IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`MEMORANDUM OPINION AND ORDER
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`ACTIVISION BLIZZARD INC.,
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`v.
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`Defendant.
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`Civil Action No. 16-453-WCB
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 1 of 18 PageID #: 54676
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`ACCELERATION BAY LLC,
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`Plaintiff,
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`In this patent case, the parties disagree about the appropriate path for moving the case
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`forward. Plaintiff Acceleration Bay LLC (“Acceleration”) argues that additional expert discovery
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`is needed regarding damages, and after discovery is completed, the case should proceed to trial.
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`Dkt. No. 746 at 3. Defendant Activision Blizzard Inc. (“Activision”) argues that the case should
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`be dismissed because Acceleration lacks an admissible damages theory and has therefore waived
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`the right to a reasonable royalty. Dkt. No. 750 at 9. Acceleration’s request for additional discovery
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`is DENIED. Activision’s request to dismiss the action is also DENIED.
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`I.
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`Background
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`This case was originally assigned to Judge Andrews. After substantial pretrial proceedings,
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`he stayed the case pending the Federal Circuit’s disposition of the appeal in the related action of
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`Acceleration Bay LLC v. 2K Sports, Inc., No. 16-455 (D. Del.) (“Take-Two”). Following the
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`Federal Circuit’s issuance of its opinion in Take-Two, Judge Andrews lifted the stay and granted
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`in part the motion for summary judgment that Activision filed in light of the Federal Circuit’s
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`decision. Dkt. No. 743.
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`1
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 2 of 18 PageID #: 54677
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`Prior to the appeal in the Take-Two case, Acceleration made multiple unsuccessful proffers
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`of expert testimony on the issue of damages in this case. In August 2018, Judge Andrews struck
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`a portion of the reasonable royalty opinion of Dr. Christine Meyer, a damages expert retained by
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`Acceleration. Dkt. No. 578. Dr. Meyer’s opinion relied on a jury verdict from another case. Id.
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`at 27–28. Because Judge Andrews viewed the exclusion of Dr. Meyer’s opinion as significantly
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`hindering Acceleration’s ability to put on an acceptable damages case, he requested additional
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`briefing from the parties regarding whether Acceleration had any remaining admissible damages
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`theories. Dkt. No. 619 at 1. That briefing was completed in October 2018, just five days prior to
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`the scheduled trial. Judge Andrews then continued the trial because he determined that “it would
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`not be possible to reach a decision on [Acceleration’s] damages case prior to the scheduled start
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`of trial.” Id. at 2.
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`In his order continuing the trial, Judge Andrews stated that he would give Acceleration “a
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`final opportunity to present [the court] with an admissible damages case,” and that Acceleration
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`could “supplement its expert reports if it wishe[d] to do so.” Id. Judge Andrews further instructed
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`Acceleration that after all supplementation and expert discovery was completed, Acceleration
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`would be required to provide the court with “a proffer of the case it intends to submit to the jury
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`on damages.” Id. That proffer, he explained, needed to consist of “a fulsome explanation of all of
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`Plaintiff’s damages theories, all the evidence it plans to put on in support of those theories, and
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`citations to Federal Circuit precedent supporting its admissibility and sufficiency.” Id. at 2–3.
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`Acceleration then requested that it be permitted to submit a report from a new damages expert,
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`Russell Parr. Judge Andrews granted that request. Dkt. No. 630.
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`Acceleration filed its damages proffer on February 15, 2019. Dkt. No. 641. That proffer
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`outlined three approaches to the reasonable royalty analysis offered by Mr. Parr: a “cost-saving”
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`2
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 3 of 18 PageID #: 54678
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`approach, id. at 4–14; a “revenue-based” approach, id. at 15–20; and a “user-based” approach, id.
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`at 21. The proffer also pointed to other documentary and testimonial evidence, as well as expert
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`opinions that, according to Acceleration Bay, provided additional support for Mr. Parr’s reasonable
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`royalty analysis. Id. at 22–26.
