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Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 1 of 14 PageID #: 21868
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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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` C.A. No. 16-454 (RGA)
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` C.A. No. 16-455 (RGA)
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`ACCELERATION BAY LLC.
`
` Plaintiff,
`
`v.
`
`ACTIVISION BLIZZARD, INC.,
`
` Defendant.
`
`ACCELERATION BAY LLC,
`
` Plaintiff,
`
`v.
`
`ELECTRONIC ARTS INC.,
`
` Defendant.
`
`ACCELERATION BAY LLC,
`
` Plaintiff.
`
`v.
`
`TAKE-TWO INTERACTIVE
`SOFTWARE, INC., ROCKSTAR GAMES,
`INC. and 2K SPORTS, INC.,
`
` Defendants.
`
`
`
`SPECIAL MASTER ORDER NO. 12
`
`
`On October 20, 2017, the parties filed their various motions, as described below. The
`
`parties’ briefs and papers responsive to the motions were filed on October 30, 2017. On
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`RD 10439320v.1
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 2 of 14 PageID #: 21869
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`November 2, 2017, a Hearing was held in Wilmington with telephonic participation by out of
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`town counsel to address all of the motions filed on October 20, 2017.
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`I will first identify Defendants’ motions and their arguments as well as the Plaintiff’s
`
`responses. A ruling on each motion will follow.
`
`Thereafter, in this Order, I will describe Plaintiff’s motions, its arguments and the
`
`responses from Defendants to those arguments. A ruling on the Plaintiff’s motions will follow.
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`Time constraints prevent the Special Master from fully setting forth all of his reasons for
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`the following Order. The Hearing was scheduled so that a ruling could be issued prior to
`
`Defendants’ responsive expert reports, which are due in approximately a week following the
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`Hearing. The Special Master rejected Plaintiff’s request to postpone the Hearing until after
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`responsive reports were due, because of the significance of the renewed motions for sanctions
`
`and to strike Plaintiff’s infringement reports.
`
`* * *
`
`Activision’s Renewed Motion for Sanctions and Motion to Strike Acceleration Bay’s
`Infringement Reports.
`
`Activision’s motion is based upon its conclusion that Plaintiff’s expert reports contain
`
`infringement contentions that had not previously been disclosed, allegedly in violation of prior
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`orders of the Special Master. Activision cites Special Master Order No. 3, which was adopted in
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`part by the Court, and Special Master Order No. 6. Activision claims that it has been
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`“ambushed” by Plaintiff because Plaintiff’s expert reports identify many new source code
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`modulars not previously identified in Plaintiff’s infringement contentions. In addition,
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`Activision states that Plaintiff’s expert reports include 9 new infringement arguments that had
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`not been disclosed in any of Plaintiff’s infringement contentions. Activision further contends
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`that Plaintiff’s expert reports contain unexplained source code citations and cross references that
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`RD 10439320v.1
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 3 of 14 PageID #: 21870
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`are in violation of Plaintiff’s disclosure obligations. Referring to exhibits, Activision contends
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`that the expert reports contain hundreds of source code citations that are not tied to any analysis.
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`The reports also allegedly contain unexplained cross references.
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`In Activision’s view, the Plaintiff is engaged in a tactic to obfuscate or hide by its source
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`code citations and cross references. The summary provided by the experts do not address
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`specific patents or claims, so that, in the opinion of Activision, there is not an informative
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`summary as required under Special Master Order No. 9. Activision cites its own expert’s report
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`on invalidity by comparison, to show that an expert should identify the specific code by pincite
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`to the actual lines of code, quotation and parenthetical explanation, so as to explain how the code
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`functions. By contrast, according to Activision, Plaintiff’s expert report have no such clarity or
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`explanation. Activision makes the interesting argument that Plaintiff’s expert report should be as
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`intelligible and clear as the expert is likely to be in testifying before the jury at trial.
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`Plaintiff responds in a thorough and complete manner, with a 30-page brief and hundreds
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`of pages of helpful exhibits. The core of Plaintiff’s argument is that its infringement contentions
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`fully support its expert reports and that the law does not justify any exclusion of its expert report
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`under the facts and circumstances in this litigation. Plaintiff writes that experts may cite to
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`additional supporting evidence, such as specific source code, beyond that identified in
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`interrogatory responses and contentions.
