Case 1:16-cv-00453-RGA Document 696 Filed 09/25/19 Page 1 of 8 PageID #: 52351
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`C.A. No. 16-453 (RGA)
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`ACCELERATION BAY LLC,
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`ACTIVISION BLIZZARD, INC.,
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`v.
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`Plaintiff,
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`Defendant.
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`DEFENDANT ACTIVISION BLIZZARD, INC.’S OPPOSITION TO
`ACCELERATION BAY’S MOTION FOR RECONSIDERATION
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`OF COUNSEL:
`B. Trent Webb
`Aaron E. Hankel
`Jordan T. Bergsten
`Maxwell C. McGraw
`SHOOK HARDY & BACON LLP
`2555 Grand Boulevard
`Kansas City, MO 64108
`(816) 474-6550
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`Tanya Chaney
`SHOOK HARDY & BACON LLP
`600 Travis Street, Suite 3400
`Houston, TX 77002
`(713) 227-8008
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`September 25, 2019
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`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
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`Attorneys for Defendant
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`Case 1:16-cv-00453-RGA Document 696 Filed 09/25/19 Page 2 of 8 PageID #: 52352
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`I.
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`INTRODUCTION
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`This Court properly excluded Acceleration Bay’s expert damages opinions that relied on
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`Acceleration’s “cost savings” expert, Dr. Valerdi, because Dr. Valerdi’s model used untestable
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`inputs with no connection to the facts of this case. Unlike other cases permitting use of a cost-
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`savings model, Acceleration and its experts claim no network exists that both: (1) has the
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`functionality of Activision’s accused networks, and (2) does not infringe. But Dr. Valerdi
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`nevertheless attempted to estimate the cost of building such a non-existent network. In doing so,
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`Dr. Valerdi assumed every line of code in the accused game would need to be rewritten,
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`including code not related to the accused networks. This Court correctly excluded Dr. Valerdi’s
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`opinions as “entirely speculative, untestable, and divorced from the facts of this case.” (D.I. 692,
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`p. 7).
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`Acceleration has no proper basis for reconsideration of this Court’s Order. First,
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`Acceleration’s reliance on Prism Techs. LLC v. Sprint Spectrum LP, 849 F.3d 1360 (Fed. Cir.
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`2017), is misplaced and only confirms the correctness of this Court’s Order. Unlike here, the
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`parties in Prism agreed that building a non-infringing backhaul network—with the same
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`technical characteristics of the accused backhaul network—would allow the defendant to: (1)
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`maintain the same functionality as its current network; (2) without infringing. Id. at 1376.
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`Second, Acceleration attempts to characterize this Court’s Order as finding the SEER-
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`SEM model inherently unreliable. But this Court made no such finding, ruling instead that Dr.
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`Valerdi’s inputs to that model were “divorced from the facts of this case.” (D.I. 692, p. 7).
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`Acceleration’s efforts to bolster the general reliability of the SEER-SEM model miss the point
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`entirely.
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`Third, Acceleration argues that Dr. Valerdi’s opinion on “Maintenance Costs” is
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`Case 1:16-cv-00453-RGA Document 696 Filed 09/25/19 Page 3 of 8 PageID #: 52353
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`somehow “separate” from his other opinions. This argument is both new and incorrect.
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`Acceleration does not and cannot deny that Dr. Valerdi’s “Maintenance Costs” opinion relies on
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`exactly the same inputs that this Court properly found to be “divorced from the facts of this
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`case.”
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`The Court should deny Acceleration’s motion for reconsideration.
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`II.
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`LEGAL STANDARD
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`“Motions for reargument or reconsideration should only be granted sparingly and should
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`not be used to rehash arguments already briefed.” Int’l Constr. Prod. LLC v. Caterpillar Inc.,
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`No. 15-108-RGA, 2016 WL 4445232, at *2 (D. Del. Aug. 22, 2016). “The movant must show at
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`least one of the following: (1) an intervening change in the controlling law; (2) the availability of
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`new evidence that was not previously available; or (3) the need to correct a clear error of law or
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`fact or to prevent manifest injustice.” Id. (internal quotation and alterations omitted). “Motions
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`for reargument or reconsideration may not be used as a means to argue new facts or issues that
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`inexcusably were not presented to the court in the matter previously decided.” Mondero v. Lewes
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`Surgical & Med. Assocs. P.A., 233 F. Supp. 3d 414, 416 (D. Del. 2017).
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`III. ARGUMENT
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`a.
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`The Prism Case Affirms that, Unlike Here, Cost-Savings Opinions Must be
`Based on Known, Acceptable, Non-Infringing Alternatives
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`Acceleration argues that Dr. Valerdi’s opinion is like the cost-savings theory that was
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`permitted in Prism, 849 F.3d 1360. In Prism, a key limitation in the asserted patent was the use
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`of an “untrusted” network. Id. at 1364. Plaintiff argued that the defendant’s accused practice of
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`leasing backhaul networks from various third parties—rather than building one private backhaul
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`network itself—met this requirement because “no single organization controls the[se networks]
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`in the aggregate.” Id. at 1365. Critically, the plaintiff’s experts also agreed that the defendant
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`2
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`Case 1:16-cv-00453-RGA Document 696 Filed 09/25/19 Page 4 of 8 PageID #: 52354
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`could “provide its customers the kind of service it wanted to offer them,” but avoid infringement,
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`by “building a private backhaul network instead of leasing backhaul services from third-party
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`providers.” Id. at 1375. Plaintiff’s expert was thus allowed to rely on his own experience and on
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`industry publications to estimate the costs of building a backhaul network with the same
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`characteristics as the existing backhaul network, except that it was wholly owned (and
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`controlled) by the defendant. Id. at 1377.