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`With respect to the cost-saving approach, each of Mr. Parr’s damages theories under that
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`approach relied on the expert opinion of Dr. Ricardo Valerdi, who offered opinions on “the cost
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`of rearchitecting each of the Accused Products in this case in order to develop a new networking
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`platform for each of the accused [video] games.” Dkt. No. 692 at 5–6 (quoting Dkt. No. 444-1,
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`Exh. C-2, at 1). Judge Andrews excluded Dr. Valerdi’s opinion because it provided “no basis in
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`fact to conclude that the creation of the infringing network saved Defendant any money over a
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`theoretical alternative.” Id. at 7. He also excluded Mr. Parr’s testimony regarding the cost-saving
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`approach because his testimony relating to that approach “depend[ed] entirely on Dr. Valerdi’s
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`opinion.” Id.
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`With respect to the revenue-based approach, Mr. Parr’s theory depended on two inputs:
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`the “Boeing/Panthesis license” and internal customer surveys conducted by Activision. The
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`Boeing/Panthesis license is a July 2002 agreement between Boeing Management Company
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`(“Boeing”) and Panthesis Inc. that granted Panthesis an exclusive license to the asserted patents in
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`this case and other intellectual property, along with the right to sublicense.1 Id. at 11–12; Dkt. No.
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`756-1 at 4.2 In return, Panthesis agreed to provide Boeing with five percent of Panthesis’s stock,
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`$5.6 million paid over time, and 12 percent of future revenue from the licensed products. Dkt. No.
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`1 Boeing was the assignee of the asserted patents until December 10, 2014. Dkt. No. 642-
`1, Exh. A ¶ 19. Accordingly, the hypothetical negotiation in this case, which Acceleration argues
`would have taken place in September 2012, is treated as if it were conducted between Boeing and
`Activision. Dkt. No. 749 at 1.
`2 All citations to Dkt. No. 756-1 refer to the page number of the PDF document.
`3
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 4 of 18 PageID #: 54679
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`692 at 11; Dkt. No. 756-1 at 16–17. Mr. Parr adopted the 12 percent figure from the
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`Boeing/Panthesis license as the royalty rate for his revenue-based approach to determining a
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`reasonable royalty. Dkt. No. 641 at 16. The royalty base in Mr. Parr’s analysis was the “world-
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`wide revenues for the [accused] games.” Dkt. No. 641 at 16.
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`Mr. Parr attempted to further apportion the revenues using Activision’s internal surveys
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`regarding the accused video games. Specifically, Mr. Parr relied on survey data indicating that
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`“57 to 62 percent” of purchasers of Call of Duty: Black Ops III, one of the accused games,
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`purchased the game “because of the infringing multiplayer modes.” Id. at 19. Because that
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`percentage was the lowest among the accused games, Mr. Parr took what he described as a “very
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`conservative approach” and further apportioned the revenues for all the accused games by 57
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`percent. Id. at 19–20. What resulted was a measure of damages that multiplied the total revenues
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`by the 12 percent royalty rate from the Boeing/Panthesis license, then multiplied that product by
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`57 percent based on the Activision survey information. Id. at 20.
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`Judge Andrews excluded Mr. Parr’s revenue-based approach for failure to apportion
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`adequately. In particular, Judge Andrews explained that the Activision surveys did not “attempt
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`to discern what portion of a gamer’s decision to buy the game is driven by the multiplayer
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`functionality versus all of the other unpatented features.” Dkt. No. 692 at 9. Judge Andrews also
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`rejected Acceleration’s suggestion—raised in two sentences in Acceleration’s brief relating to the
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`damages proffer—that the Boeing/Panthesis license could provide “built-in apportionment” for
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`the revenue-based approach. Id. at 10. The court observed that Mr. Parr “d[id] not even mention
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`the Boeing/Panthesis License in the apportionment section of his expert opinion,” and that “Mr.
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`Parr’s apportionment opinion cannot survive on an opinion that he d[id] not express.” Id. Because
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`the Boeing/Panthesis license was a license to the patents-in-suit, Judge Andrews found that the
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`4
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 5 of 18 PageID #: 54680
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`license was sufficiently technically comparable to the hypothetical license that would be applicable
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`to a reasonable royalty calculation in this case. Moreover, although Judge Andrews noted that
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`there were differences between the Boeing/Panthesis license and the hypothetical license in this
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`case, he rejected Activision’s argument that the Boeing/Panthesis license is not economically
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`comparable to the hypothetical license. Id. at 12–13. He also ruled that Mr. Parr’s reliance on that
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`license did not itself provide a basis for excluding Mr. Parr’s opinions at trial. Id.
