Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 1 of 34 PageID #: 7541
`Case 1:18-cv-01519—MN Document 211 Filed 10/30/20 Page 1 of 34 PageID #: 7541
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF DELAWARE
`
`FINJAN LLC, a Delaware Limited Liability
`Company,
`
`Plaintiff,
`
`v.
`
`RAPID7, lNC., a Delaware Corporation
`and RAPID7 LLC, a Delaware Limited
`
`Liability Company,
`
`Defendants.
`
`
`
`CA. No. 1:18-cv—01519-MN
`
`July Trial Demanded
`
`REDACTED VERSION
`(Filed on October 30, 2020)
`
`OPENING BRIEF OF DEFENDANTS RAPID7, INC. AND RAPID7 LLC IN SUPPORT
`OF THEIR MOTION TO EXCLUDE OPINIONS AND TESTIMONY OF PLAINTIFF ’S
`
`EXPERTS, RUSSELL L. PARR, NIICHAEL NIITZENMACHER, NENAD
`NIEDVIDOVIC ERIC COLE AND NIICHAEL GOODRICH
`
`Sealed Version
`
`DUANE MORRIS LLP
`
`Richard L. Renck (ID. No. 3893)
`222 Delaware Avenue, Suite 1600
`Wilmington, DE 19801
`Tel.: (302) 657-4900
`Fax: (302) 657-4901
`rlrenck@duanemom's.com
`
`Counselfor Defendants
`Rapid7, Inc. and Rapid7 LLC
`
`Dated: October 23, 2020
`
`OF COUNSEL:
`L. Norwood Jameson
`Matthew C. Gaudet
`David C. Dotson
`John R. Gibson
`Robin McGrath
`
`Jennifer H. Forte
`DUANE MORRIS LLP
`1075 Peachtree Street NE, Suite 2000
`
`Atlanta, GA 30309
`Tel.: (404) 253—6900
`Fax: (404) 253-6901
`wjameson@duanemorris.com
`mcgaudet@duanemonis.com
`dcdotson@duanemom's.com
`jrgibson@duanemorris.com
`rhncgrath@duanemor1is.com
`jhforte@duanemorris.com
`
`Jarrad M. Gunther
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 2 of 34 PageID #: 7542
`
`DUANE MORRIS LLP
`30 South 17th St.
`Philadelphia, PA 19103-4196
`Tel.: (215) 979-1837
`Fax: (215) 689-4921
`jmgunther@duanemorris.com
`
`Jordana Garellek
`DUANE MORRIS LLP
`1540 Broadway
`New York, NY 10036-4086
`Tel.: (212) 471-1829
`Fax: (212) 214-0889
`jgarellek@duanemorris.com
`
`*admitted pro hac vice
`
`2
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 3 of 34 PageID #: 7543
`
`TABLE OF CONTENTS
`
`Page
`
`I.
`
`II.
`
`INTRODUCTION ...............................................................................................................1 
`
`FACTUAL BACKGROUND ..............................................................................................2 
`
`A.
`
`B.
`
`C.
`
`Mr. Parr’s Flawed Damages Analysis .................................................................... 2 
`
`Dr. Mitzenmacher’s Flawed Analysis of the ’154 and ’289 Patents ...................... 4 
`
`Drs. Mitzenmacher, Cole, Medvidovic, and Goodrich’s Flawed
`Characterizations of the ’408, ’305, ’154, ’289, and ’918 Patents ......................... 4 
`
`III.
`
`ARGUMENT AND CITATIONS TO AUTHORITY ........................................................4 
`
`A.
`
`Mr. Parr’s Opinions Should be Excluded ............................................................... 5 
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`Mr. Parr’s Inability to Identify a Reasonable Royalty that Assumes
`All Patents-in-Suit are Valid and Infringed Demonstrates that His
`Opinions Are Methodologically Unsound and Would not Help—but
`Would Instead Confuse—the Jury .............................................................. 5 
`
`Mr. Parr’s Use of Finjan’s Notional Starting Point Royalty Rates
`Renders His Analysis Methodologically Flawed ........................................ 8 
`
`Mr. Parr’s Apportionment Analysis Is Methodologically Flawed ............ 10 
`
`Mr. Parr’s Projections of Revenues Into 2025 Are Unreliable ................. 14 
`
`Mr. Parr Relies on Non-Comparable Settlement Agreements and
`Jury Verdicts that should be Excluded from the Evidence ....................... 16 
`
`B.
