Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 1 of 12 PageID #: 9828
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`AGIS SOFTWARE DEVELOPMENT LLC,
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`Plaintiff,
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`v.
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`HTC CORPORATION,
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`Defendant.
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`LG ELECTRONICS INC.,
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`Defendant.
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`Case No. 2:17-CV-0514-JRG
`(LEAD CASE)
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`JURY TRIAL DEMANDED
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`Case No. 2:17-CV-0515-JRG
`(CONSOLIDATED CASE)
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`JURY TRIAL DEMANDED
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`AGIS SOFTWARE DEVELOPMENT LLC’S DAUBERT MOTION TO EXCLUDE
`THE OPINIONS OF W. CHRISTOPHER BAKEWELL RELATING TO DAMAGES
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`AGIS SOFTWARE DEVELOPMENT LLC,
`
`Plaintiff,
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`v.
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`HTC CORPORATION,
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`Defendant.
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`LG ELECTRONICS INC.,
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`Defendant.
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`Case No. 2:17-CV-0514-JRG
`(LEAD CASE)
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`JURY TRIAL DEMANDED
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`
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`Case No. 2:17-CV-0515-JRG
`(CONSOLIDATED CASE)
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`JURY TRIAL DEMANDED
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`AGIS SOFTWARE DEVELOPMENT LLC’S DAUBERT MOTION TO EXCLUDE
`THE OPINIONS OF W. CHRISTOPHER BAKEWELL RELATING TO DAMAGES
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`
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 2 of 12 PageID #: 9829
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`I.
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`INTRODUCTION
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`Defendant LG Electronics Inc.’s (“LG”) damages expert, W. Christopher Bakewell,
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`asserts that a reasonable royalty to compensate Plaintiff AGIS Software Development LLC
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`(“AGIS”) for LG’s alleged infringement of the patents-in-suit1 is
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` While
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`there are numerous flaws in Mr. Bakewell’s analysis, his almost total reliance on this agreement
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`renders his damages opinions unreliable and properly excluded in their entirety. In the
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`alternative,
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` should be excluded.
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`1 The “patents-in-suit” are U.S. Patent Nos. 8,213, 970 (the “’970 Patent”); 9,408,055 (the “’055 Patent”);
`9,445,251 (the “’251 Patent”); and 9,467,838 (the “’838 Patent”).
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 3 of 12 PageID #: 9830
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`3 LGE_00454766.
`4 In reaching his reasonable royalty calculation, Mr. Bakewell relies on the opinions of Mr. Edward Tittel,
`LG’s technical expert, regarding the technical comparability of
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` Exh. A at ¶ 214-216. While Mr. Bakewell merely repeats the statements
`made by Mr. Tittel without performing any analysis, the issue of technical comparability need not be
`reached because Mr. Bakewell fails to establish economic comparability between
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 4 of 12 PageID #: 9831
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`II.
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`ARGUMENT
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`A.
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`The Applicable Standards
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`Admissibility of expert testimony is a question of law governed by Federal Rule of
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`Evidence 702. See Daubert v. Merrell Dow Pharms. Inc., 509 U.S. 579 (1993). Rule 702
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`provides that an expert witness may offer opinion testimony if (a) the expert’s scientific,
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`technical, or other specialized knowledge will help the trier of fact to understand the evidence or
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`to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the
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`testimony is the product of reliable principles and methods; and (d) the expert has reliably
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`applied the principles and methods to the facts of the case. Fed. R. Evid. 702; see also Kumho
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`Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999); Power Integrations, Inc. v. Fairchild
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`Semiconductor Int’l, Inc., 711 F.3d 1348, 1372-74 (Fed. Cir. 2013) (finding expert testimony
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`unreliable because of “speculative leaps”). However, the Court must determine that an expert’s
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`testimony “both rests on a reliable foundation and is relevant to the task at hand.” Daubert at
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`594, 597. “The relevance prong [of Daubert] requires the proponent [of the expert testimony] to
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`demonstrate that the expert’s ‘reasoning or methodology can be properly applied to the facts in
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`issue.’” Johnson v. Arkema, Inc., 685 F.3d 452, 459 (5th Cir. 2012) (quoting Curtis v. M & S
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`Petroleum, Inc., 174 F.3d 661, 668 (5th Cir. 1999)). “The reliability prong [of Daubert]
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`mandates that expert opinion ‘be grounded in the methods and procedures of science and . . . be
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`more than unsupported speculation or subjective belief.’” Johnson, 685 F.3d at 459 (quoting
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`Curtis, 174 F.3d at 668).