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`With respect to the user-based approach, Mr. Parr again relied on the Boeing/Panthesis
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`license and the Activision customer surveys. Mr. Parr determined that the average price of the
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`accused games was $57, then multiplied that number by the 12 percent royalty rate from the
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`Boeing/Panthesis license and the 57 percent apportionment factor he derived from the surveys.
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`Dkt. No. 641 at 21. That figure, which represented a “per-user royalty,” was then multiplied by
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`the number of users of the infringing games. Id. Judge Andrews excluded that approach for the
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`same reason that he excluded the revenue-based approach: because the user-based approach did
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`not properly apportion the value of the patented features. Dkt. No. 692 at 9.
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`Having excluded Mr. Parr’s cost-based, revenue-based, and user-based approaches, Judge
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`Andrews recognized that his decision left Acceleration “with no intact damages theories.” Id. at
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`5; see also id. at 7 (“As this was Plaintiff’s final opportunity to present a damages case, Plaintiff
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`will not have the opportunity to submit revised expert reports . . . .”).
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`Undeterred, Acceleration notified the court a week later that it intended to “present a fact-
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`based damages case based on the already developed fact record and evidence with expert support.”
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`Dkt. No. 694 at 1. Specifically, Acceleration proposed that Mr. Parr would testify regarding (1)
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`the Georgia-Pacific factors; (2) “the Boeing/Panthesis license as comparable to the hypothetical
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`negotiation in this case”; and (3) financial information regarding the accused games. Id.
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`5
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 6 of 18 PageID #: 54681
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`Acceleration also proposed to introduce “factual evidence to establish the appropriate
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`apportionment to the footprint of the inventions.” Id. at 1–2. In response to that proposal, Judge
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`Andrews ordered Acceleration to “submit a document explaining how its proposed damages
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`testimony . . . complies with the previous order of the Court (D.I. 619) and, in any event, proffer
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`the factual evidence [it will introduce] to establish the appropriate apportionment to the footprint
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`of the inventions.” Dkt. No. 699. Acceleration filed that document on October 18, 2019. Dkt.
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`No. 700. The case was stayed pending the appeal in Take-Two before the court ruled on
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`Acceleration’s latest damages submission. Dkt. No. 711. The stay has now been lifted and the
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`case has been reassigned to me.
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`On November 16, 2022, I ordered further briefing from the parties on the issue of damages,
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`with the briefing to address the following questions: “(1) whether Acceleration Bay's damages
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`proffer at Dkt. No. 700 is consistent with the prior orders of the court; (2) whether testimony from
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`a lay witness may be used to demonstrate apportionment; (3) the extent to which intervening events
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`since October 2019 may affect the substance of Acceleration Bay's damages theories; and (4) how
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`resolution of those issues would affect further proceedings in this case.” Dkt. No. 747. The parties
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`filed simultaneous opening and responsive briefs regarding damages. Dkt Nos. 748–49, 752–53.
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`On January 18, 2023, I entered an order requesting more information from Acceleration regarding
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`its proposed damages evidence. Dkt. No. 754. Acceleration filed a response to that order, Dkt.
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`No. 756, and Activision filed a statement regarding Acceleration’s response, Dkt. No. 758. On
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`March 20, 2023, I conducted a telephonic hearing to further explore the damages issue.
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`6
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 7 of 18 PageID #: 54682
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`II.
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`Discussion
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`A. Waiver of Reasonable Royalty
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`The primary issue before the court is whether Acceleration may be permitted to rely on its
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`proposed fact-based damages theory at trial. Activision contends that Judge Andrews gave
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`Acceleration a final opportunity to present an admissible damages theory. Having failed to do so,
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`Activision argues, Acceleration has waived the right to a reasonable royalty. Acceleration
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`responds that its current proposed damages theory is consistent with the prior orders of the court
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`and that it must be allowed to present a damages case because, in the event of a finding of
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`infringement, the court is required by statute to award damages in an amount no less than a
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`reasonable royalty. 35 U.S.C. § 284.
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`Cognizant of that statutory directive, the Federal Circuit has held that “reasonable royalty
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`damages can be awarded even without [expert] testimony” in an amount that “the record evidence
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`will support.” Dow Chem. Co. v. Mee Indus., Inc., 341 F.3d 1370, 1381–82 (Fed. Cir. 2003). The
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`Federal Circuit applied that principle in Apple Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir.
