`
`
`
`
`
`
`
`
`
`
`
`
`Patent Owner’s Response and Notice of Supplemental
`Evidence in Response to Petitioner’s Objections to Patent
`Owner’s Evidence Dated November 6, 2019
`
`
`
`
`
`
`
`
`
`
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 1
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`
`AMERICAN NATIONAL MANUFACTURING INC.,
`Petitioner,
`
`v.
`
`SELECT COMFORT CORPORATION,
`Patent Owner.
`
`____________
`
`Case No. IPR2019-00514
`Patent No. 5,904,172
`____________
`
`
`
`
`
`
`
`
`
`SUPPLEMENTAL DECLARATION OF CARL G. DEGEN
`IN SUPPORT OF PATENT OWNER’S RESPONSE
`
`
`
`
`
`
`
`
`
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 2
`
`
`
`
`
`I, Carl G. Degen, declare as follows:
`
`1.
`
`I am over the age of 21 years and am fully competent to make this
`
`Supplemental Declaration. I make the following statements based on personal
`
`knowledge and, if called to testify to them, could and would do so.
`
`2.
`
`I received my Bachelor’s of Science Degree in Mathematics and
`
`Economics from the University of Wisconsin–Parkside in Kenosha, Wisconsin in
`
`1977. I then completed all but my dissertation toward a Ph.D. in Economics at the
`
`University of Wisconsin–Madison in 1980.
`
`3.
`
`I am currently employed at Laurits R. Christensen Associates, Inc. in
`
`Madison, Wisconsin, where I have worked since 1980. I started my employment as
`
`an Economist in 1980, and advanced numerous times to my current role as President,
`
`which I have held since 2005. I was previously an Economics Teaching Assistant
`
`from 1977 to 1978 and an Economics Research Assistant from 1978 to 1980 at the
`
`University of Wisconsin–Madison. I was also the Vice President of the Wisconsin
`
`Business Economics Association from 1983 to 1984.
`
`4.
`
`I have testified in numerous litigations involving intellectual property
`
`and other business disputes, and in postal and energy rate cases. Since joining Laurits
`
`R. Christensen Associates, Inc., I have worked extensively on projects for the U.S.
`
`Postal Service including productivity measurement, cost measurement, product cost
`
`1
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 3
`
`
`
`
`
`models, and regulatory reform. I have also worked on projects in the energy and
`
`railroad industries. I have authored papers and written regulatory testimony.
`
`5.
`
`6.
`
`A copy of my current CV is attached as Appendix A.
`
`I have been retained by Fox Rothschild LLP, counsel for Sleep Number
`
`Corporation, formerly known as Select Comfort Corporation (“Sleep Number”), to
`
`analyze certain unit sales data produced in this inter partes review (“IPR”)
`
`proceeding by Petitioner American National Manufacturing, Inc. (“ANM”). None
`
`of my opinions are contingent on any result or payment of my fees.
`
`Understanding of the Law
`
`7.
`
`I am not a lawyer and do not offer legal opinions. However, I do have
`
`an understanding of certain legal concepts as relevant to my work and my analysis
`
`in this case.
`
`8.
`
`I understand that there are various secondary indicia of non-
`
`obviousness (sometimes called “secondary considerations”) that a patent owner may
`
`argue support a finding of patentability. I understand one such secondary
`
`consideration is commercial success, which I understand to relate to economic
`
`considerations regarding the products at issue. I understand one relevant
`
`consideration of commercial success is demand for the patented technologies, which
`
`can relate to the amount of sales of products that include the patented technologies,
`
`the sales trends of these products, and the market’s purchasing behavior regarding
`
`2
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 4
`
`
`
`
`
`these products. I understand another relevant consideration of commercial success
`
`is adoption of the patented technologies, which I understand to relate to the extent
`
`to which patented technologies displace non-patented technologies in relevant
`
`segments of the market.
`
`9. My opinions and analyses are based on the data and evidence currently
`
`available. If additional evidence or clarifying information is provided, I reserve the
`
`right to consider its impact, if any, on my opinions and analyses and amend this
`
`declaration if appropriate.
`
`Background
`
`10.
