Case 5:16-cv-00179-RWS Document 56 Filed 03/22/18 Page 1 of 20 PageID #: 918
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TEXARKANA DIVISION
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`MAXELL, LTD.,
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`Plaintiff,
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`v.
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`ZTE CORPORATION and
`ZTE USA INC.,
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`Defendants.
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`Case No. 5:16-cv-00179-RWS
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`JURY TRIAL DEMANDED
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`MAXELL, LTD.’S OPPOSITION TO ZTE (USA), INC.’S MOTION TO EXCLUDE
`PORTIONS OF EXPERT OPINION TESTIMONY
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`PUBLIC VERSION
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`Case 5:16-cv-00179-RWS Document 56 Filed 03/22/18 Page 2 of 20 PageID #: 919
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`TABLE OF CONTENTS
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`I. LEGAL STANDARD ............................................................................................................. 1
`II.
`ARGUMENT ...................................................................................................................... 3
`A. Ms. Mulhern’s Reliance on Maxell’s Standard Royalty Rate Does Not Warrant Excluding
`Her Market Approach Opinions. ......................................................................................... 3
`1.  That
` Goes to Weight of the Evidence. .................. 4 
`2.  That
` Goes to Weight of the
`Evidence. ................................................................................................................................... 5 
`B. Ms. Mulhern’s Apportionment Methodology Is Neither Unreliable Nor Faulty. ............... 7
`C. ZTE’s Criticisms Regarding Ms. Mulhern’s Income Approach Do Not Warrant Exclusion
`of Her Opinions................................................................................................................. 10
`1.  Ms. Mulhern’s Reliance on Broadcom Is Appropriate. ..................................................... 11 
`2.  The Consumer Survey Is Not Faulty. ................................................................................... 12 
`Conclusion ........................................................................................................................ 15
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`III.
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`Case 5:16-cv-00179-RWS Document 56 Filed 03/22/18 Page 3 of 20 PageID #: 920
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`TABLE OF AUTHORITIES
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`Page(s)
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`Cases
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`ActiveVideo Networks v. Verizon Communications, Inc.,
`694 F.3d 1312 (Fed. Cir. 2012)........................................................................................2, 3, 10
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`Daubert v. Merrell Dow Pharmaceuticals, Inc.,
`509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993) .................................................1, 2, 4
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`Droplets, Inc. v. Overstock.com, Inc.,
`No. 2:11-CV-401-JRG-RSP, 2015 WL 11120841 (E.D. Tex. Jan. 7, 2015) ...........................13
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`Ericsson, Inc. v. D-Link Sys.,
`773 F.3d 1201 (Fed. Cir. 2014)..................................................................................................8
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`i4i Ltd. P’ship v. Microsoft Corp.,
`598 F.3d 831 (Fed. Cir. 2010)..........................................................................................2, 3, 10
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`Ironworks Patents, LLC v. Apple, Inc.,
`Civ. No. 10-258-SLR, D.I. 748 (D. Del. Jun. 12, 2017) ....................................................14, 15
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`Lucent Techs., Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009)................................................................................................11
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`Micro Chem., Inc. v. Lextron, Inc.,
`317 F.3d 1387 (Fed. Cir. 2003)..................................................................................................2
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`PerdiemCo, LLC v. Industrack LLC,
`No. 2:15-CV-726-JRG-RSP, 2016 U.S. Dist. LEXIS 155754, 2016 WL
`6611488 (E.D. Tex. Nov. 9, 2016) ............................................................................................7
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`Pipitone v. Biomatrix, Inc.,
`288 F.3d 239 (5th Cir. 2002) .....................................................................................................2
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`Smartflash LLC et al. v. Apple Inc.,
`Case No. 6:13-cv-00447-JRG-KNM, D.I. 374 (E.D. Tex. December 23, 2014) ....................13
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`Summit 6, LLC v. Samsung Elecs. Co., Ltd.,
`802 F.3d 1283 (Fed. Cir. 2015)..................................................................................................2
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`Other Authorities
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`Federal Rule of Evidence 702 ......................................................................................................1, 2
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`As it has done throughout this case, ZTE ignores the law and the facts. A Daubert motion
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`has a single primary purpose: to keep unreliable and irrelevant expert opinions away from the
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`jury. But in its motion to exclude portions of the opinion of Maxell’s damages expert,1 Ms.