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`2014). The district court in that case excluded the bulk of the parties’ expert testimony on
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`damages; based on that ruling, the district court granted summary judgment that neither party was
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`entitled to any damages. Apple, 757 F.3d at 1326. The Federal Circuit reversed, explaining that
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`“[i]f a patentee's evidence fails to support its specific royalty estimate, the fact finder is still
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`required to determine what royalty is supported by the record.” Id. at 1327. The circuit court
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`stated that a district court “may only award a zero royalty for infringement if there is no genuine
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`issue of material fact that zero is the only reasonable royalty.” Id. at 1328. Such a factual issue
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`can be presented, the court added, even if the patentee “fails to show that its royalty estimate is
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`correct.” Id.; see also Info-Hold, Inc. v. Muzak LLC, 783 F.3d 1365, 1371–72 (Fed. Cir. 2015).
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`7
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 8 of 18 PageID #: 54683
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`Numerous district courts have similarly recognized that even in the absence of expert
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`testimony on the issue of damages the court may not award zero damages unless there is no genuine
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`factual dispute that zero is the only reasonable royalty. See, e.g., Microsource, LLC v. Eco World
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`Grp., LLC, 587 F. Supp. 3d 770, 829 (N.D. Iowa 2022); Vaporstream, Inc. v. Snap Inc., No. 2:17-
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`cv-220, 2020 WL 978731, at *5–7 (C.D. Cal. Feb. 28, 2020); Banhazl v. Am. Ceramic Soc’y, 602
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`F. Supp. 3d 198, 229 n.8 (D. Mass. 2022); SiOnyx, LLC v. Hamamatsu Photonics K.K., 330 F.
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`Supp. 3d 574, 598 (D. Mass. 2018); Twin Rivers Eng’g, Inc. v. Fieldpiece Instruments, Inc., No.
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`2:16-cv-4502, 2018 WL 6038277, at *21 (C.D. Cal. Apr. 24, 2018); Mondis Tech. Ltd. v. LG
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`Elecs., Inc., No. 15-4431, 2020 WL 1933979, at *3–5 (D.N.J. Apr. 22, 2020); Thorne Rsch., Inc.
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`v. Xymogen, No. 2:13-cv-784, 2018 WL 1136079, at *2–4 (D. Utah Feb. 28, 2018); Acceleron,
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`LLC v. Dell Inc., No. 1:12-cv-4123, 2022 WL 1087683, at *9 (N.D. Ga. Mar. 7, 2022); RSA
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`Protective Techs., LLC v. Delta Sci. Corp., No. 19-6024, 2021 WL 4978462, at *5–6 (C.D. Cal.
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`Oct. 20, 2021).
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`I am not prepared to conclude in this case that it is clear as a factual matter that Acceleration
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`is entitled to no damages. Although Judge Andrews excluded Mr. Parr’s reasonable royalty
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`opinions based on the Boeing/Panthesis license because Mr. Parr did not conduct a proper
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`apportionment analysis, the existence of the Boeing/Panthesis license is strong evidence that a
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`reasonable royalty for infringement of the asserted patents is some amount greater than zero. And
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`Activision has not provided any evidence in support of the proposition that a reasonable royalty
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`for the asserted patents would be zero.3 See Microsource, 587 F. Supp. 3d at 829 (“The moving
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`party itself must provide evidence and argument to support a zero royalty.”).
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`3 In its most recent submission on the damages issue, Activision mentions the existence of
`another license to the asserted patents, “a 2006 arms-length license agreement to the asserted
`patents between Boeing and Sony.” Dkt. No. 758 at 13 n.2. The existence of that agreement
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 9 of 18 PageID #: 54684
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`To be sure, the Federal Circuit has explained that a patentee may waive its right to a
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`reasonable royalty in certain circumstances. Promega Corp. v. Life Techs. Corp., 875 F.3d 651,
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`666 (Fed. Cir. 2017) (A patentee may waive the right to a reasonable royalty “when it deliberately
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`abandons valid theories of recovery in a singular pursuit of an ultimately invalid damages
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`theory.”); see also Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1312 (Fed. Cir. 2018)
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`(remanding for a determination of “whether [the plaintiff] has waived the right to establish
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`reasonable royalty damages under a new theory”). The Promega and Finjan cases, however, are
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`not analogous to this case.
