Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 1 of 33 PageID #: 51894
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`C.A. No. 16-453 (RGA)
`
`))))))))
`
`ACCELERATION BAY LLC,
`
`Plaintiff,
`
`v.
`
`ACTIVISION BLIZZARD, INC.
`
`Defendant.
`
`ACCELERATION BAY’S OPPOSITION TO
`ACTIVISION’S OBJECTIONS TO ACCELERATION BAY’S DAMAGES PROFFER
`
`Philip A. Rovner (#3215)
`Jonathan A. Choa (#5319)
`POTTER ANDERSON & CORROON LLP
`Hercules Plaza
`P.O. Box 951
`Wilmington, DE 19899
`(302) 984-6000
`provner@potteranderson.com
`jchoa@potteranderson.com
`
`Attorneys for Plaintiff
`Acceleration Bay LLC
`
`OF COUNSEL:
`
`Paul J. Andre
`Lisa Kobialka
`James Hannah
`Yuridia Caire
`KRAMER LEVIN NAFTALIS
` & FRANKEL LLP
`990 Marsh Road
`Menlo Park, CA 94025
`(650) 752-1700
`
`Aaron M. Frankel
`KRAMER LEVIN NAFTALIS
` & FRANKEL LLP
`1177 Avenue of the Americas
`New York, NY 10036
`(212) 715-9100
`
`Dated: April 5, 2019
`
`PUBLIC VERSION
`
`Public version dated: April 12, 2019
`
`

`

`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 2 of 33 PageID #: 51895
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`TABLE OF CONTENTS
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`Page
`
`INTRODUCTION .......................................................................................................................... 1
`
`NATURE AND STAGE OF THE PROCEEDINGS ..................................................................... 2
`
`ARGUMENT .................................................................................................................................. 3
`
`A. Mr. Parr Provided a Conservative Apportionment for the Infringing Products ................ 3
`
`1. Mr. Parr’s Revenue and User Apportionment is Based on Reliable
`Evidence, Including Activision’s Own Survey Evidence ......................................... 3
`
`2. Mr. Parr Apportioned Based on the Infringing Technology ...................................... 8
`
`3. Mr. Parr Apportioned His Cost-Saving Bases ......................................................... 12
`
`B. Mr. Parr’s Royalty Rate Opinions are Reliable ............................................................... 14
`
`1. The Boeing/Panthesis License is Comparable ......................................................... 14
`
`2. Activision had full discovery on the Boeing/Panthesis License .............................. 19
`
`C. Mr. Parr’s Reliance on Dr. Valerdi is Appropriate ......................................................... 20
`
`1. Dr. Valerdi’s Cost-Savings Opinions are Reliable and Unrebutted ......................... 22
`
`2. Dr. Valerdi’s Opinions are Testable and Reproducible ........................................... 23
`
`3. Acceleration Bay is Not Seeking Pre-Suit Damages ............................................... 25
`
`D. Acceleration Bay is Entitled to a Reasonable Royalty for Activision’s
`Infringement of the Method Claims ................................................................................ 26
`
`E. Mr. Parr’s Opinions are Based on and Consistent with Facts of Case ............................ 27
`
`CONCLUSION ............................................................................................................................. 28
`
`i
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`

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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 3 of 33 PageID #: 51896
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`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Apple Inc. v. Motorola Inc.,
`757 F.3d 1286 (Fed. Cir. 2014)................................................................................................11
`
`Aqua Shield v. Inter Pool Cover Team,
`774 F.3d 766 (Fed. Cir. 2014)..................................................................................................21
`
`Daubert. Daubert v. Merrell Dow Pharms., Inc.,
`509 U.S. 579 (1993) ......................................................................................................... passim
`
`Dowagiac Mfg. Co. v. Minn. Moline Plow Co.,
`235 U.S. 641 (1915) ...................................................................................................................4
`
`Ericsson, Inc. v. D-Link Sys., Inc.,
`773 F.3d 1201 (Fed. Cir. 2014)..............................................................................................4, 7
`
`Fractus, S.A. v. Samsung,
`No. 6:09-cv-203-LED-JDL, 2011 WL 7563820 (E.D. Tex. Apr. 29, 2011) ...........................12
`
`Hanson v. Alpine Valley Ski Area, Inc.,
`718 F.2d 1075 (Fed. Cir. 1983)................................................................................................21
`
`Lucent Techs., Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009)................................................................................................28
`
`Monsanto Co. v. McFarling,
`488 F.3d 973 (Fed. Cir. 2007)..................................................................................................21
`
`Powell v. Home Depot, U.S.A., Inc.,
`663 F.3d 1221 (Fed. Cir. 2011)................................................................................................22
`
`Prism Techs. LLC v. Sprint Spectrum L.P.,
`849 F.3d 1360 (Fed. Cir. 2017)..........................................................................................14, 22
`
`Smith v. Ford Motor Co.,
`215 F.3d 713 (7th Cir. 2000) ...................................................................................................12
`
`Summit 6, LLC v. Samsung Elecs. Co.,
`802 F.3d 1283 (Fed. Cir. 2015)..................................................................................................7
`
`Virnetx, Inc. v. Cisco Sys., Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)................................................................................................12
`
`ii
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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 4 of 33 PageID #: 51897
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`Statutes
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`35 U.S.C. § 284 ..........................................................................................................................4, 21
`
`iii
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`

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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 5 of 33 PageID #: 51898
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`INTRODUCTION
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`The Court should deny Activision’s motion to strike Acceleration Bay’s damages proffer
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`(the “Motion”) because it ignores Russell Parr’s detailed analysis in support of his damages
`
`opinions and is based on numerous mischaracterizations of the record.