`
`I have reviewed Sleep Number’s Amended Disclosure of Asserted
`
`Claims and Infringement Contentions against ANM, which is Exhibit 2070, as well
`
`as the redacted Exhibits 2072, 2073, 2074, and 2075 (collectively, “Sleep Number’s
`
`Infringement Contentions”). I understand that these exhibits disclose ANM’s air bed
`
`systems, including names of air controllers with particular manifolds and source
`
`code, that Sleep Number has accused in an underlying district court case.
`
`11.
`
`It is my understanding that ANM petitioned the United States Patent
`
`and Trademark Office for IPR on three Sleep Number Patents: U.S. Patent No.
`
`5,904,172 (“the ‘172 Patent”); U.S. Patent No. 9,737,154 (“the ‘154 Patent”); and
`
`U.S. Patent No. 8,769,747 (“the ‘747 Patent”); and that IPR has been instituted on
`
`each Patent. I understand that infringement is not an issue in this IPR, but I use the
`
`3
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 5
`
`
`
`
`
`term “accused” throughout this declaration for ease of reference and because that is
`
`the term ANM used in its production of its unit sales data discussed below (which is
`
`reflected in Exhibit 2078 explained below).
`
`12.
`
`I have reviewed a document produced by ANM in the underlying
`
`district court case with the bates number ANMI00133414–22, which I understand is
`
`Exhibit 2077. I understand based upon my review of Exhibit 2077 that it includes
`
`the names of air controllers ANM sold between the years 1998 and 2018 and that it
`
`includes a timeline at ANMI00133414 depicting when ANM sold each air controller.
`
`For reasons described below, my analysis focuses on what ANM refers to as the Gen
`
`2 V4, Gen 3 V1, and Gen 3 V2 air controllers and focuses on the time period August
`
`2012 onward. Based upon my review, I understand that the timeline and the
`
`subsequent pages provide information regarding the “Manifold” and “Software”
`
`(ANM’s terms used in Exhibit 2077) included in these air controllers. This is
`
`relevant to my analysis as explained below.
`
`13. Exhibit 2077 (at ANMI00133414 and ANMI00133420) shows that
`
`ANM sold the Gen 2 V4 air controller (which included an “Arco/Rimco” manifold
`
`4
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 6
`
`
`
`
`
`and “Arco, Target system”1 Software) from August 2012 through approximately
`
`December 2014. Exhibit 2077 (at ANMI00133414 and ANMI00133421) shows that
`
`ANM sold the Gen 3 V1 air controller (which included an “Arco/Rimco” manifold,
`
`and “Providence, Target system” Main version 1.5 – 1.82 and Remote version 1.8
`
`Software (identified collectively as “M1.5-1.8/R1.8” in Exhibit 2078)), from June
`
`25, 2014
`
`through August 2016. Exhibit 2077 (at ANMI00133414 and
`
`ANMI00133422) shows that ANM sold the Gen 3 V2 air controller (which included
`
`
`1 Exhibit 2077 at ANMI00133420 indicates that ANM’s Gen 2 V4 air controller is
`
`the earliest air controller that ANM described as a “target pressure” controller with
`
`“Target system” software.
`
`2 I see that Exhibit 2077 at ANMI00133414 refers only to a version 1.8 but that
`
`Exhibit 2077 at ANMI00133421 refers to a version 1.5 – 1.8. I understand from
`
`Sleep Number’s counsel, Exhibits 2074 and 2075 (included in Sleep Number’s
`
`Infringement Contentions), and Exhibit 2054 (Declaration of George Edwards) that
`
`Sleep Number has inspected and accused version 1.8.
`
`5
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 7
`
`
`
`
`
`a “Koge” manifold3 and “Providence, Target system” Main versions 1.92, 1.97,4 2.0
`
`and Remote version 2.55 Software (identified collectively as “M1.92-2.0/R2.55” in
`
`Exhibit 2078)), from August 2016 onward.
`
`14.