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`In Promega, the patentee presented evidence at trial regarding the worldwide sales of the
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`accused products, and the jury awarded damages based on the worldwide sales figures. Promega,
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`875 F.3d at 655–57. After the trial, the defendant moved for judgment as a matter of law. The
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`court granted that motion, holding that no reasonable jury could have found “that all of the
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`[worldwide] accused products infringed.” Id. at 657. Because the patentee did not dispute the
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`defendant’s “separate argument that [the patentee] presented insufficient evidence to support a
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`lesser damages award,” the district court concluded that the patentee had “waived any argument
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`that the evidence at trial could support a damages calculation based on any subset of total sales.”
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`Id. at 657–58. Thus, the patentee explicitly abandoned the theory that a lesser damages award
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`could be supported by the evidence at trial. The Federal Circuit recognized that point and held
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`that when a patentee, after having its damages theory challenged, “does not dispute that it failed
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`to present an alternative case for damages, a district court does not abuse its discretion by declining
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`to give that plaintiff multiple chances to correct deficiencies in its arguments or the record.” Id. at
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`provides further support for the proposition that Acceleration would be entitled to a reasonable
`royalty in an amount greater than zero.
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`9
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 10 of 18 PageID #: 54685
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`666. In this case, although Acceleration’s damages theories have been excluded on multiple
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`occasions, Acceleration has never conceded that it lacks an alternative case for damages, nor has
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`it expressly waived any damages theory in response to a challenge from Activision.
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`In Finjan, neither the Federal Circuit nor the district court determined whether the patentee
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`had waived its right to a reasonable royalty. Rather, the court of appeals held that the evidence
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`presented at trial was insufficient to support the jury’s damages award. Finjan, 879 F.3d at 1312.
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`The court recognized that “the district court must award damages in an amount no less than a
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`reasonable royalty . . . unless the patent holder has waived the right to damages based on alternate
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`theories.” Id. (citing Promega, 875 F.3d at 666). The court then remanded the case to the district
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`court to determine whether such a waiver had occurred or whether to order a new trial on damages.
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`Id. The district court never had to make that determination, as the parties agreed to dismiss the
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`case following the issuance of the Federal Circuit’s opinion. See Finjan, Inc. v. Blue Coat Sys.,
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`No. 5:13-cv-3999, Dkt. No. 595 (N.D. Cal. Mar. 5, 2018).
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`In view of the unique circumstances present in the Promega case and the absence of an
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`actual waiver determination in Finjan, I am not persuaded that Acceleration’s failure to introduce
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`admissible expert testimony on the issue of damages is sufficient to effect a waiver of
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`Acceleration’s right to a reasonable royalty. A more appropriate conclusion, in view of Judge
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`Andrews’ prior orders, is that Acceleration has waived the right to present an expert opinion
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`regarding the reasonable royalty to be awarded in this case. Judge Andrews’ most recent order on
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`this issue strongly suggests that the “final opportunity” provided to Acceleration to present a
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`damages case was meant to provide Acceleration a final opportunity to present an admissible
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`expert opinion regarding a reasonable royalty. See Dkt. No. 619 at 2; Dkt. No. 692 at 7 (“As this
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`was Plaintiff’s final opportunity to present a damages case, Plaintiff will not have an opportunity
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`10
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 11 of 18 PageID #: 54686
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`to submit revised expert reports . . . .”). As noted, however, the absence of an expert opinion
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`regarding a reasonable royalty amount is not itself a sufficient basis to award no damages in the
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`event of a finding of infringement.
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`The remaining question is what evidence Acceleration will be permitted to introduce at
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`trial regarding damages. Acceleration has indicated that it intends to present the following
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`evidence on the issue of damages:
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`• Factual testimony from Fred Holt, the inventor and founder of Panthesis, regarding the
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`negotiation of the Boeing/Panthesis license, Dkt. No. 756 at 2;
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`• Testimony from Acceleration’s experts, including “technical opinions regarding the
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`benefits of the patented technology to the accused products” and “a tutorial on the
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`technology at issue and the problems it addresses,” id. at 3;
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`• Factual testimony from the inventors about “how they intended to use the technology
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`under the Boeing/Panthesis license,” id.;
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`• Testimony from Mr. Parr regarding “the key terms and economic comparability of the
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`Boeing/Panthesis license, including his general application of the Georgia-Pacific
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`factors, and both qualitative and quantitative assessments of the extent of the use of the
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`infringing technology by the accused products,” id. at 4; and
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`• Documents and testimony from Activision’s witnesses “regarding the extent of use and
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`importance of the infringing multiplayer functionality, including Activision’s survey
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`evidence,” id.