`
`C.
`
`Dr. Mitzenmacher’s Infringement Opinions for the ’154 and ’289 Patents
`Should be Excluded .............................................................................................. 21 
`
`1.
`
`2.
`
`’154 Patent ................................................................................................ 21 
`
`’289 Patent ................................................................................................ 24 
`
`The Opinions of Drs. Mitzenmacher, Cole, Medvidovic, and Goodrich
`Mischaracterizing the ’408, ’305, ’154, ’289, and ’918 Patents Should Be
`Excluded ............................................................................................................... 26 
`
`IV.
`
`CONCLUSION ..................................................................................................................28 
`
`i
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 4 of 34 PageID #: 7544
`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 4 of 34 PageID #: 7544
`
`TABLE OF AUTHORITIES
`
`Federal Cases
`
`Page‘s)
`
`Acceleration Bay LLC v. Activision Blizzard, Inc., 324 F. Supp. 3d 470
`(D. Del. 2018) .......................................................................................................................... 17
`
`Allergen Sales, LLC v. UCB, Inc., 2016 WL 8222619 (ED. Tex. Nov. 7, 2016) ......................... 14
`
`Atlas IP, LLC v. Medtronic, Inc., 2014 WL 5741870 (SD. Fla. Oct. 6, 2014) ............................. 17
`
`Daubert v. Merrell Dow Pliarms., 509 US. 579, 597 (1993) ............................................... Passim
`
`Deere & Co. v. Int’l Harvester Co., 710 F.2d 1551 (Fed. Cir. 1983) .............................................. 8
`
`Finjan, Inc. v. Blue Coat Svs., Case No. 15-cv—03295, Dkt. 404 (redacted
`version), at 18-19 (ND. Cal. Nov. 4, 2017) ............................................................................ 19
`
`Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299 (Fed. Cir. 2018) ........................................ 8, 13
`
`Finjan, Inc. v. Cisco Sys., Inc., Case No. 17—cv—00072-BLF, Dkt. 660 (redacted
`version) at 17-18 (ND. Cal. June 5, 2020) .............................................................................. 19
`
`Finjan, Inc. v. Secure Computing Corp, 626 F.3d 1197 (Fed. Cir. 2010) .................................... 18
`
`Finjan, Inc. v. Sophos, Inc., Case No. l4-cv-01197-WHO, 2016 WL 4268659
`(ND. Cal. Aug. 15, 2016) ............................................................................................ 11-13, 15
`
`Finjan, Inc. v. Sophos, Inc., Case No. 14-cv-01197-WHO, 2016 WL 4702651
`(ND. Cal. Sept. 8, 2016) ................................................................................................... 13-14
`
`Finjan, Inc. v. Sophos, Inc. Case No. 3:14-cv—01197—WHO, Dkt. 453
`(ND. Cal. Mar. 14, 2017) .................................................................................................. 14, 19
`
`Giese v. Pierce Chem. Co., 43. F. Supp. 2d 98, 109-10 0). Mass. 1999) ..................................... 14
`
`Good Tech. Corp. v. Mobileiron, Inc., 5: 12—cv-05826-PSG, 2015 WL 4090431
`(ND. Cal. July 5, 2015) ........................................................................................................... 10
`
`Laitram Corp. v. Rexnord, Inc., 939 F.2d 1533 (Fed. Cir. 1991) ...................................... 21, 23-25
`
`LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (Fed. Cir. 2012) ............................ 19
`
`LPMatthews LLC v. Bath & Body Works, Inc., 458 F. Supp. 2d 198
`0). Del. 2006) ..........................................................................................................................26
`
`Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 G’ed. Cir. 2009) .......................................... 15
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 5 of 34 PageID #: 7545
`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 5 of 34 PageID #: 7545
`
`Magnetar Techs. Corp. v. Six Flags Theme Parks Inc., No. 07—127—LPS—MPT,
`2014 US. Dist. LEXIS 15674, at *19-20 (D. Del. Feb. 7, 2014) .................................... Passim
`
`Mendenhall v. Cedarapids, Inc., 5 F.3d 1557 (Fed. Cir. 1993) ..................................................... 17
