UNITED STATES PATENT AND TRADEMARK OFFICE
`__________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`__________________
`
`PRONG, INC.,
`Petitioner,
`
`v.
`
`YEOSHUA SORIAS,
`Patent Owner
`
`__________________
`
`Case IPR2015-01317
`Patent 8,712,486 B2
`__________________
`
`DECLARATION OF MR. DAVID N. PARIS
`UNDER 37 C.F.R. § 1.68 IN SUPPORT OF
`PATENT OWNER SORIAS’ RESPONSE
`
`1
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`

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`INTRODUCTION
`
`I.
`
`
`1.
`
`I am an economist, and a Senior Director at Alvarez & Marsal Global
`
`Forensic and Dispute Services (“Alvarez & Marsal”) in its Washington, D.C.
`
`office. Alvarez & Marsal is a professional services consulting firm, which
`
`specializes in providing financial consulting services, including addressing issues
`
`of competition in commercial disputes. My hourly rate in this engagement is $475,
`
`and the compensation received by Alvarez & Marsal is not contingent upon the
`
`outcome of this litigation.
`
`2.
`
`I have more than 25 years of experience addressing damages and
`
`competition issues in complex commercial disputes, including breach of contract,
`
`unfair competition, and patent infringement matters. Since receiving my Master of
`
`Arts in Applied Economics from the University of Michigan, I have been
`
`employed as an economic consultant at Stout Risius Ross, Inc., Huron Consulting
`
`Group, LECG Corporation and Glassman-Oliver Economic Consultants, Inc. I
`
`have provided expert testimony on damages and competition issues, including
`
`determination of
`
`lost profits, reasonable royalties,
`
`irreparable harm and
`
`commercial success. A copy of my curriculum vitae is attached as Exhibit A.
`
`3.
`
`I have been asked by counsel for Mr. Yeoshua (“Joshua”) Sorias, the
`
`owner of U.S. Patent No. 8,712,486 B2 (the ’486 patent), to address issues related
`
`to Secondary Considerations of Non-Obviousness in the Inter Partes Review (Case
`
`
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`2
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`IPR2015-01317) before the Patent Trial and Appeal Board (“PTAB”). As part of
`
`my economic analysis, I have reviewed court filings, information produced by the
`
`parties, including documents and declarations, and publicly available information,
`
`such as trade press articles, product reviews and financial analyst and industry
`
`reports.1 I have also spoken with people knowledgeable about Zilicon, the ’486
`
`patent and the products at issue, including Mr. Joshua Sorias and Mr. Joseph C.
`
`McAlexander III, an expert retained by the Patent Owner in this matter.
`
`4.
`
`Based on the materials reviewed, my education and experience as an
`
`economist and a damages expert, and the analysis presented in this expert
`
`declaration, it is my opinion that:2
`
`a. The relevant product market to address the commercial success of
`the PocketPlug and the Squirl Case is the market for mobile phone
`cases with integrated charging, and the relevant geographic market
`is worldwide.
`
`b. The relevant market has been dominated by a single firm, Mophie,
`which has 90 percent of that market, and all other firms, including
`Prong and Zilicon, collectively account for the remaining 10
`percent.
`
`
`
`c. In such a relevant market, a seemingly small level of sales or sales
`activity can be evidence of substantial commercial success, and the
`
`
`1 A list of the materials considered for this report is included in Exhibit B.
`2 I respectfully reserve the right to supplement this expert declaration based on any
`new fact discovery and information relevant to my analysis of the commercial
`success of the Squirl Case, but unavailable as of the present date. There are sales
`activities associated with Zilicon’s current relaunch of the Squirl Case that are
`incomplete as of March 18, 2016, and are still being negotiated. If such events
`come to fruition, they may be relevant to my analysis and opinions.
`
`
`
`3
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`PocketPlug and the Squirl Case have been commercially successful
`in the relevant market.
`
`d. Actual sales of the PocketPlug in its Kickstarter project in 2012
`were evidence of this commercial success.
