Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 1 of 22 PageID #: 5646
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVSION
`
`
`
`CASE NO. 2:21-cv-00040-JRG
`(Lead Case)
`
`JURY TRIAL DEMANDED
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`
`
`CASE NO. 2:21-cv-00041-JRG
`(Member Case)
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`JURY TRIAL DEMANDED
`
`§
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`GESTURE TECHNOLOGY
`PARTNERS, LLC,
`
`Plaintiff
`
`v.
`
`HUAWEI DEVICE CO., LTD.,
`HUAWEI DEVICE USA, INC.,
`
`Defendants.
`
`
`GESTURE TECHNOLOGY
`PARTNERS, LLC,
`
`Plaintiff
`
`v.
`
`SAMSUNG ELECTRONICS CO., LTD.
`AND SAMSUNG ELECTRONICS
`AMERICA, INC.,
`
`Defendants.
`
`
`
`
`
`SAMSUNG DEFENDANTS’ DAUBERT MOTION TO PRECLUDE
`THE OPINIONS AND TESTIMONY OF PLAINTIFF’S DAMAGES EXPERT
`DAVID KENNEDY
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`

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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 2 of 22 PageID #: 5647
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`TABLE OF CONTENTS
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`Page
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`I.
`II.
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`III.
`IV.
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`V.
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`INTRODUCTION ............................................................................................................. 1
`THE KENNEDY REPORT ............................................................................................... 2
`A.
`Understanding of Samsung Features ..................................................................... 2
`B.
`Reliance on the Groehn Report & Apportionment ................................................ 3
`LEGAL STANDARD ........................................................................................................ 5
`ARGUMENT ..................................................................................................................... 6
`A.
`The Kennedy Report Depended on the Unreliable and Irrelevant Groehn
`Report ..................................................................................................................... 6
`The Kennedy Report Adopted a Hypothetical Negotiation Not Tied to the
`Facts of the Case .................................................................................................... 7
`1.
`The Kennedy Report Used an Incorrect Hypothetical Negotiation
`Date ............................................................................................................ 8
`The Kennedy Report Applied an “After-The-Fact Assessment” of
`Samsung’s “Anticipated” Profit ................................................................. 9
`The Kennedy Report Arbitrarily Assigns GTP a
` Bargaining
`Share ........................................................................................................ 10
`The Kennedy Report Failed to Apportion for Non-Infringing Uses of the
`Accused Products ................................................................................................. 12
`The Kennedy Report Ignored the Patent Rights Claimed in the Patents ............. 14
`1.
`The Kennedy Report Ignored the Distinction Between Apparatus
`and Method Claims .................................................................................. 14
`The Kennedy Report Contradicts the Court’s Construction of
`“Gesture” .................................................................................................. 15
`CONCLUSION ................................................................................................................ 15
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`B.
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`C.
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`D.
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`2.
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`3.
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`2.