`
`Miller v. Eagle Mfg. Co., 151 US. 186 (1894).............................................................................. 11
`
`Pinea'a v. Ford Motor Co., 520 F.3d 237 (3d Cir. 2008) .................................................................4
`
`Stragent, LLC v. Intel Corp, 6:11-cv-421, 2014 WL 1389304
`(E.D. Tex. Mar. 6, 2014) .......................................................................................................... 10
`
`Uniloc USA, Inc. v. Microsoft Corp, 632 F.3d 1292 (Fed. Cir. 2011) .......................................... 18
`
`Vimetx, Inc. v. Cisco S_vs., Inc., 767 F.3d 1308 (Fed. Cir. 2014) .................................................. 13
`
`Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10 (Fed. Cir. 2012) ............................. 8, 10
`
`Wi-Lan Inc. v. LG Elecs., Inc, 2019 WL 5681622 (S.D. Cal. Nov. 1, 2019) .................................9
`
`Rules
`
`Fed. R. Evid. 401 ........................................................................................................................... 14
`
`Fed. R. Evid. 402 ........................................................................................................................... 14
`
`Fed. R. Evid. 403 ....................................................................................................................... 9, 17
`
`Fed. R. Evid. 702 ................................................................................................................... Passim
`
`iii
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 6 of 34 PageID #: 7546
`Case 1:18—cv-01519-MN Document 211 Filed 10/30/20 Page 6 of 34 PageID #: 7546
`
`I.
`
`INTRODUCTION
`
`Defendants Rapid7, Inc. and Rapid7, LLC (“Rapid7”) respectfully submit this opening
`
`brief in support of their motion to exclude various opinions of Plaintiff Finjan LLC ’s (“Finjan”)
`
`experts. Specifically, the Court should exclude the opinions of Finjan’s damages expert, Mr.
`
`Russell L. Parr, pursuant to Federal Rule of Evidence 702 and Daubert for at least the following
`
`reasons:
`
`1. Mr. Parr was unable to identify the reasonable royalty that the parties would have
`
`agreed to at the hypothetical negotiation, assuming all seven patents are found valid
`
`and infringed, commenting that
`
`there are “endless possibilities” and that
`
`the
`
`overlapping nature of his opinions negates a simple summing of his figures;
`
`2. M. Pmnescumm—
`
`3. Mr. Parr’s apportionment opinions assmne that a single patent can be worth anywhere
`
`from 0 to 100% of an allegedly infringing feature, in violation of the law and logic;
`
`4. Mr. Parr improperly projects revenues out until 2025, relying on nothing more than
`
`pure speculation and conjecture; and
`
`5. Mr. Parr relies on non-comparable outlier settlement agreements and jury verdicts in
`
`mum’s
`
`agam—
`
`_ in an attempt to skew the damages horizon.
`
`The Court should exclude the infringement opinion of Dr. Michael Mitzemnacher
`
`regarding infringement of US. Patent Nos. 8,141,154 (“’154 Patent”) and 7,757,289 (“’289
`
`Patent”) for the accused Nexpose (including in combination with Metasploit or InsightIDR) and
`
`AppSpider products, pursuant to Federal Rule of Evidence 702 and Daubert because he offers
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 7 of 34 PageID #: 7547
`
`opinions that do not properly address each claim element, rendering his opinions fundamentally
`
`flawed and not useful for the jury.
`
`The Court should exclude the opinions of Drs. Mitzenmacher, Cole, Medvidovic, and
`
`Goodrich characterizing the background of the ’154 Patent, ’289 Patent, and U.S. Patent Nos.
`
`8,225,408 (“’408 Patent); 7,975,305 (“’305 Patent”); and 7,613,918 (“’918 Patent”), pursuant to
`
`Federal Rule of Evidence 702 and Daubert, to the extent they mischaracterize the patents as being
`
`directed to the detection of “vulnerabilities” without any basis or support. The patents themselves
`
`illustrate the distinction from “vulnerabilities,” rendering the experts’ attempt to explain the
`
`background of the patents using a key word from the accused products fundamentally flawed and
`
`misleading.
`
`II.
`
`FACTUAL BACKGROUND
`
`A.