`
`Mr. Parr provides a detailed economic analysis and well-founded opinions regarding the
`
`reasonable royalty to which Activision and Boeing would have agreed as a result of their
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`hypothetical negotiation. Mr. Parr employs a variety of methodologies and bases, including
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`Activision’s cost savings, revenues from sales of the infringing products and the number of user
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`of the infringing products, all of which Acceleration Bay timely disclosed during discovery, to
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`reach his opinions. Mr. Parr also carefully apportioned the damages bases to the footprint of the
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`invention, relying on the opinions of Acceleration Bay’s infringement experts as to which game
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`modes infringe and the importance of the claimed inventions to that functionality (Activision’s
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`claims to the contrary are simply incorrect) and on Activision survey data showing the
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`percentage of sales driven by its customers’ demand for the infringing game modes. And Mr.
`
`Parr’s royalty rates are tied to sound economic principles, including an analysis of the most
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`comparable license agreement and consideration of Activision’s cost of capital and weighted
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`return.
`
`Activision plays fast and loose with the record as indicated throughout this opposition.
`
`For example, Activision fabricates a non-existent
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` revenue cap for the Boeing/Panthesis
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`license, misrepresents deposition testimony by citing it for one issue when the witness was
`
`answering questions about an entirely different topic, and incorrectly claims that the m-regular
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`network concept was added to the applications for the Asserted Patents years into their
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`prosecution when it was always a part of those patent applications.
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`

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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 6 of 33 PageID #: 51899
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`While Activision raises a host of issues in its Motion, its arguments mostly boil down to
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`simply disagreeing with Mr. Parr’s observations and conclusions. Activision should address
`
`these disagreements through counter-expert opinions and cross examination; they are not a basis
`
`to exclude Mr. Parr’s opinions under Daubert. Daubert v. Merrell Dow Pharms., Inc., 509 U.S.
`
`579, 595 (1993). Moreover, in denying in relevant-part Activision’s first round of Daubert and
`
`summary judgment motions, the Court already addressed Activision’s arguments related to
`
`apportionment and Dr. Valerdi’s cost savings estimate that Activision rehashes in this Motion.
`
`There is no reason to reach a different result here and, for the reasons set forth below,
`
`Acceleration Bay respectfully requests that the Court deny Activision’s Motion.
`
`NATURE AND STAGE OF THE PROCEEDINGS
`
`The parties have already engaged in extensive Daubert motion practice before the Court.
`
`In 2018, Activision submitted just under 125 pages of briefing on Daubert and summary
`
`judgment motions, raising nearly twenty different Daubert challenges, including unsuccessful
`
`challenges to the opinions of Acceleration Bay’s infringement and cost-savings experts, Drs.
`
`Medvidovic, Mitzenmacher and Valerdi. D.I. 425 (Page Limit Order); D.I. 466 (Opening Brief);
`
`D.I. 508 (Reply Brief); D.I. 578 at 25-26, 30-31 (denying Daubert challenges to technical
`
`experts). Activision did not move the Court to reconsider its denial of Activision’s challenges to
`
`those technical opinions upon which Mr. Parr relies.