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`Mulhern, ZTE ignores this and instead asks the Court to stand in the shoes of the jury. ZTE
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`wants the Court to make decisions regarding whether the facts on which Ms. Mulhern relies are
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`sufficiently supported by the record, or whether she could have chosen other methodologies
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`where several options are available. But this is not appropriate.
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`ZTE does not challenge that Ms. Mulhern is qualified as an expert to render her damages
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`opinions or that her opinions will aid the jury. ZTE does not challenge that the facts underlying
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`Ms. Mulhern’s opinions are firmly and demonstrably rooted in the evidentiary record of this case
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`and are relevant to the case. And ZTE does not challenge that Ms. Mulhern’s methodologies are
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`not scientifically reliable. Rather, ZTE takes issue with the strength of certain facts and data that
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`underlie Ms. Mulhern’s opinions and challenges the fact that Ms. Mulhern chose to apportion a
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`royalty rate using a different methodology than ZTE’s damages expert. These issues, however,
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`are questions for the trier of fact, not a Daubert motion. Accordingly, the Court should deny
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`ZTE’s motion and leave ZTE to present its arguments where appropriate—at trial.
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`I.
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`LEGAL STANDARD
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`The trial court acts as a “gatekeeper” to exclude expert testimony that is not sufficiently
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`relevant or reliable. In this role, the trial court determines the admissibility of expert testimony
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`based on Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509
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`U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993). Opinion testimony is not admissible unless:
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`(1) the witness is qualified “as an expert by knowledge, skill, experience, training, or education,”
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`1 ZTE (USA), INC.’S Motion To Exclude Portions of Expert Opinion Testimony, filed as D.I. 207 in prior Lead
`Case No. 5:16-cv-00178-RWS.
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`Fed. R. Evid. 702; (2) the witness’s reasoning or methodology underlying the opinion testimony
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`is scientifically reliable, Daubert, 509 U.S. at 592-93; and (3) the testimony is relevant—that is,
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`it must assist the trier of fact to understand the evidence or to determine a fact at issue. Fed. R.
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`Evid. 702; Daubert, 509 U.S. at 591.
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`As gatekeeper, the Court’s role is not to weigh the expert testimony to the point of
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`supplanting the jury’s fact-finding role; instead, the Court’s role is to ensure the evidence in
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`dispute is at least sufficiently reliable and relevant to the issue that it is appropriate for the jury’s
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`consideration. See Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1391-92 (Fed. Cir. 2003)
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`(applying Fifth Circuit law) (“When, as here, the parties’ experts rely on conflicting sets of facts,
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`it is not the role of the trial court to evaluate the correctness of facts underlying one expert’s
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`testimony.”); Pipitone v. Biomatrix, Inc., 288 F.3d 239, 249-50 (5th Cir. 2002) (“‘[t]he trial
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`court’s role as gatekeeper [under Daubert] is not intended to serve as a replacement for the
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`adversary system.’ . . . Thus, while exercising its role as a gate-keeper, a trial court must take
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`care not to transform a Daubert hearing into a trial on the merits,” quoting Fed. R. Evid. 702
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`advisory committee note). As the Supreme Court explained in Daubert, 509 U.S. at 596,
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`“[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the
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`burden of proof are the traditional and appropriate means of attacking shaky but admissible
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`evidence.” See Micro Chem., 317 F.3d at 1392. “When the methodology is sound, and the
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`evidence relied upon sufficiently related to the case at hand, disputes about the degree of
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`relevance or accuracy (above this minimum threshold) may go to the testimony’s weight, but not
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`its admissibility.” i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 852 (Fed. Cir. 2010); see also
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`ActiveVideo Networks v. Verizon Communications, Inc., 694 F.3d 1312, 1333 (Fed. Cir. 2012)
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`(stating that disagreements with an expert’s conclusions and factual assumptions and
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`considerations underlying those conclusions go to the weight to be afforded the testimony, not its
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`admissibility); Summit 6, LLC v. Samsung Elecs. Co., Ltd., 802 F.3d 1283, 1299 (Fed. Cir. 2015)
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`(“[D]isputes over the expert’s credibility or over the accuracy of the underlying facts are for the
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`jury”).
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`II.
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`ARGUMENT
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`A. Ms. Mulhern’s Reliance on Maxell’s Standard Royalty Rate Does Not Warrant
`Excluding Her Market Approach Opinions.