`
`e. Zilicon’s sales activity in 2015, and currently in 2016, is evidence
`of the substantial actual and expected commercial success of the
`Squirl Case. Based on actual orders and agreements in place,
`Zilicon’s expected sales of the Squirl Case exceed $6 million.
`
`f. The retail and online availability secured by the PocketPlug and
`the Squirl Case are evidence of their actual and expected
`commercial success.
`
`g. There is a casual nexus between the commercial success of the
`PocketPlug and the Squirl Case and the advantages of the patented
`invention.
`
`h. That casual nexus is evidenced by the external marketing of the
`PocketPlug and the Squirl Case.
`
`i. That casual nexus is evidenced by wide-spread industry praise of
`the advantages of the patented invention in the PocketPlug.
`
`j. That casual nexus is evidenced by agreements Zilicon has entered
`into with third-parties knowledgeable about the relevant market.
`
`k. That casual nexus is evidenced by Affidavits from Zilicon’s
`customers and distributors.
`
`
`
`
`
`
`
`
`
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`
`
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`4
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`II. BACKGROUND
`
`
`A.
`
`Patent Owner Mr. Sorias and Zilicon Accessories, LLC
`
`5. Mr. Sorias is the inventor and owner of the ’486 patent. He is also the
`
`Chief Executive Officer of Zilicon Accessories LLC (“Zilicon”), a start-up
`
`company that was founded in 2012, and based in Brooklyn, New York. Zilicon
`
`has exclusive manufacturing and distribution rights under the ’486 patent.3 Prior to
`
`forming Zilicon, Mr. Sorias worked as a buyer for DGL Group, and his duties
`
`included sourcing and procuring components for cellular phones and cellular
`
`phone accessories.
`
`B.
`
`Petitioner Prong, Inc.
`
`6.
`
`Prong, Inc. (“Prong”) is a company based in New York that was
`
`founded by Mr. Yishai (“Jesse”) Z. Pliner and Mr. Lloyd Gladstone in 2012.4 Prior
`
`to changing the company’s name to Prong, Mr. Pliner and Mr. Gladstone operated
`
`their company as Detached, and were developing and marketing a product called
`
`the JuiceTank.5 The company has launched two products, the PocketPlug (f/k/a the
`
`
`3 Affidavit of Yeoshua Sorias (“Sorias Affidavit”), March 18, 2016. Unless
`otherwise cited, the sources of the information in this section is the Sorias
`Affidavit. Mr. Sorias has 3 other US patents (U.S. Patent Nos. 8,712,482;
`D723,457 and 9,088,670), and “each of which build upon the ’486 patent” (ibid,, p.
`2).
`4 Prong.com/about (Printed on 2/9/2016). Unless otherwise cited this is the source
`in this paragraph.
`5 “Detached Kickstarts JuiceTank, the First Case with an Integrated Wall Charger
`for iPhone,” PRNewswire, April 12, 2012. Detached is the predecessor company
`
`
`
`5
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`JuiceTank) and the PWR Case. It is my understanding that Prong has been
`
`accused of infringing the ’486 patent, and that lawsuit has been stayed pending this
`
`proceeding.6 Since its inception, “Prong has grown to also encompass an
`
`international distribution center, operations in New York and California, and a
`
`select team of esteemed engineers and designers from the technology space.”7
`
`C. The ’486 Patent
`
`7.
`
`The ’486 Patent, entitled “Detachably Integrated Battery Charger For
`
`Mobile Cell Phones And Like Devices” issued on April 29, 2014.8 I understand
`
`that a summary of the patented invention in the ’486 patent has been provided in an
`
`expert declaration submitted by Mr. Joseph McAlexander III.9
`
`
`
`
`to Prong, and I understand that the PocketPlug and the JuiceTank are essentially
`the same product (ibid, Prong.com/about and “Why That Phone Charger Took Two
`Years
`to Arrive,” The New York Times,
`June 14, 2014
`and
`facebook.com/getdetached/info/?tab=page_info (Detached is now Prong).