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`Here, Dr. Valerdi’s opinion is entirely different from the one allowed in Prism. Far from
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`pointing to an agreed upon, acceptable, non-infringing alternative with known characteristics and
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`testable costs (like the private backhaul network in Prism), here “Dr. Valerdi does not articulate
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`any characteristics of a non-infringing alternative and, indeed, adopts the position that such a
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`network does not exist.” (D.I. 692, p. 7). The omission of any description of this alternative
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`network’s characteristics squarely distinguishes this case from Prism, and renders his opinion
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`untestable, unscientific, and unsound.
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`These key distinctions between this case and Prism show that Acceleration is wrong
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`when it attributes to this Court “misapprehensions” of fact. It is irrelevant that Acceleration’s
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`experts allegedly opined on “the size of the code required to achieve the desired functionality”
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`(D.I. 695, p. 5), because they were estimating the code for a network that, in their opinion, must
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`infringe. Indeed, as this Court noted, Acceleration’s technical experts themselves opine that no
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`non-infringing networks exist that provide the same functionality as the accused networks. (D.I.
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`692, p. 6) (quoting D.I. 444-1, Exh. C-2, at 3).1 As this Court correctly found, and as
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`1 Further, while Acceleration claims these estimates are based on conversations with
`technical experts (D.I. 695, p. 5), Acceleration’s technical expert reports are entirely devoid of
`any discussion of the size of the code that Dr. Valerdi purportedly used as an input. But Dr.
`Valerdi’s cost estimates assume all of the code for the accused games would need to be re-
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`3
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`Case 1:16-cv-00453-RGA Document 696 Filed 09/25/19 Page 5 of 8 PageID #: 52355
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`Acceleration has failed to rebut, the “Federal Circuit’s precedent on cost savings does not,
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`however, support the admissibility of the estimated cost to switch to an undefined alternative that
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`the patentee contends does not exist.” (D.I. 692, p. 6).
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`It is also irrelevant that the private backhaul network in Prism “did not yet exist.” (Id.).
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`In Prism, the plaintiff identified a particular type of network with known characteristics and
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`testable costs that it admitted would be acceptable and non-infringing. Because of that, the
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`parties had an acceptable and known alternative to form a concrete basis for the cost of building
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`that network. The lack of that type of concrete basis here makes Dr. Valerdi’s opinion
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`“untestable.” (D.I. 695, pp. 6-7).2
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`b.
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`This Court Properly Found that Dr. Valerdi’s Inputs to the SEER-SEM
`Model Were Unreliable, Not that the Model Itself was Unreliable
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`Acceleration next incorrectly characterizes the Court’s Order as an attack on the SEER-
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`SEM cost estimation model itself. But the Court made no such attack. Rather, the Court made
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`clear that it was excluding Dr. Valerdi’s opinions because of Dr. Valerdi’s unreliable inputs to
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`the SEER-SEM model. For example, the Court specifically found that Dr. Valerdi “bases his
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`estimate of the cost on the number of lines of codes in the current games” and that “[e]ssentially,
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`he estimates the cost of developing the software ‘as is.’” (D.I. 692, p. 6). The Court then
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`explained that “Dr. Valerdi provides no justification as to why developing an alternative network
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`would, in theory, cost exactly the same amount as developing the existing network.” (D.I. 692, p.
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`written, including code unrelated to the accused networks. (D.I. 650, p. 25). Neither Dr.
`Valerdi, nor Acceleration’s technical experts provide any explanation for this in their reports.
`2 Acceleration is incorrect when it argues that “Dr. Valerdi is required to adopt the
`position that the non-infringing network does not exist.” (D.I. 695, p. 6). Prism establishes the
`very opposite. To the extent that Acceleration is arguing Dr. Valerdi was “required to adopt the
`position that the non-infringing network does not exist” as a prerequisite to using the SEER-SEM
`model, then such an argument proves that the model is incompatible with Federal Circuit law,
`which as Prism holds, requires the opposite assumption for a cost-savings approach.
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`4
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`Case 1:16-cv-00453-RGA Document 696 Filed 09/25/19 Page 6 of 8 PageID #: 52356
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`7).3 Thus, Dr. Valerdi’s inputs to the SEER-SEM model were all “speculative, untestable, and
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`divorced from the facts of this case.” Id. This Court’s Order did not need to address, and did not
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`address, the reliability of the SEER-SEM model.
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`c.
