Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 1 of 26 PageID #: 52280
`
`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 REPLY
`IN SUPPORT OF ITS RESPONSE TO ACCELERATION BAY’S DAMAGES PROFFER
`
`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
`Jack B. Blumenfeld (#1014)
`Stephen J. Kraftschik (#5623)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899
`(302) 658-9200
`jblumenfeld@mnat.com
`skraftschik@mnat.com
`
`Dan K. Webb
`Kathleen B. Barry
`WINSTON & STRAWN LLP
`35 West Wacker Drive
`Chicago, IL 60601
`(312) 558-5600
`
`Attorneys for Defendants
`
`OF COUNSEL:
`B. Trent Webb
`Aaron E. Hankel
`John Garretson
`Jordan T. Bergsten
`Maxwell C. McGraw
`SHOOK HARDY & BACON LLP
`2555 Grand Boulevard
`Kansas City, MO 64108
`(816) 474-6550
`
`Michael A. Tomasulo
`Gino Cheng
`David K. Lin
`Joe S. Netikosol
`WINSTON & STRAWN LLP
`333 South Grand Avenue, 38th Floor
`Los Angeles, CA 90071
`(213) 615-1700
`
`David P. Enzminger
`Louis L. Campbell
`WINSTON & STRAWN LLP
`275 Middlefield Road, Suite 205
`Menlo Park, CA 94025
`(650) 858-6500
`
`Original Filing Date: April 19, 2019
`Redacted Filing Date: May 1, 2019
`
`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 2 of 26 PageID #: 52281
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`TABLE OF CONTENTS
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`Page
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`I. .. INTRODUCTION ................................................................................................................... 1 
`
`II.
`
`SUMMARY OF ARGUMENT .......................................................................................... 1 
`
`III. ARGUMENT ...................................................................................................................... 3 
`
`Opinions—The Purported Boeing-Panthesis License is Not Comparable ........... 3 
`A.
`B. “Cost Savings” Opinions—Mr. Parr Now Directly Relies on Dr. Valerdi’s “Cost
`Savings” to Switch to an Undisclosed Alternative, With Insufficient Connection to
`the Facts of the Case ..................................................................................................... 6 
`C. Unapportioned/“Multiplayer” Opinions—None of Mr. Parr’s Opinions Attempt to
`Apportion Beyond Broad Concepts of “Networking” and “Multiplayer” That
`Indisputably Predate the Inventions ............................................................................ 10 
`D. Opinions That Fail to Address A Decade of Facts—Mr. Parr’s Opinions Should Be
`Excluded Because They Do Not Account For Boeing’s Attempts to Sell the Asserted
`Patents for
` ................................................................................................. 17 
`E. Opinions That Assume Method Claim Infringement—Acceleration Seeks Damages
`for CoD and Destiny Based On Game Sales and Foreign Customers, Which Cannot
`Infringe the Asserted Method Claims ......................................................................... 18 
`F. Legally Unsupported Opinions—Acceleration Points to No Authority Supporting the
`Admissibility of Its “Maintenance Cost,” “Rate of Return,” or “Cost of Capital”
`Theories....................................................................................................................... 19 
`IV. CONCLUSION ................................................................................................................. 19 
`
`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 3 of 26 PageID #: 52282
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Aqua Shield v. Inter Pool Cover Team,
`774 F.3d 766 (Fed. Cir. 2014)....................................................................................................8
`
`Com. of Pa. Dep’t of Pub. Welfare v. U.S. Dep’t of Health & Human Servs.,
`101 F.3d 939 (3d Cir. 1996).....................................................................................................18
`
`Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc.,
`809 F.3d 1295 (Fed. Cir. 2015)................................................................................................11
`
`Daubert v. Merrell Dow Pharm., Inc.,
`509 U.S. 579 (1993) .........................................................................................................6, 8, 11
`
`Fractus, S.A. v. Samsung,
`No. 09-cv-203, 2011 WL 7563820 (E.D. Tex. Apr. 29, 2011)................................................12
`
`Hanson v. Alpine Valley Ski Area, Inc.,
`718 F.2d 1075 (Fed. Cir. 1983)..........................................................................................5, 8, 9
`
`Home Savings of Am. v. U.S.,
`399 F.3d 1341 (Fed. Cir. 2001)............................................................................................2, 19
`
`Intellectual Ventures I LLC v. Xilinx, Inc.,
