Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 1 of 20 PageID #: 51956
`
`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.
`
`PLAINTIFF ACCELERATION BAY LLC’S OPPOSITION TO
`DEFENDANT ACTIVISION BLIZZARD INC.’S MOTION
`TO STRIKE MR. PARR’S SUPPLEMENTAL DAMAGES REPORT
`
`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 671 Filed 04/12/19 Page 2 of 20 PageID #: 51957
`
`TABLE OF CONTENTS
`
`Page
`
`NATURE AND STAGE OF THE PROCEEDINGS ..................................................................... 1
`
`SUMMARY OF THE ARGUMENT ............................................................................................. 1
`
`ARGUMENT .................................................................................................................................. 3
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`The Court Permitted Acceleration Bay to Serve a Supplemental Damages
`Report With New Damages Claims ........................................................................ 3
`
`Acceleration Bay Disclosed the Bases for Mr. Parr’s Damages Opinions ............. 4
`
`Activision Does Not Address Most of Mr. Parr’s Report ....................................... 9
`
`The Pennypack Factors Weigh Against Any Exclusion ......................................... 9
`
`The Boeing/Panthesis License is Admissible ....................................................... 14
`
`CONCLUSION ............................................................................................................................. 16
`
`i
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 3 of 20 PageID #: 51958
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`Bio-Rad Labs., Inc. v. 10X Genomics, Inc.,
`No. C.A. No. 15-152-RGA, 2018 U.S. Dist. Lexis 187897 (D. Del. Nov. 02,
`2018) ........................................................................................................................................13
`
`CallWave Commc’ns., LLC v. AT&T Mobility LLC,
`No. 1:12-cv-01701-RGA, 2015 U.S. Dist. Lexis 169183 (D. Del. Dec. 10,
`2015) ............................................................................................................................10, 12, 13
`
`Carucel Invs., LP v. Novatel Wireless, Inc.,
`No. 16-cv-118-H (KSC), 2017 U.S. Dist. Lexis 94041 (S.D. Cal. Mar. 6,
`2017) ........................................................................................................................................13
`
`In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig.,
`No. 09-MD-2118-SLR, D.I. 453 (D. Del. Oct. 22, 2013)..........................................................7
`
`Dzielak v. Whirlpool Corp.,
`No. 2:12-0089 (KM)(JBC), 2017 U.S. Dist. Lexis 39232 (D.N.J. Mar. 17,
`2017) ..........................................................................................................................................9
`
`Intellectual Ventures I LLC v. AT&T Mobility LLC,
`No. 12-193-LPS, 2017 WL 478565 (D. Del. Jan. 31, 2017) .....................................................4
`
`Meyers v. Pennypack Woods Home Ownership Ass’n,
`559 F.2d 894 (3rd Cir. 1977) ...................................................................................................10
`
`Milwaukee Elec. Tool Corp. v. Chevron N. Am. Inc.,
`No. 14-CV-1289-JPS, 2017 US Dist. Lexis 86515 (E.D. Wis. June 6, 2017) ...........................6
`
`Robert Bosch, LLC. v. Snap On, Inc.,
`No. 12-11503, 2013 WL 1703328 (E.D. Mich. Apr. 19, 2013) ................................................6
`
`Robocast, Inc. v. Apple Inc.,
`No. 11-235-RGA, 2014 WL 334199 (D. Del. Jan. 28, 2014) ....................................................4
`
`Yeti by Molly, Ltd. v. Deckers Outdoor Corp.,
`259 F.3d 1101 (9th Cir. 2001) .................................................................................................13
`
`Other Authorities
`
`Fed. R. Civ. P. 26(a) ......................................................................................................................13
`
`Fed. R. Civ. P. 30(b)(6)..................................................................................................................14
`
`ii
`
`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 4 of 20 PageID #: 51959
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`Fed. R. Civ. P. 37 ................................................................................................................... passim
`
`Fed. R. Evid. 703 ...........................................................................................................................15
`
`Fed. R. Evid. 1002 .........................................................................................................................15
`
`Fed. R. Evid. 1004(a) .....................................................................................................................15
`
`iii
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 5 of 20 PageID #: 51960
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`NATURE AND STAGE OF THE PROCEEDINGS
`
`In its October 30, 2018 Case Management Order, the Court continued the trial scheduled
`
`in this action pending resolution of the admissibility of Acceleration Bay’s damages case. D.I.