`
`I understand from Exhibits 2070 and 2072 (included in Sleep Number’s
`
`Infringement Contentions), Exhibit 2041 (Declaration of Dr. John Abraham),
`
`Exhibit 2054 (Declaration of George Edwards), and Exhibit 2078 (IPR 8) that Sleep
`
`Number has asserted that air beds sold since at least August 2012 with ANM’s air
`
`controllers that include at least an Arco or Koge “manifold” (which I understand
`
`
`3 Based on conversation with Sleep Number’s counsel, Exhibit 2041 (Declaration of
`
`Dr. John Abraham), and the bullet-point description in Exhibit 2077 at
`
`ANMI00133422, I understand that the Gen 3 V2 air controller included a Koge
`
`manifold, not an Arco/Rimco manifold as is indicated elsewhere on ANMI00133422
`
`(presumably inadvertently).
`
`4 Exhibit 2077 at ANMI00133414 does not include reference to a version 1.97, but
`
`my analyses would be the same had it been incorporated at any period of time when
`
`ANMI00133414 notes version 2.0 was incorporated because I understand from
`
`Exhibits 2074 and 2075 (included in Sleep Number’s Infringement Contentions) and
`
`Exhibit 2054 (Declaration of George Edwards) that Sleep Number asserts both as
`
`reading on its ‘154 Patent and ‘747 Patent.
`
`6
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 8
`
`
`
`
`
`from Exhibit 2041 Sleep Number refers to as the enclosure of the valve enclosure
`
`assembly) supported by the corresponding source code versions noted in Exhibit
`
`2077 read on its ‘172 Patent.5 I also understand from Exhibits 2070, 2074, and 2075
`
`(included in Sleep Number’s Infringement Contentions), Exhibit 2054 (Declaration
`
`of George Edwards), Exhibit 2041 (Declaration of Dr. John Abraham), and Exhibit
`
`2078 (IPR 8) that Sleep Number has asserted that air beds sold with ANM’s air
`
`controllers that include at least Software (i.e. source code) versions 1.8, 1.97, and
`
`2.0 read on its ‘154 Patent and ‘747 Patent.6
`
`
`5 I understand from Exhibits 2070 and 2073 that Sleep Number also accuses medical
`
`beds such as the Platinum 5000/6000. I understand from Exhibit 2078, addressed in
`
`more detail below, that ANM sold medical beds such as the “Platinum 6000
`
`Controller” with a “Medisphere” manifold. I understand from Sleep Number’s
`
`counsel that Sleep Number has accused these beds. Therefore, I include ANM’s units
`
`with the Medisphere manifold in the noted portion of my analyses below. I call these
`
`units “Medisphere units.”
`
`6 I understand from Exhibits 2070 and 2073 that Sleep Number also accuses medical
`
`beds such as the Platinum 5000/6000. I understand from Exhibit 2078, addressed in
`
`more detail below, that the medical beds ANM sold with a Medisphere manifold
`
`included either Medisphere source code or Sizewise source code (the latter of which
`
`7
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 9
`
`
`
`
`
`15. As already noted, I have also reviewed the Declarations of John
`
`Abraham and George Edwards, which are Exhibits 2041 and 2054, which I also
`
`relied upon in gleaning the foregoing information.
`
`Unit Data Analyses
`
`16.
`
`I understand from Sleep Number’s counsel and from reviewing ANM’s
`
`discovery responses dated October 14, 2019, that, on October 15, 2019, ANM
`
`produced a revised native excel document titled “IPR 8_Monthly Data For Accused
`
`and NonAccused – HIGHLY CONFIDENTIAL AEO” in this IPR, that, based on
`
`my review, I understand purports to provide unit sales data for ANM’s sales of
`
`consumer and medical beds for the time period March 2004 to September 2019. I
`
`received these data from Sleep Number’s counsel on October 15, 2019 and I
`
`reviewed the Board’s order dated October 7, 2019 requiring the production of these
`
`data. These data include only units for ANM’s identified sales. These data do not
`
`include revenues, prices, expenses, or profits regarding ANM’s identified sales,
`
`which, if made available to me in Excel format, may provide further evidence of the
`
`
`I understand from Sleep Number’s counsel has also been referred to as Platinum
`
`source code). By virtue of my inclusion of ANM’s units with the Medisphere
`
`manifold in the noted portion of my analyses below, these versions of source code
`
`are also included.
