Case 4:23-cv-01147-ALM Document 100 Filed 03/04/25 Page 1 of 6 PageID #: 6562
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`R2 SOLUTIONS LLC,
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`Plaintiff,
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`v.
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`DATABRICKS, INC.,
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`Defendant.
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`Civil Action No. 4:23-cv-01147-ALM
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`JURY TRIAL DEMANDED
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`DEFENDANT DATABRICKS, INC.’S REPLY IN SUPPORT
`OF ITS MOTION TO COMPEL PLAINTIFF R2 SOLUTIONS, LLC
`TO PRODUCE FINANCIAL DOCUMENTS
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`Case 4:23-cv-01147-ALM Document 100 Filed 03/04/25 Page 2 of 6 PageID #: 6563
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`I.
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`INTRODUCTION
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`R2’s Opposition does not dispute that the parties’ relative bargaining strengths is relevant
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`to damages, nor does it dispute that R2’s financial condition is probative of its bargaining strength.
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`(See generally, Opp.) R2’s Opposition also does not claim that the limited, relevant discovery
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`Databricks seeks—a total of merely five of R2’s financial statements—is unreasonable in scope,
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`burdensome, or disproportional to the needs of this case. (See id.)
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`Instead, R2 merely argues that its financial statements are “not necessary.” (Opp. at 3.)
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`Not only is that argument inaccurate in light of R2’s failure to produce discovery regarding its
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`costs incurred and its financial obligations, but it is insufficient to allow R2 to withhold these
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`relevant documents. Indeed, R2’s recently served damages expert report makes clear that R2 is
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`seeking
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` in damages from Databricks in this case. R2 cannot credibly argue
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`that producing merely five, indisputably relevant financial statements is overly burdensome or
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`disproportional. R2’s financial statements are relevant to damages and proportional to the needs
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`of this case, and they therefore must be produced.
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`II.
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`R2’S FINANCIAL STATEMENTS SHOW ITS FINANCIAL CONDITION AND
`THEREBY THE PARTIES’ RELATIVE BARGAINING POWERS
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`R2 does not dispute that its financial condition and obligations are relevant to determining
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`the parties’ relative bargaining powers and, therefore, a reasonable royalty analysis.1 (Opp. at 2-
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`4.) Indeed, Databricks’ Motion explained that financial statements are relevant to a party’s
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`bargaining strength, including specifically to understanding “the relative benefit [R2] would gain
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`from different royalty amounts proposed during any hypothetical negotiation.” (Mot. at 4.)
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`Nowhere in its Opposition does R2 dispute such relevance. (See generally Opp.)
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`1 R2 admits in its Opposition that it “does not contest discoverability of its financial statements on
`the basis that it is not the proper party to this hypothetical negotiation.” (Opp. at 4.)
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`Case 4:23-cv-01147-ALM Document 100 Filed 03/04/25 Page 3 of 6 PageID #: 6564
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`R2 claims that its financial statements are “not necessary” and that “there is no information
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`about R2’s hypothetical bargaining power that Databricks does not already know” in view of the
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`licensing agreements R2 has produced in this case. (Opp. at 3). However, this is not true. A
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`company’s financial condition is determined by both its revenues and costs. Though R2 may be
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`a non-practicing entity and only gain revenues through the licensing of its patent portfolio, the
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`amounts reflected in its licenses can tell only half of the story. Databricks must have information
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`about R2’s costs—i.e., information in R2’s financial statements—to discern R2’s whole financial
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`condition and thus bargaining power. No such information has been produced to Databricks to
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`date, despite that R2’s witness has confirmed that R2 does in fact incur costs and have financial
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`obligations.2 (Opp. at 1.)
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`Without R2’s financial statements, therefore, Databricks has no way of discerning the costs
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`making up R2’s financial condition and therefore its bargaining power, the relevance of which R2
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`does not dispute. This cannot be learned from R2’s produced license agreements. Nor was
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`Databricks able to determine it through the deposition of R2’s President and corporate witness. It
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`is only attainable through review of R2’s financial statements. As courts have held, a plaintiff’s
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`“general financial records are relevant to the hypothetical inquiry the trier of fact must eventually
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`make to determine the ‘reasonable royalty.” Utica Enterprises v. Federal Broach and Mach. Co.,
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`testified that
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`(
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`2 For example, R2’s President and only designated corporate witness Craig Yudell testified that
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`. (Yudell Dep. (Ex. 1) at 75:8-12.) Mr. Yudell also
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`. (Yudell Dep. at 195:20-196:16
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`”).) R2 has not
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`); id. at 194:9-17 (“
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`produced any information regarding the amounts of these costs.
