`
`Transcript of Carl G. Degen
`
`Date: January 8, 2020
`Case: American National Manufacturing Inc. -v- Sleep Number Corporation, et al.
`(PTAB)
`
`Planet Depos
`Phone: 888.433.3767
`Email:: transcripts@planetdepos.com
`www.planetdepos.com
`
`WORLDWIDE COURT REPORTING & LITIGATION TECHNOLOGY
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 1
`
`

`

`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`
`1 (1 to 4)
`
`1
`
`3
`
`APPEARANCES:
`
` On Behalf of Petitioner:
`
` SPENCER FANE LLP
` 500 Granite Parkway
` Suite 650
` Plano, TX 75024
` By: Mark Thornhill, Esq.
`
` On Behalf of Patent Owner:
`
` FOX ROTHSCHILD, LLP
` 222 South Ninth Street
` Suite 2000
` Minneapolis, MN 55402
` By: Elizabeth Patton, Esq.
`
`0
`
`
`
`1 2 3 4 5 6 7 8 9 1
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
` ALSO PRESENT: Jacob Arvold, Videographer
` Matthew Lynde (via telephone)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` UNITED STATES PATENT AND TRADEMARK OFFICE
`
` ----------------------
`
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
` ----------------------
`
` AMERICAN NATIONAL MANUFACTURING, INC.,
`
` Petitioner
`
` v.
`
` SLEEP NUMBER CORPORATION
`
` f/k/a SELECT COMFORT CORPORATION,
`
`0
`
` Patent Owner
`
`1 2 3 4 5 6 7 8 9 1
`
`11
`
` ----------------------
`
`12
`
`13
`
` Case IPR2019-00497, Patent No. 8,769,747
` Case IPR2019-00500, Patent No. 9,737,154
` Case IPR2019-00514, Patent No. 5,904,172
`
`14
`
` ----------------------
`
`15
`
` VIDEOTAPED DEPOSITION
`
`16
`
` OF
`
`17
`
` CARL G. DEGEN
`
`18
`
` January 8, 2020
`
`
`
`
`
`19
`
`20
`
`21
`
`22
`
`2
`
`4
`
`INDEX:
`
`EXAMINATION BY: PAGE
`
`Mr. Thornhill...............................6, 186
`
`Ms. Patton.....................................173
`
`EXHIBITS MARKED FOR IDENTIFICATION:
`
`Exhibit 2027....................................66
`Declaration of Dr. John Abraham
`No Bates
`
`Exhibit 2029....................................66
`Declaration of George Edwards
`No Bates
`
`Exhibit 2030.....................................8
`Declaration of Carl G. Degen
`No Bates
`
`Exhibit 2044....................................38
`Plaintiff's Amended Disclosure of
`Asserted Claims and Infringement Contentions
`No Bates
`
`Exhibit 2052....................................39
`History of features and sales
`No Bates
`
`Exhibit 2057....................................46
`Thumb Drive - No Bates
`
`
`
`
`
`
`
`
`
`
`
`1 2 3 4 5 6 7 8 9 1
`
`0
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`
`Job No. 275013
`Reported by: Amy L. Larson, RPR
`
`
`
`VIDEOTAPED DEPOSITION OF CARL G. DEGEN, taken on
`
`this 8th day of January, 2020, commencing at
`
`approximately 9:01 a.m., at the law offices of
`
`Fox Rothschild, LLP, 222 South Ninth Street,
`
`Suite 2000, Minneapolis, Minnesota.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1 2 3 4 5 6 7 8 9 1
`
`0
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 2
`
`