`
`8
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 10
`
`
`
`
`
`commercial success of ANM’s products achieved as a result of incorporating the
`
`technologies from Sleep Number’s ‘172 Patent, ‘154 Patent, and ‘747 Patent. Such
`
`evidence may include price premiums, increased revenues, reduced expenses,
`
`increased profits, and/or profit premiums on ANM’s products achieved as a result of
`
`incorporating the technologies from Sleep Number’s ‘172 Patent, ‘154 Patent, and
`
`‘747 Patent. Again, I do not have those data, so I cannot say one way or another
`
`whether they would provide evidence of commercial success, but I note that they
`
`may. I have reviewed Exhibit 2078, so I understand that it consists of a portion of
`
`“IPR 8.” Specifically, I understand that Exhibit 2078 consists of a PDF of the tab in
`
`IPR 8 titled “Raw Data,” which is the tab containing the data that I analyzed, sorted
`
`by Month lowest to highest (Column B). I routinely consider sales data of market
`
`participants to determine, among other things, commercial success, and industry
`
`adoption. The information contained in Exhibit 2078 and IPR 8 are of the type that
`
`economists like me reasonably rely upon in formulating an opinion on secondary
`
`considerations or other valuations matters. In analyzing this information, I followed
`
`methods that are accepted in the study of economics. Specifically, I utilized the raw
`
`data provided and organized those data based on different products to analyze
`
`changes in sales over time and during certain time periods. I regularly testify as to
`
`the results of such analyses because they are a reliable method of examining data.
`
`My testimony herein is based on sufficient facts and data, is the product of reliable
`
`9
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 11
`
`
`
`
`
`principles and methods, and I have applied the principles and methods reliably to the
`
`facts provided in this case to reach my opinion.
`
`17.
`
`I analyzed ANM’s “Raw Data” in Exhibit 2078 by filtering various
`
`columns of information and running various pivot tables. Specifically, my analyses
`
`consider the “Month” of each sale in Column B, the “Inner Co” sales (i.e. inter-
`
`company sales) and “3rd Party” sales (i.e. sales to third parties) in Column D, the
`
`“Description” of the product being sold in Column F, the number of “Units Sold”
`
`for each such product in Column H, whether the product was a “Medical” or
`
`“Consumer” product in Column I, whether the product sold included a “Manifold”
`
`listed in Column K that has been accused by Sleep Number, and/or whether the
`
`product sold included “Software” (i.e. source code) listed in Column L that has been
`
`accused by Sleep Number. Column K includes the following five options for
`
`“Manifold” – Arco, Koge, Medisphere, N/A, 7 and Sun/Wok. I understand from
`
`Exhibits 2070 and 2072 (included in Sleep Number’s Infringement Contentions),
`
`Exhibit 2041 (Declaration of Dr. John Abraham), and Exhibit 2054 (Declaration of
`
`George Edwards), and the “Accused” Columns J and M of Exhibit 2078 that Sleep
`
`Number has asserted that at least ANM’s air controllers with the Arco, Koge, and
`
`
`7 I understand from Sleep Number’s counsel, based on counsel’s discussion with
`
`ANM’s counsel, that “N/A” refers to a product not sold with an accused “Manifold.”
`
`10
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 12
`
`
`
`
`
`Medisphere manifolds (supported by the corresponding source code versions noted
`
`in Exhibit 2077) read on Sleep Number’s ‘172 Patent. I base my analyses below on
`
`ANM’s unit data from Exhibit 2078 that include these manifolds. For now, I do not
`
`include the N/A or Sun/Wok manifolds in my analyses. Column L includes eight
`
`options for “Software” – Arco, Arco Target, M1.5-1/8.R1.8, M1.92-2.0/R2.55,
`
`Medisphere, N/A,8 Sizewise, and Sun/Wok. I understand from Exhibits 2070, 2074,
`
`and 2075 (included in Sleep Number’s Infringement Contentions), Exhibit 2054
`
`(Declaration of George Edwards), Exhibit 2041 (Declaration of Dr. John Abraham),
`
`and the “Accused” Columns J and M of Exhibit 2078 that Sleep Number has asserted
`
`that at least ANM’s air controllers with source code versions 1.8, 1.97, and 2.0
`
`(supported by the corresponding manifolds noted in Exhibit 2077) read on its ‘154
`
`Patent and ‘747 Patent. I base my analyses below on ANM’s unit data from Exhibit
`
`2078 that include these versions of source code. For now, I do not consider the Arco,
`
`Arco Target, N/A, or Sun/Wok versions of source code.