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`Plaintiff points to a number of errors in Activision’s brief regarding claims that Plaintiff’s
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`expert reports include nine new infringement theories. As an example, Plaintiff refers to
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`Activision’s assertion that the “use of an overlay network to connect the participants were not
`
`disclosed in Acceleration’s Interrogatory Responses.” Plaintiff cites to its June 19, 2017
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`supplemental responses to Interrogatories 7 and 9, in rebuttal. Another example, according to
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`RD 10439320v.1
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 4 of 14 PageID #: 21871
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`Plaintiff, is Activision’s assertion that Acceleration did not cite any source code in its
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`infringement contentions for Destiny. In its brief, Plaintiff points to its August 25, 2017 filing
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`for Destiny of two infringement claim charts. Contrary to Activision’s claim that Plaintiff’s
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`reports did not contain an “informative summary” of the expert’s opinions, Plaintiff’s reports did
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`have a 3-page summary, identifying the asserted claims, the accused products and summarizing
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`opinions including the participant’s connections and why the network is incomplete and m-
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`regular.
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`The Special Master has been through the parties’ exhibits to their briefs to evaluate
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`Activision’s argument that Plaintiff’s experts are presenting new infringement theories. To some
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`extent, Plaintiff’s experts are providing additional support and additional source code citations,
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`but they are in support of broad theories disclosed in its infringement contentions. It doesn’t
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`appear that Plaintiff’s reports contain entirely new theories regarding the participants in the
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`networks, why the networks are m-regular or why the networks are incomplete. Thus it is
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`difficult for Activision to sustain its burden with regard to Plaintiff’s expert reports presenting
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`new theories.
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`Activision complains that Plaintiff’s expert reports use cross referencing, in an
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`inappropriate manner. In response, Plaintiff contends that its experts’ cross referencing avoids
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`repeating materials for the same claim elements and is necessary because of the page limitations
`
`imposed on the expert reports. It is hard to fault with the expert’s use of cross referencing, in
`
`light of the number of games, extensive source code and over 100 elements involved in the
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`various patents at issue in this litigation.
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`RD 10439320v.1
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`4
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 5 of 14 PageID #: 21872
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`The law imposes a heavy burden of persuasion on the party that seeks to exclude or strike
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`significant portions of the opposing party’s expert report. Cases in this Court, the Third Circuit1,
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`and in other Federal Courts all resist excluding expert reports, absent a showing of bad faith or
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`other deceptive conduct that puts the moving party under extreme prejudice if exclusion is not
`
`granted. The law anticipates that patent litigation is conducted in a number of stages, with
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`consequential conduct at each stage. Early in patent litigation, the plaintiff is under an obligation
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`to disclose its infringement contentions, so that discovery can be taken by the opposing party
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`before expert reports are due. Activision properly points to a number of this Special Master’s
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`prior orders for Plaintiff to supplement its infringement contentions. A review of Plaintiff’s
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`supplemental responses as to its contentions in the last several months indicates that the Plaintiff
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`has attempted to supplement its contentions. As Plaintiff points out in its brief on this Motion,
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`some of the fact discovery, including even some source code access to Plaintiff, was not
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`available to Plaintiff until after the date for fact discovery cut-off. The Special Master wishes
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`that Plaintiff’s interrogatory responses, as to its contentions, would have been more complete at
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`an earlier stage in this litigation, but there is not convincing evidence of any bad faith by
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`Plaintiff.
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`As the Special Master indicated in certain prior Orders in this litigation, consideration of
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`the sanctions or any penalty imposed upon Plaintiff with regard to its alleged failure to timely
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`disclose its infringement contentions was postponed until after Plaintiff provided its expert
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`reports. The Special Master has thoroughly reviewed all of the Plaintiff’s filings, and in
`
`particular its expert reports and Activision’s arguments with regard to them. While the
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`Plaintiff’s expert reports could have been more clearly written, it does not appear that they are
`
`
`1 Meyers v. Pennypack Woods Home Ownership Ass’n, 559 F.2d 894 (3rd Cir. 1977).