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`-i-
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 3 of 22 PageID #: 5648
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`
`TABLE OF AUTHORITIES
`
`
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`Page(s)
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`Cases
`
`Aqua Shield v. Inter Pool Cover Team,
`774 F.3d 766 (Fed. Cir. 2014)................................................................................................7, 9
`
`Bio-Rad Labs., Inc. v. 10X Genomics Inc.,
`967 F.3d 1353 (Fed. Cir. 2020)................................................................................................12
`
`Biscotti Inc. v. Microsoft Corp.,
`No. 2:13-CV-01015-JRG-RSP, 2017 WL 2536962 (E.D. Tex. May 18, 2017) ......................12
`
`BMC Software, Inc. v. Servicenow, Inc.,
`No. 2:14-cv-903-JRG, 2016 WL 367251 (E.D. Tex. Jan. 29, 2016) ...................................1, 15
`
`Bourjaily v. United States,
`483 U.S. 171 (1987) ...................................................................................................................5
`
`Cassidian Commc’ns, Inc. v. Microdata GIS, Inc.,
`No. 2:12-cv-00162-JRG, 2013 WL 11322510 (E.D. Tex. Dec. 3, 2013) ..................................8
`
`CloudofChange, LLC v. NCR Corp.,
`No. 6:19-cv-00513-ADA (W.D. Tex. Nov. 9, 2021), Dkt. No. 205 ........................................15
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`Commonwealth Sci. & Indus. Rsch. Org. v. Cisco Sys., Inc. (CSIRO),
`809 F.3d 1295 (Fed. Cir. 2015)............................................................................................5, 14
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`Daubert v. Merrell Dow Pharm., Inc.,
`509 U.S. 579 (1993) ......................................................................................................... passim
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`Exmark Mfg. Co. v. Briggs & Stratton Power Prods. Grp., LLC,
`879 F.3d 1332 (Fed. Cir. 2018)........................................................................................1, 5, 13
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`Finjan, Inc. v. Blue Coat Sys., Inc.,
`879 F.3d 1299 (Fed. Cir. 2018)................................................................................5, 11, 13, 14
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`Garretson v. Clark,
`111 U.S. 120 (1884) ...................................................................................................................6
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`Hanson v. Alpine Valley Ski Area, Inc.,
`718 F.2d 1075 (Fed. Cir. 1983)..................................................................................................9
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`Infernal Tech. LLC v. Activision Blizzard Inc.,
`No. 3:18-cv-01397-M, 2021 WL 4391250 (N.D. Tex. Sept. 16, 2021) ....................................1
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`-ii-
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 4 of 22 PageID #: 5649
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`LaserDynamics, Inc. v. Quanta Comput., Inc.,
`694 F.3d 51 (Fed. Cir. 2012)..............................................................................................6, 7, 8
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`Lucent Techs. Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009)................................................................................................10
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`M2M Sols. LLC v. Motorola Sols., Inc.,
`No. 12-cv-33-RGA, 2016 WL 767900 (D. Del. Feb. 25, 2016) ................................................6
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`Mentor Graphics Corp. v. EVE-USA, Inc.,
`870 F.3d 1298 (Fed. Cir. 2017) (per curiam) ...........................................................................13
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`Packet Intelligence LLC v. NetScout Sys., Inc.,
`965 F.3d 1299, 1314-15 (Fed. Cir. 2020) ..........................................................................14, 15
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`Phillips v. AWH Corp.,
`415 F.3d 1303 (Fed. Cir. 2005)................................................................................................14
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`Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,
`904 F.3d 965 (Fed. Cir. 2018)........................................................................................7, 13, 14
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`ResQNet.com, Inc. v. Lansa, Inc.,
`594 F.3d 860 (Fed. Cir. 2010) (per curiam) .............................................................................14
`
`Riles v. Shell Expl. & Prod. Co.,
`298 F.3d 1302 (Fed. Cir. 2002)............................................................................................9, 10
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`RSA Protective Techs., LLC v. Delta Sci. Corp.,
`2:19-cv-06024-JAK (PLAx), 2021 WL 4978462 (C.D. Cal. Oct. 20, 2021) ............................8
`
`Sinclair Refining Co. v. Jenkins Petroleum,
`289 U.S. 689 (1933) ...................................................................................................................9
`
`Summit 6 LLC v. Samsung Elecs. Co., Ltd.,
`802 F.3d 1283 (Fed. Cir. 2015)................................................................................................13
`
`Tech Pharm. Servs., LLC v. Alixa Rx LLC,
`No. 4:15-CV-766, 2017 WL 3318247 (E.D. Tex. Aug. 3, 2017) ..............................................6
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`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)............................................................................................1, 12
`
`Virnetx, Inc. v. Cisco Sys., Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)....................................................................................11, 12, 14
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`Whitserve, LLC v. Comput. Packages, Inc.,
`694 F.3d 10 (Fed. Cir. 2012)......................................................................................................5
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`-iii-
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`Wordtech Sys., Inc. v. Integrated Networks Sols., Inc.,
`609 F.3d 1308 (Fed. Cir. 2010)............................................................................................7, 10
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`Statutes
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`35 U.S.C. § 284 ..............................................................................................................................14
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`Other Authorities
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`Federal Rule of Evidence 702 ..........................................................................................................1
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`-iv-
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 6 of 22 PageID #: 5651
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`I.