`
`As authorized by the Court, Acceleration Bay served a supplemental damages report
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`from expert Russell Parr on December 7, 2018. D.I. 619. Mr. Parr’s report does not raise any
`
`new infringement theories, and relies on the same infringement and cost-savings opinions that
`
`the Court found admissible under Daubert. On February 15, 2019, Acceleration Bay served a
`
`2
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`

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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 7 of 33 PageID #: 51900
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`detailed proffer of its damages case, which is based upon, inter alia, and consistent with Mr.
`
`Parr’s opinions. D.I. 641.
`
`Activision then filed this Motion, which seeks to preclude Acceleration Bay from
`
`presenting its damages claims for Activision’s infringement on three principal grounds: (1) Mr.
`
`Parr’s apportionment, (2) Mr. Parr’s reliance on the license between Boeing and Panthesis for the
`
`Asserted Patents and (3) Mr. Parr’s reliance on Dr. Valerdi’s cost-savings estimate, which the
`
`Court already approved under Daubert. Acceleration Bay hereby opposes Activision’s Motion.
`
`ARGUMENT
`
`A.
`
`Mr. Parr Provided a Conservative Apportionment for the Infringing
`Products
`
`Mr. Parr provided multiple opinions regarding how the parties could determine a
`
`reasonable royalty for Activision’s infringing use of the patented technology based on (1) an
`
`appropriate revenue base and royalty rate, (2) a per-user royalty and (3) Activision’s cost-savings
`
`from infringement. Mr. Parr relied on the opinions of Acceleration Bay’s technical experts, for
`
`which the Court already denied Activision’s Daubert challenges, to conservatively apportion
`
`each of these damages bases to the footprint of the invention and to account for non-infringing
`
`features. D.I. 642-1, Ex. A (Parr Report) at e.g., ¶18(b); D.I. 641 (Acceleration Bay’s Proffer) at
`
`17-21 (summarizing apportionment methodologies). Activision’s criticisms of Mr. Parr’s
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`apportionment methodologies are counter-factual, ignore its own surveys and rely on a non-
`
`existent non-infringing alternative, unsupported by any technical expert in this case.
`
`1.
`
`Mr. Parr’s Revenue and User Apportionment is Based on Reliable Evidence,
`Including Activision’s Own Survey Evidence
`
`For his revenue-based and user-based royalty opinions, Mr. Parr conservatively
`
`apportioned the bases to the footprint of the invention through consideration of quantitative and
`
`3
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`

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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 8 of 33 PageID #: 51901
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`qualitative measures of the customer demand for and use of the infringing functionality. D.I.
`
`642-1, Ex. A (Parr Report) at ¶18(b).1 “As a substantive matter, it is the ‘value of what was
`
`taken’ that measures a ‘reasonable royalty’ under 35 U.S.C. § 284.” Ericsson, Inc. v. D-Link
`
`Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014) (quoting Dowagiac Mfg. Co. v. Minn. Moline
`
`Plow Co., 235 U.S. 641, 648 (1915)). Apportionment can be addressed in a variety of ways,
`
`including “by careful selection of the royalty base to reflect the value added by the patented
`
`feature [or] . . . by adjustment of the royalty rate so as to discount the value of a product’s non-
`
`patented features; or by a combination thereof.” Ericsson, Inc., 773 F.3d at 1226. “The essential
`
`requirement is that the ultimate reasonable royalty award must be based on the incremental value
`
`that the patented invention adds to the end product.” Id. Here, Mr. Parr did just that.
`
`Apportionment of Base: Mr. Parr’s methodology for each of these measures began by
`
`apportioning the revenue and user bases to remove revenues for non-accused versions of the
`
`infringing products, such as, by way of example, PlayStation versions of Call of Duty. D.I. 642-
`
`1, Ex. A (Parr Report) at ¶ 228; Declaration of Yuridia Caire in Support of Opposition to
`
`Activision’s Response to Damages Proffer (“Caire Decl.”), Ex. 1 at ¶ 228 (Parr Supp). This
`
`initial apportionment reduced these bases by as much as
`
`. Id.
`
`Mr. Parr relied on the technical opinions of Drs. Mitzenmacher and Medvidovic to tie the
`
`base to the footprint of the technology and account for the patented features by considering the
`
`portion of the usage of the video games attributable to the infringing multiplayer modes, which
`
`are enabled by the Patents-in-Suit. D.I. 642-1, Ex. A (Parr Report) at ¶¶ 18, 205-211. Dr.