`5
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`RD 10439320v.1
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 6 of 14 PageID #: 21873
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`strikingly different from Plaintiff’s infringement contentions. It is reasonable for expert reports
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`to expand on, or amplify infringement contentions in reaching the expert’s conclusions.
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`The Special Master notes that much discovery was conducted within a couple of months
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`before the fact discovery cut-off date and for another month after that date. Neither party is to be
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`faulted for this, but it resulted in some additional source code production and in Plaintiff’s
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`supplemental infringement contentions as late as August 25, 2017. Furthermore, the Special
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`Master understands that there will be discovery as to the expert reports and an opportunity for the
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`parties to fully explore the expert’s opinions and the bases therefore. All these factors lessen the
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`possibility of prejudice to Activision.
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`ORDER: The Motion is DENIED.
`
`* * *
`
`Activision’s Renewed Motion for Sanctions and Motion to Strike the Damages Opinion of
`Christine S. Meyer, Ph.D.
`
`Activision’s motion actually contains several motions, but all portions deal with
`
`Plaintiff’s damages theories and expert report. Like Activision’s above motion to strike
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`Plaintiff’s expert reports on infringement, here too Activision contends that Plaintiff’s damage
`
`expert relies on new damage theories that were not disclosed in a timely manner. Activision
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`states that Plaintiff has discarded its damages theory disclosed in its interrogatory responses and
`
`instead has devised an entirely new damage theory based upon facts revealed for the first time in
`
`its expert report. Activision points to prior orders of the Special Master requiring the Plaintiff to
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`disclose its damage theories and precluding the Plaintiff from adding new products to its
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`damages case.
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`The crux of Activision’s argument is that Dr. Meyer did not rely on Plaintiff’s previously
`
`disclosed damage theory based upon a royalty of 15.5% of revenue. Instead Dr. Meyer based her
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`RD 10439320v.1
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`6
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 7 of 14 PageID #: 21874
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`damages on a $2.10 per unit royalty, which she calculates based on another expert’s testimony
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`and a jury verdict in another case. According to Activision, Dr. Meyer also has a number of new
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`theories or approaches to damages that Plaintiff never disclosed. Dr. Meyer allegedly calculates
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`damages based upon the present value of royalties expected from projected sales of “future
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`products”. Dr. Meyer allegedly states that damages would be the same regardless of the
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`hypothetical negotiation date. According to Activision this violates the Special Master Order
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`binding the Plaintiff to the date of service of the complaint as the hypothetical negotiation date.
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`In addition, Dr. Meyer through the expert report of Dr. Valerdi, offers an allegedly new theory
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`that the cost of re-writing the source code to avoid any potential infringement would be billions
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`of dollars. Finally, Activision complains that Plaintiff did not disclose that it would reply on
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`evidence information from the “Uniloc” cases.
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`Plaintiff vigorously responds based upon the discovery record prior to Dr. Meyer’s
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`damages report, and the relevant law regarding striking an expert’s report. Plaintiff points out
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`that in discovery and prior to Dr. Meyer’s report, Plaintiff disclosed that its damages claim
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`would be based upon a per user royalty through the expiration of the patents. A reasonable
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`royalty based upon the number of unique users for each of the accused products was disclosed in
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`discovery responses on June 2, 2017. In those same responses, Plaintiff stated that it would seek
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`additional damages “through the remaining lifetime of the patent.”
`
`Disclosure as to Plaintiff’s reliance on the Uniloc case is less clear, but satisfactory. This
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`past June, Plaintiff requested production of expert opinions relating to the determination of
`
`damages in the Uniloc cases. The Uniloc cases were clearly identified in Plaintiff’s brief in
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`July 5, 2017. In discovery responses thereafter, Plaintiff stated that it sought the Uniloc
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`RD 10439320v.1
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`7
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 8 of 14 PageID #: 21875
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`information for purposes of a “reasonable royalty analysis of damages”. Uniloc was also
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`disclosed during deposition questioning.