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`INTRODUCTION
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`The expert report of Mr. David Kennedy (“Kennedy Report”) is fundamentally flawed and
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`unreliable for multiple reasons, each of which provides an independent ground for exclusion.
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`First, the Kennedy Report blindly relied on GTP’s expert survey report (“Groehn Report”), which
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`is currently the subject of a separate Daubert motion. Should the Court find the Groehn Report
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`unreliable and not relevant to determining a reasonable royalty in this case, the Kennedy Report
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`should be excluded accordingly. Second, the Kennedy Report relied on a hypothetical negotiation
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`not “tied to the relevant facts and circumstances” of this case. Uniloc USA, Inc. v. Microsoft Corp.,
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`632 F.3d 1292, 1318 (Fed. Cir. 2011). This too warrants exclusion. Third, the Kennedy Report
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`failed to apportion for non-infringing uses of the Accused Products or consumers’ actual usage of
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`the alleged patented features. The end result is a royalty rate that does not reflect the “incremental
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`value that the patented invention adds to the end product.” Exmark Mfg. Co. v. Briggs & Stratton
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`Power Prods. Grp., LLC, 879 F.3d 1332, 1348 (Fed. Cir. 2018) (citation omitted). Fourth, the
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`Kennedy Report wholly ignored any difference between the asserted method and apparatus claims,
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`and also deviated from the Court’s claim construction order. Each of these shortfalls provides a
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`separate grounds for exclusion. Infernal Tech. LLC v. Activision Blizzard Inc., No. 3:18-cv-01397-
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`M, 2021 WL 4391250, at *13 (N.D. Tex. Sept. 16, 2021) (excluding expert report for not showing
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`“a nexus or connection between [defendant’s] performance of the claimed method and sales); BMC
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`Software, Inc. v. Servicenow, Inc., No. 2:14-cv-903-JRG, 2016 WL 367251, at *2 (E.D. Tex. Jan.
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`29, 2016) (excluding expert testimony for contradicting construed claim terms).
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`Pursuant to Federal Rule of Evidence 702, Defendants Samsung Electronics Co. Ltd. and
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`Samsung Electronics America, Inc. (collectively, “Samsung) move to exclude the opinions and
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`testimony of Plaintiff Gesture Technology Partners, LLC’s (“GTP”) damages expert, David
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`Kennedy. The facts and data upon which Mr. Kennedy relied, and the methodology that Mr.
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`-1-
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 7 of 22 PageID #: 5652
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`Kennedy applied, will confuse the trier of fact and result in an untethered damages award (if any).
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`These systemic flaws cannot be cured by “[v]igorous cross-examination, presentation of contrary
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`evidence, [or] careful instruction on the burden of proof.” Daubert v. Merrell Dow Pharm., Inc.,
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`509 U.S. 579, 596 (1993). Samsung respectfully requests that the Court strike the Kennedy Report
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`in its entirety, and preclude Mr. Kennedy from offering his opinions and testimony at trial.
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`II.
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`THE KENNEDY REPORT
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`GTP accuses Samsung of infringing U.S. Patent Nos. 7,933,431 (“’431 Patent”), 8,194,924
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`(“’924 Patent”), 8,553,079 (“’079 Patent”), and 8,878,949 (“’949 Patent”) (collectively, “Patents-
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`in-Suit”).1
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` GTP alleged that 32 Samsung smartphones and tablets (“Accused Products”) infringe
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`the patents. Ex. A, pp. 2-18 (Infringement Contentions); Ex. B, ¶ 42 (Occhiogrosso Report).
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`Similarly, GTP alleged that seven software-based features infringe when used by the Accused
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`Products. Ex. B, ¶ 197.
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`A.
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`Understanding of Samsung Features
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`.
