Case 2:21-cv-00040-JRG Document 178 Filed 12/30/21 Page 1 of 8 PageID #: 9084
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVSION
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`CASE NO. 2:21-cv-00040-JRG
`(Lead Case)
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`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,
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`Plaintiff
`
`v.
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`HUAWEI DEVICE CO., LTD.,
`HUAWEI DEVICE USA, INC.,
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`Defendants.
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`
`GESTURE TECHNOLOGY
`PARTNERS, LLC,
`
`Plaintiff
`
`v.
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`SAMSUNG ELECTRONICS CO., LTD.
`AND SAMSUNG ELECTRONICS
`AMERICA, INC.,
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`Defendants.
`
`
`SAMSUNG DEFENDANTS’ REPLY IN SUPPORT OF THEIR 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 178 Filed 12/30/21 Page 2 of 8 PageID #: 9085
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`I.
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`INTRODUCTION
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`The Kennedy Report uses a sales-based damages model that does not distinguish between
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`damages for infringement of apparatus and method claims. Mot. at 14-15. GTP confirms as much.
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`Opp. at 12-13. The Court cannot send this “legally flawed damages model to the jury[.]” Infernal
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`Tech. LLC v. Sony Interactive Ent. LLC (“Sony”), No. 2:19-cv-00248-JRG, Dkt. 281 at 5 (E.D.
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`Tex. Feb. 26, 2021). Recognizing this approach is methodologically unsound, GTP now seeks a
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`reprieve and requests leave to supplement. Opp. at 13. Not only is GTP’s request untimely, but a
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`supplement cannot cure the defect. Unlike Sony, the record here is devoid of any evidence that
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`Samsung has used or tested the Asserted Method Claims. The only “appropriate resolution” for
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`this failure is exclusion of the Kennedy Report. Compare id.
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`GTP’s opposition does not remedy the Kennedy Report’s other failings, either. If admitted,
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`the jury will be presented with an apportionment model that does not account for the vast majority
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`of uses of the camera(s) in the Accused Products. GTP’s attempt to explain this methodological
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`error conflates non-infringing alternatives and non-infringing uses. Opp. at 9-12. The jury will
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`also hear about a hypothetical negotiation untethered to the facts of this case. For example, GTP
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`concedes that Mr. Kennedy’s hypothetical negotiation is founded entirely on ex-post data from
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`wholly outside the period of alleged infringement. Opp. at 4-5. Further, GTP doubles down on
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`Mr. Kennedy’s “Samsung 51/49 Rule,” a thinly disguised use of the discredited Rule of Thumb
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`approach. GTP argues this profit “split” is admissible, Opp. at 7 (citing Sanofi-Aventis
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`Deutschland Gmbh v. Glenmark Pharm. Inc., USA, No. 07-CV-5855 (DMC-JAD), 2011 U.S. Dist.
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`LEXIS 10512 (D.N.J. Feb. 3, 2011). It is not. See Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308,
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`1332 (Fed. Cir. 2014) (overturning Sanofi-Aventis). Altogether, Mr. Kennedy’s opinions are not
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`merely “shaky,” Opp. at 3, but are fatally flawed to the point of collapse. The Kennedy Report
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`should be excluded in full.
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`-1-
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`Case 2:21-cv-00040-JRG Document 178 Filed 12/30/21 Page 3 of 8 PageID #: 9086
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`II.
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`ARGUMENT
`A.
`A Supplement Cannot Cure the Kennedy Report’s Failure to Distinguish
`Between Damages for Apparatus and Method Claims
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`GTP asks the Court for a lifeline. Opp. at 13. The Court should reject this fruitless attempt
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`to save the Kennedy Report. Unlike the plaintiff in Sony, GTP has not set forth a damages theory
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`that implicates Samsung’s use or testing of the Accused Products. Compare Sony, Dkt. 1 ¶ 27
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`(“SIE and SIEA are engaged in the business of developing, testing . . . video games.”). And unlike
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`in Sony, GTP’s technical expert here has not attempted to establish that Samsung demonstrated
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`and internally tested the Accused Products, much less whether or how any such activity constituted
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`direct infringement. Compare Sony, Dkt. 281 at 2 (citing Expert Report of John C. Hart). Not
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`only was any such theory waived long ago, but a “do over” permitting GTP to rewrite its expert
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`reports at this stage would unfairly prejudice Samsung and set a dangerous precedent. The Court
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`here is not faced with the “unenviable choice” presented in Sony. See id. at 6.
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`B.
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`The Kennedy Report Failed to Apportion for Non-Infringing Use
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`Apportioning for non-infringing use is a legal requirement. Finjan, Inc. v. Blue Coat Sys.,
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`Inc., 879 F.3d 1299, 1309-10 (Fed. Cir. 2018). GTP concedes that Mr. Kennedy did not conduct
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`this apportionment. Opp. at 10
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`(emphasis omitted). Instead, GTP claims apportionment for non-infringing use was
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` Id. (emphasis omitted). But apportionment must be “tangible”
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`rather than “implicit.” See Garretson v. Clark, 111 U.S. 120, 121 (1884).