`
`Mr. Parr’s Flawed Damages Analysis
`
`Mr. Parr uses the “hypothetical negotiation” to apply a rate-times-base framework for
`
`damages. Ex. 1 (Parr Rep.) ¶ 36.1
`
`For his royalty rate, Mr. Parr applies what he dubs Finjan’s “long established” policy where
`
`it “
`
` Id. According to Mr. Parr, these opening offers are supported by
`
`
`
`
`
` Id. Despite these rates being, at best, Finjan’s starting point for a
`
`negotiation—and despite citing to ample evidence that no licensee has ever agreed to these rates—
`
`Mr. Parr blindly utilizes these rates as the end point for the negotiation as well.
`
`1 The referenced exhibits are attached to the accompanying Declaration of John R. Gibson.
`
`2
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 8 of 34 PageID #: 7548
`
`Mr. Parr then conducts an apportionment of the accused products based upon a
`
`methodology he wholesale adopts from Finjan’s technical experts. Ex. 2 (Parr Tr.) at 206:15-
`
`209:3. Specifically, he relies on Drs. Cole and Mitzenmacher “
`
`
`
`
`
` Ex. 1 (Parr Rep.) ¶ 300. For each accused product, Mr. Parr (via Finjan’s technical
`
`experts) identifies the total number of features and the number of features “implicated” by each
`
`patent and, assuming that each feature is of equal technical and economic value, derives a per-
`
`product, per-patent “apportionment factor,” e.g., 3/12, 2/10, 3/9, etc. Id. pp. 118-127.
`
`Mr. Parr applies this apportionment factor to all (100%) of the revenue from the accused
`
`products from the sales to date, plus projections out to 2025 (for the ’154 and ’289 Patents), and
`
`opines that Rapid7 should be ordered to pay now for alleged infringement through 2025 (i.e., for
`
`activities that have not yet occurred and may never occur). The end result is seven schedules—
`
`one for each patent—that sets forth the revenues per accused product, and the total present value
`
`one-time payment if each product is found to infringe that patent. Mr. Parr acknowledges that,
`
`
`
`
`
` Ex. 1 (Parr Rep.) ¶ 36. Due to the overlapping and
`
`cumulative nature of his apportionment figures, Mr. Parr does not actually provide an opinion as
`
`to what the reasonable royalty would be if all seven Patents-in-Suit are found valid and infringed.
`
`As he admitted:
`
`
`
`
`
` Ex. 2 (Parr Tr.) at 39:2-9. Indeed, despite his over 35 years of
`
`experience providing expert damages opinions in patent matters (id. at 10-12), and having spent
`
`
`
`3
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 9 of 34 PageID #: 7549
`
`over
`
` forming his per-patent royalty opinions in this matter (id. at at 8:15-17), Mr. Parr
`
`admitted that he would need to
`
`
`
` Id. at 40-41.
`
`B.
`
`Dr. Mitzenmacher’s Flawed Analysis of the ’154 and ’289 Patents
`
`Dr. Mitzenmacher offers infringement opinions for the only asserted claim of the ’154
`
`Patent with respect to the accused Nexpose and AppSpider Products that both (1) fails to address
`
`the claim’s requirement for “invoking a second function with the input only if safe”; and (2)
`
`precludes the satisfaction of that claim element based on Dr. Mitzenmacher’s own analysis of the
`
`accused products, as he has opined that all functions are invoked before any alleged determination
`
`whether they are safe as a threshold issue.
`
`C.
`
`Drs. Mitzenmacher, Cole, Medvidovic, and Goodrich’s Flawed
`Characterizations of the ’408, ’305, ’154, ’289, and ’918 Patents
`
`Drs. Mitzenmacher, Cole, Medvidovic, and Goodrich fundamentally mischaracterize the
`
`background of the ’408, ’305, ’154, ’289, and ’918 Patents as relating to the detection of
`
`“vulnerabilities.” Ex. 8 (Medvidovic Rep.) ¶ 79, 81, 82, 83; Ex. 9 (Cole Rep.) ¶ 90; Ex. 5 (Mitz.
`
`Rep.) ¶¶ 68, 69, 70; Ex. 7 (Goodrich Rep.) ¶¶ 67, 68, 72. They make these characterizations
`
`without any support from either the patent specifications or the asserted claims. The only
`
`discussion of “vulnerabilities” in any of the patents-in-suit illustrates that “vulnerabilities” are in
`
`fact what the patents are not about. See, e.g., D.I. -1, ’289 Patent, 1:18-22; ’154 Patent, 1:18-22.