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` The Kennedy
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`Report’s analysis of the Patents-in-Suit’s “technical benefits” thus consisted of Mr. Kennedy’s
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`Id. Mr. Kennedy described the
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` the Patents-in-Suit as
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`Id. ¶ 29. The Kennedy Report used “the term ‘Gesture’ as that term has been construed by the
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`Court and as that term has been used” in the Occhiogrosso Report. Id. ¶ 28.
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`1 Unless otherwise stated, all exhibits referenced herein are attached to the Declaration of David
`M. Fox, filed concurrently herewith.
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`The Kennedy Report listed a number of functionalities allegedly enabled by the Asserted
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`Claims of the Patents-in-Suit. Specifically, the Kennedy Report considered
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` Id. ¶ 118.
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`Id. ¶ 39. Exhibit 13 of the Kennedy Report purports to map Samsung’s alleged infringement of
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`the Patents-in-Suit to a subset of the Accused Products and the Samsung features assigned to the
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`Id., Ex. 13.
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`B.
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`Reliance on the Groehn Report & Apportionment
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`III. LEGAL STANDARD
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`The patentee bears the burden of proving damages. Whitserve, LLC v. Comput. Packages,
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`Inc., 694 F.3d 10, 26 (Fed. Cir. 2012). “[T]oday, given the great financial incentive parties have
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`to exploit the inherent imprecision in patent valuation, courts must be proactive to ensure that
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`[expert evidence] is sufficiently reliable to support a damages award.” Commonwealth Sci. &
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`Indus. Rsch. Org. v. Cisco Sys., Inc. (CSIRO), 809 F.3d 1295, 1301 (Fed. Cir. 2015) (alteration
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`added). Accordingly, a court assumes the role of gatekeeper to ensure the relevance and reliability
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`of the expert’s testimony. Daubert, 509 U.S. at 597. The proponent of expert testimony must
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`establish its reliability by a preponderance of evidence. Bourjaily v. United States, 483 U.S. 171,
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`174-76 (1987); Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1310 (Fed. Cir. 2018).
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`To be admissible, expert testimony opining on a reasonable royalty must sufficiently tie
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`the expert testimony on damages to the facts of the case. Exmark Mfg., 879 F.3d at 1349. “If the
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`patentee fails to tie the theory to the facts of the case, the testimony must be excluded.” Id. Further,
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`the patentee “must in every case give evidence tending to separate or apportion the defendant’s
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`profits and the patentee’s damages between the patented feature and the unpatented features . . .
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`[unless] the entire value of the whole machine, as a marketable article, is properly and legally
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`-5-
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 11 of 22 PageID #: 5656
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`attributable to the patented features.” Garretson v. Clark, 111 U.S. 120, 121 (1884) (alteration
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`added). If “there is simply too great an analytical gap between the [basis for the expert opinion]
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`and the opinion proffered, the court may exclude the testimony as unreliable.” Tech Pharm. Servs.,
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`LLC v. Alixa Rx LLC, No. 4:15-CV-766, 2017 WL 3318247, at *2 (E.D. Tex. Aug. 3, 2017).
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`IV. ARGUMENT
`A.
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`The Kennedy Report Depended on the Unreliable and Irrelevant Groehn
`Report
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` The Groehn Report, however, was unreliable because
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`Dr. Groehn’s survey (1) did not use products tied to the facts of the case, (2) did not use attributes
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`tied to GTP’s technology, and (3) used unreliable methodologies yielding “irrational results.”
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`Should the Court grant Samsung’s Daubert motion to exclude the Groehn Report, the Court should
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`also exclude the Kennedy Report for its foundational reliance thereon. M2M Sols. LLC v. Motorola
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`Sols., Inc., No. 12-cv-33-RGA, 2016 WL 767900, at *7 (D. Del. Feb. 25, 2016) (“Mr. Bluestein’s
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`opinion provides the foundation for Mr. Bero’s reasonable royalty analysis. Without Mr.