`

`7
`
`8
`
`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`
`2 (5 to 8)
`
`Q. I'm Mark Thornhill representing
` American National Manufacturing. It's a
` pleasure to meet you.
` Sir, during the course of this
` deposition you understand that you're sworn
` to tell the truth, and you do understand
` that, don't you?
`A. Yes.
`Q. Okay. You've given many depositions in the
` course of your career, haven't you, sir?
`A. Yes.
`Q. Okay. So I'm assuming that you're familiar
` with the process. The only thing that I ask
` of you is that if I ask a question that you
` don't understand, please ask me to restate it
` or to clarify it, because otherwise I'm going
` to just accept that you do understand the
` question.
` Is that fair?
`A. Yes.
`Q. Good.
` MR. THORNHILL: So let's just mark
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`5
`
`6
`
` P R O C E E D I N G S
`
`
`
` THE VIDEOGRAPHER: Here begins
`
`Disk Number 1 in the videotaped deposition
`
`of Carl G. Degen in the matter of
`
`American National Manufacturing, Inc. vs.
`
`Sleep Number Corporation, before the
`
`Patent Trial and Appeal Board, United States
`
`Patent and Trademark Office, Case Numbers
`
`0
`
`IPR2019-00497, dash 00500 and dash 00514.
`
`1 2 3 4 5 6 7 8 9 1
`
`11
`
`Today's date is January 8th, 2020. The time
`
`12
`
`on the video monitor is 9:02 a.m.
`
`13
`
` The videographer today is
`
`14
`
`Jacob Arvold representing Planet Depos.
`
`15
`
`This video deposition is taking place at
`
`16
`
`222 South Ninth Street, Suite 2000,
`
`17
`
`Minneapolis, Minnesota.
`
`18
`
` Would counsel please voice identify
`
`19
`
`themselves and state whom they represent.
`
`20
`
` MR. THORNHILL: For
`
`21
`
`American National Manufacturing,
`
`22
`
`Mark Thornhill of the Spencer Fane law firm.
`
` Mr. Degen's declaration as Exhibit 2030.
` (Exhibit 2030 marked.)
`BY MR. THORNHILL:
`Q. Mr. Degen, the court reporter has placed in
` front of you Exhibit 2030. Can you identify
` that as the declaration that you submitted in
` this case dated October 23, 2019?
`A. Yes, it appears to be a copy of that.
`Q. Right. And that represents your sworn
` testimony as of that date; isn't that
`0
` correct?
`11
`A. Yes.
`12
`Q. In fact, the document has your signature at
`13
` the last page of the text, isn't that so?
`14
`A. That's correct, on page 19.
`15
`Q. Right. And just above it says that you made
`16
` those statements under penalty of perjury?
`17
`A. Correct.
`18
`Q. Okay. And, sir, is it -- you understand that
`19
` there actually are three proceedings with the
`20
` same controversy in this matter?
`21
`A. Yes.
`22
`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
`
`1234567891
`
` MS. PATTON: Elizabeth Patton from
`
`Fox Rothschild representing the patent owner,
`
`Sleep Number Corporation.
`
` THE VIDEOGRAPHER: And also
`
` appearing by phone?
`
` MR. THORNHILL: Is Matthew Lynde,
`
` L-Y-N-D-E, of Cornerstone Consulting.
`
` THE VIDEOGRAPHER: The court
`
` reporter today is Amy Larson representing
`
`0
`
` Planet Depos.
`
`1 2 3 4 5 6 7 8 9 1
`
`11
`
` Would the reporter please swear in
`
`12
`
` the witness.
`
`13
`
`
`
`14
`
` CARL G. DEGEN,
`
`15
`
`16
`
`17
`
` a witness in the above-entitled action,
`
` after having been first duly sworn, was
`
` deposed and says as follows:
`
`18
`
`
`
`19
`
` EXAMINATION
`
`20
`
`BY MR. THORNHILL:
`
`21
`
`Q. Good morning, Mr. Degen.
`
`2 22 2
`
`
`
`A . G o o d m o r n i n g .A . G o o d m o r n i n g .
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 3
`
`