`
`III.
`
`ARGUMENT AND CITATIONS TO AUTHORITY
`
`Expert testimony is admissible only if
`(a) the expert’s scientific, technical, or other specialized knowledge will help the
`trier of fact to understand the evidence or to determine a fact in issue; (b) the
`testimony is based on sufficient facts or data; (c) the testimony is the product of
`
`4
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 10 of 34 PageID #: 7550
`Case 1:18—cv-01519-MN Document 211 Filed 10/30/20 Page 10 of 34 PageID #: 7550
`
`reliable principles and methods; and (d) the expert has reliably applied the
`principles and methods to the facts of the case.
`
`Fed. R. Evid. 702. There are three requirements under Rule 702: “(1) the proffered witness must
`
`be an expert, i. e., must be qualified; (2) the expert must testify about matters requiring scientific,
`
`technical or specialized knowledge; and (3) the expert’s testimony must assist the trier of fact.”
`
`Pineda v. Ford Motor Co., 520 F.3d 237, 244 (3d Cir. 2008).
`
`A.
`
`Mr. Parr’s Opinions Should be Excluded
`
`1.
`
`Mr. Parr’s Inability to Identify a Reasonable Royalty that Assumes
`
`All Patents—in-Suit are Valid and Infringed Demonstrates that His
`Opinions Are Methodologically Unsound and Would not Help—but
`
`Would Instead Confuse—the Jury
`
`Mr. Parr’s testimony will not assist the trier of fact, and instead relies on irrelevant and
`
`prejudicial evidence and appears deliberately calculated to mislead the jury into awarding damages
`
`greater than can be supported by the admissible evidence. Similarly, Mr. Parr’s opinions are not
`
`reliable, because they rely on legally and logically flawed premises and, as explained below, do
`
`not conduct the necessary “further apportionment” required by the Federal Circuit.
`
`Mr. Parr may only provide opinion testimony if his “specialized knowledge will help the
`
`trier of fact to lmderstand the evidence or to determine a fact in issue.” Fed. R. Evid. 702(a). As
`
`Finjan’s damages expert, the “fact in issue” that Mr. Parr’s opinions are supposed to help the jury
`
`determine is the reasonable royalty that Finjan and Rapid7 would have agreed to at the hypothetical
`
`negotiation, based on the assrnnption that the seven Patents—in—Suit are valid and infringed. Ex. 2
`
`(Parr Tr.) at 19:18-24. Mr. Parr, however, admitted that he does not know What that number is,
`
`beeeueeheh—
`
` 5
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 11 of 34 PageID #: 7551
`Case 1:18—cv-01519—MN Document 211 Filed 10/30/20 Page 11 of 34 PageID #: 7551
`
`— Whh
`
`seven Patents-in—Suit. seven sets of accused products—each with, according to Finjan’s flawed
`
`analysis. up to 12 features—the opportunities for miscalculation are replete.
`
`In Mr. Pan’s own
`
`words: there are ‘—” and he did not render a conclusion ‘-
`
`
`Because Mr. Pair admits that there ‘—” which is itselfproblematic
`
`for the reasons discussed in § III.A.3, infra—the jury would—
`
`_” But Mr. Parr does not provide any explanation as to how a jury is supposed to
`
`do such adjustments, and admits‘—.” EX. 2 (Parr
`
`Tr.) at 40. At his deposition, the best Mr. Parr could offer was the following:
`
`
`
`Id. But Mr. Mr. Parr admitted that—even with his over 35 years’ experience providing damages
`
`opinions, and after spending over - hours working on the case—he ‘—
`
`I” calculating the damages if all seven patents are considered valid and infringed and would
`
`need to do the calculation ‘—” to make sm‘e he got it light. Id. at 40-41; see also
`
`id. at 43:7-21.
`
`The absurdity of it all was laid bare on redirect. when Mr. Parr was asked by his cormsel
`
`whether he eehhh atease—
`
`—. But even after being prompted and asked leading
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 12 of 34 PageID #: 7552
`Case 1:18—cv-01519—MN Document 211 Filed 10/30/20 Page 12 of 34 PageID #: 7552
`
`questions by his counsel, Mr. Parr confused even himself as to what he would need to do to even
`
`come to an approximation of his damages figure if only two patents are infringed:
`
`
`
`Id. at 242:23—244210 (objections omitted for clarity). Of course, even that approximation only
`
`involved two patents, and only looked at whether there were overlapping time periods, not
`
`overlapping accused flmctionality, both of which the jury will have to wrestle with.