`
`18. My analyses address two questions: 1) Did ANM’s use/changes
`
`regarding technologies that Sleep Number asserts read on Sleep Number’s ‘172
`
`Patent, ‘154 Patent, and ‘747 Patent impact ANM’s average monthly unit sales of
`
`
`8 I understand from Sleep Number’s counsel, based on counsel’s discussion with
`
`ANM’s counsel, that “N/A” refers to a product not sold with an accused “Software.”
`
`11
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 13
`
`
`
`
`
`accused pumps/air controllers as seen as in Exhibit 2078; and 2) What was ANM’s
`
`adoption rate of the manifolds/source code that Sleep Number asserts read on Sleep
`
`Number’s ‘172 Patent, ‘154 Patent, and ‘747 Patent compared to the sales of
`
`mattresses identified by ANM as accused in Column M of its “Raw Data” (Exhibit
`
`2078).
`
`Impact from ANM’s Changes in Manifold and/or Software
`
`19. Because Exhibit 2077 (at ANMI00133420) shows that ANM’s first
`
`offering of a “target pressure” air controller was in August 2012, I begin my analyses
`
`of ANM’s unit sales data from Exhibit 2078 in August 2012 and conduct the
`
`analyses over four periods of time: (1) August 2012 through June 2014 (“Period 1”),
`
`(2) July 2014 through July 2016 (“Period 2”), (3) August 2016 through August 2017
`
`(“Period 3”), and (4) September 2017 through September 2019 (“Period 4”).9 Period
`
`1 reflects the time frame that ANM sold the Gen 2 V4 air controller with an
`
`
`9 Additionally, I start my analysis in 2012 because I understand from Exhibit 2058
`
`(Declaration of Elizabeth Patton) and Exhibit 2062 referenced within (Agreement
`
`and Amendment) that, prior to 2012, ANM’s unit sales to consumers would have
`
`been subject to a non-compete agreement between parties in this IPR. Therefore, I
`
`do not include this time period in my analyses, which is largely focused on consumer
`
`sales but partially includes medical sales of Medisphere units as addressed below.
`
`12
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 14
`
`
`
`
`
`Arco/Rimco manifold (see Exhibit 2077 at ANMI00133414, ANMI00133420),
`
`which I understand from Exhibits 2070 and 2072 (included in Sleep Number’s
`
`Infringement Contentions), Exhibit 2041 (Declaration of Dr. John Abraham),
`
`Exhibit 2054 (Declaration of George Edwards), and the “Accused” Columns J and
`
`M of Exhibit 2078 is asserted by Sleep Number to read on Sleep Number’s ‘172
`
`Patent. Period 2 reflects the time frame that ANM sold the Gen 3 V1 air controller
`
`with an Arco/Rimco manifold
`
`(see Exhibit 2077 at ANMI00133414,
`
`ANMI00133421), which I understand from Exhibits 2070 and 2072 (included in
`
`Sleep Number’s Infringement Contentions), Exhibit 2041 (Declaration of Dr. John
`
`Abraham), Exhibit 2054 (Declaration of George Edwards), and the “Accused”
`
`Columns J and M of Exhibit 2078 is asserted by Sleep Number to read on Sleep
`
`Number’s ‘172 Patent; and included source code version M1.5-1.8/R1.8 which I
`
`understand from Exhibits 2070, 2074, and 2075 (included in Sleep Number’s
`
`Infringement Contentions), Exhibit 2054 (Declaration of George Edwards), and the
`
`“Accused” Columns J and M of Exhibit 2078 is asserted by Sleep Number to read
`
`on Sleep Number’s ‘154 Patent and ‘747 Patent. Period 3 reflects the time frame that
`
`ANM sold the Gen 3 V2 air controller with a Koge manifold (see Exhibit 2077 at
`
`ANMI00133414, ANMI00133422), which I understand from Exhibits 2070 and
`
`2072 (included in Sleep Number’s Infringement Contentions), Exhibit 2041
`
`(Declaration of Dr. John Abraham), Exhibit 2054 (Declaration of George Edwards),
`
`13
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 15
`
`
`
`
`
`and the “Accused” Columns J and M of Exhibit 2078 is asserted by Sleep Number
`
`to read on Sleep Number’s ‘172 Patent; and included source code versions 1.9 and
`