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`Even if GTP were allowed to “implicitly” apportion for non-infringing use, the Groehn
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`Report did not do this. The Groehn Report sought to calculate the consumer value of “the accused
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`features only.” See Visteon Glob. v. Garmin Int’l, Inc., No. 10-cv-10578, 2016 WL 5956325, at
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`*15 (E.D. Mich. Oct. 14, 2016) (finding conjoint survey analysis did not apportion for non-
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`-2-
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`Case 2:21-cv-00040-JRG Document 178 Filed 12/30/21 Page 4 of 8 PageID #: 9087
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`infringing use where it did not “determine the value of all features of the accused devices”). Put
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`another way, the Groehn Report purports to show the value of “patented features” compared to
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`non-infringing alternatives, but ignores the significant non-infringing uses of the camera(s) in the
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`Accused Products. Ex. H, Groehn Report ¶ 40. Cf. Mot. at 14 (Samsung Camera Features).
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`Mr. Kennedy’s analysis is nowhere near “akin” to the analysis in Summit 6. Opp. at 11.
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`In Summit 6, first the damages expert (like Mr. Kennedy) apportioned
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` i.e., the camera(s). Ex. I, Kennedy Report ¶
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`124. Second, the expert (unlike Mr. Kennedy)
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` Id. Third, the expert (unlike Mr. Kennedy)
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` Id. With
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`these three steps (versus Mr. Kennedy’s single step), the expert in Summit 6 apportioned for “the
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`percentage of camera users who used the camera to perform the infringing methods rather than
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`for other purposes.” Opp. at 11 (emphasis added). Not so here.1
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`GTP’s other attempts to explain Mr. Kennedy’s apportionment model are trivial. Opp. at
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`9-10.2 Mr. Kennedy’s failure to apportion for non-infringing use is dispositive, undermining the
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`reliability of Mr. Kennedy’s resulting damages estimation.
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`C.
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`The Kennedy Report Adopted a Hypothetical Negotiation Not Tied to the
`Facts of the Case
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`1.
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`The Kennedy Report Used an Incorrect Hypothetical Negotiation Date
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`GTP cites the “Kennedy Supplemental Report” to rebut that the Kennedy Report uses the
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`1 GTP’s assertion that apportionment for non-infringing uses was
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` is belied by the fact that Mr. Kennedy applied an
`for the value of the camera(s) in the Accused Products. See Opp. at 10. Mr. Kennedy recognized
`the need to apportion to the camera(s), but failed to account for non-infringing uses.
`2
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`-3-
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`Case 2:21-cv-00040-JRG Document 178 Filed 12/30/21 Page 5 of 8 PageID #: 9088
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`incorrect hypothetical negotiation date. Opp. at 4. GTP asserts that Samsung
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`. These barbs are proven false by the fact that
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`Samsung filed a motion to strike the supplement (and Dr. Groehn’s supplement) on the same day
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`as the instant motion. Dkt. 143. Besides correcting the date of the hypothetical negotiation, the
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`supplement is immaterial to the Kennedy Report’s unreliability. Mot. at 8.
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`2.
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`Use of a 2021 Conjoint Survey for the Hypothetical Negotiation in 2017
`(or 2014), Without Further Analysis, is Improper
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`GTP concedes that Mr. Kennedy did not endeavor to incorporate ex ante assumptions when
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`applying Dr. Groehn’s
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` calculations to the hypothetical negotiation. See Opp.
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`at 5-7. Instead, Mr. Kennedy fully adopted those calculations, purporting to state precisely (to the
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`dollar and cent) how consumers value the “patented features” today. Id. He did not provide any
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`analysis of how those calculations might have differed during the period of alleged infringement.
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`Cf. Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 770 (Fed. Cir. 2014) (requiring a
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`hypothetical negotiation wherein the parties “would have anticipated the profit-making potential
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`of use of the patented technology”). But a proper damages estimation “necessarily involves some
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`approximation of the market as it would have hypothetically developed[.]” Riles v. Shell Expl. &
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`Prod. Co., 298 F.3d 1302, 1311 (Fed. Cir. 2002). Exhibits 3-5 to the Kennedy Report do not meet
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`this legal standard. Opp. at 6. Samsung does not broadly challenge the use of conjoint surveys,
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`Opp. at 7, but the law required Mr. Kennedy to provide some analysis of what the parties “would
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`have anticipated” as to the profit-making potential. Mot. 910. He failed to do so.
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`3.
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`The “Samsung 51/49 Rule” is Arbitrary and Unfairly Prejudicial
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`It is telling that GTP’s opposition cites Sanofi-Aventis to support its use of the “Samsung
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`51/49 Rule.” Opp. at 7-8. The Federal Circuit expressly overturned Sanofi-Aventis because any
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`discussion of an arbitrary “split” in profit skews the jury’s damages calculation. Virnetx, Inc., 767
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`-4-
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`Case 2:21-cv-00040-JRG Document 178 Filed 12/30/21 Page 6 of 8 PageID #: 9089
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`F.3d 1308, 1332-1333. It is irrelevant whether Mr. Kennedy opined on the “relationship between
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`the parties and their relative bargaining power” before or after he applied this arbitrary 51/49 split.