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`3
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 5 of 12 PageID #: 9832
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`While the Federal Circuit has recognized the relevance of settlement agreements to prove
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`the amount of a reasonable royalty, these licenses are not admitted without scrutiny. Res-Q-
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`Net.com, Inc. v. Lansa, Inc., 594 F.3d 860, 872 (Fed. Cir. 2010) (noting that because litigation
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`settlement agreements are likely influenced to some degree by litigation, the hypothetical
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`negotiation can be skewed); see LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 77
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`(Fed. Cir. 2012) (“The propriety of using prior settlement agreements to prove the amount of a
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`reasonable royalty is questionable.”). Accordingly, “the Court assesses litigation licenses on a
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`case-by-case basis in determining their admissibility.” ReedHycalog, UK, Ltd. v. Diamond
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`Innovations Inc., 727 F. Supp. 2d 543, 547 (E.D. Tex. 2010).
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`The Federal Circuit has held that “alleging loose or vague comparability between
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`different technologies or licenses does not suffice.” LaserDynamics, 694 F.3d at 79. Where an
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`expert relies on comparable licenses that differ in some respects from the hypothetical
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`agreement, he must “account for the ‘technological and economic differences’ between them.”
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`See Wordtech Sys. v. Integrated Networks Sol’ns, Inc., 609 F.3d 1308, 1320 (Fed. Cir. 2010).
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`“Testimony relying on licenses must account for such distinguishing facts when invoking them
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`to value the patented invention.” ResQNet, 594 F.3d at 869 (holding that it is improper to rely on
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`a license with no relationship to the claimed invention).
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`B.
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` In his report, Mr. Bakewell provides
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`almost no additional insight into this, omitting or glossing over other salient facts that
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`undoubtedly played a role in the parties’ decision to settle for this sum, such as the fact,
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`4
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 6 of 12 PageID #: 9833
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`Mr. Bakewell also fails to account for other economic differences
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`disputed validity or infringement,5
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` Mr. Bakewell fails to make any adjustments for
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` This failure alone is sufficient grounds
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`to exclude at least portions of Mr. Bakewell’s opinion. See Realtime Data v. Echostar Corp.
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`et al., 6:17-CV-00084-RWS-JDL, Dkt. 271 (E.D. Tex. Nov. 15, 2018) (in excluding lump sum
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`settlement license, the Court concluded that “the final agreement reached lacks any reference to
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`the. . . royalty base (if any at all) used to arrive at the lump-sum payment”); Realtime Data v.
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`Echostar et al., 6:17-CV-00084-RWS, JDL, Dkt. 272, (E.D. Tex. Nov. 15, 2018) (identifying
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`relevant facts and data necessary to compare a lump sum license including accused revenues,
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`apportionment factors, and royalty rates that the lump-sum payment was based upon).
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`5
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 7 of 12 PageID #: 9834
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`A royalty figure that fails to account for such differences is unreliable. See Flexuspine
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`Inc. v. Globus Medical Inc., 6:15-cv-00201-JRG-KNM, 2016 WL 9276023, at *5 (E.D. Tex. Jul.
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`6, 2016). See also Eidos Display LLC v. Chi Mei Innolux Corp., 6:11-CV-00201-JRG, 2017 WL
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`1322550, at *4 (E.D. Tex. Apr. 6, 2017) (holding that the resolution of active litigation was a
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`circumstance that “diminish[ed] the relevance of the AUO settlement agreement to the
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`hypothetical negotiation”); ART+COM Innovation Pool GmbH v. Google Inc., 155 F. Supp. 3d
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`489, 512 (D. Del. 2016) (“Without adequately accounting for the differences in economic
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`circumstances between the past settlement licenses and the hypothetical negotiation, the license
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`agreements cannot be considered economically comparable.”).