`

`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`9
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`Q. And this sworn testimony was submitted for
` all three -- all three proceedings, you did
` not make a separate declaration for -- or a
` different declaration for any of the three
` proceedings?
`A. I believe for one of the proceedings some of
` the exhibit number references were changed,
` but the exhibits are exactly the same, and
` the text and opinions are exactly the same.
`Q. Okay. The declaration, sir, Exhibit 2030,
` includes a copy of your resume at Appendix A.
` Do you see that?
`A. Yes.
`Q. And then immediately following the resume
` there's a page titled, Deposition and Trial
` Testimony.
` Do you see that?
`A. Yes.
`Q. Is the resume still accurate as of today?
`A. Yes.
`Q. Is the statement of deposition and trial
` testimony accurate as of today?
`
`3 (9 to 12)
`
`11
`
` experience?
`A. Correct.
`Q. You've been a professional economist for how
` many years approximately, 30, 40?
`A. Forty-two.
`Q. So is it okay with you then if we discuss
` this generally in terms using the word
` "commercial success" rather than going
` through the words about secondary indicia,
` et cetera?
`A. Yes.
`Q. Commercial success is a fair way to describe
` the basic analysis that you were conducting?
`A. It's -- it's broader than the analysis I've
` conducted. I've looked at two specific
` analyses that fall under the rubric of
` commercial success.
`Q. Fine. And one of those is whether there is
` demand for the patented technologies; is that
` correct?
`A. Yes.
`Q. And another -- and the second of those
`
`1234567891
`
`10
`
`A. Yes.
` analyses that you've prepared -- that you've
` conducted, is the adoption rate of the
`Q. Sir, in this case and through your sworn
` patented technologies; is that correct?
` testimony presented in Exhibit 2030, you talk
`A. Yes.
` about secondary indicia of nonobviousness, is
`Q. Now, sir, in cases previous to the case that
` that so?
`A. I think -- yes, secondary indicia or
` we're on here today, have you provided sworn
` sometimes called secondary consideration,
` testimony in other patent cases on the
` yes.
` general topic of commercial success?
`A. Commercial success comes under several of the
`Q. Okay. And in particular, you're talking here
` factors in Georgia-Pacific, so I would say in
` about the concept of commercial success?
`0
` a -- in a large number of cases where I've
`A. Specifically, yes.
`11
` given royalty opinions, commercial success,
`Q. And just for reference purposes, I was
`12
` including demand and adoption, would have
` looking at paragraph 8 of your declaration.
`13
` been included in my analyses, or at least
` That may be where you were looking.
`14
` considerations within my analyses.
`A. Yes, it is.
`15
`Q. In any other patent cases have you opined
`Q. Okay. And you explain in paragraph 8,
`16
` about demand for patented technology?
` "Commercial success relates to economic
`17
`A. Yes, I've looked at the sales of products
` considerations regarding the products at
`18
` embodying the patented technology relative to
` issue"; is that correct?
`19
` those that don't and how those have changed
`A. I explain that that's my understanding, yes.
`20
` over time.
`Q. Okay. All right. And that's your
`21
`Q. How would you compare and contrast those
` understanding developed during your years of
`22
`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
`
`12
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 4
`
`

`

`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`13
`
` previous testimonies about demand for
` patented -- patented technologies from the
` undertaking that you have made in this case?
`A. I would say they're very similar.
`Q. Have you opined in patent cases before about
` adoption rate of patented technologies?
`A. Yes.
`Q. And were those also in the context of royalty
` cases?
`A. Yes, I believe one of the Georgia-Pacific
` factors directs me to consider the extent of
` use. And in a number of those cases I've
` looked at how the accused technology was
` adopted throughout the product line.
`Q. And in those other cases, have you -- did
` your sworn testimony include calculations of
` demand on units sold caused by the patented
` technologies?
`A. Yes.
`Q. And did they include opinions and
` calculations about the adoption rate of
` patented technologies?
`
`4 (13 to 16)
`
`15
`
` been testimony that it's widespread or that
` it's a hundred percent, so there was no need
` to do calculations.
`Q. I see. And is that also -- so now I want to
` move to the adoption rate issue.
`A. Yes.
`Q. And, again, I'm just asking because you used
` the word "considered," I'm trying to
` understand what you really mean here.
` So to be clear, what I'm asking is
` whether in any previous patent cases you have
` given sworn testimony regarding your
` calculations of adoption rates of patented
` technologies?
`A. Yes. So I'm -- I'm a little confused. In
` terms of previous patent cases, I have
` testified in a previous IPR case involving
` patents that included explicit calculations
` of demand and adoption --
`Q. Okay.
`A. -- and other things.
` Beyond that, in cases involving a
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`1234567891
`
`14
`A. I'm sure many of them have looked at the rate
` of adoption. I don't know whether I've
` always calculated the -- calculated the
` adoption rate in explicit percentage terms,
` but the -- how widespread it was over time,
` how it changed over time was certainly
` considered in many of the cases I've
` testified in.
`Q. You are -- you used the word
` "considered," and I just want to --
`A. Yeah.
`Q. -- make sure that we're using the same
` vernacular here.
` I'm asking whether you have given
` sworn testimony which specifically relates to
` calculations of demand for patented
` technology in a patent case and
` is -- is that yes or no?
`A. I believe it's yes. I've testified in a lot
` of cases, and I'm hard-pressed to identify a
` particular one. But certainly in some cases
` I've calculated it. In other cases there's
`
` reasonable royalty calculation, I have also
` calculated demand and adoption rates and
` considered them in many more.
`Q. Okay. Well, let's talk about the IPR case,
` okay?
`A. Okay.
`Q. That would be a case then before the PTAB?
`A. Yes.
`Q. Okay. And can you tell me the -- the parties
` to that case?
`0
`A. Yes, it's the fourth case listed on the
`11
` page 24 of Exhibit 2030, Polygroup Limited.
`12
`Q. Oh, Polygroup Limited, okay.
`13
`A. Versus Willis Electric Company.
`14
`Q. Is that the only PTAB case in which you have
`15
` given sworn testimony?
`16
`A. As far as I can remember, yes.
`17
`Q. In the Polygroup case, were you providing
`18
` expert opinions on behalf of
`19
` Willis Electric?
`20
`A. Yes.
`21
`Q. And was this a challenge -- who was the
`22
`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
`
`16
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 5
`
`