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`Dr. Valerdi’s “Maintenance Costs” Opinions are Admittedly Calculated
`from the Same Unreliable Inputs as his Other Excluded Opinions
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`Acceleration argues that Mr. Parr’s opinion relying on Dr. Valerdi’s “Maintenance
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`Costs” opinion should not have been excluded because it is “separate” from his other opinions
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`(D.I. 695, p. 10). But Dr. Valerdi used the same assumptions on lines of code for determining
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`maintenance costs as he did for calculating the development cost of the imaginary, non-
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`infringing network that he contends does not exist. Indeed, Acceleration admits that Dr.
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`Valerdi’s “Maintenance Costs” opinion merely “determined the cost of ongoing maintenance for
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`the theoretical non-infringing alternative” that the Court properly found was untestable and
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`unreliable. Id. Acceleration does not argue that the excluded “Maintenance Costs” opinion
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`performed any additional calculations to make it less “speculative, untestable, and divorced from
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`the facts of this case” than Dr. Valerdi’s other opinions. (D.I. 692, p. 7). Nor could it, as the
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`cost of maintaining an imaginary, non-existent network with unknown characteristics is no more
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`reliable than the cost of building such a network.4 Thus, the flawed foundational inputs for Dr.
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`Valerdi’s “cost maintenance” opinion render the entire opinion unreliable and inadmissible. This
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`Court correctly excluded the “Maintenance Costs” opinion.5
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`3 Acceleration lists “additional inputs” into the SEER-SEM model (D.I. 695, p. 7), but
`does not deny that they are all designed to estimate the cost of developing the accused software
`“as is,” without any justification for doing so.
`4 Mr. Parr’s maintenance cost opinion is unreliable for the additional reason that he
`makes no attempt to compare the maintenance costs of the imaginary non-infringing network to
`the maintenance costs of the existing accused networks.
`5 This issue is also untimely raised for the first time on reargument, as Acceleration’s
`previous briefing merely claimed in a footnote that the “maintenance costs” opinion is different
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`5
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`Case 1:16-cv-00453-RGA Document 696 Filed 09/25/19 Page 7 of 8 PageID #: 52357
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`IV. CONCLUSION
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`Activision respectfully requests that the Court deny Acceleration’s motion for
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`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
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`/s/ Jack B. Blumenfeld
`__________________________________
`Jack B. Blumenfeld (#1014)
`Stephen J. Kraftschik (#5623)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899
`(302) 658-9200
`jblumenfeld@mnat.com
`skraftschik@mnat.com
`
`Attorneys for Defendant
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`reconsideration.
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`OF COUNSEL:
`B. Trent Webb
`Aaron E. Hankel
`Jordan T. Bergsten
`Maxwell C. McGraw
`SHOOK HARDY & BACON LLP
`2555 Grand Boulevard
`Kansas City, MO 64108
`(816) 474-6550
`
`Tanya Chaney
`SHOOK HARDY & BACON LLP
`600 Travis Street, Suite 3400
`Houston, TX 77002
`(713) 227-8008
`
`September 25, 2019
`
`
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`from Dr. Valerdi’s other opinions, but did not support that conclusory claim with argument or
`evidence. (D.I. 665, p. 22 n.10). Nor did that brief explain whether and how the Court should
`treat the “maintenance costs” opinion differently. The Court should deny Acceleration’s motion
`for this additional reason. See Mondero, 233 F. Supp. 3d at 416.
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`6
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`Case 1:16-cv-00453-RGA Document 696 Filed 09/25/19 Page 8 of 8 PageID #: 52358
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`CERTIFICATE OF SERVICE
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`I hereby certify that on September 25, 2019, I caused the foregoing to be
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`electronically filed with the Clerk of the Court using CM/ECF, which will send notification of
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`such filing to all registered participants.
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`I further certify that I caused copies of the foregoing document to be served on
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`September 25, 2019, upon the following in the manner indicated:
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`Philip A. Rovner, Esquire
`Jonathan A. Choa, Esquire
`POTTER ANDERSON & CORROON LLP
`1313 North Market Street, 6th Floor
`Wilmington, DE 19801
`Attorneys for Plaintiff
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`Paul J. Andre, Esquire
`Lisa Kobialka, Esquire
`James R. Hannah, Esquire
`Hannah Lee, Esquire
`Yuridia Caire, Esquire
`Greg Proctor, Esquire
`Michael H. Lee, Esquire
`William Hannah, Esquire
`KRAMER LEVIN NAFTALIS & FRANKEL LLP
`990 Marsh Road
`Menlo Park, CA 94025
`Attorneys for Plaintiff
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`Aaron M. Frankel, Esquire
`Marcus A. Colucci, Esquire
`Cristina Martinez, Esquire
`Shannon H. Hedvat, Esquire
`KRAMER LEVIN NAFTALIS & FRANKEL LLP
`1177 Avenue of the Americas
`New York, NY 10036
`Attorneys for Plaintiff
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`VIA ELECTRONIC MAIL
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`VIA ELECTRONIC MAIL
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`VIA ELECTRONIC MAIL
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`/s/ Jack B. Blumenfeld
`________________________________
`Jack B. Blumenfeld (#1014)
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