`No. 10-1065-LPS, 2014 WL 1814384 (D. Del. Apr. 14, 2014) ........................................17, 18
`
`LaserDynamics, Inc. v. Quanta Comput., Inc.,
`694 F.3d 51 (Fed. Cir. 2012)....................................................................................................15
`
`Oddi v. Ford Motor Co.,
`234 F.3d 136 (3d Cir. 2000).......................................................................................................6
`
`Ormco Corp. v. Align Tech., Inc.,
`463 F.3d 1299 (Fed. Cir. 2006)................................................................................................18
`
`Powell v. Home Depot, U.S.A., Inc.,
`663 F.3d 1221 (Fed. Cir. 2011)..............................................................................................8, 9
`
`Prism Techs. LLC v. Sprint Spectrum L.P.,
`849 F.3d 1360 (Fed. Cir 2017)...................................................................................................8
`
`Sprint Commc’ns Co. L.P. v. Comcast IP Holdings, LLC,
`No. 12-1013-RGA, 2015 WL 410342 (D. Del. Jan. 29, 2015) ....................................12, 14, 15
`
`
`
`

`

`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 4 of 26 PageID #: 52283
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`Summit 6, LLC v. Samsung Electronics Co., Ltd.,
`802 F.3d 1283 (Fed. Cir. 2015)................................................................................................11
`
`Transocean Offshore Deepwater Drilling, Inc. v. GlobalSantaFe Corp.,
`No. 03-2910, 2006 WL 3227315 (S.D. Tex. Nov. 6, 2006) ....................................................10
`
`Wordtech Sys., Inc. v. Integrated Network Sols., Inc.,
`609 F.3d 1308 (Fed. Cir. 2010)..................................................................................................3
`
`
`
`

`

`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 5 of 26 PageID #: 52284
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`
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`I.
`
`INTRODUCTION
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`Each of the seven new damages calculations proffered by Acceleration Bay falls far short
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`of the requirements of reliability for presentation to a jury.1 Acceleration makes no attempt to
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`distinguish the multitude of cases cited by Activision establishing that each of Acceleration’s
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`new damages calculations is inadmissible. Instead, Acceleration tries to distract the Court from
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`the fundamental flaws in Acceleration’s fourth attempt at an admissible damages case by citing
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`to inapposite cases, substituting attorney argument for expert opinions, and accusing Activision
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`of misrepresenting the record. Activision respectfully requests that this Court exclude all seven
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`royalty theories.
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`II. SUMMARY OF ARGUMENT
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`As more fully explained below, each of Acceleration’s new damages calculations rests on
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`a variety of faulty inputs, insufficient proof, and failed economic reasoning. For any one of the
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`following reasons, Acceleration’s latest damages should be excluded.
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` Opinions. Four of Mr. Parr’s new theories rely on a
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` royalty rate derived
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`exclusively from a purported technology license between Boeing and Panthesis in 2002. The
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`Court should exclude these opinions because they are based on an alleged license that is neither
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`technically nor economically comparable.
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`“Cost Savings” Opinions. Five of Mr. Parr’s damages calculations use as a direct input
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`the supposed “cost savings” calculations of Dr. Valerdi. These royalties should be excluded
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`because they are not tied to the facts of the case, they are not “testable,” they fail to estimate the
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`cost of any real alternative, and they violate Acceleration’s promise to not seek pre-suit damages.