`
`619. In that Order, the Court authorized Acceleration Bay to provide a supplemental damages
`
`report, after excluding certain opinions of Acceleration Bay’s prior damages expert, Dr. Meyer.
`
`Id. The Court later confirmed that Acceleration Bay was permitted to submit a damages report
`
`from a new damages expert. D.I. 630. On December 7, 2018, Acceleration Bay submitted the
`
`supplemental damages expert report of Russell Parr. Id. Activision submitted a responsive
`
`supplemental report on January 25, 2019. Id. Activision then deposed Mr. Parr. After
`
`Acceleration Bay submitted a proffer detailing its damages claims, Activision filed its motion to
`
`strike Mr. Parr’s supplemental damages report. D.I. 652 (the “Motion”). In the Motion,
`
`Activision does not challenge Mr. Parr’s credentials or the substance of his opinions; rather,
`
`Activision focuses on its incorrect argument that Mr. Parr’s opinions and certain facts upon
`
`which he relies were not properly disclosed. Acceleration Bay hereby opposes the Motion.
`
`SUMMARY OF THE ARGUMENT
`
`The Court should deny Activision’s Motion to strike Mr. Parr’s report because
`
`Acceleration Bay fully disclosed the bases for its damages case over two years ago. Even if it
`
`did not, Activision cannot meet its high burden under Rule 37 or Pennypack to warrant the
`
`extreme sanction of excluding Mr. Parr’s opinions.
`
`Mr. Parr’s report presents seven opinions for a reasonable royalty, based on three
`
`methodologies: (1) Activision’s cost savings from infringement, (2) Activision’s revenues from
`
`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 6 of 20 PageID #: 51961
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`the Infringing Products and (3) users of the Infringing Products.1 Acceleration Bay disclosed
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`each of these methodologies in its interrogatory responses during fact discovery and they have
`
`been the subject of extensive fact and expert discovery by the parties.
`
`Activision unreasonably complains that Mr. Parr’s report does not present the same
`
`damages opinions that Dr. Meyer presented in her damages report. But the Court specifically
`
`gave Acceleration Bay the opportunity to present a supplemental report from a new expert after
`
`it struck Dr. Meyer’s claim. Thus, the point of the supplementation was to not reiterate Dr.
`
`Meyer’s claim. Indeed, if Mr. Parr merely reiterated Dr. Meyer’s opinions, Activision would
`
`have undoubtedly moved to strike them based on the Court’s prior Daubert ruling.
`
`While Activision seeks to exclude the entirety of Mr. Parr’s report, its Motion does not
`
`address most of the opinions he presents, including his damages claims that are not based on the
`
`Boeing/Panthesis license, his apportionment analysis, and his analysis of the background to the
`
`hypothetical negotiation.
`
`As to the license between Boeing and Panthesis, there is no merit to Activision’s claims
`
`that it is prejudiced by Mr. Parr’s reliance on this license. Acceleration Bay timely produced all
`
`of the documents relating to that license and its negotiations, Activision deposed multiple
`
`witnesses on the license and the relationship between Boeing and Panthesis early during fact
`
`discovery, Activision’s damages expert offered over two hundred pages of analysis of the
`
`Boeing/Panthesis license on two occasions, once in her 2017 expert report and later in her 2019
`
`supplemental expert report responding to Mr. Parr’s report, and Activision had an opportunity to
`
`depose Mr. Parr on his opinions based on the Boeing/Panthesis license. Thus, Activision had full
`
`1 Mr. Parr also offered a maintenance cost-savings opinion that is not based on application of any
`rate. D. I. 642-1, Ex. A (Parr Report) at ¶¶ 200-203. Activision’s Motion does not address this
`opinion.