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`ZTE’s first complaint is not directed towards Ms. Mulhern’s methodology, but to one of
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`the inputs thereto. Specifically, ZTE does not like that Ms. Mulhern relies on Maxell’s standard
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`royalty rate as an upper bound rate for her market approach analysis. Importantly, ZTE admits
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`there is support in the record for the standard rate
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`. But ZTE challenges the
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`“reliability” of the rate. Such argument, however, plainly goes to the weight of Ms. Mulhern’s
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`opinion, not its admissibility. See, e.g., i4i Ltd. P’ship, 598 F.3d at 852; ActiveVideo Networks,
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`694 F.3d at 1333.
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`Ms. Mulhern explained in detail the basis for her reliance on the standard rate,
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`demonstrating it is supported by the record and related to the case at hand. For example, Ms.
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`Mulhern states in her report—and testified at her deposition—that her use of the standard
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` rate was based on the testimony of, and her conversations with, Maxell’s corporate
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`witness, Kenji Nakamura. Ex. A, Mulhern Rpt. ¶¶79-82; Ex. B, Mulhern Tr. at 61:18-62:6, 74:4-
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`11. Mr. Nakamura specifically testified that
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`. Ex. C, Nakamura Tr. 33:2-19, 34:14-18, 36:9-14, 91:16-19,
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`99:12-19. Ms. Mulhern also explained that the standard rate is supported by her own review of
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`prior Hitachi licenses covering the portfolio. Ex. B, Mulhern Tr. at 74:23-75:11, 111:7-112:1.
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`There is no genuine argument that the foregoing is not probative evidence. Nor can it be
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`reasonably argued—ZTE’s motion is anything but reasonable—that the foregoing evidence is
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`not sufficient to support Ms. Mulhern’s opinion. Even ZTE’s own damages expert acknowledged
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`that he relies on materials from his clients, including telephone discussions with the client, in
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`preparing his opinions in patent infringement cases. Ex. D, Kennedy Tr. at 25:13-19.
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`As shown in greater detail below, ZTE’s arguments regarding the standard royalty rate go
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`to the strength of this evidence. The appropriate means for ZTE to address this, however, is not
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`through a Daubert motion, but rather through “[v]igorous cross-examination, presentation of
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`contrary evidence, and careful instruction on the burden of proof.” Daubert, 509 U.S. at 596.
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`1. That
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`Goes to Weight of the Evidence.
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`ZTE does not deny that Maxell’s corporate representative testified
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`. Nor does
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`ZTE deny that
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`. ZTE also does not assert that
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` are not relevant
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`to the case. In other words, ZTE is not arguing the evidence does not exist, is inadmissible, or is
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`otherwise irrelevant. Rather, ZTE attacks Ms. Mulhern’s reliance on
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`. Mot. 4.
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`Given that the evidence regarding
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` is in the record, undisputed, and
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`relevant, ZTE’s argument that
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`evidence, not its admissibility. ZTE is free to cross-examine Maxell’s corporate witness and Ms.
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`Mulhern regarding
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`have on Ms. Mulhern’s opinions.
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`and the impact this may
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`2. That
`of the Evidence.
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` Goes to Weight
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`ZTE prefers that licenses to the portfolio be the basis of any analysis of a royalty rate in
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`this case, as opposed to
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`. Mot. at 4-5. First, ZTE’s preference should have no bearing
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`here. ZTE is free to offer its own expert opinion relying on the evidence it prefers, which ZTE
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`has done. Second, Ms. Mulhern does rely on the license agreements. See, e.g., Ex. A, Mulhern
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`Rpt. ¶¶54-78, 85-87; Ex. B, Mulhern Tr. at 74:23-75:11, 111:7-112:1. For example, she opines
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`that the agreements
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`. See e.g., Ex. A, Mulhern Rpt. ¶97; Ex. B, Mulhern Tr. at
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`74:23-75:11, 111:7-112:1. ZTE’s concern is, therefore, apparently that Ms. Mulhern does not
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`rely only on the license agreements, to the exclusion of all other evidence.