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`As to the hypothetical negotiation date, Plaintiff’s June 2, 2017 discovery responses
`
`stated that the hypothetical license negotiation date is “the date on which Defendant’s
`
`infringement began. Defendant’s infringement began in March of 2015.” Dr. Meyer based her
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`damage calculation on the hypothetical negotiation date of March 11, 2015.
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`Activision is concerned that the $2.10 per user rate for a reasonable royalty is
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`inconsistent with Plaintiff’s prior disclosure of a 15.5% royalty rate. However, in discovery
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`Plaintiff did state that the 15.5% royalty rate was only one theory of damages. It stated in its
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`June 2, 2017 discovery responses that it would seek damages based upon a “reasonable royalty
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`based on the number of unique users.” Thereafter, Plaintiff sought from Activision its Uniloc
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`cases with their expert damages opinion. Plaintiff states that any delay for the Uniloc disclosure
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`was a result of Activision’s resistance to its discovery request. In any event, the possible
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`prejudice to Activision is lessened by Dr. Meyer’s total damages being less than the amount that
`
`Plaintiff estimated for its damages in its discovery responses prior to Dr. Meyer’s report.
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`As with Activision’s Motion to Strike Plaintiff’s infringement expert reports, Activision
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`cannot meet its burden to compel striking Plaintiff’s damages expert report. The law recognizes
`
`that experts will elaborate on their opinions, particularly when calculating damages. The general
`
`theories and underlying information for calculating the damages claimed were disclosed to
`
`Activision late in the fact discovery in this litigation. However, Plaintiff is not entirely at fault
`
`for any such late disclosures. Both parties engaged in a significant amount of last minute
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`discovery, both before and after the fact discovery cut-off. It is extremely prejudicial to
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`Plaintiff’s ability to present its case if Dr. Meyer’s expert report were stricken. On the other
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`RD 10439320v.1
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 9 of 14 PageID #: 21876
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`hand, Activision has nearly two months before it needs to submit its damages reply report. The
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`Motion to Strike Plaintiff’s Damages Report is denied.
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`ORDER: The Motion is DENIED.
`
`* * *
`Plaintiff Acceleration Bay’s Motion to Strike
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`Plaintiff’s motion to strike will be treated as two motions, separately below:
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`1. Striking the deposition erratas of Patrick Griffith and Jason Argent; and
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`2. Striking various portions of the invalidity expert report of Dr. Karger.
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`Motion to Strike the Deposition Erratas of Patrick Griffith and Jason Argent
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`Plaintiff’s motion to strike the deposition erratas is based upon the time requirements to
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`file an errata and on the allegation that Defendants timed the filing of the erratas so as to
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`prejudice Plaintiff. As to timing, both erratas were late under Fed. R. Civ. Proc. 30(e). As to
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`the alleged prejudice to Plaintiff, Mr. Griffith’s errata reversed his deposition testimony
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`concerning the limit on the maximum number of players a relay can handle. Furthermore,
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`although Mr. Griffith’s signed his errata 9 days before Plaintiff served its opening infringement
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`report, Activision delayed filing that errata until after Plaintiff’s report was served. Similarly
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`with regard to Mr. Argent’s errata, Acceleration Bay served the errata on the day that
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`Acceleration Bay served its damages expert report. Mr. Argent’s errata reversed his testimony
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`relating to the number of unique users of the accused products and the number of sessions, which
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`relate to Plaintiff’s damages case.
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`Defendants’ response emphasizes the law and the context in which the erratas sheet were
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`made. As to the law, Defendants correctly observe that the courts, particularly the Third Circuit,
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`are reluctant to limit the filing of erratas, particularly where the errata supplements the
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`information or is necessary to put the evidence in context. Perhaps more significantly, the
`9
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`RD 10439320v.1
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 10 of 14 PageID #: 21877
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`“Pennypack” factors impose a heavy burden of the party seeking to strike erratas. A moving
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`party must show it sustains prejudice and show some degree of bad faith by the other party. That
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`showing has not been made by Plaintiff with respect to the erratas of Messrs. Griffith and
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`Argent.
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`Mr. Griffith’s errata purports to correct his deposition testimony that the source code has
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`a maximum limit for the number of packets, not people. It is not clear whether Mr. Griffith was
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`confused at the time of his deposition, but it does appear that the errata clarifies his testimony
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`and imposes no additional burden on Plaintiff.