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`Activision opposes Acceleration’s proposal to rely on those items of evidence on two
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`grounds. First, Activision argues that the evidence on which Acceleration seeks to rely is not
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 12 of 18 PageID #: 54687
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`legally sufficient to support a reasonable royalty award. Second, Activision argues that
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`Acceleration’s proposal fails to comply with the prior orders of the court.
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`1. Apportionment
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`With respect to Activision’s first point, I agree that the jury’s damages award must satisfy
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`the typical requirements for apportionment that have been set forth by the Federal Circuit. That
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`court has made clear that the reasonable royalty award in each case must be carefully tied “to the
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`claimed invention’s footprint in the market place.” ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d
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`860, 869 (Fed. Cir. 2010). That is, when the accused product is a multi-component product, the
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`patentee “must apportion or separate the damages between the patented improvement and the
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`conventional components of the multi[-]component product.” Exmark Mfg. Co. Inc. v. Briggs &
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`Stratton Power Prod. Grp., LLC, 879 F.3d 1332, 1338 (Fed. Cir. 2018). In the context of this case,
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`those rules mean that the reasonable royalty awarded to Acceleration, if infringement is found,
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`must compensate Acceleration for only the value that the patented invention adds to the accused
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`video games, and not any other features associated with those games. See Ericsson, Inc. v. D-Link
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`Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014) (“The essential requirement is that the ultimate
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`reasonable royalty award must be based on the incremental value that the patented invention adds
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`to the end product.”).
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`Acceleration Bay asserts that its factual evidence will satisfy the legal requirements for
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`apportionment because the Boeing/Panthesis license contains “built-in apportionment.” Dkt. No.
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`756 at 2. To the contrary, I conclude as a matter of law that the Boeing/Panthesis license does not
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`provide built-in apportionment. In order for a license to provide built-in apportionment, it must
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`be “highly comparable . . . such that principles of apportionment are effectively baked into the
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`license.” IOENGINE, LLC v. PayPal Holdings, Inc., No. 18-452, 2022 WL 2800861, at *23 (D.
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`12
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 13 of 18 PageID #: 54688
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`Del. June 15, 2022) (cleaned up). That is, the license must “plainly reflect[] the value that the
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`contracting parties settled on for the patent.” Pavo Sols. LLC v. Kingston Tech. Co., Inc., 35 F.4th
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`1367, 1380 (Fed. Cir. 2022).
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`Although it is true that the Boeing/Panthesis agreement contained a license to the asserted
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`patents in this case, it differed from the license that would result from a hypothetical negotiation
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`between Boeing and Activision in several respects. First, the Boeing/Panthesis license also
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`contained licenses to other forms of intellectual property, including copyrights, trade secrets, and
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`trademarks. See Dkt. No. 756-1 at 6–7. Second, the Boeing/Panthesis license was broader than
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`the license that would be the subject of the hypothetical negotiation in this case because, as
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`Acceleration acknowledged, it was an exclusive license, and it included the right to sublicense.4
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`Dkt. No. 641 at 10. Finally, the Boeing/Panthesis license contained significant consideration
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`beyond the 12 percent royalty rate; it also required Panthesis to pay a flat $5.6 million fee to Boeing
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`and to grant 5% of Panthesis’ stock to Boeing. Dkt. No. 756-1 at 16–17. Thus, it is evident that
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`the 12 percent royalty rate does not “plainly reflect[]” the value that Boeing and Panthesis placed
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`on a non-exclusive license to the asserted patents in particular. See Pavo Sols., 35 F.4th at 1380.
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`That conclusion is reinforced by the fact that Acceleration’s current proposed damages
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`theory would result in a higher damages award than Mr. Parr’s revenue-based approach that was
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`described in Acceleration’s February 2019 proffer and ultimately excluded by the court. In fact,
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`the two theories are essentially the same, except that the current proposed theory does not apply
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`the 57 percent apportionment rate that Mr. Parr derived from Activision’s consumer surveys. Mr.
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`Parr’s decision to further apportion the 12 percent royalty rate applied to the total revenues from
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`4 Mr. Parr acknowledged that the exclusive nature of the Boeing/Panthesis license
`distinguished it from the non-exclusive license that would have been the product of the
`hypothetical negotiation in this case. Dkt. No. 642-1, Exh. A ¶¶ 110–11.