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`Again, ZTE’s arguments are appropriately presented via cross-examination and not
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`through exclusion of the evidence or related testimony. Ms. Mulhern’s conclusions regarding
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`cross-licenses and uncertainty are rooted in her expertise and supported by evidence she
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`considered. For example, with respect to the impact that uncertainty regarding validity,
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`enforceability, and infringement may have, Ms. Mulhern consulted statistics and articles
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`regarding success rates in patent litigations. Ex. A, Mulhern Rpt. ¶¶89-91. With respect to cross-
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`licenses, Ms. Mulhern considered information provided to her by Maxell’s representative and her
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`review of publicly available information regarding Hitachi’s business. Ex. A, Mulhern Rpt. ¶¶
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`88; Ex. B, Mulhern Tr. at 59:14-60:4, 72:5-73:6, 74:23-75:11, 111:7-112:1.
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`With respect to Ms. Mulhern’s reliance on information provided directly by Maxell’s
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`representative, Mr. Nakamura, ZTE asserts this reliance is inappropriate because—ZTE
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`incorrectly claims—the information he provided contradicted his earlier testimony. Specifically,
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`ZTE contends that Mr. Nakamura’s statement to Ms. Mulhern that, in Maxell’s view,
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`However, Mr. Nakamura’s statement and testimony did not contradict each other. Far
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`from contradictory, Mr. Nakamura’s statement that
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`. Ex. C, Nakamura Tr. at 34:14-18. Moreover,
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`. But ZTE’s apparent failure to conduct this discovery does not mean Maxell
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`withheld information or lacked knowledge.3 Thus, the information Mr. Nakamura provided Ms.
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`Mulhern, which was consistent with his deposition testimony and further corroborated by Ms.
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`Mulhern’s independent review of Hitachi’s licenses and business, provides a reliable basis for
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`her opinion.
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`ZTE also appears to argue that the fact Ms. Mulhern did not quantify the value of the
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`cross-licensing provisions somehow renders her methodology unreliable. But Ms. Mulhern did
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`not seek to use the cross-licenses to arrive at a specific effective royalty rate for each license.
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`2 ZTE also notes that Mr. Nakamura claimed attorney-client privilege over discussions held between Maxell and
`certain Hitachi attorneys regarding Maxell licensing negotiations. Such claim regarding Maxell’s licensing
`negotiations is not relevant to Maxell’s knowledge regarding prior Hitachi licenses.
`3 Conversations between damages experts and corporate witnesses is common practice, as ZTE’s expert admitted.
`Ex. D, Kennedy Tr. at (rough) 20:14-20. It does not indicate that a witness was not forthcoming or dishonest at
`deposition, but rather that the expert sought information that was not inquired into at the witness’s deposition. See,
`e.g., Ex. B, Mulhern Tr. 22:12-22.
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`Rather, Ms. Mulhern stated that the cross-licenses supported her understanding and opinion that
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`the standard rate was relevant and appropriate. See Ex. B, Mulhern Tr. at 112:2-9. Ms. Mulhern
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`did not pluck a royalty rate out of thin air, as ZTE seems to suggest. Ms. Mulhern considered
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`several sources of evidence to ensure they were consistent and ultimately concluded that the
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`standard
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` rate she was provided was tied to the evidence. Such analysis is appropriate
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`and reliable. Indeed, “estimating a reasonable royalty and apportionment is never an exact
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`science.” See, e.g., PerdiemCo, LLC v. Industrack LLC, No. 2:15-CV-726-JRG-RSP, 2016 U.S.
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`Dist. LEXIS 155754, 2016 WL 6611488, at *3 (E.D. Tex. Nov. 9, 2016) (“[E]stimating a
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`reasonable royalty and apportionment is never an exact science. At some level an expert must be
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`allowed to rely on and use his or her judgment, provided the opinion is supported by facts and
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`data.”).
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`B. Ms. Mulhern’s Apportionment Methodology Is Neither Unreliable Nor Faulty.
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` Ms. Mulhern apportioned the portfolio license rate among the asserted and non-asserted
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`patents. Ms. Mulhern addresses this directly and states in her report:
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`Finally, to account explicitly for the fact that the portfolio rates described
`above include the grant of numerous patents other than those at issue in
`the hypothetical negotiation, I have applied an “apportionment factor” to
`account for the contribution of the Patents-in-Suit to the overall licensed
`products. To assess the share of overall product value associated with the
`Asserted Patents, for each Asserted Patent, I analyzed the share of the total
`cost of all components in the Accused Products attributable to the specific
`components incorporating the patented technology.