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`6
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 8 of 12 PageID #: 9835
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`III. CONCLUSION
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`For all of the foregoing reasons, AGIS respectfully requests that the Court exclude
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`Mr. Bakewell’s opinions as to damages calculations based
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` Mr. Bakewell’s damages opinion should therefore be excluded in its
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`entirety, but at minimum as that agreement.
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`Dated: January 25, 2019
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`BROWN RUDNICK LLP
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` /s/ Alfred R. Fabricant
`Alfred R. Fabricant
`NY Bar No. 2219392
`Email: afabricant@brownrudnick.com
`Lawrence C. Drucker
`NY Bar No. 2303089
`Email: ldrucker@brownrudnick.com
`Peter Lambrianakos
`NY Bar No. 2894392
`Email: plambrianakos@brownrudnick.com
`Vincent J. Rubino, III
`NY Bar No. 4557435
`Email: vrubino@brownrudnick.com
`Alessandra C. Messing
`NY Bar No. 5040019
`Email: amessing@brownrudnick.com
`Shahar Harel
`NY Bar No. 4573192
`Email: sharel@brownrudnick.com
`John A. Rubino
`NY Bar No. 5020797
`Email: jrubino@brownrudnick.com
`Enrique W. Iturralde
`NY Bar No. 5526280
`Email: eiturralde@brownrudnick.com
`Timothy J. Rousseau
`NY Bar No. 4698742
`Email: trousseau@brownrudnick.com
`Daniel J. Shea, Jr.
`NY Bar No. 5430558
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`7
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 9 of 12 PageID #: 9836
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`Email: dshea@brownrudnick.com
`Justine Minseon Park
`NY Bar No. 5604483
`Email: apark@brownrudnick.com
`BROWN RUDNICK LLP
`7 Times Square
`New York, NY 10036
`Telephone: 212-209-4800
`Facsimile: 212-209-4801
`
`Samuel F. Baxter
`Texas State Bar No. 01938000
`Email: sbaxter@mckoolsmith.com
`Jennifer L. Truelove
`Texas State Bar No. 24012906
`Email: jtruelove@mckoolsmith.com
`McKOOL SMITH, P.C.
`104 East Houston Street, Suite 300
`Marshall, Texas 75670
`Telephone: 903-923-9000
`Facsimile: 903-923-9099
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`ATTORNEYS FOR PLAINTIFF, AGIS
`SOFTWARE DEVELOPMENT LLC
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`8
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 10 of 12 PageID #: 9837
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`CERTIFICATE OF CONFERENCE
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`I certify that on January 24, 2019, lead and local counsel for AGIS (Alfred R. Fabricant,
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`Vincent J. Rubino, and Jennifer Truelove) and for LG (Michael Berta and Mark Mann) conferred
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`via telephone in compliance with L.R. CV-7(h-i) regarding the issues presented in the foregoing
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`Motion. The Parties still were unable to resolve the issues and are at an impasse regarding the
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`relief sought. The Court assistance is thus necessary. LG opposes this Motion.
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`/s/ Alfred R. Fabricant
` Alfred R. Fabricant
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 11 of 12 PageID #: 9838
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`CERTIFICATE OF AUTHORIZATION TO FILE UNDER SEAL
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`The undersigned certifies that the foregoing document is authorized to be filed under seal
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`pursuant to the Protective Order entered in this case.
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`/s/ Alfred R. Fabricant
` Alfred R. Fabricant
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`Case 2:17-cv-00514-JRG Document 138 Filed 01/29/19 Page 12 of 12 PageID #: 9839
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that, on January 25, 2019, all counsel of record who are
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`deemed to have consented to electronic service are being served with a copy of this document via
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`the Court’s CM/ECF system per Local Rule CV-5(a)(3).
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`/s/ Alfred R. Fabricant
` Alfred R. Fabricant
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