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`See Opp. at 7 (citing Sanofi-Aventis); id. 8 n.3. If admitted, Mr. Kennedy’s use of this Rule of
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`Thumb will unfairly prejudice Samsung because it “provides a baseline from which juries might
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`hesitate to stray, even if the evidence supported a radically different split.” Mot. at 12.
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`It is further telling that GTP’s opposition provides no connection between the purported
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`“steps” Mr. Kennedy takes to arrive at the 51/49 split. If anything, GTP’s opposition made clear
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`that Mr. Kennedy’s opinion reflects the classic “analytical gap” that courts disallow. Gen. Elec.
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`Co. v. Joiner, 522 U.S. 136, 146 (1997); Brown v. Illinois Cent. R.R., 705 F.3d 531, 537 (5th Cir.
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`2013) (“[A]n expert’s testimony that ‘it is so’ is not admissible.”). Indeed, neither the 13.6% nor
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`the $550,000 relates in any way to Mr. Kennedy’s 51/49 split. Mr. Kennedy was not “entitled” to
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`conclude Samsung’s adjusted gross profit margin is an appropriate measure for determining the
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`parties’ bargaining share without showing how he arrived at that conclusion. Opp. at 8.
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`D. Mr. Kennedy Failed to Account for Shortcomings in the Groehn Report
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`GTP’s opposition does not change the fact that smartphones and tablets are different types
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`of products with different features and consumer demands. The Groehn Report excluded tablets.
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`Mr. Kennedy’s calculations relating to tablets should likewise be excluded. Mot. at 6.
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`Samsung notes GTP’s reliance on SimpleAir, where this Court excluded plaintiff’s use of
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`“overall product revenue.” SimpleAir, Inc. v. Google, No. 2:14-cv-00011, 2015 U.S. Dist. LEXIS
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`135915, at *7 (E.D. Tex. Oct. 6, 2015). Exclusion of Samsung’s overall product profit would
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`cause Dr. Groehn’s calculations to crumble, and thus Mr. Kennedy’s as well. Mot. at 6-7 n.2.
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`III. CONCLUSION
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`For the foregoing reasons, Samsung respectfully requests that the Court grant its motion
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`to preclude the opinions and testimony of Mr. Kennedy.
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`-5-
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`Case 2:21-cv-00040-JRG Document 178 Filed 12/30/21 Page 7 of 8 PageID #: 9090
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`DATED: December 28, 2021
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`Respectfully submitted,
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`
`By: /s/ Christopher W. Kennerly
`Christopher W. Kennerly (TX Bar No. 00795077)
`chriskennerly@paulhastings.com
`Radhesh Devendran (pro hac vice)
`radheshdevendran@paulhastings.com
`Boris S. Lubarsky (pro hac vice)
`borislubarsky@paulhastings.com
`David M. Fox (pro hac vice)
`davidfox@paulhastings.com
`PAUL HASTINGS LLP
`1117 S. California Avenue
`Palo Alto, CA 94304
`Telephone: (650) 320-1800
`Facsimile: (650) 320-1900
`
`Allan M. Soobert
`allansoobert@paulhastings.com
`PAUL HASTINGS LLP
`2050 M Street NW
`Washington, D.C. 20036
`Telephone: 202-551-1700
`Facsimile: 202-551-1705
`
`Elizabeth L. Brann
`elizabethbrann@paulhastings.com
`PAUL HASTINGS LLP
`4747 Executive Drive, 12th Floor
`San Diego, CA 92121
`Telephone: (858) 458-3000
`Facsimile: (858) 458-3005
`
`Robert Laurenzi
`robertlaurenzi@paulhastings.com
`PAUL HASTINGS LLP
`200 Park Avenue
`New York, NY 10166
`Telephone: (212) 318-6000
`Facsimile: (212) 319-4090
`
`Melissa R. Smith (TX Bar No. 24001351)
`GILLAM & SMITH, LLP
`303 S. Washington Ave.
`Marshall, TX 75670
`Telephone: (903) 934-8450
`Facsimile: (903) 934-9257
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`-6-
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`Case 2:21-cv-00040-JRG Document 178 Filed 12/30/21 Page 8 of 8 PageID #: 9091
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`melissa@gillamsmithlaw.com
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`Attorneys for Defendants Samsung Electronics
`Co., Ltd and Samsung Electronics America, Inc.
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`CERTIFICATE OF SERVICE
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`I certify that a true and correct copy of the foregoing document was filed electronically in
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`compliance with Local Rule CV-5 on December 28, 2021. As of this date, all counsel of record
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`had consented to electronic service and are being served with a copy of this document through
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`the Court’s CM/ECF system under Local Rule CV-5(a)(3)(A) and by email.
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`CERTIFICATE OF AUTHORIZATION TO SEAL
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`I hereby certify that under Local Rule CV-5(a)(7), the foregoing document is filed under
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`seal pursuant to the Court’s Protective Order entered in this matter.
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` /s/ Christopher W. Kennerly
`Christopher W. Kennerly
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`-7-
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