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`Ex. A, Mulhern Rpt. ¶96; see also, e.g., Ex. B, Mulhern Tr. at 120:10-121:8. Thus, the true issue
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`is not whether Ms. Mulhern apportioned the rate (she plainly did), but that ZTE disagrees with
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`Ms. Mulhern’s apportionment. Again, that ZTE prefers a different methodology does not
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`demonstrate Ms. Mulhern’s methodology to be faulty, unreliable, or irrelevant.
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`There are multiple ways to apportion a portfolio royalty rate. As an example, consider a
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`portfolio and royalty that apply to an entire desk. If patents from that portfolio were asserted
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`against only drawers of a desk, then apportioning the portfolio rate could be done through at least
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`two different methods. For example, one can apply the desk portfolio rate against just the drawer
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`components, meaning that the costs of the components—the costs of the drawer versus the cost
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`of the entire desk—provide the means for apportioning the royalty. Ms. Mulhern used a
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`methodology like this (rooted in the royalty base) in her report. Another example is to use the
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`number of patents—the number of asserted patents versus the number of patents in the overall
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`portfolio—to provide the means for apportioning the royalty. Dr. Kennedy used a patent-
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`counting methodology (rooted in the royalty rate) in his report. There are other examples, as
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`well, such as comparing patent citations of the asserted patents versus patent citations of the
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`broader portfolio (another method rooted in the royalty rate).
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`That apportionment may be performed in various ways has been recognized by the
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`Federal Circuit, which held that apportionment may occur in the royalty base, royalty rate, or
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`anywhere in between so long as “the ultimate reasonable royalty award [is] based on the
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`incremental value that the patented invention adds to the end product.” Ericsson, Inc. v. D-Link
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`Sys., 773 F.3d 1201, 1226 (Fed. Cir. 2014) (stating that various methods of apportionment
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`include, for example, “by careful selection of the royalty base to reflect the value added by the
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`patented feature, where that differentiation is possible; by adjustment of the royalty rate so as to
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`discount the value of a product’s non-patented features; or by a combination thereof.”).
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`As stated above, Ms. Mulhern has apportioned the portfolio rate by adjusting the royalty
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`base to reflect the value added by the asserted patented features. Specifically, for each asserted
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`patent, Ms. Mulhern analyzed the share of the cost of the accused products attributable to the
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`specific components incorporating the patented technology. Ex. A, Mulhern Rpt. ¶96. Ms.
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`Mulhern then applied the standard rate to those shares to arrive at high end royalty rates for the
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`patents.
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`ZTE asserts that Ms. Mulhern’s apportionment is faulty because the value of the asserted
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`patents exceeds the “value” of the entire portfolio containing those patents. But that is not so.
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`First, for ZTE’s assertion to be true, Ms. Mulhern would have needed to adopt the high end rate
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`for each asserted patent, and to argue that each and every accused product practices each and
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`every asserted patent. Neither of these predicate requirements are true. In fact, Ms. Mulhern
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`adopted rates well below the high-end rates and each accused product is not asserted to infringe
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`every asserted patent. Ms. Mulhern’s actual effective royalty per unit
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`. Ex. A, Mulhern Rpt. Revised Exs. 33,
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`35. This corresponds to an effective rate of about
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`% of the average selling price ($
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`)
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`across all accused products, well below the standard
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` royalty rate.4
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`Moreover, ZTE ignores the fact that the standard rate in a normal licensing scenario
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`would be applied to all of ZTE’s smartphone products sold in the United States, not just the
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`accused products.5 Over the relevant time period, accused products made up only about % of
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`ZTE U.S. smartphone and tablet sales. This means the true effective licensed rate for Ms.
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`Mulhern’s royalty, applied to all of ZTE’s smartphone sales as would normally be the practice
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`outside litigation, is as low as
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`%. This is far below Maxell’s and Hitachi’s standard rate, and
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`shows ZTE’s arguments on this point to ring hollow.
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`4 Using ZTE’s example of the ZTE Blade V8 Pro offers a similar result. Assuming this product infringes every
`patent, applying Ms. Mulhern’s ultimate royalty rates would result in a payment of $
`/unit, which corresponds to
`roughly % of the average selling price of $
`. Still below the
` standard royalty rate. Most products,
`however, are not accused of infringing all the asserted patents. This includes the Blade V8 Pro, which is accused of
`infringing five of the eight patents. In fact, the royalty for the Blade V8 Pro amounts to
`, which is a
`%
`royalty rate against its sale price.
`5 See, e.g., Ex. B, Mulhern Tr. 117:13-119:10.