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`Bluestein’s conclusions, that foundation crumbles.”).2
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`2 Besides its bald reliance, the Kennedy Report impermissibly reads-in facts and data not actually
`established in the Groehn Report. For example, the Groehn Report determined
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` for smartphones only. The Kennedy Report applied the same numbers, however, to
`opine on damages for smartphones and tablets. The only explanation Mr. Kennedy provided for
`this incongruence was his unsupported, conclusory assertion that the Samsung features
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` Ex. D,
` royalty rates the Kennedy Report applied
`Kennedy Dep. at 86:19-87:9. Thus, the
`to tablets are effectively “plucked out of thin air[.]” LaserDynamics, Inc. v. Quanta Comput., Inc.,
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`-6-
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 12 of 22 PageID #: 5657
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`B.
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`The Kennedy Report Adopted a Hypothetical Negotiation Not Tied to the
`Facts of the Case
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`In patent litigation, the hypothetical negotiation construct attempts to ascertain the royalty
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`on which the parties would have agreed had they successfully negotiated an agreement “just before
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`infringement began.” Wordtech Sys., Inc. v. Integrated Networks Sols., Inc., 609 F.3d 1308, 1319
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`(Fed. Cir. 2010). Doing so ensures that the damages calculation is not “skewed” by an “after-the-
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`fact-assessment.” LaserDynamics, Inc., 694 F.3d at 75-76. The purpose of this conceptual
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`negotiation is to reliably “determine the economic value of the patented technology in the
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`marketplace at the relevant time.” Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 772 (Fed.
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`Cir. 2014) (internal quotation marks omitted) (citation omitted). To do so, the royalty estimation
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`“must reflect the two-sided nature” of the negotiation, and further, take into account variables that
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`can affect “the hypothetical forecast, including costs and availability of non-infringing alternatives,
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`the patented technology’s role in the firm’s (expected) overall business, and the (expected) actions
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`of competing firms in the market.” Id. at 771-72 (alterations in original).
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`694 F.3d 51, 69 (Fed. Cir. 2012); see also Ex. D, Kennedy Dep. at 86:16-87:9
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`Making matters worse, the Groehn Report (and thus the Kennedy report) violates the Entire Market
`Value Rule. The Groehn Report does not analyze, much less establish, that
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` are “the basis for customer demand” for the Accused
`Products. Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 904 F.3d 965, 978 (Fed.
`Cir. 2018). Nonetheless, the Groehn Report opines that, without these two features, Samsung
`would have sold
` fewer units. Tbl. 8, line [L]. Dr. Groehn then takes all of the
`resulting profit reduction of
` Tbl. 8, line [M], and divides it by the actual units sold
`of
`, Tbl. 8, line [B], to calculate his supposed change in profit per unit of
`, Tbl.
`8, line [N]. Attributing
` all of the profit reduction from selling
`fewer Accused Products, as the Groehn Report does, without having established these two features
`as the “basis for customer demand,” violates the Entire Market Value Rule and is yet another
`reason to exclude the Kennedy Report.
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 13 of 22 PageID #: 5658
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`1.
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`The Kennedy Report Used an Incorrect Hypothetical Negotiation Date
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`The Kennedy Report is unreliable from the start, using the incorrect date as the framework
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`for the hypothetical negotiation between GTP and Samsung. An incorrect hypothetical negotiation
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`date results in a “skewed” damages analysis. LaserDynamics, Inc., 694 F.3d at 76. The correct
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`determination of the date is therefore “essential” to properly assessing damages. Id. at 75.
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`GTP alleges that 32 Accused Products infringe the Patents-in-Suit. Ex. A, pp. 2-18; Ex.
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`B, ¶ 42. The earliest of these products was the Galaxy S5, released in April 2014. It follows
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`necessarily that alleged “infringement began” in or around April 2014, and the hypothetical
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`negotiation date is thus in or around April 2014. Yet the Kennedy Report relied on a hypothetical
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`negotiation date
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` Mr. Kennedy’s proposed date is
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`incorrect factually and legally, yet the Kennedy Report relied on his date throughout.