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`Unapportioned/“Multiplayer” Opinions. This Court also should exclude all seven of
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`1 Attachment A summarizes Acceleration’s new theories and Activision’s objections thereto.
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`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 6 of 26 PageID #: 52285
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`Mr. Parr’s royalty opinions because they fail to apportion anything approaching the value of the
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`claimed invention, and instead attempt to capture the entire value of “multiplayer” and
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`“networked” games with no apportionment for the features not related to networking nor the
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`specific contributions of
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`the asserted patents
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`to preexisting networking
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`technology.
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`Acceleration’s recitation of certain steps it took to apportion fails to address the many critical
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`facts Mr. Parr ignored in that apportionment.
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`Opinions That Fail to Address A Decade of Facts. This Court further should exclude all
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`seven of Mr. Parr’s royalty opinions because Mr. Parr ignores critical post-2002 developments
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`and facts related to Boeing’s financial expectations at the hypothetical negotiation in 2012.
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`Opinions That Assume Method Claim Infringement. Mr. Parr’s revenue- and user-
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`based opinions should be excluded because Mr. Parr mistakenly assumes that the manufacture
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`and sale of the accused games is “deemed to infringe” the asserted method claims, including
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`sales made to foreign customers.
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`Legally Unsupported Opinions. This Court ordered Plaintiff to provide fulsome
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`“citations to Federal Circuit precedent” supporting the admissibility of its proffered theories.
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`(D.I. 619 at 2-3). Acceleration failed to cite any Federal Circuit case supporting its “marginal
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`maintenance costs” and “investment rate of return” theories. (D.I. 641 at 12-15). Elsewhere,
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`Acceleration incorrectly claimed that “[t]he Federal Circuit approved” its “cost of capital”
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`theories in its Home Savings of America decision. (D.I. 641 at 11-12). Not so. The Home
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`Savings decision was not a patent case, and had nothing to do with patent damages. Because
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`none of these theories have support in any relevant Federal Circuit authority, they should be
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`excluded.
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`
`
`2
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`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 7 of 26 PageID #: 52286
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`III. ARGUMENT
`A.
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` Opinions—The Purported Boeing-Panthesis License is Not Comparable
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`Acceleration does not substantively respond to any of Activision’s arguments for why the
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`Court should exclude Mr. Parr’s opinions seeking to apply the exact
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`royalty rate from an
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`un-produced exclusive technology license between Boeing and Panthesis in July 2002. Mr. Parr
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`fails
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`to assess
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`technical comparability,
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`ignores key differences defeating economic
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`comparability, and unreliably cobbles the agreement’s terms from draft documents and an
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`inventor’s stale seventeen-year old recollection. These opinions should thus be excluded.
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`Wordtech Sys., Inc. v. Integrated Network Sols., Inc., 609 F.3d 1308, 1320 (Fed. Cir. 2010)
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`(requiring damages experts to “account for the technological and economic differences between”
`
`the prior licenses and the present case).
`
`Even if the agreement terms assumed by Mr. Parr are accepted as true, Mr. Parr fails to
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`establish technical comparability for two reasons.
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`First, the purported 2002 technology license gave
`
`
`
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`
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` While Acceleration asserts the agreement is comparable because it
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`“involves the same patents,” D.I. 667 at 15,
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`
`
`3
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`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 8 of 26 PageID #: 52287
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`
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` (D.I. 650 at 17).
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`Second, Acceleration does not dispute that m-regularity—which Mr. Parr and
`
`Acceleration repeatedly tout as the hallmark of the asserted patents—was not added to the claims
`
`of the asserted patent applications until after the purported Boeing-Panthesis technology license.
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`(D.I. 650 at 17 n.7). While Acceleration argues that m-regularity already appeared in the
`
`specifications of the purportedly licensed applications, it is axiomatic that a patent’s claims
`
`define the right to exclude and thus set the value for a license. The absence of any analysis on
`
`the technical comparability of the claims as they existed at the time of the purported licensed to
`
`Panthesis is fatal.