`
`1 Activision’s criticisms of Mr. Parr’s apportionment for his revenue-based and user-based
`royalty opinions do not apply to his five damages opinions premised on a cost-savings base.
`Those five opinions rely on a different apportionment methodology tied to the specific source
`code providing the infringing functionality. D.I. 642-1, Ex. A (Parr Report) at ¶¶ 149-203.
`
`4
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`

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`Medvidovic determined that Call of Duty: Black Ops III and Call of Duty: Advanced Warfare
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`infringe when in the multi-player modes with at least five players in the session, which is always
`
`the case for the Call of Duty games (excluding the single-player campaign modes, which are not
`
`at issue). See, e.g., D.I. 454, 455, Ex. 40 (Medvidovic Report) at ¶ 123; Caire Decl., Ex. 2 (AB-
`
`AB 002486) (Team Deathmatch games are restricted to 6 to 12 players, shows
`
` of all online
`
`players are in the Team Deathmatch mode); Ex. 3 (AB-AB 002484) (Moshpit mode requires 12-
`
`18 players); Ex. 4 (AB-AB 002487) (Gun Game requires 6-8 players); Ex. 5 (Kirk Tr.) at
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`184:14-185:1 (common number of players for Team Death Match is 8 versus 8). Destiny always
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`infringes, because it always operates in an online mode with a large number of participants—
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`this is an important design feature of the game that sets it apart from earlier first person shooter
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`games, and it has no single player, offline mode. D.I. 480, Ex. 67 (9/24/17 Bims Report) at
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`¶¶ 67-68. Finally, World of Warcraft has no non-infringing modes because the participants in
`
`the infringing network are Activision’s back-end servers, and there are always more than five
`
`such servers participating in any gameplay session. See, e.g., Caire Decl., Ex. 6 (ATVI0030239)
`
`at 441 (showing more than 4 servers).2
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`To quantify the importance of the infringing game modes, as compared to non-infringing
`
`game modes and features, Mr. Parr utilized Activision’s customer surveys. D.I. 642-1, Ex. A
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`(Parr Report) at ¶¶18(b), 205-211. Activision found that for Call of Duty: Black Ops III, the
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`highly responsive, infringing multiplayer modes drove the purchase for
`
` percent of
`
`Activision’s customers. Id. at ¶ 208. Activision’s studies for Call of Duty Black Ops III showed
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`2 The source code for World of Warcraft, not attached as an exhibit, but available upon the
`Court’s request, confirms the large number of servers involved in every gameplay session. See,
`e.g., BLZ-SRC-WoW000398-404 (Layout.xml) (showing ream configurations with at least 5
`servers); BLZ-SRC-WoW 000117 (Jamstructconst.h) (showing more than a dozen servers
`involved in all gameplay sessions.
`
`5
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`

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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 10 of 33 PageID #: 51903
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`an even higher percentage of customer purchase decisions driven by these infringing modes -
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`
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`percent. Id. at ¶¶18(b), 208.
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`Mr. Parr also relied on various qualitative indications of the footprint of the invention and
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`the extent and importance of the Infringing Product’s usage of the infringing functionality. For
`
`example, Mr. Parr relied on Activision’s internal surveys for Call of Duty and Destiny,
`
`deposition testimony of Activision’s employees regarding the popularity and demand of the
`
`infringing functionality, documents showing the awards received for the infringing game modes,
`
`articles from Activision containing quotes from its CEO regarding the infringing aspects of the
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`infringing products, and presentations regarding the accused functionality in the games. D.I.
`
`642-1, Ex. A (Parr Report) at ¶¶36-38, 126-140, 145, 205-211.
`
`For example, Call of Duty: Advanced Warfare, Black Ops III and Destiny were
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`nominated for “Best Multiplayer” in the 2015 BAFTA Awards due to the highly responsive
`
`online play enabled by Activision’s infringement. Id., Parr Report at ¶¶37-38. Call of Duty:
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`Advanced Warfare and Black Ops III were also nominated for “Best Competitive Multiplayer”
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`game in the IGN Best of 2014, 2015 Awards and World of Warcraft: Warlords of Draenor was
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`nominated for “Role-Playing/Massively Multiplayer Game of the Year” in the 2015 by the
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`Academy of Interactive Arts and Sciences Interactive Achievement. Id. at ¶¶ 37, 39. This
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`evidence further confirms that the accused infringing multiplayer modes are the primary
`
`purchase driver for the infringing products, and that the accused Destiny and World of Warcraft
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`games always operate in an infringing multiplayer mode. Thus, the infringing technology has an
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`even greater footprint with respect to these games. Id.