`1.92 which I understand from Exhibits 2070, 2074, and 2075 (included in Sleep
`
`Number’s Infringement Contentions) and Exhibit 2054 (Declaration of George
`
`Edwards) is not asserted by Sleep Number to read on Sleep Number’s ‘154 Patent
`
`or ‘747 Patent. Period 4 reflects the time frame that ANM sold the Gen 3 V2 air
`
`controller with a Koge manifold (see Exhibit 2077 at ANMI00133414,
`
`ANMI00133422), which I understand from Exhibits 2070 and 2072 (included in
`
`Sleep Number’s Infringement Contentions), Exhibit 2041 (Declaration of Dr. John
`
`Abraham), Exhibit 2054 (Declaration of George Edwards), and the “Accused”
`
`Columns J and M of Exhibit 2078 is asserted by Sleep Number to read on Sleep
`
`Number’s ‘172 Patent; and included source code version 2.0 which I understand
`
`from Exhibits 2070, 2074, and 2075 (included in Sleep Number’s Infringement
`
`Contentions), Exhibit 2054 (Declaration of George Edwards), and the “Accused”
`
`14
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 16
`
`
`
`
`
`Columns J and M of Exhibit 2078 is asserted by Sleep Number to read on Sleep
`
`Number’s ‘154 Patent and ‘747 Patent.10
`
`20. My analyses identify unit sales of ANM’s accused pumps/air
`
`controllers as products containing variants of “pump” or “controller” in the
`
`“Description” in Column F of Exhibit 2078 and have a “Manifold” asserted to read
`
`on Sleep Number’s ‘172 Patent in Column K and/or have a “Software” (i.e. source
`
`code version) asserted to read on Sleep Number’s ‘154 Patent or ‘747 Patent in
`
`Column L of Exhibit 2078 as discussed above in paragraphs 14 and 17 and their
`
`footnotes. Specifically, when analyzing data in the “Description” column (which I
`
`also reference below), I used the pivot table feature of Excel to isolate rows hitting
`
`on those terms. Attached as Appendix B is a chart created from these data showing
`
`ANM’s monthly unit sales of pumps/air controllers that include a manifold and/or
`
`source code that I understand is asserted to read on Sleep Number’s ‘172 Patent,
`
`‘154 Patent, and/or ‘747 Patent (“accused pumps/air controllers”) as discussed above
`
`in paragraphs 14 and 17 and their footnotes. The three vertical lines indicate the
`
`
`10 To the extent that ANM’s source code version 1.97 was implemented during a
`
`portion of Period 4, I understand from Exhibit 2054 (Declaration of George
`
`Edwards) that Sleep Number has asserted this source code version also reads on
`
`Sleep Number’s ‘154 Patent and ‘747 Patent and thus my analysis remains the same.
`
`15
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 17
`
`
`
`
`
`transitions between the Periods described above in paragraph 19. The four horizontal
`
`lines indicate ANM’s average monthly unit sales during each Period described above
`
`in paragraph 19. ANM’s average monthly unit sales of accused pumps/air controllers
`
`as defined above (calculated based on “Month” (Column B); and using “Units Sold”
`
`(Column H) from ANM’s data in Exhibit 2078) by Period as defined in paragraph
`
`19 above are shown in Table 1 below:
`
`More specifically, I determined based on adding up the number of accused pumps/air
`
`controllers as defined above for each Period as defined above that:
`
`
`
`
`
`
`
`
`
` If only
`
`consumer demand is considered—and ANM’s Medisphere units are excluded—the
`
`results of these analyses are consistent. Appendix B_1 is my Appendix B chart
`
`excluding Medisphere units. Table 1A shows ANM’s sales of accused pumps/air
`
`controllers excluding Medisphere units:
`
`16
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 18
`
`
`
`
`
`I determined based on adding up the number of accused pumps/air controllers
`
`(excluding Medisphere units) as defined above for each Period as defined above that:
`
`
`
`
`
`
`
`
`
` This provided sufficient information to compare the data.