`
`2
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 7 of 20 PageID #: 51962
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`discovery on the Boeing/Panthesis license. Indeed, in the five months since Mr. Parr served his
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`report relying on the Boeing/Panthesis license, Activision never served any supplemental
`
`discovery requests relating to the license.
`
`Thus, as further discussed below, Activision cannot meet its burden to show that the
`
`extreme sanction of excluding the opinions of Mr. Parr is warranted.
`
`ARGUMENT
`
`A.
`
`The Court Permitted Acceleration Bay to Serve a Supplemental Damages
`Report With New Damages Claims
`
`Two months before the scheduled trial in this action, the Court struck the portion of Dr.
`
`Meyer’s damages report relying on the jury verdict in a Uniloc case. D.I. 578 at 27-28. After
`
`the Court excluded certain additional damages evidence, the parties then submitted briefing to
`
`the Court on the remaining damages claims available to Acceleration Bay. D.I. 601. Given that
`
`trial was less than a week away, the Court determined that “it would not be possible … to reach a
`
`decision on Plaintiff’s damages case prior to the scheduled start of trial.” D.I. 619 at 2.
`
`The Court offered the parties the choice between bifurcating damages from the scheduled
`
`trial, which Acceleration Bay requested, or continuing the trial indefinitely while the Court
`
`resolved damages issues. The Court continued the trial, as Activision requested. Id. Having
`
`taken the trial off calendar, the Court permitted Acceleration Bay to “supplement its expert
`
`reports if it wishes to do so,” authorizing Activision to provide responsive supplemental reports
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`and take depositions. Id. The Court then confirmed, over Activision’s objection, that
`
`Acceleration Bay could serve a supplemental report from a new expert. D.I. 630 at 3, n.1
`
`Activision’s primary argument is that Mr. Parr’s report should be stricken for going
`
`beyond the damages opinions set forth in Dr. Meyer’s report. But the Court did not limit
`
`Acceleration Bay to pursuing the same damages case that Dr. Meyer provided in her report.
`
`3
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 8 of 20 PageID #: 51963
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`Instead, Acceleration Bay understands that the Court intended to permit Acceleration Bay to
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`assert appropriate damages claims for Activision’s infringement without merely rehashing the
`
`same claims the Court already excluded. That is why the Order provided for responsive reports,
`
`depositions and a round of motion practice to deal with the new opinions. As set forth below,
`
`Acceleration Bay fully complied with the Court’s schedule and timely disclosed the
`
`methodologies and bases for the damages claims that Mr. Parr presents.
`
`For these reasons, the authorities upon which Activision relies for exclusion are
`
`inapposite. D.I. 652 (Motion) at 3, 6. The Court’s Robocast, Inc. v. Apple Inc., No. 11-235-
`
`RGA, 2014 WL 334199 (D. Del. Jan. 28, 2014) decision rejected a plaintiff’s effort to introduce
`
`an unauthorized supplemental damages report. Intellectual Ventures is irrelevant for the same
`
`reason; it turned on an unauthorized and untimely supplemental report correcting alleged errors
`
`from an opening expert report that came six months after the Defendant notified the plaintiff of
`
`those errors. Intellectual Ventures I LLC v. AT&T Mobility LLC, No. 12-193-LPS, 2017 WL
`
`478565 at *5 (D. Del. Jan. 31, 2017). In contrast to those cases, the Court expressly authorized
`
`Mr. Parr’s report, which Acceleration Bay timely served under the Court’s schedule. Thus there
`
`is no basis to strike it. D.I. 619 at 2.
`
`B.
