Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 1 of 34
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`TOUCHSTREAM TECHNOLOGIES, INC.,
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`GOOGLE LLC,
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`Defendant.
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`Plaintiff,
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`v.
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`§
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`Civil Case No. 6:21-cv-569-ADA
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`JURY TRIAL DEMANDED
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`DEFENDANT GOOGLE LLC’S DAUBERT MOTION TO EXCLUDE CERTAIN
`OPINIONS OF DAMAGES EXPERT MARK J. CHANDLER
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 2 of 34
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`TABLE OF CONTENTS
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`Page
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`Chandler Fails To Account For Differences Between The
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` And
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`Chandler’s Three “Discounts” Fail To Apportion To The Value Of The Patented
`
`INTRODUCTION .................................................................................................................. 1
`I.
`II. FACTUAL BACKGROUND ................................................................................................. 3
`III.
`LEGAL STANDARD ......................................................................................................... 5
`IV.
`ARGUMENT ...................................................................................................................... 7
`A. Mr. Chandler’s Per Unit Royalty Method Should Be Excluded For Failure To
`Apportion. ................................................................................................................................... 7
`1.
`The Hypothetical Negotiation. ................................................................................................ 8
`2.
`Invention. .............................................................................................................................. 12
`3.
`Chandler Also Fails To Apportion His Royalty Base. ............................................... 19
`B. Mr. Chandler Should Be Precluded From Presenting His Unreliable Revenue-Based
`Approach To The Jury. ............................................................................................................. 19
`C. Chandler Should Be Precluded From Presenting His Unreliable
`To The Jury. .............................................................................................................................. 21
`D. Chandler’s Foreign Damages Opinion Is Legally Improper And Must Be Excluded ...... 22
`E. Chandler Should Be Precluded From Referring To Prejudicial Materials That Are Legally
`Irrelevant To Any Claim ........................................................................................................... 22
`V. CONCLUSION ..................................................................................................................... 26
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 3 of 34
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`TABLE OF AUTHORITIES
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`Page
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`CASES
`
`Bio-Rad Labs., Inc. v. 10X Genomics, Inc.,
`No. 15-152-RGA, 2018 WL 4691047 (D. Del. Sept. 28, 2018) ....................................7, 11, 12
`
`CSIRO v. Cisco Sys., Inc.,
`809 F.3d 1295 (Fed. Cir. 2015)..................................................................................................6
`
`Daubert v. Merrell Dow Pharmaceuticals, Inc.,
`509 U.S. 579 (1993) .................................................................................................6, 18, 20, 22
`
`Ericsson, Inc. v. D-Link Sys., Inc.,
`773 F.3d 1201 (Fed. Cir. 2014)..............................................................................................6, 7
`
`ESW Holdings, Inc. v. Roku, Inc.,
`6:19-cv-44-ADA, Dkt. 150 (W.D. Tex. March 23, 2021) .......................................................23
`
`Exmark Mfg. Co. Inc. v. Briggs & Stratton Power Prod. Grp., LLC,
`879 F.3d 1332 (Fed. Cir. 2018)....................................................................................13, 15, 18
`
`Finesse Wireless LLC v. AT&T Mobility LLC,
`No. 2:21-cv-00316, Dkt. 240 (E.D. Tex. Dec. 21, 2022) ........................................................24
`
`Finjan, Inc. v. Blue Coat Sys., Inc.,
`879 F.3d 1299 (Fed. Cir. 2018)..................................................................................................6
`
`Freshub, Inc. v. Amazon.com, Inc.,
`6:21-cv-511-ADA, Dkt. No. 22 (W.D. Tex. June 13, 2021) ...................................................23
`
`Garretson v. Clark,
`111 U.S. 120 (1884) .............................................................................................................7, 15
`
`Gen. Elec. Co. v. Joiner,
`522 U.S. 136 (1997) .............................................................................................................6, 21
`
`Huawei Techs. Co. v. T-Mobile US, Inc.,
`No. 2:16-cv-00052-JRG-RSP, Dkt. 440 (E.D. Tex. Sept. 29, 2017) .......................................24
`
`Implicit, LLC v. Trend Micro, Inc.,
`No. 6:16-CV-00080-JRG, Dkt. 253 (E.D. Tex. Oct. 3, 2017) .................................................24
`2
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 4 of 34
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`TABLE OF AUTHORITIES
`(continued)
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`Page
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`Info-Hold v. Muzak,
`2013 WL4482442 (S. D. Ohio Aug. 20, 2013), rev’d in part on other grounds,
`783 F.3d 1365 (Fed. Cir. 21015)..............................................................................................11
`
`LaserDynamics, Inc. v. Quanta Comput., Inc.,
`694 F.3d 51 (Fed. Cir. 2012)............................................................................................ passim
`
`MLC Intellectual Prop., LLC v. Micron Tech., Inc.,