`6 Fourth Amended Complaint, pp. 14-5. I also understand that Mr. Robert Anders,
`Mr. Sorias’ industrial design expert has opined that the Prong PocketPlug device
`practices the patented invention of the ’486 patent (“Declaration of Mr. Robert
`John Anders under 37 C.F.R. § 1.68 In Support of Patent Owner Sorias’ Response”
`(“Anders Declaration”), March 17, 2016, pp. 26-7).
`7
`Techfaster.com/ces-preview-prong-first-phone-case-charger/
`2/16/2016).
`8 U.S. Patent No. 8,712,486 B2. The’486 patent was filed on January 11, 2012
`(ibid).
`9 “Declaration of Mr. Joseph McAlexander III under 37 C.F.R. § 1.68 In Support
`of Patent Owner Sorias’ Response” (“McAlexander Declaration”), March 18,
`2016, p. 21.
`
`(Printed
`
`on
`
`
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`D.
`
`Secondary Considerations of Non-Obviousness
`
`8.
`
`I understand that Secondary Considerations of Non-Obviousness
`
`include commercial success, long-felt but unresolved needs, failure of others,
`
`unexpected results, copying, licensing, and praise.10 I further understand that
`
`evidence “showing objective indicia of nonobviousness constitutes ‘independent
`
`evidence of nonobviousness,’” and that “[s]uch evidence can establish that ‘an
`
`invention appearing to have been obvious in light of the prior art was not.’”11
`
`9.
`
`I have been asked to address the economic considerations of
`
`commercial success in this matter. I understand that “[c]ommercial success
`
`involves establishing success in the marketplace of a product encompassed by the
`
`claims and a nexus between the commercial product and the claimed invention.”12
`
`The economic considerations of commercial success thus focus on two questions:
`
`(1) Have the products that practice the patented invention been commercially
`
`successful in the relevant market?; and, (2) Was that commercial success due to the
`
`advantages of the patented invention (casual nexus)?
`
`
`
`
`10 KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007).
`11 Intri-Plex Technologies, Inc. & MMI Holdings, LTD. v. Saint-Gobain
`Performance Plastics Rencoi Limited, Case IPR2014-00309, Paper 83.
`12 IPR2012-00006, Final Decision at 34. The theory of commercial success
`“presumes an idea would successfully have been brought to market sooner, in
`response to market forces, had the idea been obvious to persons skilled in the art”
`(Merck & Co., Inc. v. Teva Pharmaceuticals USA, Inc., 395 F.3d 1364, 1376-77
`(Fed. Cir. 2005)).
`
`
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`E.
`
`The Relevant Products
`
`10. The relevant products represent a new hybrid product that has
`
`combined and integrated the functionality of several existing market segments
`
`within the mobile phone accessories industry.13 They have combined the
`
`functionality of protective cases with integrated chargers (PocketPlug), and
`
`protective cases with integrated chargers and integrated external backup batteries
`
`(Squirl Case). My analysis will focus on the PocketPlug from 2012 to present, and
`
`the Squirl Case from 2015 to present.
`
`11. Prong began marketing the PocketPlug in March 2012 when it started
`
`a Kickstarter project to help bring the product to market. After a long delay, Prong
`
`launched the PocketPlug for the iPhone 4/4s and 5/5s in December 2013.14 The
`
`retail price of the PocketPlug was $59.95 for iPhone 4/4s, and $69.95 for iPhone
`
`5/5s.15
`
`
`13 “Charge Your iPhone Without a Cord Using JuiceTank,” the-gadgeteer.com,
`March 18, 2012 (Printed on 2/18/2016). A Future Market Insights (“FMI”)
`industry report identified the following segments by product type: protective case,
`headphone/earphone, charger, battery, memory card, power bank, portable speaker,
`and other (“Mobile Phone Accessories Market Expected to Reach US$121.72 by
`2025; Says Future Market Insights,” FMI News Release, August 21, 2015).
`14 “PocketPlug – iPhone case with built-in charger,”dudeiwantthat.com, December
`2013 update (Printed on 2/18/2016, and “Why That Phone Charger Took Two
`Years to Arrive,” The New York Times, June 14, 2014.
