, in order to arrive at the
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`“final terms” of the deal, Mr. Parr interviewed Dr. Holt regarding his recollection of the terms—
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`almost 16 years in the past—and reviewed unexecuted drafts of the agreement. Id. at ¶ 64–65.
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`This Court has recognized that “‘Rule 26 imposes a duty on Plaintiffs; it grants them no
`
`right to produce information in a belated fashion.’” Robocast, Inc., 2014 WL 334199, at *1
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`(quoting Gallagher, 568 F. Supp. 2d at 631) (emphasis in original). If Acceleration desired to
`
`utilize the Boeing-Panthesis license in its damages case, it could have done so in response to
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`8
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`interrogatories after being compelled to do so or in Dr. Meyer’s reports. In fact, the unexecuted
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`draft versions of the license agreement cited by Mr. Parr in his report were produced by
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`Acceleration on January 15, 2016—a year and a half prior to Acceleration’s supplemental
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`responses to Interrogatory No. 1. Acceleration chose to not use the Boeing-Panthesis license,
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`and should not be permitted to introduce it years later as a critical input. Robocast, Inc., 2014
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`WL 334199, at *1.
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`iv. Mr. Parr’s Departures From Acceleration’s Damages Disclosures
`Significantly Prejudice Activision And Warrant Exclusion Under Pennypack.
`
`To evaluate whether a Rule 37 failure is excused from exclusion, courts in the Third
`
`Circuit consider the Pennypack factors: (1) the surprise or prejudice to the moving party; (2) the
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`ability of the moving party to cure any such prejudice; (3) the extent to which allowing the
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`testimony would disrupt the order and efficiency of trial; (4) bad faith or willfulness in failing to
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`comply with the court’s order; and (5) the importance of the testimony sought to be excluded.
`
`See Meyers v. Pennypack Woods Home Ownership Ass’n, 559 F.2d 894, 904–05 (3d Cir. 1977),
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`overruled on other grounds, Goodman v. Lukens Steel Co., 777 F.2d 113 (3d Cir. 1985). But
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`where, as here, a case involves “sophisticated, complex litigation” between “parties represented
`
`by competent counsel,” courts “have been less indulgent in their application and more willing to
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`exclude evidence without a strict showing that each of the Pennypack factors has been satisfied.”
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`Bridgestone Sports Co. Ltd. v. Acushnet Co., No. 05-132-JJF, 2007 WL 521894, at *4 (D. Del.
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`Feb. 15, 2007).
`
`Despite Activision’s repeated requests prior to the service of Mr. Parr’s report,
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`Acceleration refused to explain the nature or scope its damages theories and would not agree that
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`its supplemental report would be limited to Acceleration’s discovery disclosures. Instead of
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`complying with this Court’s Order to “supplement its expert reports,” Acceleration submitted a
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`9
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` 
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`wholesale reworking of its damages case. This is extremely prejudicial to Activision, and
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`threatens to vitiate the years of prior disclosures, expert and fact depositions, and the multitude
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`of discovery orders in this case. For example, Mr. Parr relied upon new interviews with fact
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`witnesses and technical experts—to which he cites over 30 times in his report—to craft his novel
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`damages opinions. Ex. 1, Parr Report at ¶¶ 65, 146. Additionally, the
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` royalty rate derived
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`from the Boeing-Panthesis license was disclosed to Mr. Parr in an off-the-record interview with
`
`Mr. Holt. Id. Activision was deprived of its opportunity to depose these individuals on
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`contested trial issues.
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`Further, Mr. Parr’s reliance on Dr. Holt’s memory
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`is severely undercut by
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`contemporaneous documents cited by Mr. Parr in his own report. In his interview with Mr. Parr,
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`Dr. Holt told him that the final terms of the license agreement were as follows:
`
` of stock in
`
`Panthesis,
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` paid by Panthesis over time, and a
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` royalty on future revenues. Ex. 1,
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`Parr Report at ¶ 65. But the very first document relied upon by Mr. Parr in his discussion
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`conflicts with Dr. Holt’s recollection without explanation. See Id. ¶ 63, n.99. This document
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`outlines Panthesis’s financial history, including details surrounding the purported license, and
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`states only that Panthesis was required “to give Boeing
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` at signing.” Ex. 20, HOLT
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`002455–458, at 457. Mr. Parr makes no mention of this
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` payment, or explanation as to
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`why it was not the
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` he derived from Dr. Holt. Instead, he simply assumed that the
`
`
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`payment “more than covered any value allocated to the software” also licensed under the
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`same deal. Ex. 1, Parr Report at ¶ 65.
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`Although requested by Activision, and promised by Acceleration, the executed license
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`was never produced, nor were its contents fairly disclosed factually or as a supporting input into
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`Acceleration’s damages case. See Bridgestone Sports Co., 2007 WL 521894, at *5 (precluding
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` 
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`undisclosed and untimely opinion because of “the additional time and expense” associated with
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`the same).
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`B.
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`The Boeing-Panthesis License Is Inadmissible Under the Federal Rules of
`Evidence.