`10 F.4th 1358 (Fed. Cir. 2021) ......................................................................................7, 10, 12
`
`MobileMedia Ideas, LLC v. HTC Corp.,
`2013 WL 12158524 (E.D. Tex. Apr. 24, 2013) .......................................................................24
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`NetFuel, Inc. v. Cisco Sys. Inc.,
`No. 5:18-cv-02352-EJD, 2020 WL 1274985 (N.D. Cal. Mar. 17, 2020) ................................13
`
`Omega Pats., LLC v. CalAmp Corp.,
`13 F.4th 1361 (Fed. Cir. 2021) ............................................................................................7, 10
`
`PerdiemCo, LLC v. Industrack LLC,
`2016 WL 6611488 (E.D. Tex. Nov. 9, 2016) ..........................................................................18
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`ProTradeNet, LLC v. Predictive Profiles, Inc.,
`Civ. No. 6:18-CV-00038-ADA, 2019 WL 6499488 (W.D. Tex. Oct. 11, 2019) ..................5, 6
`
`Puga v. RCX Solutions, Inc.,
`922 F.3d 285 (5th Cir. 2019) .....................................................................................................6
`
`Rembrandt Wireless Techs., LP v. Samsung Elecs. Co.,
`2015 WL 627430 (E.D. Tex. Jan. 31, 2015) ............................................................................24
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`ResQNet.com, Inc. v. Lansa, Inc.,
`594 F.3d 860 (Fed. Cir. 2010)..............................................................................................6, 18
`
`ROY-G-BIV Corp. v. ABB, Ltd.,
`6:11-cv-622, 2014 WL 12465449 (E.D. Tex. Aug. 1, 2014) ...................................................15
`
`SimpleAir, Inc. v. AWS Convergence Techs., Inc.,
`No. 2:09-CV-289, Dkt. 505 (E.D. Tex. Apr. 3, 2012) .............................................................24
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 5 of 34
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`TABLE OF AUTHORITIES
`(continued)
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`Page
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`U.S. Salt Inc. v. Broken Arrow, Inc.,
`563 F.3d 687 (8th Cir. 2009) ...................................................................................................11
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`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)........................................................................................ passim
`
`VirnetX, Inc. v. Cisco Sys.,
`767 F.3d 1308 (Fed. Cir. 2014)........................................................................................7, 8, 19
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`VLSI Technology LLC v. Intel Corporation,
`6:21-cv 0057-ADA, Dkt. No. 508 (W.D. Tex. Feb. 19, 2021) ..........................................23, 25
`
`Whitserve, LLC v. Comput. Packages Inc.,
`694 F.3d 10 (Fed. Cir. 2012)..............................................................................................13, 18
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`Wordtech Sys., Inc v. Integrated Networks Sols., Inc.,
`609 F.3d 1308 (Fed. Cir. 2010)..................................................................................................8
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`OTHER AUTHORITIES
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`Fed. R. Evid. 403 .....................................................................................................................20, 22
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`Fed. R. Evid. 702 ...............................................................................................................15, 20, 22
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 6 of 34
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`Abbreviation
`Touchstream
`Google
`Asserted Patents
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`Asserted Claims
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`
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`Exhibit
`Ex. 1
`Ex. 2
`Ex. 3
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`Ex. 4
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`TABLE OF ABBREVIATIONS
`
`Definition
`Touchstream Technologies, Inc.
`Google LLC
`U.S. Patent Nos. 8,356,251 (the “’251 Patent”); 8,782,528 (the
`“’528 Patent”); and 8,904,289 (the “’289 Patent”)
`Claims 1, 5, and 7-9 of the ’251 Patent; claims 1, 5, 8, 11, 12, 14,
`and 28 of the ’528 Patent; and claims 1, 2, 6, 7, and 8 of the ’289
`Patent.
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`TABLE OF EXHIBITS
`
`Description
`Expert Report of Mark J. Chandler and Exhibits 1 to 21 (“Chandler Rep.”)
`Deposition Transcript of Chandler (“Chandler Dep. Tr.”)
`Supplemental Expert Report of Mark J. Chandler and Exhibits 22 to 23
`(“Chandler Supp. Rep.”)
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 7 of 34
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`I.
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`INTRODUCTION
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`Touchstream seeks more than
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` based on a
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` of the
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`damages number Touchstream would put before the jury through Mark Chandler, Touchstream’s
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`damages expert. The Court has an obligation to act on its gatekeeper responsibility to assure that
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`the jury is presented with expert opinions that are relevant and help the jury reach a conclusion
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`consistent with the governing law. Chandler’s opinions should not make it through the gate
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`because they are not tied to the footprint of the alleged invention of the patents-in-suit, include
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`non-U.S. damages, and would impermissibly skew the jury’s determination of damages through
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`the presentation of large royalty and revenue amounts that are unreliable, irrelevant and legally
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`impermissible.