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`Mr. Parr also fails to meaningfully analyze economic comparability. First, Mr. Parr fails
`
`to account for the drastically different royalty bases.
`
`
`
`
`
`
`
`
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`but the record is clear and undisputed.3
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` Acceleration alleges that this fact is “fabricated”
`
`
`2 Because the agreement was not produced, there is no documentary record of the rate. Later
`materials, however, described it as a
` (See Ex. 31, Executive Summary, at 1.)
`3 See, e.g., Ex. 32, BOURASSA003591-618, at 594
`
`
` Ex. 33,
`
`
`HOLT002422-451, Business Plan, at 446
`
`
`
`4
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`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 9 of 26 PageID #: 52288
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`
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`Despite all of its rhetoric, Acceleration does not point to any evidence that either Boeing
`
`or Panthesis contemplated
`
` and Mr.
`
`Parr’s failure to discuss this massive difference makes his opinions fundamentally unreliable.4
`
`Mr. Parr applies this
`
` royalty from a 2002 agreement between Boeing and a startup
`
`middleware company to a 2012 hypothetical negotiation for all worldwide revenues of Call of
`
`Duty and World of Warcraft, franchises that had been hugely successful by 2012.5 Acceleration
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`also argues that the ten-year difference between the purported 2002 Boeing-Panthesis technology
`
`license and the 2012 hypothetical negotiation date “is not a per se bar.” (D.I. 667 at 18, n.8).
`
`But Mr. Parr’s failure to account for this economic difference merits exclusion, especially where
`
`his report points to a six-year difference as defeating comparability for the 2006 Boeing-Sony
`
`agreement which, as opposed to the 2002 Boeing agreement, directly addressed the patents in
`
`suit. (D.I. 650 at 19-20). Acceleration has similarly failed to show that this single
`
`license
`
`was sufficiently “established” as to have any bearing on Activision. Hanson v. Alpine Valley Ski
`
`Area, Inc., 718 F.2d 1075, 1078 (Fed. Cir. 1983) (“[A] single licensing agreement does not
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`generally demonstrate uniformity nor acquiescence in the reasonableness of the royalty rate.”).
`
`Finally, Acceleration completely ignores Activision’s argument that “Mr. Parr’s opinion
`
`on this purported agreement, which is pieced together by emails, draft agreements, and the
`
`nineteen-year old recollection of Dr. Holt,” and “which is contradicted by later documents he
`
`does not discuss, does not meet the threshold requirement of reliability for presentation to the
`
`jury.” (D.I. 650 at 21; see also, e.g., Ex. 31 (“The Boeing Company ... will receive a small
`
`
`4 Acceleration illogically suggests that this difference in royalty bases means “that the royalty
`rate for Boeing/Activision should be even higher.” (D.I. 667 at 17). Mr. Parr has not provided
`such an opinion, or assessed this difference in the royalty base at all. It is too late to do so now.
`5 Nor has Acceleration even tried to explain why a
` license on potential future revenues
`would ever apply to alleged cost savings.
`
`5
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`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 10 of 26 PageID #: 52289
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`
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`royalty for these patents.”)). Acceleration also fails to distinguish the cases cited by Activision
`
`excluding testimony on this basis. Id. Rather, Acceleration merely deflects this authority by
`
`claiming Activision had a fair opportunity to conduct discovery, without explaining how
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`Acceleration can meet its burden of establishing the requirements for admissibility (it does not).