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`Considering all of this evidence, Mr. Parr conservatively used the lowest percentage from
`
`any of the surveys of the percentage of sales primarily driven by the infringing multiplayer
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`6
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`

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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 11 of 33 PageID #: 51904
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`modes,
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`, as his baseline apportionment across all games. Id. at ¶¶18, 208, 210-211. The
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`Federal Circuit has approved Acceleration Bay’s approach of apportioning based on the use of
`
`the infringing features as compared to non-infringing features. Summit 6, LLC v. Samsung Elecs.
`
`Co., 802 F.3d 1283, 1296 (Fed. Cir. 2015) (factor 11 supports expert’s reliance on percentage of
`
`infringer’s customers who used infringing feature in the reasonable royalty calculation). For
`
`example, in Summit, the expert apportioned the infringing features from non-infringing features
`
`based on surveys that showed the percentage of camera users who used the camera to perform
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`the infringing methods rather than for other purposes. Id. Based on these usage statistics, the
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`expert in Summit concluded that 20.8% of revenues was due to the infringing features and
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`ultimately determined a reasonable royalty based on this usage and profit margins. Moreover,
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`the Federal Circuit has held that apportionment can be addressed in a variety of ways, including
`
`“by careful selection of the royalty base to reflect the value added by the patented feature [or] by
`
`adjustment of the royalty rate so as to discount the value of a product’s non patented features; or
`
`by a combination thereof.” Ericsson, 773 F.3d at 1226.
`
`Apportionment of Rate: Mr. Parr then further apportioned with respect to the rate
`
`applied to the apportioned base. The
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` rate Mr. Parr selected from the Boeing-Panthesis
`
`license (discussed in Section B.1) is already apportioned to the footprint of the invention in that
`
`it too attempts to value the use of the patented technology in video games in the context of
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`preexisting network technology and unpatented features. Specifically, when Boeing and
`
`Panthesis agreed to a
`
` royalty on revenue from video games, that implicitly included the
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`parties’ agreement as to the portion of the revenues from video games that would be attributable
`
`to the footprint of the invention. Similarly, Mr. Parr’s weighted-average-cost-of-capital based
`
`royalty quantitatively accounts for the portions of the enterprise earnings fairly attributable to the
`
`7
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`

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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 12 of 33 PageID #: 51905
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`patented technology as opposed to other company assets, including the non-patented intellectual
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`property embodied in the franchises (such as characters and story elements). D.I. 642-1, Ex. A
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`(Parr Report) at ¶¶ 157-196; D.I. 642-1, Ex. B (errata). Thus, these rates are a further
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`apportionment to the footprint of the invention.
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`Application of Georgia-Pacific Factors: In applying these rates, Mr. Parr considered the
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`other relevant factors under the Georgia-Pacific reasonable royalty analysis, including the extent
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`that the infringing technology is driving derivative or convoyed sales not included in the royalty
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`base (id. at ¶¶ 119-123), the benefits of the patented technology over older, non-infringing
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`networking technology (id. at ¶¶ 134-136), the “highly valuable” extensive use of the infringing
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`technology in the game in “enabling the rich, multiplayer capability in [the] games” (id. at
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`¶¶ 137-141), and the portion of the profits fairly attributable to non-patented elements (id. at
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`¶¶ 144-145). On the whole, Mr. Parr found that these factors favor increasing the royalty rate
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`yet, to be conservative, Mr. Parr did not upwardly adjust from the Boeing/Panthesis royalty rate.
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`Id. at ¶¶65-71, 156.
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`Thus, Mr. Parr conservatively apportioned both the base and the rate, and fully accounted
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`for the contributions of the patented technology as opposed to unpatented elements.
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`2.
`
`Mr. Parr Apportioned Based on the Infringing Technology
`
`Activision’s primary criticism of Mr. Parr’s apportionment methodology is that Mr. Parr
`
`did not properly apportion down to the footprint of the invention because he supposedly failed to
`
`account for the contribution of conventional multiplayer functionality and other features to the
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`success of the infringing products. Activision’s attacks, however, are based on incorrect and
`
`unsupported assumptions.