`
`Acceleration Bay Disclosed the Bases for Mr. Parr’s Damages Opinions
`
`During discovery, Acceleration Bay disclosed the basis for each of Mr. Parr’s damages
`
`opinions. On August 18, 2017, Acceleration Bay served a supplemental response to Activision’s
`
`Interrogatory No. 1, which sought “a detailed description of the methodology for determining the
`
`damages.” D.I. 584-1, Ex. 1 (Resp. Interrog. No. 1) at 1. Acceleration Bay identified that it
`
`would “seek damages under at least the following theories,” which included the three theories
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`upon which Mr. Parr based all his opinions:
`
`4
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 9 of 20 PageID #: 51964
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`[1] a reasonable royalty based on Defendant’s revenue from the
`Accused Products, … [2] a reasonable royalty based on the
`number of unique users for each of the Accused Products; … and
`[3] cost savings to Defendant from using the Asserted Patents.
`
`Id. at 6 (emphasis added).2 Thus, the premise of Activision’s Motion, that Acceleration Bay did
`
`not timely disclose the basis for Mr. Parr’s theories is incorrect.
`
`Fully consistent with this disclosure, Mr. Parr provided seven opinions identifying what a
`
`reasonable royalty would be in this case, each of which Acceleration Bay disclosed in the above
`
`interrogatory response. He offered (1) an opinion based on Activision’s revenues from the
`
`Infringing Products, (2) an opinion based on the number of users, and (3) five opinions based on
`
`cost savings. D.I. 642-1, Ex. A (Parr Report) at ¶ 18 (summary of opinions). While Activision’s
`
`Motion seeks to strike Mr. Parr’s report in its entirety, Activision does not challenge or even
`
`discuss any of the three bases in its Motion. Rather, Activision only discusses specifically Mr.
`
`Parr’s opinions regarding the Boeing/Panthesis license as the basis for a
`
` royalty rate.
`
`Acceleration Bay reiterated the royalty bases and further disclosed that the appropriate
`
`royalty rate would be a matter of expert opinion:
`
`the royalty base may be the [1] total revenues related to the
`Accused Products, [2] the cost savings realized from use of the
`Asserted Patents, the number of units sold, [3] number of unique
`users … Plaintiff will seek guidance from its expert as to an
`appropriate apportionment and royalty rate. At this time,
`Plaintiff estimates that the royalty rate will be
` of total
`revenues based on industry information, a royalty based on the
`number of users or sessions, and/or cost savings. Plaintiff cannot
`
`2 Acceleration Bay qualified its response to reserve the right to increase the damages assessment
`given that it anticipated receiving additional discovery, such as the supplemental revenue
`information that Activision recently produced. D.I. 584-1, Ex. 1 (Resp. Interrog. No. 1) at 9-10
`(“Plaintiff cannot determine the largest amount of damages that it will seek from a jury for
`Defendant’s infringement at least because … Defendant’s infringement is ongoing and continues
`to increase … and … Plaintiff cannot calculate the total royalty without knowing the total base
`(which Defendant has not provided).”)
`
`5
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 10 of 20 PageID #: 51965
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`calculate the total royalty without knowing the total base (which
`Defendant has not provided) … and royalty rate (which is a
`subject of expert opinion and ongoing discovery).
`
`D.I. 584-1, Ex. 1 (Resp. Interrog. No. 1) at 8-9 (emphasis added).
`
`As stated in the interrogatory response, Mr. Parr provided several royalty rate opinions.
`
`Id. Those opinions are based on (1) the Boeing/Panthesis agreement, (2) Activision’s cost of
`
`capital and (3) Activision’s investment rate of return. D.I. 641 at 8-15. The Motion only
`
`addresses Mr. Parr’s opinions based on the Boeing/Panthesis agreement, leaving the other rates
`
`unchallenged. The maximum rate identified by Mr. Parr is
`
`, which is lower than the
`
`
`
`rate estimate Acceleration Bay included in its interrogatory response during fact discovery, while
`
`noting that the selection of a rate “is a subject of expert opinion.” D.I. 584-1, Ex. 1 (8/18/17
`
`Resp. Interrog. No. 1) at 8-10.