`

`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`17
`
`5 (17 to 20)
`
`19
`
` examine and opine and give sworn testimony
` regarding adoption rate?
`A. Yes.
`Q. And that would be adoption rate of the
` accused technology -- excuse me, the patented
` technology, which was -- which was related to
` the electric connection of the Christmas
` tree?
`A. Sorry, can I have that question again?
`Q. Of course. It was poorly phrased.
` So the question is: In your
` adoption rate analysis in the Polygroup case,
` you were providing information regarding how
` you calculated the adoption rate of the
` patented technology, which was this
` electrical connection?
`A. Yes.
`Q. And in the adoption rate analysis, were you
` looking at units sold of the patented
` technologies or economic results of the sales
` of the patented technologies?
`A. I believe it was units sold, but I'm not
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
` patent owner in that case?
`A. Willis Electric, I believe. It says
` limited -- yeah, yeah, patent --
` Willis Electric Company Limited, patent
` owner.
`Q. Okay. What was the product, the patented
` product or device in that case?
`A. The general product was the -- a lighted
` Christmas tree. And the particular
` technology had to do with the electrical
` connections formed on assembly.
`Q. And in that case did you submit sworn
` testimony regarding commercial success of --
` commercial success?
`A. Yes.
`Q. And commercial success of the patented
` technology which related to the electrical
` connection?
`A. Yes.
`Q. Were you looking at the commercial success
` achieved by the patent owner or the -- the
` opponent, which would have been Polygroup?
`
`1234567891
`
`18
`A. My recollection is both, but I'm not sure as
` I sit here.
`Q. Are you confident that you were looking at
` least at the commercial success of the patent
` owner?
`A. I -- I'm not confident which -- which party
` or both, as I sit here.
`Q. How long ago was this?
`A. Two years.
`Q. In your analysis -- in your commercial
` success analysis, did you examine demand for
` the patented technologies?
`A. Yes.
`Q. Did you use the same professional approach to
` the demand question as you used here?
`A. Yes.
`Q. Were you certain -- were you observing demand
` in terms of units sold as opposed to demand
` based upon economic results?
`A. I believe I did both. I had analyzed units
` sold, I also had dollar sales.
`Q. And in the Polygroup case, did you also
`
` certain. I know I -- I recall that I was
` looking at market shares, and I don't recall
` whether those were in units or dollars or
` both.
`Q. Now, you did not examine market share in the
` case that we're on today; is that correct?
`A. Yes.
`Q. But you did examine market share in the
` Polygroup case?
`A. Yes.
`0
`Q. Are there other differences in terms of what
`11
` it was that you -- let me strike that.
`12
` Are there other differences in terms
`13
` of the methodological approach that you used
`14
` in the Polygroup case from what you use here?
`15
`A. Are you asking me in total or are you asking
`16
` me specific to my demand analysis?
`17
`Q. To your demand and your adoption rate
`18
` analysis.
`19
`A. I can't recall the specifics of what I did in
`20
` the Willis case, but it would have been very
`21
` similar.
`22
`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
`
`20
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 6
`
`