`15 “PocketPlug Cuts the Charging Cord,” trendhunter.com/trends/the-pocketplug,
`September 15, 2013 (Printed on 2/12/2016).
`
`
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`12. Zilicon initially launched the Squirl Case in 2015, and products
`
`reached store shelves in October.16 Its retail price was $99.99, and its initial retail
`
`partners were the Target
`
` retail chains.17 However, in November 2015,
`
`an issue arose with its UL Certification. The products that had already been
`
`shipped to Target had to be recalled. Products ordered by
`
`and ready to ship
`
`were never shipped.18 It is my understanding that the product has received the
`
`necessary certification, and is currently being re-launched at this time.
`
`F.
`
`The Relevant Product Market
`
`13. This is not the first time a hybrid product has emerged in the mobile
`
`phone accessories industry. In 2006, Mophie introduced the first battery (or
`
`power) case, which at the time was a new emerging market segment that combined
`
`the functionality of protective cases and an integrated external backup battery.19
`
`
`16 “Squirl launches 360 protective case with integrated hidden power plugs and
`external battery that Doubles life of iPhone 6,” squirlcase.com/news, October 20,
`2015 (Printed on 2/20/2016).
`17 Squirlcase.com/es/ (Printed on 2/20/2016).
`18 Sorias Affidavit.
`19 “Behind The Invention: The mophie Juice Pack,” medium.com/@benkaufman/.
`Mophie introduced “the world’s first battery-case” called the Relo Recharge at
`Macworld 2006. This battery case worked with the Video iPod and iPod Nano.
`Interestingly, at that time, “no one cared about Recharge…Recharge was shelved.
`Rendered a failure. We [Mophie] wouldn’t look at it again for over a year” (ibid).
`
`
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`14. Apple launched its first iPhone in June 2007.20 Almost as soon as it
`
`was introduced, “complaints about battery life started to flare up across the
`
`internet.”21 As these mobile devices have continued to add functionality and
`
`require more power, this concern about battery life has continued to exist: “one of
`
`the major points of focus that was evident at the international CES was the attempt
`
`to make your smartphone last through the day or even longer.”22
`
`15. Mophie has been in business since 2005, and it was one of the first
`
`companies to address this problem. It did so with the introduction of its first Juice
`
`Pack battery case for iPhones in 2008.23 Since then, Mophie has continued to
`
`launch battery cases for Apple iPhones, and it has expanded to make battery cases
`
`for other mobile devices, such as Samsung Galaxy smartphones. Mophie has
`
`become the “leading producer of battery cases for cellular phones in the world.”24
`
`As one article on Mophie noted:
`
`Despite countless knockoffs, the Mophie brand has become the
`‘Kleenex’ of external power, and used by millions of people
`
`about
`
`the Apple
`
`iPhone,”
`
`
`20
`to know
`“Everything you wanted
`cellphone.lovetoknow.com (Printed 2/12/2016).
`21 “Behind the Innovation: The Mophie Juice Pack,” medium.com/@benkaufman/
`(Printed on 3/9/2016).
`22 “Always Forget the Charger at Home? Try Prong’s PocketPlug: An iPhone case
`that comes with an Integrated Charger,” technorms.com/.
`23 “Mophie’s rapid growth: A timeline of the portable power company,”
`mlive.com/business, April 4, 2015 (Printed on 3/8/2016).
`24 “Zagg, Inc.,” Wunderlich Securities, Inc. February 3, 2016, p. 1. Zagg Inc.
`announced a definitive agreement to buy Mophie for $100 million on February 3,
`2016 (ibid).
`
`
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`worldwide. Mophie was by no means an overnight success and
`certainly did not take a linear path to greatness.”25
`
`
`
`
`
`16. Table 1 above shows Mophie sales in millions of dollars from 2006 to
`
`2015. Mophie’s sales illustrate the point, discussed above, that it “was by no
`
`means an overnight success.” As shown above, its sales were less than one million
`
`dollars in 2006, and they increased to $1.9 million in 2007. Then, in 2008, the year
`
`it introduced the Juice Pack for iPhones, its sales increased to $2.7 million.