`
`The upshot is that Mr. Pan’s per—patent opinions will confuse, not clarify, the issues before
`
`the jury. Indeed, it appears that Finjan‘s real goal is to have the jury do exactly what Mr. Parr says
`
`you cannot do: sum 11p the per-patent royalties to come lip with an inflated lump-sum. This is
`
`certainly an improper result (as Mr. Palr acknowledges), and it would be 1mduly prejudicial to
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 13 of 34 PageID #: 7553
`
`Rapid7 for the Court to permit such obviously confusing and misleading opinions to be presented
`
`to the jury. Moreover, this problem of “overlap” is the direct result of a methodologically flawed
`
`apportionment opinions, as discussed below.
`
`2.
`
`Mr. Parr’s Use of Finjan’s Notional Starting Point Royalty Rates
`Renders His Analysis Methodologically Flawed
`
`According to Mr. Parr,
`
` Ex. 1 (Parr Rep.) ¶ 36; see also id. ¶¶ 290 (“
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` Mr. Parr’s use
`
`of these notional starting offers as the start and finish to the hypothetical negotiation is
`
`methodologically flawed.
`
`Mr. Parr repeatedly concedes that the
`
`
`
` See id. The Federal Circuit has held that the “evidentiary value” of
`
`opening offers “is limited by, inter alia, the fact that patentees could artificially inflate the royalty
`
`rate by making outrageous offers.” Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 30
`
`(Fed. Cir. 2012) (citing Deere & Co. v. Int’l Harvester Co., 710 F.2d 1551, 1557 (Fed. Cir. 1983)).
`
`The Federal Circuit reiterated this holding with respect to Finjan’s own licensing practices: “that
`
`an 8-16% royalty rate would be the current starting point in licensing negotiations says little about
`
`what the parties would have proposed or agreed to in a hypothetical arm’s length negotiation” at
`
`
`
`8
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 14 of 34 PageID #: 7554
`
`the time of the hypothetical negotiation. Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1312
`
`(Fed. Cir. 2018) (emphasis in original).
`
`The identical rationale applies here given that Mr. Parr identifies no evidence that any of
`
`Finjan’s nearly
`
`
`
`repeatedly emphasizes that Finjan
`
`Ex. 1 (Parr Rep.) ¶¶ 148 (“
`
`
`
`).
`
`
`
` To the contrary, he
`
`. See, e.g.,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Under these facts, courts have consistently excluded testimony regarding unaccepted offers
`
`by a patentee as being unduly prejudicial. See Wi-Lan Inc. v. LG Elecs., Inc., 2019 WL 5681622,
`
`*6-*8 (S.D. Cal. Nov. 1, 2019) (excluding use of rate sheet as unduly prejudicial pursuant to Fed.
`
`R. Evid. 403 where evidence showed that rates offered were consistently rejected and licensees
`
`agreed to a lower rate in every license) (collecting cases). Indeed, Mr. Parr has not provided any
`
`
`
`9
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 15 of 34 PageID #: 7555
`
`evidence as to why Rapid7 would have agreed to Finjan’s opening rates, or why Finjan’s consistent
`
`history of
`
` would be inapplicable here. Instead, he simply
`
`takes it as a given to artificially inflate his damages figure beyond what the effective rates of
`
`Finjan’s lump-sum agreements demonstrate. This approach defies real world negotiation reality,
`
`as reflected by the Federal Circuit’s Whitserv opinion and Finjan’s own witnesses.
`
`3.
`
`Mr. Parr’s Apportionment Analysis Is Methodologically Flawed
`
`Mr. Parr’s opinions utilize an apportionment methodology that is flawed and unreliable for
`
`at least two reasons.
`
`First, Mr. Parr assumes, without support, that it is possible to equally value—from both a
`
`technical and economic perspective—the features of the accused products. Mr. Parr adopts this
`
`opinion directly from Finjan’s technical experts, but there is nothing in their reports, or in Mr.