`

`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`21
`
`6 (21 to 24)
`
`23
`
` testimony on behalf of the alleged infringer?
`A. Yes.
`Q. And in that context, it's your memory that
` you may have testified that commercial
` success was not achieved?
`A. I don't know that it would have been limited
` to testimony on behalf of the infringer, but
` I'm -- I'm sure I've given testimony that
` commercial success has not been achieved, and
` some of those would have been on behalf of
` the infringer.
`Q. In a royalty case?
`A. In a royalty case.
`Q. Sir, you have -- again, just looking back at
` your career, in the context of testifying
` regarding commercial success and focusing on
` an analysis that is on unit sales or on
` economics, on profits and losses, could you
` tell me whether you more frequently
` testify -- or excuse me.
` Could you tell me whether you more
` frequently have based your analysis on unit
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`Q. What was the position that you took in the
` Polygroup versus Willis case regarding
` demand?
`A. It was my opinion that the demand
` demonstrated commercial success.
`Q. And what was the opinion that you made in the
` Polygroup versus Willis case regarding
` adoption rate?
`A. It was my opinion that the adoption rate
` demonstrated commercial success.
`Q. Was there ever any order from the PTAB that
` in any way referenced your position in that
` case regarding commercial success?
` MS. PATTON: Object to the
` foundation.
` THE WITNESS: I have no knowledge
` one way or another.
`BY MR. THORNHILL:
`Q. Did the PTAB render a decision in that case,
` to your knowledge?
`A. I think so, but I'm not sure.
`Q. Okay.
`
`1234567891
`
`22
`
`A. I -- I testified and I haven't had contact
` since then.
`Q. Okay. So just to be clear then, do you know
` whether your opinions regarding commercial
` success were accepted, rejected, or whether
` anything was said by the PTAB, the judges, in
` that case?
`A. Not -- not that I can recall.
`Q. In your experience, have you ever given sworn
` testimony in a patent case in which you were
` contending that commercial success was not
` demonstrated?
`A. I can't recall a specific case, but I'm sure
` I have.
`Q. And then over the course of your career --
` strike that.
` And although you can't remember a
` specific case, would you expect that that
` testimony, just based upon your memory, would
` have been in the context of a royalty case?
`A. Yes.
`Q. So in royalty cases have you given sworn
`
` sales or on economic results?
`A. No.
`Q. And do you believe that there is a
` circumstance where economic results are the
` more appropriate or more desired focus as
` opposed to unit sales?
`A. So what -- what do you mean by "economic
` results"? Are you talking about sales data
` or -- sales --
`Q. I'm talking about financial data.
`0
`A. Sales in dollar terms, are you talking about
`11
` profit rates, are you talking about price per
`12
` unit?
`13
`Q. It could be --
`14
`A. Any of those?
`15
`Q. It could be any of those. It's anything --
`16
`A. Okay.
`17
`Q. It's about money as opposed to about the
`18
` number of items sold.
`19
`A. Yes. Okay. Could I have the question again?
`20
`Q. Sure. And my general question here just
`21
` is -- let me do it this way: Do you have a
`22
`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
`
`24
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 7
`
`