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`Case 1:16-cv-00453-WCB Document 767 Filed 03/28/23 Page 14 of 18 PageID #: 54689
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`the accused games indicates that Mr. Parr (and Acceleration) believed that the Boeing/Panthesis
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`license required further apportionment. If Mr. Parr and Acceleration had believed that the
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`Boeing/Panthesis license provided built-in apportionment, presumably they would have offered
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`that theory instead of a theory that resulted in a damages award that was 43 percent lower than
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`Acceleration’s current proposal.
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`For those reasons, I conclude that the Boeing/Panthesis license does not contain built-in
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`apportionment. Thus, any damages award that reflects the 12 percent royalty rate from that license
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`without any additional apportionment is highly unlikely to be supported by the record evidence.
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`Because the Boeing/Panthesis license does not contain built-in apportionment, it is difficult
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`to predict exactly what level of apportionment might be established by the evidence that
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`Acceleration seeks to introduce at trial. However, that lack of clarity is insufficient to justify an
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`award of no damages at this stage of the case, as the evidence strongly suggests that Acceleration
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`would be entitled to some non-zero amount of damages in the event of an infringement finding. It
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`is true that the jury may not ultimately arrive at an award that is supported by the record, but it is
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`“entirely speculative” to reach that conclusion before the trial has even begun and to foreclose
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`Acceleration from even attempting to present a persuasive damages case. See Vaporstream, 2020
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`WL 978731, at *7. In the event that an award of damages by the jury is not supported by the record
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`evidence, the court can resolve that issue after the close of the evidence or after the verdict, if
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`necessary. And if the court concludes that Acceleration has failed to present a legally sufficient
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`damages case, it will be entitled, at least, to nominal damages. See AOS Holding Co. v. Bradford
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`White Corp., No. 18-412, 2021 WL 5411103, at *38 (D. Del. Mar. 31, 2021), aff’d sub nom. A.O.
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`Smith Corp. v. Bradford White Corp., No. 2021-2022, 2022 WL 3053891 (Fed. Cir. Aug. 3, 2022).
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`2.
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`Prior Orders of the Court
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`With respect to Activision’s second point, it is true that Judge Andrews required
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`Acceleration to submit a “fulsome explanation” of the evidence on which it would seek to rely.
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`Dkt. No. 619 at 2. However, Acceleration’s submission in response to that directive did mention,
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`at least in general terms, the factual evidence on which it now seeks to rely. See Dkt. No. 641 at
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`23–26. To clarify the precise nature of the evidence that Acceleration will introduce, I discussed
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`this issue during a teleconference with the parties.
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`As for Mr. Parr’s testimony, Acceleration is correct that Judge Andrews did not exclude
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`his testimony in its entirety. For example, Judge Andrews did not exclude Mr. Parr’s testimony
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`on the ground that the Boeing/Panthesis license was not at least minimally comparable to the
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`hypothetical negotiation in this case. Dkt. No. 692 at 11–13. And there is no indication that Judge
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`Andrews excluded other aspects of Mr. Parr’s testimony, such as his general framing of the
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`hypothetical negotiation and the Georgia-Pacific factors. To the extent Mr. Parr seeks to offer
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`testimony that is within the scope of his report and has not been excluded, he will be permitted to
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`do so. See Vaporstream, 2020 WL 978731, at *5 (excluding the royalty rate opinion and “final
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`reasonable royalty calculation” of the plaintiff’s expert but explaining that “[b]ecause the Court
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`did not exclude all of [the expert’s] opinions, [the plaintiff] may present a damages case at trial
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`containing [the expert’s] remaining opinions, such as his analysis of the Georgia-Pacific factors
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`and his analysis of the apportioned reasonable royalty base”). Regarding the other expert
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`testimony that Acceleration seeks to introduce, those experts will of course not be permitted to
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`offer testimony that is outside the scope of their respective reports.
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`To be clear, Acceleration will not be permitted to rely on damages theories that have
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`already been excluded by the court. For example, Acceleration will not be permitted to rely on
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`Activision’s consumer survey evidence, which Judge Andrews held was not sufficient to
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`demonstrate apportionment. Dkt. No. 692 at 8–9. Nor will Acceleration’s counsel be permitted
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`to argue that the jury should adopt a reasonable royalty based on t