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`8
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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 13 of 33 PageID #: 51906
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`Activision starts with the irrelevant observation that “online games have existed since the
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`1970s and predate the patents, including Activision’s own multiplayer games.” D.I. 650
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`(“Motion”) at 2. As an initial matter, Activision ignores that the game modes that Mr. Parr
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`identifies as the “multiplayer” game modes were all determined by Acceleration Bay’s
`
`infringement experts to be infringing. Mr. Parr relies on the opinions of these experts that the
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`infringing multiplayer modes of the infringing products could not work without infringing.
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`Because these games require infringement to operate, it is not the case that the patented
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`technology has only an incidental footprint.
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`Activision also makes the incorrect assumption that these earlier online games are
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`equivalent to the current-generation games accused of infringement. Activision offers no
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`evidence in support of that premise. In contrast, Dr. Bims explains that Acceleration Bay’s
`
`patents provide significant benefits over older networks and the infringing products capitalize on
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`those benefits to realize their market success. Mr. Parr relied on Dr. Bims’ opinions, including
`
`his assessment of the deficiencies in conventional networks that Activision relies on:
`
`At the time the Asserted Patents were filed, conventional network design was a
`complete network, where the network topology was a full mesh with direct
`connections between all participants. The problem with such networks is they do
`not scale well as the number of participants grows. For example, each
`participating process would need to manage its direct connections to all other
`participating processes as the number of such connections grows indefinitely, and
`would need to process messages at the network and application level from all
`other participants, quickly overloading the maximum capacity of the participants
`to process messages as the number of connections and the messages sent over
`them grows indefinitely.
`
`D.I. 480, Ex. 67 (Bims Report) at ¶ 47.
`
`Mr. Parr also relies on Dr. Bims’ extensive discussion of the benefits of the claimed
`
`inventions, including as applied specifically in the infringing products, over the conventional
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`networks that Activision references in its Motion. Id., Bims Report at ¶¶ 48-70; D.I. 480, Ex. 68
`
`9
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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 14 of 33 PageID #: 51907
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`(Bims Reply Report) at ¶¶ 8-31; D.I. 642-1, Ex. A (Parr Report) at ¶¶ 34-35, 134, 146. For
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`example, Dr. Bims describes some of the benefits from the use of m-regular networks, which are
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`not found in the conventional networks Activision points to:
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`The novel m-regular network topology ensures reliability and scalability of the
`network, as explained by the patents, effectively leveraging each of the participants to
`connect to a potentially dynamic subset of ‘m’ other participants who themselves could
`be connected to ‘m’ participants. This was a significant advancement over
`conventional network topologies.
`
`The redundancy of the message sending helps to ensure the
`overall reliability of the broadcast channel. Since each
`computer has four connections to the broadcast channel, if
`one computer fails during the broadcast of a message, its
`neighbors have three other connections through which they
`will receive copies of the broadcast message. Also, if -the
`internal connection between two computers is slow, each
`computer has three other connections through which it may
`receive a copy of each message sooner.
`
`D.I. 480, Ex. 67 (Bims Report) at ¶ 54 (quoting ‘344 Patent at 7:50-58).
`
`Activision conflates the infringing multiplayer modes of the infringing products, which
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`use and require m-regular networks to provide superior and commercially successful gameplay,
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`with outdated online video games from the 1970s. The fatal flaw in Activision’s argument is
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`that it does not offer any evidence that the primitive multiplayer networks used in the 1970s are a
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`viable option to replace the highly customized, highly efficient infringing networks used in the
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`infringing products. Indeed, Activision does not even identify any such games that supposedly
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`comprise a viable non-infringing alternative. Thus, these unidentified games are not a basis to
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`preclude Mr. Parr’s apportionment opinion.
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`Activision’s reference to its own unidentified multiplayer games is equally unavailing.
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`Activision does not identify a shred of evidence that these games are both (1) non-infringing and
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`(2) technically suitable replacements for the infringing networks used in the infringing products.
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`Activision’s argument depends on these games being a non-infringing alternative, but that is not
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`10
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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 15 of 33 PageID #: 51908
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`in evidence. As argued in detail in Acceleration Bay’s motion to strike portions of Ms. Lawton’s
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`damages opinions, Activision has never offered any analysis that these earlier games are non-
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`infringing. D.I. 648 (Motion to Strike) at 3-7. In particular, none of Activision’s technical
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`experts have examined the earlier games in these franchises to determine if they are non-
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`infringing. Thus, the commercial success of games that may or may not be infringing is
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`irrelevant to the proper apportionment in this case.