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`Even if this Court declines to strike Mr. Parr’s report under Rule 37, a significant portion
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`of it should be stricken for relying upon an inadmissible license agreement between Boeing and
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`Panthesis. Mr. Parr’s report uses a
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` royalty rate from the purported agreement as the critical
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`basis for four out of seven novel royalty calculations.3 Mr. Parr admits that the final “executed
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`copy of the license to Panthesis was not obtained,” and relies upon secondary evidence to prove
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`the contents of the final license agreement. Ex. 1, Parr Report at ¶ 64–65. Mr. Parr’s opinions
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`based upon the purported Boeing-Panthesis license should be stricken as a violation of the best
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`evidence rule.
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`i. Acceleration Does Not Meet Its Burden To Make A Threshold Showing
`That An Exception to the Best Evidence Rule Applies.
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`“To prove the content of a writing . . . the original writing . . . is required, except as
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`otherwise provided in these rules or by Act of Congress.” FED. R. EVID. 1002. Federal Rules of
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`Evidence 1004(a)-(d) outline exceptions to the best evidence rule if an original writing is
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`unavailable. Of the four exceptions, only Rule 1004(a) could possibly apply to the Boeing-
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`Panthesis license. FED. R. EVID. 1004(a) (“Other evidence of the content of a writing . . . is
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`admissible if all the originals are lost or destroyed, and not by the proponent acting in bad
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`faith.”). Acceleration bears the burden to prove “two elements[:] loss or destruction of the
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`documents and the absence of bad-faith, have been met.” Remington Arms Co. v. Liberty Mut.
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`                                                            
`3 The
` rate was applied to Mr. Parr’s revenue-based (Ex. 1, Parr Report at ⁋ 223, Ex. 5),
`user-based (Id. at ⁋ 226) calculations, and two of the five cost savings reasonable royalty
`calculations (Id. at ⁋⁋ 156, 196).
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`Ins. Co., 810 F. Supp. 1420, 1426 (D. Del. 1992). Both threshold prerequisites represent “a
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`preliminary question of law to be resolved by the Court.” Id. (citing FED. R. EVID. 1008).
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`Acceleration’s only support for the final terms of the Boeing-Panthesis license is via
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`secondary evidence considered by Mr. Parr. Acceleration filed its damages proffer on February
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`15, 2019. D.I. 641. In its section regarding the
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` rate derived from the Boeing-Panthesis
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`license, Acceleration states that “Mr. Parr considered the negotiations and agreement that
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`resulted from the arms-length negotiation between Boeing and Panthesis . . . .” D.I. 641, at 9.
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`Not so.
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`The final agreement was never produced in this case, however, as noted Mr. Parr in his
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`report. Ex. 1, Parr Report at ¶ 64. In order to determine the unproduced agreement’s final terms,
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`Mr. Parr first cited to three draft license agreements, which he says “disclose the terms under
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`which Panthesis obtained the license from Boeing.” Id. at ¶ 64. In fact, these draft agreements
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`offered no such disclosure. Included in these drafts were royalty rates ranging from
`
`to
`
`
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`and many handwritten revisions. Id. The fact-finder is entitled to the best evidence when it
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`comes to legally operative documentation memorializing legal rights, regardless of any interview
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`with a cooperating and paid witness. Acceleration failure to show it meets its required threshold
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`showing in its proffer directly violates this Court’s Order, so this Court should strike the Boeing-
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`Panthesis agreement. D.I. 691, at 2–3.
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`ii. Mr. Parr’s 12% Royalty Rate Is Based On Inadmissible Hearsay.
`
`Dr. Holt’s statements in his post-discovery interview with Mr. Parr are textbook hearsay
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`as they are out of court statements offered to prove the truth of the matter asserted—that the final
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`executed agreement between Boeing and Panthesis included a
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` royalty. FED. R. EVID.
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`801(c). Because Acceleration failed to properly disclose the Boeing-Panthesis license as an
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`input to its damages case, no discovery was conducted on this topic. See supra § IV(A)(iii).
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`Thus, because the final executed agreement was never produced, the only way Mr. Parr was able
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`to “confirm” the final terms was by speaking off-the-record with Dr. Holt. Dr. Holt’s out of
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`court statements regarding the final terms of the Boeing-Panthesis agreement should be excluded
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`as hearsay, and Mr. Parr’s opinions that are based on the
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` royalty rate should be stricken.
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`Activision recognizes that Federal Rule of Evidence 703 “allows experts to use evidence
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`that would not usually be admissible, such as, hearsay.” Inline Connection Corp. v. AOL Time
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`Warner Inc., 470 F. Supp. 2d 435, 442 (D. Del. 2007). However, courts also require that the
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`hearsay evidence “is reasonably applied or relied upon by experts in the field for their
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`conclusions.” Id.
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`In Inline Connection Corp., the court permitted defendants’ experts to present the
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`challenged hearsay evidence because it was collected in accordance with industry and
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`professional standards. Id. at 442–43. Here, Mr. Parr