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`Because Acceleration Bay disclosed the factual bases for Mr. Parr’s damages opinions
`
`during discovery, it was appropriate for Mr. Parr to provide his own opinions regarding the
`
`appropriate rate to apply, which are the domain of damages experts. Rule 37 makes clear that
`
`the disclosure rules are not meant to supplant expert opinions and that specific information
`
`regarding damages claims is within the proper scope of expert discovery. See, e.g., Milwaukee
`
`Elec. Tool Corp. v. Chevron N. Am. Inc., No. 14-CV-1289-JPS, 2017 US Dist. Lexis 86515 at
`
`*19 (E.D. Wis. June 6, 2017) (“a precise assessment of how the facts connect to the applicable
`
`legal standard or a calculation of the ultimate damages claims can await expert
`
`analysis.”)(citation omitted); Robert Bosch, LLC. v. Snap On, Inc., No. 12-11503, 2013 WL
`
`1703328, at*4 (E.D. Mich. Apr. 19, 2013) (finding disclosure of damages theories sufficient
`
`because “[t]he precise details of those theories should be reserved for expert discovery.”). While
`
`requiring the parties to disclose the facts known to them during discovery, Judge Robinson
`
`6
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 11 of 20 PageID #: 51966
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`“acknowledge[d] that the final calculation of damages is properly the subject of expert
`
`opinion.” Declaration of Aaron Frankel in Opposition to Motion to Strike Supplemental Expert
`
`Damages Report (“Frankel Decl.”), Ex. 1, In re Cyclobenzaprine Hydrochloride Extended-
`
`Release Capsule Patent Litig., No. 09-MD-2118-SLR, D.I. 453 at 2-3 (D. Del. Oct. 22, 2013)
`
`(emphasis added). Acceleration Bay did exactly that in disclosing the methods and bases it
`
`planned to use for its damages calculations.
`
`Activision’s Motion is a rehash of its similar, unsuccessful motion to strike Acceleration
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`Bay’s original damages report for supposedly going beyond the disclosure of Acceleration Bay’s
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`interrogatory responses. The Special Master disagreed, finding that Activision could not “meet
`
`its burden to compel striking Plaintiff’s damages expert report. The law recognizes that experts
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`will elaborate on their opinions, particularly when calculating damages. The general theories
`
`and underlying information for calculating the damages claimed were disclosed to Activision
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`late in the fact discovery in this litigation.” D.I. 347 at 8 (emphasis added). Those same
`
`“general theories and underlying information” are the bases for Mr. Parr’s opinions.
`
`Acceleration Bay also disclosed during discovery the range of the damages it was
`
`seeking: “Plaintiff estimates that, based on revenue information provided through 2016, the
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`maximum amount of damages that Plaintiff will seek from a jury if it had to go to trial at this
`
`time based on the information it currently has is
`
` in damages for Defendant’s
`
`infringement through 2016.” D.I. 584-1, Ex. 1 at 9-10 (6/2/17 1st Supp. Resp. Interrog. No. 1)
`
`(emphasis added). Thus, Acceleration Bay based that estimate on the then-available data for
`
`March 2015 through 2016. Mr. Parr’s opinions are based on a period about twice as long, i.e.,
`
`from March 2015 through September 2018, relying on the supplemental data Activision provided
`
`through the third quarter of 2018. D.I. 642-1, Ex. A (Parr Report) at ¶¶ 18(a), 49. Thus, the
`
`7
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 12 of 20 PageID #: 51967
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` million3 damages range Mr. Parr offers is entirely consistent with Acceleration
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`Bay’s interrogatory responses. Activision’s complaint that Mr. Parr’s report seeks twice the
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`damages as Dr. Meyer’s report ignores the critical fact that he was relying on data for a period
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`twice as long as was available to Dr. Meyer and was based upon the recently supplemented
`
`revenue information that Activision, after much prompting and a motion to compel, finally
`
`produced.4 See, e.g., D.I. 646.