`
`21. Applying this information in a reliable way using the widely recognized
`
`and accepted Wald Test, which is a test that allows the comparison of the means
`
`between two datasets, I statistically tested ANM’s mean unit sales of accused
`
`pumps/air controllers for each Period to the mean of ANM’s unit sales of accused
`
`pumps/air controllers in an adjacent Period to determine if ANM’s average monthly
`
`unit sales of accused pumps/air controllers was statistically different between the
`
`compared Periods. Appendix C shows the results of my statistical analyses generated
`
`by this testing in the form of the log file exported by the STATA software, a
`
`commonly accepted software for statistical analyses, which I used to perform these
`
`analyses. Appendix C_1 shows the results of my statistical analyses generated by
`
`17
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 19
`
`
`
`
`
`this testing after excluding Medisphere units in the form of a log file exported by the
`
`STATA software used to perform these analyses.
`
`22.
`
`I understand from Exhibit 2077; Exhibits 2070, 2074, and 2075
`
`(included in Sleep Number’s Infringement Contentions); and Exhibit 2054
`
`(Declaration of George Edwards) that ANM’s product changes between Period 1
`
`and Period 2 include a change from ANM’s Arco Target source code not asserted to
`
`read on Sleep Number’s ‘154 Patent and ‘747 Patent to ANM’s version 1.8 source
`
`code asserted to read on Sleep Number’s ‘154 Patent and ‘747 Patent.
`
`
`
`
`11 As shown in Appendix C,
`
`
`
`18
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 20
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`23.
`
`I understand from Exhibit 2077; Exhibits 2070, 2074, and 2075
`
`(included in Sleep Number’s Infringement Contentions); and Exhibit 2054
`
`(Declaration of George Edwards) that ANM’s product changes between Period 2
`
`and Period 3 include a change from source code asserted to read on Sleep Number’s
`
`‘154 Patent and ‘747 Patent (version 1.8) to source code not asserted to read on Sleep
`
`Number’s ‘154 Patent or ‘747 Patent (versions 1.9 and 1.92). I understand from
`
`Exhibit 2077; Exhibits 2070 and 2072 (included in Sleep Number’s Infringement
`
`Contentions); and Exhibit 2041 (Declaration of Dr. John Abraham) that ANM’s
`
`
`12 As shown in Appendix C_1,
`
`
`
`
`
`
`
`19
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 21
`
`
`
`
`
`accused pumps/air controllers also changed at this time from an Arco/Rimco
`
`manifold to a Koge manifold—both of which are asserted to read on Sleep Number’s
`
`‘172 Patent.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`20
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 22
`
`
`
`
`
`24.
`
`I understand from Exhibit 2077; Exhibits 2070, 2074 and 2075
`
`(included in Sleep Number’s Infringement Contentions); and Exhibit 2054
`
`(Declaration of George Edwards) that ANM’s product changes between Period 3
`
`and Period 4 include a change from source code not asserted to read on Sleep
`
`Number’s ‘154 Patent and ‘747 Patent (versions 1.9 and 1.92) to source code
`
`asserted to read on Sleep Number’s ‘154 Patent and ‘747 Patent (version 2.0 and
`
`version 1.97 to the extent it was implemented).
`
`
`13 As shown in Appendix C,
`
`
`
`21
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 23
`
`
`
`
`
`
`
`
`
`25.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` I understand from my experience that the demand
`
`
`
`
`
`
`
`
`14 As shown in Appendix C_1,
`
`
`
`22
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 24
`
`
`
`
`
`, is a relevant factor
`
`to consider regarding commercial success of ANM’s accused pumps/air controllers.
`
`ANM’s Adoption of Accused Manifolds and Source Code
`
`26.