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`Case 4:23-cv-01147-ALM Document 100 Filed 03/04/25 Page 4 of 6 PageID #: 6565
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`No. 01-CV-74655, 2006 WL 8095265, at *4 (E.D. Mich. Jan. 13, 2006) (holding such records are
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`relevant to various Georgia-Pacific factors including factor 12). The necessity and relevance of
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`the documents sought is therefore unquestionable.
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`III. R2’S FINANCIAL STATEMENTS ARE PROPORTIONAL TO THE NEEDS OF
`THIS CASE, PARTICULARLY IN LIGHT OF R2’S RECENTLY REVEALED
`DAMAGES CLAIM
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`R2 does not claim that Databricks’ discovery request is overbroad, unduly burdensome, or
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`disproportional to the needs of this case. (See generally Opp.) Nor can it. Indeed, Databricks is
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`seeking a total of merely five financial statements. Where R2 contends that its damages are
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`, Databricks’ limited request for R2’s 2020-2024 financial statements is unquestionably
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`proportional to the needs of this case.
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`IV. CONCLUSION
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`For the reasons above, Databricks respectfully requests that the Court grant Databricks’
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`request for R2’s 2020-2024 financial statements.
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`Dated: February 25, 2025
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`Respectfully submitted,
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`/s/ Jessica M. Kaempf
`Jessica M. Kaempf
`WA Bar No. 51666 (Admitted E.D. Texas)
`Email: jkaempf@fenwick.com
`Jonathan G. Tamimi
`WA Bar No. 54858 (Admitted E.D. Texas)
`Email: jtamimi@fenwick.com
`FENWICK & WEST LLP
`401 Union Street, 5th Floor
`Seattle, WA 98101
`Telephone:
`206.389.4510
`Facsimile:
`206.389.4511
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`Michael J. Sacksteder
`CA Bar No. 191605 (Admitted E.D. Texas)
`Email: msacksteder@fenwick.com
`Gregory Sefian
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`Case 4:23-cv-01147-ALM Document 100 Filed 03/04/25 Page 5 of 6 PageID #: 6566
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`CA Bar No. 341802 (Admitted Pro Hac Vice)
`Email: gsefian@fenwick.com
`S. Emma Lee
`CA Bar No. 344074 (Admitted Pro Hac Vice)
`Email: emma.lee@fenwick.com
`FENWICK & WEST LLP
`555 California Street, 12th Floor
`San Francisco, CA 94104
`Telephone:
`415.875.2300
`Facsimile:
`415.281.1350
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`Dargaye Churnet
`CA Bar No. 303659 (Admitted E.D. Texas)
`Email: dchurnet@fenwick.com
`FENWICK & WEST LLP
`730 Arizona Ave, 1st Floor
`Santa Monica, CA 90401
`Telephone:
`310.434.5400
`Facsimile:
`650.938.5200
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`Vigen Salmastlian
`CA Bar No. 276846 (Admitted E.D. Texas)
`Email: vsalmastlian@fenwick.com
`FENWICK & WEST LLP
`801 California Street,
`Mountain View, CA 94041
`Telephone:
`650.988.8500
`Facsimile:
`650.938.5200
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`Attorneys for Defendant
`Databricks Inc.
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`Case 4:23-cv-01147-ALM Document 100 Filed 03/04/25 Page 6 of 6 PageID #: 6567
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`CERTIFICATE OF AUTHORIZATION TO SEAL
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`Pursuant to Local Rule CV-5(a)(7)(B), I am authorized to file the foregoing document
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`under seal pursuant to the Protective Order (Dkt. 61) because this document references Designated
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`Material.
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`/s/ Jessica M. Kaempf
`Jessica M. Kaempf
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`CERTIFICATE OF SERVICE
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`I hereby certify that all counsel of record who are deemed to have consented to electronic
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`service are being served with a copy of this document via electronic mail per Local Rule CV-5 on
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`February 25, 2025. Additionally, I hereby certify that all counsel of record who have consented
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`to electronic service are being served with a copy of these documents via electronic mail per Local
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`Rule CV-5.
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`/s/ Jessica M. Kaempf
`Jessica M. Kaempf
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`5
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