`
`Mophie’s annual sales were under $3.00 million during each of its first four years
`
`in business. In short, it took Mophie the better part of a decade to become the $200
`
`million company that it is today.
`
`17.
`
`It is also noteworthy that the mobile accessory industry is different
`
`today, than it was when Mophie started out in 2005. In September 2005, Apple
`
`reconfigured its Video iPod and iPod Nano, and “[e]very existing accessory being
`
`sold by every single company (large and small) was rendered obsolete…The entire
`
`iPod accessory market instantly became a level-playing field with no clear
`
`
`25 “Behind The Invention: The mophie Juice Pack,” medium.com/@benkaufman/
`(Printed on 3/9/2016).
`
`
`
`11
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`TABLE 1
`Mophie Sales, 2006 - 2015
`(In Millions of Dollars)
`
`Sales
`
`2006
`$0.75
`
`2007
`$1.90
`
`2008
`$2.70
`
`2009
`$16.00
`
`2010
`$25.00
`
`2011
`$47.00
`
`2012
`$150.00
`
`2013
`$215.00
`
`2014
`N/A
`
`2015
`$200.00
`
`Source: Exhibit C.
`
`

`
`leader.”26 Mophie was able to capitalize on that “huge” opportunity. This was not
`
`the case for Prong when it started marketing the PocketPlug in 2012, nor was it the
`
`case for Zilicon when it introduced the Squirl Case in 2015-2016.
`
`18.
`
`Just as Mophie did in 2008, the PocketPlug and the Squirl Case also
`
`sought to address the battery life issue associated with mobile phones, and in
`
`addition “solve the problem of the forgotten charger,” and the need for additional
`
`components and cords.27 Prong has a “Features” Chart that it displays on its
`
`website page for each of its current PocketPlug and PWR Case products.
`
`19. Chart 1 shown below is a recreation of that Chart, with Zilicon’s
`
`Squirl Case added to the chart (in place of the Prong PWR Case product, which I
`
`have removed). Prong’s chart compares the key features of its products with other
`
`products that also provide power to a mobile phone. The differentiating feature of
`
`both the PocketPlug and the Squirl Case are that they include an “Integrated Wall
`
`Charger” and “No Cords [are] Needed.” By comparison, none of the other
`
`products have features of: (i) being pocketable, (ii) include an “Integrated Wall
`
`Charger” and (iii) are “No Cords Needed.” This includes “Other Battery Cases”
`
`products, such as Mophie’s Juice Pack devices, which still require a separate
`
`charger and cords.
`
`
`26 “Behind The Invention: The mophie Juice Pack,” medium.com/@benkaufman/
`(Printed on 3/9/2016).
`27 “Always Forget the Charger at home? Try Prong’s PocketPlug: An iPhone case
`that comes with an integrated charger.” Technorms.com.
`
`
`
`12
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`
`
`
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`20. The PocketPlug when first
`
`launched via Kickstarter offered
`
`consumers a choice between having an integrated charger and not needing any
`
`cords and having a back-up battery and needing a charger and cords. This was
`
`illustrated in Chart 1 above in the comparison of the PocketPlug and “Other
`
`Battery Cases.” However, by the time the PocketPlug shipped in December 2013:
`
`Their [Prong’s] case no longer seemed cutting edge. By then, sleek
`and inexpensive cases that doubled as battery chargers from
`companies like Mophie and Lenmar were flooding the market. ‘The
`
`
`
`13
`
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`CHART 1
`FEATURE COMPARISON
`
`No Cords
`Needed
`
`Integrated Wall
`Charger
`
`YES
`
`YES
`
`YES
`
`YES
`
`X
`
`X
`
`X
`
`YES
`
`X
`
`X
`
`Backup Battery
`
`YES
`
`X
`
`YES
`
`X
`
`YES
`
`Protective
`
`YES
`
`YES
`
`YES
`
`YES
`
`Pocketable
`
`YES
`
`YES
`
`YES
`
`X
`
`Source: Exhibit D.