`
`Parr’s description of those opinions, that would render such a methodology reliable from either a
`
`technical or an economic perspective. In other words, the opinions that the features are all of equal
`
`value “is not based on any theory that meets the Daubert criteria of verifiability, peer review or
`
`publication, an acceptable error rate, or general acceptance in the scientific community.” Stragent,
`
`LLC v. Intel Corp., 6:11-cv-421, 2014 WL 1389304, *4 (E.D. Tex. Mar. 6, 2014); see also Good
`
`Tech. Corp. v. Mobileiron, Inc., 5:12-cv-05826-PSG, 2015 WL 4090431, *7 (N.D. Cal. July 5,
`
`2015) (“Weinstein similarly counts up the ten Gartner inclusion criteria, assigns equal value to
`
`each one, and uses the resulting 30 percent to apportion MobileIron's profits. Weinstein does no
`
`investigation into whether any of the criteria is more important than others, or how strongly each
`
`criterion is tied to the patents. This is insufficient.”).
`
`Second, even if there were factual support for application of equal values (which there is
`
`not), Mr. Parr’s apportionment improperly assumes that a particular patent can account for
`
`anywhere from 0 to 100% of the economic and technical value of a particular feature depending
`
`
`
`10
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 16 of 34 PageID #: 7556
`
`on which of the other Patents-in-Suit might also be implicated during any given time.2 For
`
`example, Mr. Parr has opined that the accused InsightVM product has 12 features, the same three
`
`of which—
`
`
`
`are alleged to infringe each of the
`
`’154, ’289, ’305, and ’408 patents. Under the (unsupported) assumption that each of the 12 total
`
`features of InsightVM is of equal technical value, Mr. Parr thus apportions down to 3/12 of the
`
`value of InsightVM for each patent. In other words, he opines that each of the ’154, ’289, ’305,
`
`and ’408 patents, independently and collectively, account for 3/12 of the technical (and economic)
`
`value of InsightVM. While this opinion avoids the double-counting issue that has plagued many
`
`of Finjan’s prior damages opinions, it introduces “overlap”—which is the cause for the issues
`
`discussed in §III.A.1., supra—and demonstrates the methodological apportionment failing
`
`discussed below.
`
`It is axiomatic that “no patent can issue for an invention actually covered by a former
`
`patent.” Miller v. Eagle Mfg. Co., 151 U.S. 186, 198 (1894). Thus, assuming validity (as Mr. Parr
`
`must), it can only be the case that these patents “cover related and intermingled technologies, not
`
`identical ones.” Finjan, Inc. v. Sophos, Inc., Case No. 14-cv-01197-WHO, 2016 WL 4268659, *4
`
`(N.D. Cal. Aug. 15, 2016) (“Sophos I”). By way of example, if we assume that each of the ’154,
`
`’289, ’305, and ’408 patents each cover, for example, the
`
`Mr. Parr opines, “
`
` feature3 as
`
`” at
`
`
`2 To the extent Mr. Parr relies on the opinions of Finjan’s technical experts for his
`methodologically flawed apportionment analysis, Rapid7 moves to exclude those experts’
`testimony as well.
`
`3 Of course, it is absurd to even speak of, e.g.,
`disclosed by any of the Patents-in-Suit, but that is Finjan’s theory.
`
`” being a feature that is
`
`
`
`11
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 17 of 34 PageID #: 7557
`
`best, together contribute to the total value of that feature. Id. Despite this, Mr. Parr confirmed that
`
`his analysis captures that same 1/12 value, “
`
`
`
`” that are at issue. Ex. 2 (Parr Tr.) at 217:15-19. This cannot be true, as a
`
`matter of law and logic.
`
`To be sure, Mr. Parr does not overtly argue that his per-patent royalties are cumulative
`
`when this overlapping functionality is present. See, e.g., Ex. 1 (Parr Rep.) ¶ 304. But that does
`
`not solve the overarching methodological flaw that finds Mr. Parr ascribing 100% of the technical
`
`and economic value of, e.g., the
`
`” feature to, depending on the time
`
`period, anywhere from one to four patents, as shown in the chart below as it relates to the accused
`
`InsightVM:
`
`’305 Patent
`’408 Patent
`’154 Patent
`’289 Patent
`
`4/11/2017 –
`2/8/2018
`X
`
`2/8/2018-
`8/18/2020
`X
`X
`X
`X
`
`8/18/2020 –
`5/27/2021
`
`5/27/2021 –
`12/12/2025
`
`12/12/2025 –
`5/12/2029
`
`X
`X
`X
`
`X
`X
`
`X
`
`Ex. 1 (Parr Rep.) pp. 118-120. The discussion in Sophos I, in which the court excluded similar
`
`opinions from one of Finjan’s other damages experts (Dr. Layne-Farrar), illustrates the
`
`methodological failing in this analysis:
`
`I understand that these are complicated, intermingled technologies and that it is
`difficult to separate them, but it is not necessary for us to do so to resolve this issue.