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`Ignoring the facts, the law, and basic math, ZTE essentially asks the Court to make a
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`decision regarding the admissibility of Ms. Mulhern’s opinion without considering the entirety of
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`her opinion. In addition to the apportionment discussed above, Ms. Mulhern also recognized that
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`patent-practicing components can incorporate functionality unrelated to the Asserted Patents.
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`Ms. Mulhern therefore opined that the high-end royalty rate required downward adjustment
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`such that the appropriate royalty would be toward the lower end of the rates suggested by the
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`market approach. This further apportionment in Ms. Mulhern’s report, which constitutes part of
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`her analysis, cannot just be ignored.
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`ZTE’s final argument against Ms. Mulhern’s apportionment methodology asserts that
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`Exmark Mfg. Co. supports the claim that Ms. Mulhern’s methodology does not sufficiently tie
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`the advantages of the patented technology to the royalty rate in this case. Again, ZTE either did
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`not read or simply ignored sections of Ms. Mulhern’s report. In fact, Ms. Mulhern states that her
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`apportionment methodology already accounts for other potential drivers of demand because it
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`accounts specifically for the patented component share of overall product value. Ex. A, Mulhern
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`Rpt. ¶157. Ms. Mulhern need not perform additional, redundant quantitative calculations to
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`address functionalities not covered by the asserted patents because they are already excluded. It
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`is sufficient, and indeed conservative, to conclude that the final royalty rate should be toward the
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`lower end of the range calculated using component share.
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`C. ZTE’s Criticisms Regarding Ms. Mulhern’s Income Approach Do Not Warrant
`Exclusion of Her Opinions.
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`ZTE also criticizes Ms. Mulhern’s income approach, stating that she did not compare
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`reliable litigated rates and relied on a faulty methodology regarding consumer surveys. As with
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`ZTE’s other arguments, this goes to the weight of Ms. Mulhern’s opinion, not its admissibility.
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`See, e.g., i4i Ltd. P’ship, 598 F.3d at 852; ActiveVideo Networks, 694 F.3d at 1333.
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`Case 5:16-cv-00179-RWS Document 56 Filed 03/22/18 Page 14 of 20 PageID #: 931
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`1. Ms. Mulhern’s Reliance on Broadcom Is Appropriate.
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`For two of the asserted patents, Ms. Mulhern utilizes a litigated patent value for a
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`comparable patent—specifically, the ’686 patent litigated in Broadcom v. Qualcomm. Ex. A,
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`Mulhern Rpt. ¶¶105-112. ZTE does not assert that the use of litigated rates is itself an unreliable
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`methodology. Rather, ZTE asserts that the ’686 patent is not a reliable comparable because it had
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`been held invalid on appeal before the time of the hypothetical negotiation. The comparability of
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`the litigated patent, however, is an issue for the trier of fact.
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`A reasonable royalty represents the payment or stream of payments that the accused
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`infringer would have paid in exchange for a license to the Asserted Patents, assuming a finding
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`of validity, enforceability, and infringement. See, e.g., Lucent Techs., Inc. v. Gateway, Inc., 580
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`F.3d 1301, 1324 (Fed. Cir. 2009). The litigated rate for the ’686 patent was therefore set based
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`on an assumption of validity, enforceability, and infringement. That one of these assumptions
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`was later adjudged to be incorrect does not change what the appropriate royalty rate would have
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`been if the patent had been affirmed valid and infringed. Ms. Mulhern explained this at her
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`deposition:
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`10· · · · · Q.· · · Your report states that:· The ’686
`11· ·patent is a comparable value from a technical
`12· ·perspective, but that patent is invalid.· Why didn’t
`13· ·that impact your opinion?
`14· · · · · A.· · · Because the royalty rate that was
`15· ·determined in that proceeding stems directly from
`16· ·the presumption of validity, enforceability, and
`17· ·infringement of that patent.· So the presumption
`18· ·going in is that that patent is valid, enforceable,
`19· ·and infringed, and that was the finding at the time
`20· ·the royalty rate was determined.· So that rate
`21· ·applies to that invention had it been valid,
`22· ·enforceable, and infringed.· The fact that
`23· ·subsequently on appeal it was invalidated doesn’t
`24· ·negate the observation of the economic value of that
`25· ·invention.