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`In sum, Acceleration Bay invented the technology that Activision is relying on to operate
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`its modern, high quality, highly successful multiplayer games at a much higher level than older
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`multiplayer games. Accordingly, it was reasonable for Mr. Parr to rely on the technical opinions
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`of Acceleration Bay’s experts as the basis for determining the footprint of the inventions.
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`Activision’s Motion offers no rebuttal of their technical analysis, let alone a showing that Mr.
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`Parr’s reliance on these technical opinions renders his opinions unreliable. Activision also
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`studiously ignored Mr. Parr’s consideration of the benefits of the patented technology over older
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`games in his Georgia-Pacific analysis, as discussed above, which further relied on Acceleration
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`Bay’s technical experts.3
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`The Federal Circuit has repeatedly confirmed that there are multiple ways to apportion
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`and determine a reasonable royalty. See Apple Inc. v. Motorola Inc., 757 F.3d 1286, 1319 (Fed.
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`Cir. 2014) (“[t]here are multiple reasonable methods for calculating a royalty, and directly
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`estimating the value a consumer places on the infringing feature is not a requirement of
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`3 Mr. Parr never “freely admit[ed] that the ‘multiplayer’ and ‘networked’ versions of the accused
`games can be played without infringing under Activision’s theories,” as Activision falsely claims
`without citation. Motion at 10, n.3. To the contrary, Mr. Parr, relying on Acceleration Bay’s
`technical experts, noted that Destiny and World of Warcraft are always infringing, and Call of
`Duty’s multiplayer mode infringes when there are at least five players, which is always the case
`for the infringing modes. D.I. 642-1, Ex. A (Parr Report) at ¶ 18(b), 209-211.
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`11
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`Case 1:16-cv-00453-RGA Document 669 Filed 04/12/19 Page 16 of 33 PageID #: 51909
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`admissibility.”). Activision can address any technical differences between the multiplayer
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`functionality and asserted claims or the correctness of Mr. Parr’s conclusions and the opinions of
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`the technical experts, during cross-examination. Id., citing Smith v. Ford Motor Co., 215 F.3d
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`713, 718 (7th Cir. 2000) (explaining that disagreements about the factual underpinnings of an
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`expert's analysis go to weight, not admissibility).4
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`Thus, there is no basis to exclude Mr. Parr’s damages opinions based on revenues and
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`users.5
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`3.
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`Mr. Parr Apportioned His Cost-Saving Bases
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`Mr. Parr provides a series of damages opinions based on Dr. Valerdi’s cost-savings
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`estimate. D.I. 642-1, Ex. A (Parr Report) at ¶¶ 18, 149-203; D.I. 641(Proffer) at 7-8, 10. Dr.
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`Valerdi determined the cost savings to Activision from its infringement, by estimating how much
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`4 Activision’s authorities are inapposite to these facts. For example, the Fractus case dealt with a
`plaintiff that commissioned flawed surveys in an attempt to skew the preference for plaintiff’s
`technology, whereas Mr. Parr used Activision’s own surveys, the accuracy of which is not in
`dispute, and which indicate the importance of the infringing game modes. See Motion at 7;
`Fractus, S.A. v. Samsung, No. 6:09-cv-203-LED-JDL, 2011 WL 7563820, at *1 (E.D. Tex. Apr.
`29, 2011). Virnetix, Inc. is distinguishable because, as Activision points out, in that case “the
`expert did not even attempt to subtract any unpatented features from the base.” Motion at 11;
`Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1328 (Fed. Cir. 2014). Here, Mr. Parr
`conservatively apportioned both the base and the rate to account for unpatented features. D.I.
`641(Proffer) at 17-20; D.I. 642-1, Ex. A (Parr Report) at ¶18(b).
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`5 Activision’s further general argument that there are non-infringing alternatives is not a basis to
`exclude Mr. Parr’s damages opinions for lack of apportionment (or otherwise). This is an area of
`significant dispute between the parties. Acceleration Bay’s technical experts have provided
`extensive opinions that there are no non-infringing alternatives and, in particular, that Activision
`failed to identify any viable non-infringing alternatives. See, e.g., D.I. 454, 455, Ex. 40
`(9/25/2017 Medvidovic