`
`B. “Cost Savings” Opinions—Mr. Parr Now Directly Relies on Dr. Valerdi’s “Cost
`Savings” to Switch to an Undisclosed Alternative, With Insufficient Connection to
`the Facts of the Case
`
`The majority of Mr. Parr’s opinions directly rely on the opinion of Dr. Valerdi, who
`
`calculates the cost to Activision of revising every line of code for the WoW network into some
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`other undisclosed and undefined non-infringing alternative. Because Dr. Valerdi fails to
`
`calculate the cost to switch to some real-world alternative that can be described and measured—
`
`as required in the cases cited by Acceleration—his opinion is impermissibly divorced from the
`
`facts of this case and from reliable scientific methods. See Oddi v. Ford Motor Co., 234 F.3d
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`136, 146 (3d Cir. 2000). While Dr. Meyer, Acceleration’s previous damages expert,
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`appropriately concluded that, due to the limitations of Dr. Valerdi’s analysis, “it is necessary to
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`rely on other indicators of value” (Ex. 9, Meyer Report, ¶ 57), Mr. Parr does the opposite and
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`relies on Dr. Valerdi’s numbers as a direct input to five of his seven calculations. Because Dr.
`
`Valerdi’s numbers are not sufficiently reliable or tied to the facts of the case to serve this
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`function, this Court should exclude Mr. Parr’s five “cost savings” opinions.6
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`First, Dr. Valerdi’s calculations are not tied to the facts of the case because they are
`
`6 Acceleration incorrectly claims that this Court “approved” of Dr. Valerdi’s entire
`methodology through Daubert briefing that occurred before Acceleration served Mr. Parr’s
`report or its damages proffer. (D.I. 667 at 22). Acceleration itself, however, does not challenge
`Activision’s explanation that “This Court previously rejected Activision’s argument ... based on
`the unreliability of ‘the computer program that Dr. Valerdi uses.’ (D.I. 578 at 30-31),” or that
`“Activision does not renew that argument here, but raises new arguments germane to Mr. Parr’s
`extended reliance on Dr. Valerdi’s estimates, especially in view of new facts arising since the
`original reports of Dr. Meyer and Dr. Valerdi.” (D.I. 650 at 23, n.12).
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`6
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`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 11 of 26 PageID #: 52290
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`
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`entirely untethered to the infringement allegations of this case. Specifically, Acceleration does
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`not dispute that Dr. Valerdi used as his input every line of code for the accused games. Neither
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`Mr. Parr nor any of Acceleration’s technical experts provide any explanation or defense to this
`
`approach.
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`Underscoring this defect is that Mr. Parr does not adjust any of Dr. Valerdi’s estimates to
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`reflect the significant narrowing of the case since Dr. Valerdi served his opinion. (See D.I. 578
`
`at 3 (five patents either not infringed or invalid)). Acceleration makes no attempt to distinguish
`
`this case from Apple Inc. v. Motorola, Inc., which affirmed exclusion of a damages expert in part
`
`because plaintiff “did not adjust its 40%-50% rate when the ‘559 patent dropped out of the case
`
`on summary judgment, further suggesting that the rate was never tied to the specific patents at
`
`issue.” 757 F.3d 1286, 1325 (Fed. Cir. 2014), overruled on other grounds by Williamson v.
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`Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015).
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`Acceleration provides only a generalized argument that “the scope of the non-infringing
`
`alternative remains unchanged,” claiming that “[f]or example, a key to developing a non-
`
`infringing alternative would be re-working the World of Warcraft network to operate without
`
`using an m-regular, incomplete network.” (D.I. 667 at 23). But this only proves Activision’s
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`point. When Dr. Valerdi issued his opinion, Acceleration asserted the ‘497 Patent against WoW,
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`which did not require m-regular or incomplete networks. Even assuming Dr. Valerdi’s opinion
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`was ever “tied to the specific patents at issue,” it would have captured the cost to Activision of
`
`designing away from the additional functionality of the ‘497 Patent, which means Mr. Parr’s
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`reliance on it now significantly inflates his damages opinion. In truth, Dr. Valerdi’s calculations
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`are not now, and never were, “tied to the specific patents at issue,” and should thus be excluded.
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`Second, Dr. Valerdi does not measure the cost of switching to a particular alternative,
`
`7
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`

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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 12 of 26 PageID #: 52291
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`
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`but instead purports to calculate the cost of switching to a nebulous and unspecified alternative
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`that he also contends does not exist. As such, his opinions fail on “testability,” which the
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`Supreme Court describes as the “criterion of the scientific status of a theory.” Daubert v.