`
`Finally, Activision’s Motion ignores that the majority of Mr. Parr’s opinions stem from
`
`the same information and bases as Dr. Meyer. Mr. Parr applies a conservative apportionment to
`
`the damages calculations which is based on the apportionment that Dr. Meyer applied. Compare
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`D.I. 642-1, Ex. A (Parr Report) at ¶¶ 205-211 with D.I. 480-1, Ex. 69 (Meyer Report) at ¶¶ 169-
`
`176. Dr. Meyer discussed and tabulated Dr. Valerdi’s cost-savings estimate which is one of the
`
`bases Mr. Parr relies on. D.I. 480-1, Ex. 69 (Meyer Report) at ¶¶ 56, 130, 137, 140, Exhibit 5.
`
`And Mr. Parr’s discussion of the facts informing the key Georgia-Pacific analysis is very similar
`
`to Dr. Meyer’s. D.I. 642-1, Ex. A (Parr Report) at ¶¶ 62-147, D.I. 480-1, Ex. 69 (Meyer Report)
`
`at ¶¶ 60-141.
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`Thus, Mr. Parr’s report is based on timely disclosed theories, and there is no basis to
`
`strike any portion of it, let alone the entire report.
`
`3 This range includes Mr. Parr’s consideration of supplemental user data for World of Warcraft
`through March 2019. See Declaration of Yuridia Caire Opp. Activision’s Resp. Damages
`Proffer, Ex. 1 (Parr Supp.).
`4 Activision’s statement that the damages claim based on Dr. Meyer’s report was limited to “
`” is unexplained and incorrect. D.I. 652 (Motion) at 7, n.2. She provided a damages
`opinion of
`. D.I. 480-1, Ex. 69 (Meyer 9/25/17 Report) at ¶ 179.
`
`
`
`8
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 13 of 20 PageID #: 51968
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`C.
`
`Activision Does Not Address Most of Mr. Parr’s Report
`
`Activision has no support for its overreaching request to exclude the entirety of Mr.
`
`Parr’s report. Beyond the general (and incorrect, as discussed above) claim that the report is too
`
`different from Acceleration Bay’s prior disclosures, the Motion only addresses Mr. Parr’s
`
`
`
`royalty rate opinion related to Boeing/Panthesis agreement. See D.I. 652 (Motion) at 11. As
`
`Activision acknowledges, that argument does not apply to Mr. Parr’s cost-of-capital and
`
`investment-rate-of-return based royalty rate opinions or to his maintenance-cost savings opinion,
`
`which is not based on application of a royalty rate.5 Id. at n.3. The Motion also does not address
`
`Mr. Parr’s apportionment or the three bases he opines on – cost savings, revenues and users, all
`
`of which were timely disclosed by Acceleration Bay. Finally, the Motion does not identify any
`
`reason to exclude (or even mention) Mr. Parr’s discussion of the background facts relevant to the
`
`Georgia-Pacific factors, which is very similar to Dr. Meyer’s corresponding discussion.
`
`Thus, Activision fails to make a case for striking Mr. Parr’s report in its entirety.
`
`D.
`
`The Pennypack Factors Weigh Against Any Exclusion
`
`As discussed above, Acceleration Bay timely disclosed the bases for Mr. Parr’s opinions.
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`However, even if the Court were to credit Activision’s unfounded argument to the contrary,
`
`exclusion would still not be warranted. Exclusion under Rule 37 is an “extreme sanction” that
`
`should be avoided if the untimely disclosure was “substantially justified or is harmless.” Fed. R.
`
`Civ. P. 37; see, e.g., Dzielak v. Whirlpool Corp., No. 2:12-0089 (KM)(JBC), 2017 U.S. Dist.