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`As to Mr. Argent’s errata, it relates to determining the number of unique users of the
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`accused products. Defendants contend that Mr. Argent was confused during his deposition and
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`that the questions related to certain technical information. According to Defendants, Mr.
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`Argent’s errata simply explains in detail that the same player may be included in the data for
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`playing alone or playing with a group of players. This clarifies what Defendants describe as a
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`double-counting problem.
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`One reason, besides the Pennypack factors, as to why courts are reluctant to strike erratas
`
`is that the moving party has an opportunity to test the witnesses’ credibility at trial. A trial tactic
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`is to cross examine a trial witness as to inconsistencies between the deposition and the errata.
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`This factor lessens the possible prejudice to Plaintiff.
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`As to the delay in filing the erratas, Defendants argue travels and launching new products
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`as an excuse. While the delay in the filing of the erratas is of concern to the Special Master,
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`Plaintiff cannot meet its burden of demonstrating the prejudice to it under the “Pennypack”
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`factors.
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`RD 10439320v.1
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`10
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 11 of 14 PageID #: 21878
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`During the hearing, Plaintiff offered to withdraw the motion as to Mr. Argent, in return
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`for certain data related to his deposition. On November 6th, Defendant Take-Two accepted
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`Plaintiff’s offer. Thus, the motion as to Mr. Argent has been withdrawn.
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`ORDER: The Motion to Strike the Deposition Errata of Mr. Griffith is DENIED.
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`Plaintiff’s Motion to Strike Portions of the Invalidity Expert Report of Dr. Karger
`
` Plaintiff contends that Dr. Karger’s expert report contains new grounds for invalidity that
`
`the Defendants did not timely disclose in their invalidity contentions. Plaintiff asserts that it
`
`relied on Defendants’ invalidity contentions in conducting fact discovery and in setting forth its
`
`claim construction positions and infringement contentions. It also contends that Dr. Karger
`
`failed to provide any invalidity analysis for several prior art references. Plaintiff’s Motion
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`actually contains several grounds for its motions.
`
`A portion of Plaintiff’s motion concerns Dr. Karger’s opinions regarding the “Shoubridge
`
`reference”. Dr. Karger opined that asserted claims 12-15 of the ‘344 patent and claims 12-13 of
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`the ‘966 patent are anticipated and rendered obvious by the Shoubridge reference. Plaintiff
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`contends that Defendants never alleged that Shoubridge anticipates any of those claims. In its
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`brief, Plaintiff distinguishes between “anticipation” and “obviousness”. Plaintiff writes that
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`“Defendant’s assertion that Shoubridge renders obvious claim 12 of the ‘344 and claim 12 of the
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`‘966 Patent is not an assertion that Shoubridge anticipates those claims, let alone claims 13-5 of
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`the ‘344 patent and claim 13 of the ‘966 patent for which Defendant never asserted that
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`Shoubridge renders the claim obvious”.
`
`Plaintiff argues that as a matter of law, a claim of obviousness requires an identification
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`of multiple references that are being combined, a motivation to combine those references and the
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`content from each reference that is subject to the combination. According to Plaintiff,
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`RD 10439320v.1
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`11
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 12 of 14 PageID #: 21879
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`Defendants’ invalidity contentions do not specifically identify any of those combinations, or the
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`motivations to combine.
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`Plaintiff claims that Defendants’ invalidity contentions did not disclose Dr. Karger’s
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`opinions that the asserted claims are invalid under 35 U.S.C. §112 for lack of written description,
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`non-enablement and/or indefiniteness. Plaintiff’s brief contains a chart identifying Karger’s
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`invalidity claims under 35 U.S.C. §112 and Defendants’ invalidity contentions. Dr. Karger finds
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`that there are not written descriptions for the value of ‘m’ that varies over time for the broadcast
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`channel, for the broadcast channel network where only some of the participants meet the
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`limitations of the claims, for computers that are not connected by point-to-point connections
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`being “neighbors”, or for computers that are not connected by point-to-point connections through
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`which data packets can be sent and received. According to Plaintiff, Defendants invalidity
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`contentions made no attempt to explain the basis for purported lack of written description,
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`definiteness or enablement for any claim element upon which Dr. Karger opines.