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`This is not harmless error and warrants exclusion of the entire report. LaserDynamics, 694
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`F.3d at 76-77 (remanding for new trial on damages pursuant to correct hypothetical negotiation
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`date because said date “alters the time period when the analysis under Georgia-Pacific is to take
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`place”); Cassidian Commc’ns, Inc. v. Microdata GIS, Inc., No. 2:12-cv-00162-JRG, 2013 WL
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`11322510, at *2 (E.D. Tex. Dec. 3, 2013) (“Mr. Gallagher’s expert report is fatally flawed, in that
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`it calculates reasonable royalty based on an incorrect hypothetical negotiation date”); RSA
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`Protective Techs., LLC v. Delta Sci. Corp., 2:19-cv-06024-JAK (PLAx), 2021 WL 4978462, at *5
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`(C.D. Cal. Oct. 20, 2021) (“These cases make clear that using the wrong hypothetical negotiation
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`is not harmless error”). The Court should exclude the Kennedy Report on this basis alone.
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 14 of 22 PageID #: 5659
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`2.
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`The Kennedy Report Applied an “After-The-Fact Assessment” of
`Samsung’s “Anticipated” Profit
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`As hindsight is 20/20, courts prohibit using information as to “what actually happened” to
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`determine a reasonable royalty. Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1081 (Fed.
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`Cir. 1983). The ex ante approach is particularly critical when determining “the infringer’s profit.”
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`Id.; Aqua Shield, 774 F.3d at 770 (“[T]he core economic question is what the infringer, in a
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`hypothetical pre-infringement negotiation under hypothetical conditions, would have anticipated
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`the profit-making potential of use of the patented technology to be”) (emphasis in original).
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`Naturally, the ex ante approach “necessarily involves some approximation of the market
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`as it would have hypothetically developed absent infringement.” Riles v. Shell Expl. & Prod. Co.,
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`298 F.3d 1302, 1311 (Fed. Cir. 2002). The Kennedy Report does not adopt any “approximation”
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`whatsoever. The Kennedy Report is silent regarding what the parties would have “anticipated” as
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`to Samsung’s profit by virtue its alleged use of the patented technology. Instead, it “plucks”
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`purported per-unit profit numbers straight from the Groehn Report (derived from a conjoint survey
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`conducted in the last half of 2021) to serve as the foundation for Mr. Kennedy’s damages analysis.
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`See Ex. C, Exhibit 3. The methodology further violates the “Book of Wisdom,” as it did not
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`attempt to establish that there would have been “uncertain prophecy” when GTP and Samsung
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`engaged in the hypothetical negotiation. Cf. Sinclair Refining Co. v. Jenkins Petroleum, 289 U.S.
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`689, 697-98 (1933). As the Kennedy Report admits,
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` Ex. C, ¶ 270 (emphasis in original) (bolded added). Yet Mr. Kennedy does not attempt
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`to approximate the parties’ “expectations” or Samsung’s “anticipated” profit.3
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`3 See Ex. D, Kennedy Dep. at 155:6-11:
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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 15 of 22 PageID #: 5660
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`The Kennedy Report was required to create a hypothetical negotiation wherein GTP and
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`Samsung “approximate”—in April 2014—what the patented technology would be worth in the
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`future. But the per-unit “change in profit” numbers from the Groehn Report relate to the purported
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`value of certain patented features today. This means that the Kennedy Report’s use of these
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`present-day numbers created a “hypothetical negotiation” wherein GTP and Samsung did not
`
`“reconstruct the market” to “project economic results.” See Riles, 298 F.3d at 1311. This violates
`
`the purpose of the hypothetical negotiation construct.
`
`It is possible the parties here would have agreed in the hypothetical negotiation that the
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`patented technology would, in the future, enable Samsung to sell smartphones with
`
`
`
`functionality for a
`
`more than smartphones without that functionality. But Mr. Kennedy did not even attempt to
`
`engage in this ex-ante inquiry, and instead looked solely at the market after infringement had
`
`ended.4 Cf. Wordtech Sys., 609 F.3d at 1319. This methodological failure warrants exclusion.