`

`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`25
`
`7 (25 to 28)
`
`27
` to analyze Sleep Number data, and I did not
` request them.
`Q. Okay. And in other cases in which you've
` testified in the past on behalf of the patent
` owner, did you request -- strike that.
` Did you receive, from the patent
` owner, information regarding its unit sales
` of the patented technologies?
`A. In some cases.
`Q. And you -- and in those cases, did you then
` use that information to present a demand
` analysis?
`A. Possibly in some of them. It would depend on
` the timing and the -- what was going on with
` the product, whether that type of analysis
` could be applied. But I'm sure I have at
` times.
`Q. And in cases in which you were testifying on
` behalf of the patent owner, have you
` received -- have you used, excuse me,
` financial information from the patent owner
` about its -- the financial effects of the
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
` belief that in a commercial success analysis,
` one method of analysis is preferred over the
` other, assuming the data is available, and
` the two to compare would be unit sales and
` economic results, i.e., profits, losses,
` expressions of money?
`A. I wouldn't quite characterize it that way.
` To me, I would look at -- if the data were
` available, I would look at unit sales, I
` would look at adoption rates, I would look at
` any kind of price premium associated with the
` technology, and I would look at incremental
` profitability associated with the technology.
` So if all are available, I will consider them
` all.
`Q. Okay. Now, in this case you look only at
` unit sales of American National Manufacturing
` for your demand analysis and your adoption
` rate analysis, correct?
`A. That's all I was provided. I'm aware that
` the -- that Sleep Number asked for financial
` results and that the PTAB did not grant the
`
`26
`
`28
`
` request.
` patented technologies in conducting an
`Q. Okay. Did you ask for information regarding
` adoption analysis, adoption rate analysis?
` unit sales of the patented technologies
`A. There may have been some cases where that was
` achieved by Sleep Number?
` true. Adoption rate is usually focused --
`A. I was not provided those. I was -- I -- I
` excuse me -- on units, but sometimes units
` was given a set of data, and I understood
` aren't available and you have to just look at
` that's what was available.
` dollars.
`Q. Okay. But did you ask for information
`Q. Did you ask for any information that you did
` regarding unit sales of the patented
` not receive in connection with your analysis
` technologies achieved by Sleep Number?
` in this case?
`0
`A. I did not ask for that. That was not part of
`A. No. My assignment was given the data that
`11
` what I was asked to do.
` were available could I -- did I have an
`12
`Q. Did you ask for financial information,
` opinion about commercial success, and I used
`13
` profits, revenues, et cetera, achieved by
` the data that were available.
`14
` Sleep Number in connection with its -- with
`Q. Did you consider that it would be -- strike
`15
` the patented technologies that are at issue
` that.
`16
` here today?
` Did you independently conduct any
`17
`A. Same answer.
` type of research that pertained to unit sales
`18
`Q. Which is?
` of the patented technologies as achieved by
`19
`A. My assignment was to analyze the data that
` Sleep Number?
`20
` were available for American National
`A. I'm sorry, I blanked there for a second.
`21
` Manufacturing. I was not asked to -- for --
`Q. It's okay.
`22
`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
`
`1234567891
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 8
`
`

`

`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`29
`
`8 (29 to 32)
`
`31
`
` software in the controller.
`Q. Right. So I understand that point, that the
` ANM sales, according to your analysis, unit
` sales of accused items increased during
` particular times.
` But I'm trying to understand how an
` increase in unit sales translates into a
` seller's commercial success, since we agree,
` I believe, that an increase in unit sales
` doesn't necessarily relate to a positive
` effect in profitability?
`A. And I would say, in this case, I've seen no
` evidence that there were price changes that
` drove the sales increases and would have
` resulted in less profit.
` In general, I assume that businesses
` are rational and that businesses adopt
` technologies to increase their success. Any
` company that lowers prices so it can sell
` more and make less money isn't behaving
` rationally. I'm not saying it never happens,
` but it's not the expected outcome.
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`A. Could I have that again?
`Q. Did you conduct -- sorry for speaking over
` you.
` My question was whether you
` conducted any research on your own in this
` case regarding the unit sales of the patented
` technologies as achieved by Sleep Number?
`A. No, I did not.
`Q. Did you conduct any research regarding the
` revenues or expenses recognized by
` Sleep Number in connection with the patented
` technologies?
`A. I did not.
`Q. Did you conduct any independent research of
` any type in connection with this analysis?
`A. I analyzed the data that were available to
` me. I don't -- I'm not sure what you mean by
` "independent." But I did not gather any data
` beyond the data that were available to me.
`Q. Beyond the data that were given to you?
`A. Correct.
`Q. Sir, in the case that we're on today, we've
`
`1234567891
`
`30
`
` discussed this, you analyzed unit sales as
`Q. Okay. And, indeed, you said you've seen no
` opposed to financial results, correct?
` evidence in this case of price changes.
`A. Correct. I had no dollar sales,
` You've seen no economic -- you've seen no
` profitability or prices.
` economic -- or let me say that differently --
`Q. And am I right that an increase in unit sales
` you've seen no financial results in this
` does not necessarily relate to or cause an
` case, because as you said, they were not
` increase in a company's profitability?
` available to you as to the seller, ANM?
`A. That's correct.
`A. Yes. I mean, even beyond that, I've seen
` documents that indicate they were
`Q. A seller could increase its units sold, for
` requested, but the PTAB wouldn't allow them.
` example, but recognize a decrease in profit
`0
` margin, for example?
`Q. Right. Okay.
`11
`A. That can happen.
`A. Which leads me to think the PTAB thinks you
`12
` can analyze commercial success using just
`Q. How is it then that unit sales are, in your
`13
` units. I would have preferred financial
` view, a measure of a seller's commercial
`14
` results, but the pattern is there in the
` success?
`15
`A. Well, as my analysis demonstrates, when I
` units.
`16
` look at the periods -- when I look at my four
`Q. Why would you have preferred financial
`17
` periods and look at when ANM was using
` results?
`18
` accused controllers, it was using accused
`A. Because I would like to have done a price
`19
` manifolds the whole time, but it's -- when
` premium and incremental profit analysis.
`20
` it's using accused controllers, the shift in
`Q. Why would you have liked to have done such an
`21
` sales is coincident with the change in the
` analysis?
`22
`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
`
`32
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`American National Manufacturing, Inc.
`Exhibit 1067
`IPR2019-00514
`Page 9
`
`