`
`X
`
`X
`
`X
`
`YES
`
`X
`
`X
`
`X
`
`

`
`technology caught up with what we were offering,’ Mr. Gladstone
`said.28
`
`21. The Squirl Case has added the functionality of an external back-up
`
`battery to the combination of a protective case and an integrated charger. The
`
`integrated charger and flat folding AC prongs of the Squirl Case are what
`
`differentiate it from the “battery chargers from companies like Mophie and
`
`Lenmar…[that] were flooding the market.”29 This is also illustrated in the features
`
`comparison between the Squirl Case and the “Other Battery Cases” in Chart 1
`
`above.
`
`22. The relevant market to assess the commercial success of the
`
`PocketPlug and the Squirl Case is the market for mobile phone cases with
`
`integrated charging. This market is dominated by battery cases, and specifically
`
`Mophie battery cases. It includes battery cases for all mobile devices, and this new
`
`and emerging charger case segment that includes the PocketPlug, the PWR Case
`
`and the Squirl Case. These new and emerging products have only been available
`
`since December 2013, and like Mophie, need time to develop and launch a
`
`complete line of products that are compatible with other mobile phones besides
`
`iPhones, and to introduce their brand new category to the market. In 2015, after a
`
`
`28 “Why That Phone Charger Took Two Years to Arrive,” The New York Times,
`June 14, 2014.
`29 “Affidavit of Christian Scheder” (“Scheder Affidavit”), March 17, 2016, p. 2.
`
`
`
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`decade in business, Mophie still believed that it was “trying to introduce a brand
`
`new category to the market.”30
`
`23. Moreover, Prong and Zilicon do not have the “level playing field” that
`
`Mophie did. They are competing in a relevant market with an established market
`
`leader in Mophie, and “countless knock offs.” A “Market Positioning Analysis &
`
`Recommendations” prepared for Zilicon noted: “the Competitive Landscape for
`
`Mobile Cases with Integrated Charging…is a sea of sameness with virtually every
`
`case offering the same or very similar features & power specs.”31
`
`
`30 “After A Decade in Business, Mophie Makes Its TV Debut – In the Super
`Bowl,” forbes.com, January 29, 2015 (Printed on 3/7/2016).
`31 “Squirl Market Positioning Analysis & Recommendations,” Loft, p._. The
`analysis
`identified Mophie as
`the
`industry
`leader (Juice Pack Air/Plus
`$99.99/$119.95), Tier 1 brands (Otter (Resurgence - $99.99), Belkin (Grip Power -
`$99.99), TYLT (Energi - $99.99) & Boostcase (Boostcase - $99.99)) and Tier 2
`brands (Trianium (Aluminum Backplate - $79.99) & I-Blason (Unity Power -
`$69.99/$79.99) (ibid).
`
`
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`
`
`24. Table 2 above shows my estimate of the relevant market for mobile
`
`phone cases with integrated charging in 2015. According to Mr. Shawn
`
`Dougherty, co-founder and chief executive officer of Mophie: “Mophie has a 90
`
`percent share of the market for mobile battery cases.”32 This is consistent with
`
`Mophie’s vice president of marketing Mr. Ross Howe’s statement in 2015: “we
`
`[Mophie] have such a large piece of the category [mobile battery cases], it’s not
`
`possible to increase any more market share; we are trying to increase the whole
`
`32 “Portable-power company Mophie still plans to build R&D center in
`Kalamazoo,” mlive.com/business, April 4, 2015 (Printed on 3/11/2016).
`
`
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`TABLE 2
`THE MARKET FOR MOBILE PHONE CASES
`WITH INTEGRATED CHARGING
`2015
`
`Segment
`
`Company
`
`Sales
`
`Shares
`
`Battery Cases:
`
`Mophie
`
`
`
`200.00$
`
`90.0%
`
`Otter
`Belkin
`TYLT
`Boostcase
`Trianium
`I-Blason
`ALL OTHERS
`
`Prong
`Zilicon
`
`Total
`
`Charger Cases:
`
`Sources: Exhibit E.