`
`Merrell Dow Pharm., Inc., 509 U.S. 579, 593 (1993). Indeed, this opinion is no more reliable or
`
`scientific than an estimate of the cost to drive to Shangri-La, or El Dorado, or any other
`
`imaginary place with an unspecified location. Any such estimate cannot be tested until the there
`
`is an objectively defined destination. Acceleration is thus incorrect when it claims this is a
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`problem that could have been fixed if Activision “purchase[d] the software tool that Dr. Valerdi
`
`used” to conduct its own analysis, or if Activision conducted more discovery on this issue. (D.I.
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`667 p. 24). Rather, it is clear Dr. Valerdi fails to provide any description of the characteristics of
`
`the alternative to which Activision could have switched, and instead claims it is impossible
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`because it does not exist.
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`Notably, the very case that Acceleration cites for support of “cost savings” as a
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`methodology identifies a particular, real-world non-infringing alternative—building a “backhaul
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`network”—based on decades of industry data and the defendant’s own witnesses who “testified
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`to the high costs.” Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1376-1377 (Fed.
`
`Cir 2017). None of these cases supports Acceleration’s plan to present the jury with an
`
`estimated cost to switch to a non-infringing alternative that the patentee cannot describe because
`
`the patentee contend it does not exist.7 This Court should exclude Mr. Parr’s royalties relying on
`
`
`7 Acceleration’s citations to Aqua Shields, Hanson, and Powell further demonstrate the fatal
`flaw with its manufactured “cost savings” in this case. (D.I. 641 at 4-6; D.I. 667 at 21-22). In
`Aqua Shield, the Federal Circuit explained that “cost savings” calculations may be appropriate
`where, unlike here, “such evidence is reliable, relevant, and not unduly prejudicial[.]” Aqua
`Shield v. Inter Pool Cover Team, 774 F.3d 766, 771-772 (Fed. Cir. 2014). In Hanson, the
`$12,500 in cost savings were based on the undisputed fact that the patented method cost “$75.00
`
`
`8
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`

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`
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`this flawed theory, which fails the most basic test of scientific reliability from the Supreme
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`Court.
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`Third, Dr. Valerdi admits that his opinion merely calculates, for the entire WoW game,
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`“the cost of developing the software as is.” (Ex. 7, Valerdi Dep. Tr. 100:6-11). But Activision
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`produced and Dr. Meyer already relied on real-world numbers to calculate this very amount in a
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`report previously served in this case, and it is a small fraction of Dr. Valerdi’s estimate. (Ex. 9,
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`Meyer Report Exhibit 4E (real-world costs of making the WoW “base game and all of the
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`expansions” was approximately
`
`). Acceleration mysteriously claims that its prior
`
`expert’s real-world calculations are “not dispositive,” without explaining why they are unreliable
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`or, more fundamentally, why Mr. Parr’s reliance on litigation-inspired “estimates” are reliable.
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`(D.I. 667 at 23).
`
`Acceleration also suggests that this difference can be explained because the 2004 World
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`of Warcraft game is “more primitive” than the “much expanded 2012 World of Warcraft games.”
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`Id. But this ignores that Dr. Meyer’s
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` calculation included the cost of developing
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`the WoW “base game” and the accused expansions. (Ex. 9, Meyer Report Exhibit 4E). It also
`
`ignores that when Dr. Valerdi wrote his report, Acceleration still accused the 2004 version of
`
`World of Warcraft of infringement, and that his opinion merely estimated “the cost of
`
`developing the software as is” nearly a decade before the hypothetical negotiation (Ex. 7, Valerdi
`
`
`less” per a minute than the prior art. Hanson, 718 F.2d at 1076-1077. Likewise, in Powell, the
`defendant’s business records showed that its “employees had suffered numerous injuries before
`the [infringing] saw guards . . . costing . . . upwards of $1,000,000 per year.” Powell v. Home
`Depot, U.S.A., Inc., 663 F.3d 1221, 1240-41 (Fed. Cir. 2011). In each case, the “cost savings”
`were based on real-world data, not imaginary calculations.