`
`Lucent Techs. Inc. v. Gateway, Inc., 580 F.3d 1301, 1332 (Fed. Cir. 2009) (describing that the
`
`purpose of Georgia-Pacific factor 10 is “to elucidate how the parties would have valued the
`
`patented feature during the hypothetical negotiation”) (emphasis added).
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`3.
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`The Kennedy Report Arbitrarily Assigns GTP a
`
` Bargaining Share
`
`Mr. Kennedy opined as to how the profit allegedly gained from Samsung’s use of the
`
`patented technology would be “divided” between GTP and Samsung. Ex. C, ¶ 267. Mr. Kennedy
`
`opined that in the hypothetical negotiation,
`
`
`
`Ex. C, ¶ 300, Exhibit 2. He justified this split as appropriate because
`
`
`4 The Patents-in-Suit expired by July 2020.
`
`-10-
`
` Id.
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` Ex. E, ¶ 42.
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`
`
`

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`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 16 of 22 PageID #: 5661
`
`
`It is unclear how the Kennedy Report came to this conclusion. It appears that Mr. Kennedy
`
`attempted to first determine both GTP’s and Samsung’s
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` which requires
`
`
`
`
`
`at 133:4-137:3. The Kennedy Report then concludes, using this admittedly incomplete financial
`
` Id. ¶ 290; see also Ex. D, Kennedy Dep.
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`data, that
`
`
`
`
`
`
`
`This conclusory assertion, devoid of supporting facts or data, cannot form the basis of a
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`jury’s verdict. Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1333 (Fed. Cir. 2014).
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`Next, Mr. Kennedy argued that Samsung’s starting point in the hypothetical negotiation
`
`would have been
`
`
`
` But Mr. Kennedy ignored Samsung’s presumed knowledge of GTP’s history of
`
`, and GTP’s willingness to accept a $
`
`
`
`offer from
`
`
`
` for a license to the “
`
` Portfolio,” which included the Patents-in-
`
`Suit here. Indeed, evidence of GTP’s negotiations with
`
` are perhaps the most pertinent
`
`evidence of the “arms-length bargaining” that is central to the hypothetical negotiation. Finjan,
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`Inc., 879 F.3d at 1309. These negotiations took place before commencement of any litigation
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` and involved the Patents-in-Suit here
`
`5
`
`After establishing these two end-points, the Kennedy Report abruptly aborts consideration
`
`of these end-points and concludes that the parties would agree to
`
`
`
`
` is not “comparable” for purposes of approximating a
`5 This is not to say that the
`reasonable royalty. Rather, failing to account for the
`negotiations is emblematic of a larger
`methodological problem with the
`” adopted by Mr. Kennedy.
`
`-11-
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`

`

`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 17 of 22 PageID #: 5662
`
`
` Ex. C, ¶ 300. This arbitrary
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`conclusion is akin to the “Rule of Thumb” methodology courts now roundly reject. See, e.g.,
`
`Virnetx, Inc. 767 F.3d at 1334 (“[T]he suggestion that those profits be split on a 50/50 basis—even
`
`when adjusted to account for certain individual circumstances—is insufficiently tied to the facts
`
`of the case, and cannot be supported”); Uniloc USA, Inc., 632 F.3d at 1318 (“In short, [the damages
`
`expert’s] starting point of a 25 percent royalty had no relation to the facts of the case, and as such,
`
`was arbitrary, unreliable, and irrelevant.”); see also Biscotti Inc. v. Microsoft Corp., No. 2:13-CV-
`
`01015-JRG-RSP, 2017 WL 2536962, at *4-5 (E.D. Tex. May 18, 2017). Further, the Kennedy
`
`Report’s reliance on
`
` is not harmless error.
`
`
`
`“provides a baseline from which juries might hesitate to stray, even if the evidence
`
`supported a radically different split.” Virnetx, Inc., 767 F.3d at 1333. As a result, the Kennedy
`
`Report’s methodology runs the risk of “inappropriately skewing the jury’s verdict.” Id.