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`Ex. B, Mulhern Tr. at 160:10-25. In other words, the value of the invention disclosed in the ’686
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`patent has a certain value when considered valid, enforceable, and infringed—just like the
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`asserted patents in this case do. That litigated value was provided in the Broadcom v. Qualcomm
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`case and, because the invention disclosed in the ’686 patent is comparable to the invention
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`disclosed in two of the asserted patents here, it is appropriate to do the comparison Ms. Mulhern
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`did. And as she explained, the subsequent invalidation by the Federal Circuit is not “relevant to
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`the economics.” Id. 161:8-12.
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`In view of the fact that ZTE’s challenge to Ms. Mulhern’s reliance on litigated rates is
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`limited to the impact that ultimate invalidation of that patent has on its litigated rate, exclusion of
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`such evidence and Ms. Mulhern’s opinions is not appropriate. Rather, ZTE may raise the
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`invalidation during its cross-examination of Ms. Mulhern at trial.
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`2. The Consumer Survey Is Not Faulty.
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`ZTE did not hire a survey expert. As a result, ZTE has no expert opinion on which to
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`challenge Dr. Erdem’s survey or Ms. Mulhern’s reliance on the survey. Undeterred, ZTE
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`challenges Dr. Erdem’s survey, specifically that the survey language—crafted with the help of
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`Maxell’s technical experts—does not accurately describe the patented technology. ZTE argues
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`that the survey’s descriptions are too broad and encompass many technologies beyond those
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`found in the asserted patents. But ZTE’s assertions are almost entirely conclusory. The only
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`specific example ZTE provided in support of its criticism is Dr. Erdem’s inclusion of Google
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`maps as an example of a GPS/navigations app, which example is not even part of Dr. Erdem’s
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`description of the patented technology. Ex. E, Erdem Rpt. ¶17, Appendix B-17.
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`ZTE asserts this example is inappropriate because Maxell’s assertions of infringement of
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`the ’317 patent do not include Google maps. However, while it is true that Maxell is not accusing
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`Google maps in this litigation, that does not mean Google maps does not practice the asserted
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`patents. Moreover, and perhaps more importantly, Google maps is provided as an example of a
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`navigation app, not as an example of infringing technology. Ex. E, Erdem Rpt. ¶¶17, 27,
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`Appendix B-15, B-17. In fact, Dr. Erdem’s description of the patented technology of the ’317
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`patent does not mention Google or Google maps at all. Ex. E, Erdem Rpt. ¶17, Appendix B-17.
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`Regardless, any concern ZTE has about the alleged overbreadth of the survey can be
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`explored on cross-examination. See, e.g., Droplets, Inc. v. Overstock.com, Inc., No. 2:11-CV-
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`401-JRG-RSP, 2015 WL 11120841, at *2 (E.D. Tex. Jan. 7, 2015) (denying motion to strike
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`testimony based on accusations of survey’s overall breadth because issue could be addressed on
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`cross-examination). ZTE’s criticism also could have been explored by a rebuttal expert report,
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`but it chose not to hire a survey expert and therefore challenges Dr. Erdem’s expert opinions
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`without understanding how surveys are designed or conducted.
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`To support its argument that Ms. Mulhern’s reliance on the survey data to extrapolate
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`royalty rates is flawed methodology, ZTE relies on Smartflash LLC et al. v. Apple Inc. This case,
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`however, is inapposite. In Smartflash v. Apple, the issue before the Court was whether the survey
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`evidence adequately supported the plaintiff’s damages expert’s use of the entire market value
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`rule. Case No. 6:13-cv-00447-JRG-KNM, D.I. 374 at 3-5 (E.D. Tex. December 23, 2014). The
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`Court there held that using the entire market value rule is not appropriate where the patented
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`feature is not the sole motivator of purchase. The Court found that an affirmative response in a
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`survey (to whether a patented capability motivated a purchase) was “insufficient evidence to
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`show that the patented feature alone motivated survey respondents to purchase the accused
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`devices because the questions did nothing to distinguish those features as the sole motivating
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`factor.” Id. at 5 (emphasis added). Thus, that survey was insufficient to support use of the entire
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`market value rule in that case. Id.
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`That is not an issue before the Court here. As an initial matter, Dr. Erdem’s survey did
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`not seek affirmative responses; it used ratings-based questions to determine importance because
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`“[s]tudies suggest that ‘reliability is higher when all points are labeled with words than when
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`only some are,’ and ‘[r]esearchers can maximize reliability