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`According to Plaintiff, Dr. Karger’s report does not provide any opinion that the
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`references in the DirectPlay and Age of Empires actually anticipate or render obvious the claims
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`of the ‘069 and ‘147 patents. According to Plaintiff, Dr. Karger simply states that Defendants’
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`counsel had advised him that the Plaintiff’s infringement claims are “nebulous and unclear” and
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`that he was “asked to assume Plaintiff’s accusations with respect to this claim appear to be
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`directed at routine gaming operations” that are supposedly similar to the operations provided by
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`DirectPlay and Age of Empires. Dr. Karger’s report states that if the Plaintiff “provides a
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`credible explanation as to how it is applying these claims to the accused products, I will consider
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`my analysis and supplement my opinions”. Plaintiff contends that Dr. Karger cannot withhold
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`providing an invalidity theory until sometime in the future. Plaintiff’s argument is that invalidity
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`RD 10439320v.1
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`12
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 13 of 14 PageID #: 21880
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`contentions for Age of Empires were not disclosed previously by Defendants. To the extent that
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`there is any disclosure by Defendants, it is, according to Plaintiff, a citation to the entire game
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`and all of its documentation without any specificity.
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`Defendants’ response to all of Plaintiff’s separate arguments for striking portions of Dr.
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`Karger’s report is twofold. First, the invalidity arguments in Dr. Karger’s report were disclosed
`
`throughout the discovery and Plaintiff’s Motion is little more than quibbling about specifics
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`some of these disclosures, and, furthermore, any new arguments are in response to Plaintiff’s
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`new positions on infringement. Defendants’ second argument is that as a matter of law, Plaintiff
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`cannot meet its burden under “Pennypack” factors, since Plaintiff points to no concrete prejudice
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`or unfair surprise. In addition, one of the “Pennypack” factors is the importance of the evidence.
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`Under that factor, it is relevant to the Special Master that the evidence in Dr. Karger’s report is
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`important to the case and Defendants would be prejudiced if portions of Dr. Karger’s report were
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`stricken. Finally, as to possible prejudice to Plaintiff, while Plaintiff brought dozens of
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`discovery motions in this litigation, it never brought a motion to compel additional responses to
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`Defendants’ invalidity interrogatory responses.
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`Turning to the specific arguments made by Plaintiff, the Defendants in their brief and
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`exhibits accurately point to persuasive evidence. In their May 6, 2016, invalidity contentions,
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`Defendants disclosed Shoubridge as prior art for multiple patents. Thus, Plaintiff has known of
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`the Shoubridge relevance for over a year.
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`Similarly, as to Dr. Karger’s discussion of prior art combinations, references to those
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`combinations were also disclosed in Defendants’ 2016 initial invalidity contentions. Dr.
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`Karger’s opinions relating to invalidity under Section 112 grounds were also disclosed in
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`Defendants’ 2016 invalidity contentions. Those contentions put Plaintiff on notice that the claim
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`RD 10439320v.1
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`13
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`Case 1:16-cv-00455-RGA Document 309 Filed 11/07/17 Page 14 of 14 PageID #: 21881
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`terms were defective. Plaintiff never complained that this notice was insufficient. Defendants
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`argue that it was Plaintiff who provided overly broad constructions. In Defendants’
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`supplemental invalidity contentions filed on June 8, 2017, Defendants identified all the claim
`
`terms on which Dr. Karger’s Section 112 arguments were based.
`
`With respect to Dr. Karger’s invalidity arguments regarding specific games and patents
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`‘069 and ‘147, Dr. Karger properly will supplement his opinion when the Plaintiff clarifies its
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`claim construction. Also, with respect to the game Age of Empires, Defendant did not obtain the
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`source code for it from Microsoft until after the close of discovery.
`
`ORDER: The Motion to Strike portions of Dr. Karger’s expert report is DENIED.
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`
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`Dated: November 7, 2017
`
`
`
`
`
`/s/ Allen M. Terrell, Jr.
`Allen M. Terrell, Jr., Special Master
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`RD 10439320v.1
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`14
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