`
`The Kennedy Report’s “bargaining share” methodology is a wolf in sheep’s clothing. It is
`
`disguised to avoid appearing like the roundly rejected “Rule of Thumb,” but it rests on the same
`
`arbitrary and unreliable methodological flaws. Indeed, any plaintiff in any case involving
`
`Samsung as a defendant could argue it would “share” the economic benefit of the patented
`
`technologies based on the exact same
`
`metric, regardless of the particular circumstances of the
`
`case. Such ill-founded guesswork cannot support the jury’s award. Uniloc USA, Inc., 632 F.3d at
`
`1313 (rejecting analysis that is “essentially arbitrary”). Just like the 50/50 Rule of Thumb that has
`
`been rejected by courts, the “
`
` is likewise impermissible.
`
`C.
`
`The Kennedy Report Failed to Apportion for Non-Infringing Uses of the
`Accused Products
`
`When the accused technology is not the whole of the accused product, apportionment is
`
`required. Bio-Rad Labs., Inc. v. 10X Genomics Inc., 967 F.3d 1353, 1376 (Fed. Cir. 2020); see
`
`-12-
`
`

`

`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 18 of 22 PageID #: 5663
`
`
`also Mentor Graphics Corp. v. EVE-USA, Inc., 870 F.3d 1298, 1299 (Fed. Cir. 2017) (per curiam)
`
`(denying rehearing en banc) (“[W]here an infringing product is a multi-component product with
`
`patented and unpatented components, apportionment is required”).
`
`claim evaporates under close scrutiny.
`
`
`
` That
`
`
`
`
`
`
`
` was the first step taken by the damages
`
`expert in Summit 6. See Summit 6 LLC v. Samsung Elecs. Co., Ltd., 802 F.3d 1283, 1297 (Fed.
`
`Cir. 2015). But the Kennedy Report stops there. In Summit 6, the expert apportioned the “camera-
`
`related revenue further.” Id. (emphasis added). The expert in Summit 6 “estimated the percentage
`
`of camera users who used the camera to perform the infringing methods rather than for other
`
`purposes.” Id. (emphasis added). The Kennedy Report, however, fails to perform this “further”
`
`apportionment. Ex. D, Kennedy Dep. at 101:22-103:3
`
`
`
`
`
`
`
`The Kennedy Report thus fails to isolate the “incremental value” of the claimed invention.
`
`Finjan, Inc., 879 F.3d at 1311; Cf. Summit 6, 802 F.3d at 1297 (discussing the expert’s further
`
`apportionment based on “usage statistics” to conclude the amount “due to the infringing features”);
`
`Exmark Mfg. Co., 879 F.3d at 1348 (upholding damages calculation that “reliably apportions
`
`between the improved and conventional features of the accused [devices]”).
`
`The failure to apportion for non-infringing uses is fatal to the Kennedy Report. Power
`
`Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 904 F.3d 965, 977 (Fed. Cir. 2018)
`
`-13-
`
`

`

`Case 2:21-cv-00040-JRG Document 144 Filed 12/03/21 Page 19 of 22 PageID #: 5664
`
`
`(“[P]atentee is only entitled to a reasonable royalty attributable to the infringing features.”). By
`
`failing to “apportion damages only to the patented features,” id. at 970 (discussing Virnetx, Inc.),
`
`the Kennedy Report simply did not account for the myriad other uses of the Accused Products’
`
`cameras that are not alleged to infringe the Patents-in-Suit. Ex. F (Samsung Camera Features).
`
`The Kennedy Report should be excluded on this basis. See Finjan, Inc., 879 F.3d at 1311 (“Further
`
`apportionment was required to reflect the value of the patented technology compared to the value
`
`of the unpatented elements.”).
`
`D.
`
`The Kennedy Report Ignored the Patent Rights Claimed in the Patents
`
`Under 35 U.S.C. § 284, damages awarded for patent infringement “must reflect the value
`
`attributable to the infringing features of the product, and no more.” CSIRO, 809 F.3d at 1301
`
`(emphasis added). To