`
`I also understand from my experience that evidence of adoption—
`
`specifically here, ANM’s adoption of the technologies asserted to read on Sleep
`
`Number’s ‘172 Patent, ‘154 Patent, and ‘747 Patent in its pumps/air controllers—is
`
`another relevant consideration regarding commercial success. I measured ANM’s
`
`adoption of accused technologies by comparing its sales of accused pumps/air
`
`controllers (as defined in paragraphs 14 and 17 and their footnotes above) to its sales
`
`of accused mattresses (defined as those identified as “Accused” by ANM in Column
`
`M of Exhibit 2078).15
`
`
`15
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`. I understand from Exhibit 2070 that Sleep Number asserts
`
`that its ‘172 Patent, ‘154 Patent, and ‘747 Patent cover an entire mattress system.
`
`23
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 25
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`24
`worN
`
`Sleep Number Corp.
`SUPPLEMENTALEXHIBIT 2055
`IPR2019-00514
`
`Page 26
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 26
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`27.
`27.
`
`25
`25
`
`
`
`
`
`Sleep Number Corp.
`SUPPLEMENTALEXHIBIT 2055
`IPR2019-00514
`
`Page 27
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 27
`
`
`
`
`
`
`
`28.
`NCo
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`26
`26
`
`
`
`Sleep Number Corp.
`SUPPLEMENTALEXHIBIT 2055
`IPR2019-00514
`
`Page 28
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 28
`
`
`
`
`
`Conclusions
`
`29. My analyses, based on the available data and evidence, consider
`
`ANM’s unit sales and adoption of technologies asserted to read on Sleep Number’s
`
`‘172 Patent, ‘154 Patent, and/or ‘747 Patent. My testimony is based on sufficient
`
`facts and data, is the product of reliable principles and methods, and I have applied
`
`the principles and methods reliably to the facts provided in this case to reach my
`
`opinion. To isolate the impact of technologies asserted to read on Sleep Number’s
`
`‘172 Patent, ‘154 Patent, and/or ‘747 Patent, I compare data by four different
`
`“Periods” defined by information in ANM’s Exhibit 2077 showing the timeline
`
`when ANM transitioned the relevant products to a new manifold and/or source code
`
`technology and by relying upon information provided in Exhibits 2070, 2072, 2073,
`
`2074 and 2075 (Sleep Number’s Infringement Contentions), Exhibit 2041
`
`(Declaration of Dr. John Abraham), and Exhibit 2054 (Declaration of George
`
`Edwards). I have not seen evidence that other factors impacted ANM’s unit sales at
`
`these same transition points. To the extent other factors are brought to my attention,
`
`I reserve the right to analyze and opine about them. Based upon my analyses detailed
`
`above, I believe to a reasonable degree of certainty that there is clear evidence of
`
`commercial success based on:
`
`•
`
`27
`
`
`
`
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 29
`
`
`
`
`
`•
`
`•
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`30. These analyses demonstrate that demand for technologies that read on
`
`Sleep Number’s ‘172 Patent, ‘154 Patent, and ‘747 Patent exists. Regarding Sleep
`
`Number’s ‘172 Patent, since July 2014, Table 2 and my analyses described above
`
`show
`
`
`
` Specific to Sleep Number’s ‘154 Patent and
`
`‘747 Patent, my review of Exhibit 2078, Exhibit 2077, Exhibit 2054, Table 1, Table
`
`1A, Table 2, Appendix B, Appendix B_1, Appendix C, and Appendix C_1 and my
`
`analyses described above show
`
`
`
`28
`
`Sleep Number Corp.
`SUPPLEMENTAL EXHIBIT 2055
`IPR2019-00514
`Page 30
`
`
`
`
`
`
`
`
`
`
`
` My review of Exhibit 2078, Exhibit 2077, Exhibit 2054, Table 1, Table
`
`1A, Table 2, Appendix B, Appendix B_1, Appendix C, and Appendix C_1 and my
`
`analyses described above show
`
`
`
`
`
`
`
`
`
`. My review of Exhibit 2078, Exhibit 2077, Exhibit 2054, Table 1, Table 1A,
`
`Table 2, Appendix B, Appendix B_1, Appendix C, and Appendix C_1 and my
`
`analyses described above also show
`
`
`
`29