`
`=
`
`
`
`22.20$
`
`10.0%
`
`
`
`222.20$
`
`100.0%
`
`

`
`size of the pie.”33 Therefore, since Mophie’s worldwide sales in 2015 were
`
`estimated to be $200 million, the market for mobile phone cases with integrated
`
`charging would be approximately $222.2 million.34
`
`25. All other firms in this market account for only 10 percent of it, or
`
`approximately $22.2 million. If as indicated from an informal counting of
`
`companies and products available on Walmart.com and Amazon.com; there are at
`
`least 50 firms, including Prong and Zilicon, accounting for that 10 percent of the
`
`relevant market.35 The average company had annual sales of $444,000, and its
`
`market share was 0.20 percent.36 Thus, a seemingly small level of sales can be
`
`evidence of commercial success in this highly competitive relevant market that is
`
`dominated by Mophie.
`
`G. Relevant Geographic Market
`
`
`33 “After A Decade in Business, Mophie Makes Its TV Debut – In the Super
`Bowl,” forbes.com, January 29, 2015 (Printed on 3/7/2016).
`34 Sales were estimated based on Mophie sales, which are a combination of direct
`sales (direct to consumer on Mophie.com) and sales through retailers.
`35 An informal counting of battery cases offered on Walmart.com and amazon.com
`conservatively totaled between 50 and 100 companies and products.
`36 These estimates are illustrative and likely very conservative for two reasons.
`First, there are a group of at least 6 tier 1 and tier 2 firms, as identified by LOFT,
`that have significant or limited market penetration, and likely have battery cases
`sales higher than the average. This means the vast majority of these 50 firms are
`really accounting for less than 10 percent of this relevant market. The second
`reason these numbers are likely very conservative is that there are likely more than
`50 firms accounting for that 10 percent market share. If, for example, there were
`100 firms accounting for that 10 percent market share, then the average sales for
`each of those 100 firms would be $222,000 and the average market share would be
`0.10 percent.
`
`
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`

`
`26. The relevant geographic market to analyze the commercial success of
`
`the PocketPlug and the Squirl Case is worldwide. As discussed above, Mophie is
`
`the leading supplier of battery cases for cellular phones in the world, and its
`
`estimated sales were worldwide. Countries that also use the U.S. standard AC
`
`power outlets include Canada, Mexico, China, Japan, and many countries in South
`
`America.37
`
`III. THE COMMERCIAL SUCCESS OF THE RELEVANT PRODUCTS
`
`
`27. The first determination examines the commercial success of the
`
`PocketPlug and the Squirl Case in the relevant market. It is my opinion as an
`
`economist, and based on the analysis provided below that there is evidence of
`
`substantial actual and expected commercial success of the relevant products in the
`
`relevant mobile phone case with integrated charging market. This opinion is based
`
`on my economic analysis of: (A) Actual PocketPlug (f/k/a JuiceTank) Sales; (B)
`
`Zilicon’s recent sales activity for the Squirl Case; and (C) Retail and Online
`
`Market Availability for the PocketPlug and the Squirl Case.
`
`A. Actual PocketPlug (f/k/a JuiceTank) Sales
`
`28. The actual sales of a product are normally a good indicator of the
`
`commercial success of a product. However, it must be analyzed in the proper
`
`context. Prong has not produced any post-launch sales data for its PocketPlug
`
`
`37 prong.com/faq (Printed on 2/29/2016).
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`

`
`device, and Zilicon is currently re-launching the Squirl Case after it was forced to
`
`recall shipments and delay filling purchase orders from its 2015 launch. Therefore,
`
`the only available evidence on actual sales of the PocketPlug comes from Prong’s
`
`Kickstarter project. Kickstarter is a “popular collective fundraising site that allows
`
`everyday consumers to support products they want to see come to market.”38
`
`1) Kickstarter Project
`
`29.