`

`9 (33 to 36)
`
`35
`
`Transcript of Carl G. Degen
`Conducted on January 8, 2020
`33
`
`1234567891
`
`0
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`
`A. Because that's one -- those are additional
` considerations under commercial success, as
` far as I understand.
`Q. Do you believe they are -- in your
` experience, are they a preferred method of
` demonstrating commercial success?
`A. I think they're just other methods of
` analyzing commercial success.
`Q. Do you think that they are more instructive
` methods of measuring commercial success?
`A. I don't know how to answer that. The PTAB
` clearly thinks units are enough, but -- and
` they're the instructee here. I'd like to see
` them all.
`Q. Right. And, sir, I mean, we don't know and
` you don't know what the PTAB -- strike that.
` You don't know the reason for the
` PTAB's decision, do you?
`A. I don't -- I mean, beyond what they put in
` their order, I do not.
`Q. Right.
`A. I've reviewed that. I don't recall it off
`
` experienced where because of the data that
` was available to you, you had results that
` were contradictory?
`A. I just don't recall off the top of my head.
` I mean, it could happen, but I -- I can't
` think of an example.
`Q. Okay. In any event, if there was -- if there
` had been -- if there had been financial
` information available in this case regarding
` ANM, it's your expectation that you would
` have performed analyses given that financial
` information, the results of the pat -- sales
` of the patented technologies?
`A. I can't speak for counsel, but I assume if
` financial information were available, they
` would have been -- I would have -- they would
` have been included in my assignment.
`Q. But then wouldn't you also have been
` interested in the financial results from
` Sleep Number of its sales of the patented
` technologies?
`A. I'd have to know more about Sleep Number's
`36
`
`1234567891
`
`34
`
` the top of my head.
`Q. All right. So we're not here to make any
` assumptions about the PTAB, and that really
` wasn't my question.
` I was just asking whether these
` types of financial results, you feel, are a
` preferred method of making a -- excuse me --
` commercial success analysis?
`A. Yeah, I would -- I go back to my earlier
` answer, which is there are additional types
` of analyses that can be done under the rubric
` of commercial success.
`Q. Do you prefer to conduct multiple analyses so
` as to provide greater validation to your
` conclusions?
`A. I -- my general mode is that I will analyze
` all available data to see whether they're
` corroborative or contradictory, but --
`Q. Have you had -- excuse me.
`A. And I analyzed the available data in this
` case.
`Q. So have you had situations that you've
`
` use of the patent over time, whether --
` whether there were -- there were clear before
` and afters that could be calculated. My
` understa