`Under Layne-Farrar’s methodology, the total value of the threat engine feature does
`not change. In this example there are several logical possibilities: the ’844 patent
`alone may contribute the full value of the threat engine feature, the ’494 patent
`alone may contribute the full value of the threat engine feature, or some
`combination of technologies covered by both the ’844 and ’494 patents may
`together contribute the full value of the threat engine feature. However, what is not
`possible, as a matter of law and logic, is that the ’844 and ’494 patents’ combined
`add more value to the threat engine feature than its total value. This is what Layne-
`Farrar’s report assumes by apportioning the value of the threat engine feature to
`
`12
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 18 of 34 PageID #: 7558
`
`both the ’844 and ’494 patents. This method assumes that both patents add the
`full value of that feature to the SAV Engine. As discussed, this is not possible
`under patent law; therefore this apportionment calculation is not a reliable
`methodology for calculating a reasonable royalty.
`
`2016 WL 4268659, at *4. Or, put more succinctly, “if each patent is valid, then each cannot
`
`contribute the full value of a single module.” Finjan, Inc. v. Sophos, Inc., Case No. 14-cv-01197-
`
`WHO, 2016 WL 4702651, at *2 (N.D. Cal. Sept. 8, 2016) (“Sophos II”). Yet that is exactly what
`
`Mr. Parr’s analysis assumes is possible.
`
`And while the flaw in Mr. Parr’s analysis is clear as a matter of logic, it is also clear as a
`
`matter of Federal Circuit law. In particular, it is obvious that Mr. Parr has failed to undertake the
`
`requisite further apportionment required under the law. Blue Coat, 879 F.3d at 1310; Virnetx, Inc.
`
`v. Cisco Sys., Inc., 767 F.3d 1308, 1329 (Fed. Cir. 2014) (“a patentee's obligation to apportion
`
`damages only to the patented features does not end with the identification of the smallest salable
`
`unit if that unit still contains significant unpatented features.”). It cannot be the case that, for
`
`example, the ’305 Patent is itself responsible for 100% of the technical and economic value of the
`
`“lightweight endpoint agent” feature from April 11, 2017 to February 8, 2018, but then from
`
`February 9, 2018 to August 18, 2020, that same technical value is all of a sudden provided by four
`
`patents, and then on December 13, 2025, that same technical value is all of sudden exclusively
`
`provided by the ’289 Patent. This same problem exists for each product for which Mr. Parr—and
`
`Finjan’s technical experts—opine that more than one patent is infringed by a particular feature,
`
`i.e., all accused products. For each situation, “[f]urther apportionment was required to reflect the
`
`value of the patented technology compared to the value of the unpatented elements.” Blue Coat,
`
`879 F.3d at 1311. Indeed, this is the exact same issue that resulted in Finjan’s Dr. Layne-Farrar’s
`
`opinions getting struck in Sophos I and II:
`
`The problem here is that Layne-Farrar has not sufficiently apportioned the value of
`the various modules to each patent … . Layne-Farrar could have attempted to
`
`
`
`13
`
`

`

`Case 1:18-cv-01519-MN Document 211 Filed 10/30/20 Page 19 of 34 PageID #: 7559
`
`further apportion the modules to each patent. For example, she could have
`determined that each of the five patents, which all cover module 1, contribute 1/5
`the value of the module. … But her decision not to apportion the modules to each
`patent does not make it reasonable to attribute the full value of module 1 to all five
`patents.
`
`Sophos II, 2016 WL 4702651, *2. In short, Mr. Parr’s failure to conduct the necessary “further
`
`apportionment”—and allow for improper “overlap”—renders his analysis methodologically
`
`flawed such that the