`
`Lexis 39232, at *82, 90-93 (D.N.J. Mar. 17, 2017) (declining to invoke extreme sanction of
`
`5 This admission contradicts the introduction to Activision’s Motion which mischaracterizes Mr.
`Parr’s report as “opin[ing] on a single royalty rate of
` that is based entirely on a purported
`Boeing-Panthesis license agreement.” D.I. 652 (Motion) at 1. Mr. Parr’s opinions are based on
`several different rates and the maintenance-cost opinions are not based upon a rate. D.I. 642-1,
`Ex. A (Parr Report) at ¶ 18 (summary).
`
`9
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`

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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 14 of 20 PageID #: 51969
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`excluding critical evidence submitted through an untimely supplemental report); see also
`
`CallWave Commc'ns., LLC v. AT&T Mobility LLC, No. 1:12-cv-01701-RGA, 2015 U.S. Dist.
`
`Lexis 169183, at *5-10 (D. Del. Dec. 10, 2015) (declining to strike expert opinion).
`
`In determining whether exclusion under Rule 37 should apply, the Court considers the
`
`“Pennypack factors.” Applied to the facts, all of the Pennypack factors, listed below, favor
`
`Acceleration Bay and weigh against any exclusion.
`
`(1) The prejudice or surprise to the party against whom the
`evidence is offered; (2) The ability of the opposing party to cure
`any prejudice; (3) The extent to which allowing the evidence
`would disrupt an orderly and efficient trial; (4) Whether there was
`any bad faith or willfulness in failing to comply with the court's
`order; and (5) The importance of the evidence being considered.
`
`Meyers v. Pennypack Woods Home Ownership Ass'n, 559 F.2d 894, 904-905 (3rd Cir. 1977).
`
`Activision’s Motion exclusively relies on the first factor, purported prejudice and surprise, and
`
`does not even address the other four factors. Activision has fallen far short of meeting its burden
`
`to show that exclusion is proper under Pennypack.
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`Factor 1: Prejudice. There was no prejudice or surprise to Activision because
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`Acceleration Bay made available to it all of the underlying documents and relevant witnesses in
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`2017. The inventors produced at least 90 documents relating to the Boeing/Panthesis license,
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`negotiations and relationship. Frankel Decl. at ¶ 4. Activision deposed the inventors on this
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`agreement and the circumstances leading up to and after the agreement, and deposed Ms.
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`Radovsky, Boeing’s Director of Global Patent and Technology Licensing, on Boeing’s licensing.
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`That Activision should not be surprised by this evidence is confirmed by the decision of
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`Activision’s damages expert to dedicate a good portion of her 2017 report to these topics. D.I.
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`486, Ex. C-6 (Lawton 2017 Report) at ¶¶ 106-107, 148-151, 146-294. Ms. Lawton then
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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 15 of 20 PageID #: 51970
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`confirmed in her early 2018 deposition that the Boeing/Panthesis relationship upon which Mr.
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`Parr relies is “highly relevant” to the hypothetical negotiation in this case:
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`So, in your view . . . it is appropriate to take into account
`Q.
`the interested parties in the hypothetical negotiation such as
`Panthesis?
`
`A. Well, to the extent that Boeing …had a share[d] interest in
`Panthesis and had granted them a license and for which there was
`substantial business material regarding Panthesis's efforts to
`commercialize the technology, in my opinion that would be highly
`relevant information that would [sic] inform the expectations of
`Boeing at the time of the hypothetical negotiation.
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`Frankel Decl., Ex. 2 (Lawton 1/25/18 Tr.) at 62:18-63:6 (emphasis added).
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`After receiving Mr. Parr’s report in late 2018, Activision provided a five hundred page
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`responsive report from Ms. Lawton with a further voluminous discussion of the
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`Boeing/Panthesis agreement and the surrounding relationship. D.I. 649, Ex. 1 (Lawton 2019
`
`Report) at ¶¶105-125. Ms. Lawton’s 2019 report noted that her 2017 report “includes an
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`extensive discussion of both Boeing and Boeing’s intellectual property strategy and efforts to
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`license or sell the Patents-in-Suit over time, including the putative July 2002 Boeing-Panthesis
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`license.” Id. at ¶ 105 (emphasis added).