`
`In 2012, PocketPlug (f/k/a JuiceTank) was featured in a Kickstarter
`
`project called “JuiceTank: The first ever iPhone CASE and CHARGER in one.”39
`
`The company sold 2,076 JuiceTank devices, and generated sales of $130,148 in
`
`two months.40 As I stated earlier, a seemingly small amount of sales can be
`
`indicative of commercial success.
`
`
`38 “Detached Kickstarts JuiceTank, the First Case with an Integrated Wall Charger
`for iPhone,” PRNewswire, April 12, 2012. On Kickstarter, “Products that reach
`their pledge goal…use the funds to support production and packaging efforts.
`Those that are unsuccessful do not receive any of the funds” (ibid). Since
`Kickstarter’s launch in 2009, over 10 million total backers have pledged over $2.2
`billion
`on more
`than
`100,000
`successfully
`funded
`projects
`(kickstarter.com/about?ref=nav
`(Printed
`on
`3/4/2016)
`and
`kickstarter.com/help/stats?ref=hello (Printed on 3/4/2016)).
`39
`Kickstarter.com/projects/juicetank-the-first-ever-iphone-charger-and-case-
`i/description (Sorias Exhibit 2024).
`40 “JuiceTank: The First ever
`in one,”
`iPhone CASE and CHARGER
`2
`and
`Kickstarter.com/projects/juicetank
`(Printed
`on
`2/3/2016),
`p.
`kickstarter.com/projects/juicetank (Printed on 3/9/2016). The goal was to raise
`$125,000 during its funding period between March 14, 2012 and May 13, 2012,
`and it met that goal (ibid, p. 13). The average price for those JuiceTank devices
`sold on Kickstarter was $62.69 ($130,148/2,076).
`
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`30. The Kickstarter project is evidence of the substantial commercial
`
`success of the PocketPlug (f/k/a JuiceTank) in the context of all Kickstarter
`
`projects. Mr. Gladstone described it as “one of the most successful campaigns in
`
`the history of Kickstarter at the time.”41 According to Kickstarter statistics (from
`
`June 24 2012): only 41.1 percent of all projects launched on Kickstarter reached
`
`their goal and received the funds generate through their product sales.42 That
`
`percentage drops to 27.2 percent in the technology category, where slightly more
`
`than one in four Kickstarter projects reached its goal.
`
`31. Another indication of the success of this Kickstarter project was the
`
`$130,148 in sales that Prong generated in two months. Only 0.7 percent of all of
`
`the successfully launched Kickstarter projects raise more than $100,000. While
`
`that percentage increased to 8.5 percent in the technology category, it was still less
`
`than one out of every ten successful projects that generated that level of consumer
`
`support. This Kickstarter project was evidence of commercial success of the
`
`PocketPlug.
`
`
`41 Linkedin.com/in/lloydgladstone?auth (Printed on 3/17/2016).
`42
`Web.archive.org/web/20120622212453/http://www.Kickstarter.com/help/stats?ref
`=fo (Printed on 3/17/2016). For all projects, 41.1 percent is equal to 25,079
`successful projects divided by 61,054 total projects. In the technology category,
`27.2 percent is equal to 331 successful projects divided by 1,215 total projects
`(ibid). The 0.7 percent of all successful projects that raised more than $100,000 is
`equal to 168 projects that raised $100,000 or more divided by 25,079 successful
`projects. In technology category 8.5 percent equals 28 divided by 331 (ibid).
`
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`
`32. The $130,148 in product sales generated in two months is also
`
`evidence of substantial commercial success in the context of the relevant market
`
`for mobile phone cases with integrated charging. As discussed above, the market
`
`has been dominated by Mophie since it launched its first battery case in 2008.
`
`Assuming a comparable market structure in 2012, then the average all other firm
`
`sales would have been $444,000, and that firm’s average sales over two months
`
`would have been $74,000.43 The PocketPlug’s (f/k/a JuiceTank) Kickstarter sales
`
`in 2012 were thus 1.76 times greater than the average all other firms’ sales during a
`
`comparable two month time period. In sum, this analysis shows that a