`
`9
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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 14 of 26 PageID #: 52293
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`Dep. Tr. 100:6-11).8 Because Dr. Valerdi’s calculations merely provide a severely inflated
`
`estimate of a number that is already in the record calculated from real-world data by
`
`Acceleration’s own expert, it should be excluded.
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`Fourth, Acceleration admits that it promised not to seek pre-suit damages in this case, but
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`Mr. Parr’s cost-savings analysis disavows that promise as he seeks a lump sum payment for costs
`
`that would allegedly have been saved between 2012 and 2014, long-before Acceleration filed
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`suit in March 2015. Acceleration hollowly asserts that the “hypothetical negotiation is a
`
`theoretical construct,” D.I. 667 p. 26, but ignores Transocean Offshore Deepwater Drilling, Inc.
`
`v. GlobalSantaFe Corp., No. 03-2910, 2006 WL 3227315 (S.D. Tex. Nov. 6, 2006). There, pre-
`
`suit damages were also disallowed and the court overturned the jury’s award of an “upfront
`
`royalty” for a pre-suit hypothetical negotiation date because it “accrued” before suit was filed.
`
`Id. at **3-5. Because Acceleration’s “cost savings” seek damages that accrued long-before this
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`lawsuit was filed, they should be excluded in view of Acceleration’s prior representations in this
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`case.
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`C. Unapportioned/“Multiplayer” Opinions—None of Mr. Parr’s Opinions Attempt to
`Apportion Beyond Broad Concepts of “Networking” and “Multiplayer” That
`Indisputably Predate the Inventions
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`Acceleration does not even address Activision’s core apportionment arguments for why
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`Acceleration’s proffer falls far short of the requirement to tie its damages to the asserted patents.
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`Acceleration does not deny that Mr. Parr: (1) only apportions down to broad functionalities like
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`“multiplayer” and “networking” that predate the patents and alleged infringement; (2) fails to
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`apportion out unpatented elements that he specifically recognizes as valuable; and (3) fails to
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`value or even discuss the functionality—like “cross-realm zones”—that is the basis for
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`8 See also, e.g., Ex. 6, Valerdi Report, p. 13 (stating a 2004 release date for WoW); Ex. 9,
`Meyer Report, Exhibit 3 (2004 version of World of Warcraft listed as an “Accused Product”).
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`10
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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 15 of 26 PageID #: 52294
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`Acceleration’s claim of infringement. These unaddressed flaws require exclusion. See
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`Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc., 809 F.3d 1295, 1301 (Fed. Cir.
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`2015) (“CSIRO”) (explaining that apportionment is an “‘essential requirement’ for reliability
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`under Daubert”).
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`First, Acceleration appears to admit that Mr. Parr only apportions down to the value of
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`“multiplayer” and “networked” games, but it fails to distinguish cases that exclude damages
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`experts who, like Mr. Parr, only apportion down to a broad technology that the patentee did not
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`invent.9 Acceleration points to nothing,10 nor could it, that even purports to tie any of Mr. Parr’s
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`calculations to the asserted patents other than a single CoD survey question and Dr. Valerdi’s
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`cost estimates for rewriting the entire WoW code base. That single CoD survey question only
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`asks about the full “multiplayer” mode of the game (as opposed to single player), and even that
`
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`9 See D.I. 650 at 7-15 (citing NetAirus Techs., LLC v. Apple, Inc., No. 10-cv-3257, 2013 WL
`11237200 (C.D. Cal. Oct. 23, 2013); Limelight Networks, Inc. v. XO Commc’ns, LLC, No. 3:15-
`cv-720, 2018 WL 1460703 (E.D. Va. Mar. 23, 2018); Ex. 28, Apple Inc. v. Wi-LAN, Inc., No. 14-
`cv-2235 (S.D. Cal. Jan. 3, 2019); Sprint Commc’ns, No. 12-1013-RGA, 2015 WL 410342 (D.