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`Having already taken extensive discovery on the Boeing/Panthesis license and having
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`had the opportunity to submit an extensive rebuttal report, Activision predictably did not request
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`additional depositions of Acceleration Bay’s witnesses regarding the Boeing/Panthesis
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`agreement or request any other supplemental discovery. If Activision thought it needed more
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`discovery, it had five months to ask for it, rather than waiting to raise it in its Motion.
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`As such, there has been no prejudice or surprise to Activision. This alone is reason to
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`deny the Motion, given that the prejudice factor is the sole basis upon which Activision premises
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`its Motion.
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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 16 of 20 PageID #: 51971
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`Factor 2: Ability to Cure. The ability of Activision to cure any prejudice weighs in
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`favor of Acceleration Bay and against exclusion. Activision had every opportunity to take
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`discovery on and address the Boeing/Panthesis agreement. As discussed above, in response to
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`Mr. Parr’s opinions, Activision had the opportunity to serve a supplemental report, depose Mr.
`
`Parr and file a Daubert motion, along with the present Motion to Strike. See, e.g., CallWave
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`Commc'ns, 2015 U.S. Dist. Lexis 169183, at *9 (finding any prejudice from the late disclosure
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`could be cured through deposition). Activision did not request any further discovery, nor does
`
`its Motion identify any discovery it needs. Thus, given Activision’s response to Mr. Parr’s
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`Report, there is nothing to “cure.”
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`Factor 3: Disruption to the Trial Date. This factor also weighs against preclusion.
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`Given all the motion practice that Activision has engaged in, there is no current trial date to
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`disrupt. Id. (finding that the absence of a trial date weighs against preclusion). In fact, the entire
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`premise of this months-long supplemental discovery period was to take the trial off calendar so
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`the parties could resolve all damages issues. The Court approved the stipulated schedule
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`between the parties regarding supplemental damages reports, expert discovery, briefing and a
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`hearing on the issue, and a trial date will be set after the conclusion of these damages issues.
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`Thus, Mr. Parr’s report will not disrupt the advancement of this case to an orderly and efficient
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`trial.
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`Factor 4: Bad Faith. There is no evidence of bad faith or willfulness in this case.
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`Acceleration Bay complied with the Court’s Order and its discovery obligations in disclosing its
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`supplemental damages claims. Indeed, the Court offered Acceleration Bay the opportunity to
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`submit the supplemental damages report at issue.
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`Case 1:16-cv-00453-RGA Document 671 Filed 04/12/19 Page 17 of 20 PageID #: 51972
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`Factor 5: Importance of the Evidence. This factor also weighs against exclusion
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`because the importance of the damages case “is clear if this litigation is to proceed on the merits
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`of the case.” Id. It is presumably for this reason that the Court elected to give Acceleration Bay
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`this opportunity to provide supplemental damages reports after precluding portions of Dr.
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`Meyer’s opinions.
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`Given that all of the factors weigh in favor of Acceleration Bay, the extreme sanction of
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`exclusion is not warranted. In Bio-Rad, this Court faced similar circumstances regarding the
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`exclusion of a damages expert, granting leave to serve a supplemental damages report, and
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`giving the opposing party leave to submit a supplemental rebuttal report. Bio-Rad Labs., Inc. v.
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`10X Genomics, Inc., No. C.A. No. 15-152-RGA, 2018 U.S. Dist. Lexis 187897, at *2, 10 (D.
`
`Del. Nov. 02, 2018). After consideration of the Pennypack factors, the Court declined to strike
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`the supplemental report, noting particularly that any prejudice due to material outside of the
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`allowed supplem