`Del. Jan. 29, 2015), Whitserve, 694 F.3d 10 (Fed. Cir. 2012); Lucent, 580 F.3d 1301, 1332-33
`(Fed. Cir. 2009); Rembrandt Social Media, LP v. Facebook, Inc., No. 13-158, 2013 WL 6327852
`(E.D. Va. 2013)).
`10 Acceleration claims that the Federal Circuit blessed its survey-based “approach of
`apportioning based on the use of the infringing features” in Summit 6, LLC v. Samsung
`Electronics Co., Ltd., 802 F.3d 1283, 1288 (Fed. Cir. 2015). (D.I. 641 at 20; D.I. 667 at 7). But
`Summit only underscores the deficiencies Acceleration’s proffer. There, unlike here, Summit’s
`expert first apportioned the base to the revenues attributable to the camera in the accused phones
`($14.15 per phone). Summit, 802 F.3d at 1297-1298. Summit’s expert then “relied on surveys
`commissioned by Samsung” that showed: 1) “at least 65.3% of camera users used the camera
`regularly to capture only photos”; 2) “at least 77.3% of those users ... shared the photos”; and 3)
`“at least 41.2% of those users who shared the photos did so by MMS....” Id. By multiplying
`these three figures, Summit’s expert “estimated that at least 20.8% of camera users utilized the
`camera for the infringing features rather than for other camera-related features,” resulting in per-
`phone profits of $2.93 ($14.15*20.8%). Id. Summit’s expert then apportioned to the
`incremental profits further, using additional data to arrive at profits of just $0.56 per phone,
`which he further apportioned by discounting the rate by 50%. Id. Mr. Parr did none of this—
`choosing instead to mechanically multiply the various bases by
`based on one survey.
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`11
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`Case 1:16-cv-00453-RGA Document 688 Filed 05/01/19 Page 16 of 26 PageID #: 52295
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`“multiplayer” category encompassed “multiplayer” cooperative game modes such as “Zombies”
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`that are limited to four or less players and that are not accused of infringement.11 (Ex. 1, Parr
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`Report, ¶ 208; Ex. 5, Kostich Depo. Ex. 5 at. 2, 13; Ex. 7, Valerdi Depo. Tr. at 109:3-12).
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`Acceleration does not argue, nor could it, that the patentee invented all multiplayer video
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`games. At best, the claimed inventions provided improvements over decades old networking
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`technology. Acceleration makes no effort to analyze or quantify those purported improvements,
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`while at the same time ignoring the prior versions of the same multiplayer games at issue here
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`that Acceleration does not accuse of infringement. And Acceleration does not challenge
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`Activision’s argument that courts “routinely exclude damages opinions that only apportion down
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`to a broader technology that the patentee admittedly did not invent,” or even try to distinguish
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`the cases Activision cites for this proposition. (D.I. 650, pp. 7-8 at 7 n. 2).12 Acceleration also
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`makes no effort to distinguish this case from this Court’s decision Sprint Commc’ns. that
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`excluded opinions that “measure[d] the portion of the IMS network that is made up of the entire
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`billing functionality,” where the asserted “patent does not purport to cover billing functionality
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`generally” and the expert failed to “mention the improvements added to [the accused] network
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`by the [asserted] patent.” Sprint Commc’ns Co. L.P. v. Comcast IP Holdings, LLC, No. 12-
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`1013-RGA, 2015 WL 410342, *2 (D. Del. Jan. 29, 2015). This Court should follow these
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`11 “Coop” mode was accused of infringing the ‘497 Patent only. (See Ex. 34, Medvidovic
`Report, at ¶ 81). Th