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`Chandler agrees, as he must, that “the reasonable royalty in this case must account for the
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`use made of the patented invention and the value derived from the patented invention by the
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`infringer, in this case Google.” (Ex. 2, Chandler Dep. Tr. at 33:20-34:2.) But he admits that he
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`did not determine “
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`3, Chandler Supp. Rep. at 17.)
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`”—he claims he was unable to do so. (Ex.
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`Notwithstanding that fatal admission, Chandler opines that a “reasonable” royalty in this
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`case is nearly
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`. He gets to that number by adopting
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` that Touchstream entered into with a
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`
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`—an agreement that resulted in total payments to Touchstream of
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`approximately
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`. This “reasonable” royalty opinion should be excluded because it fails
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`to meet the standards set by the Federal Circuit with regard to apportionment in three respects:
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 8 of 34
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`First, Chandler fails to account for numerous differences between the
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` agreement and the hypothetical negotiation between
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`Touchstream and Google. Second, the three “discounts” Chandler applies to his “per unit” rate
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`are arbitrary, not tied to the facts of this case, and fail to apportion between patented and unpatented
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`features of the accused devices. Third, Chandler fails to apportion the royalty base, improperly
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`relying instead on the total number of product activations regardless of whether devices were ever
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`used to “cast” content or not.
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`In addition to his unreliable “per unit” approach, Chandler describes two additional
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`“potential” approaches to calculating damages in this case—a revenue-based approach and a so-
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`called “
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` approach—but admits that he cannot reliably calculate a reasonable royalty
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`using either of them, rendering them unhelpful and confusing to the jury. Despite his admitted
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`lack of a reliable conclusion, Chandler mentions various irrelevant and inflated numbers in his
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`discussion of these approaches, including Google revenue streams unrelated to the patented
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`invention and royalty rates in admittedly noncomparable agreements. Because Chandler himself
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`opines that these numbers are unreliable, he should be precluded from presenting them to the jury.
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`Chandler’s opinion calculating damages based on extraterritorial infringement should also
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`be excluded. This is primarily because Touchstream is not entitled to seek such damages, as
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`repeatedly addressed in this case, most recently in Google’s accompanying motion for summary
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`judgment. And, in addition to that opinion being legally improper, Chandler again fails to properly
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`apportion to the value of the patented invention, another independent basis for exclusion of his
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`(already legally impermissible) opinion regarding non-U.S. damages.
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`For all these reasons, as explained in detail below, the Court should exclude the specified
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`proffered opinions of Mr. Chandler and all arguments based thereon.
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`II.
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`FACTUAL BACKGROUND
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`The Asserted Patents are all titled “Play control of content on a display device” and claim
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`a “system for presenting and controlling content on a display device.” See ’289 Patent at Abstract.1
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`Touchstream, through its expert reports, generally alleges that Google infringes the Asserted
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`Patents by testing and selling “cast-enabled” devices or by Google providing software to third
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`parties that supports casting (generally referred to herein as the “Accused Products”). Chandler’s
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`damages report groups the Accused Products into three categories—“pure” Chromecast Enabled
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`Devices (i.e., the original Google Chromecast devices), Google-branded Chromecast Enabled
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`Devices that have additional functionality (i.e., Google Smart Speakers and Google Displays), and
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`third-party Chromecast Enabled Devices (including televisions and speakers).
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`Chandler served his initial expert report in this case on November 14, 2022. (Ex. 1
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`(“Chandler Rep.”).) In that report, he alleges three possible approaches to determine reasonable
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`royalty damages in this case: (1) a per unit approach with a fixed fee per device multiplied by the
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`number of devices activated during the damages period; (2) a revenue-based approach applying a
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`royalty rate to the aggregate revenues he claims Google received resulting from the use of the
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`Asserted Patents; and (3) a so-called
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` (“LTV”) approach using the LTV of the
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`Accused Devices as a proxy to estimate the monetary value Google receives from use of the
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`patented invention. (Ex. 1, Chandler Rep. at 86; Ex. 2, Chandler Dep. Tr. at 30:5-32:3.) Chandler,
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`however, only provided an opinion as to the amount of damages using the first approach of a per
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`unit royalty. (Ex. 2, Chandler Dep. Tr. at 32:4-10.) He concluded that he did not have sufficient
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`1 All Defined Terms are set forth in the preceding Table of Abbreviations. Substantial
`additional detail about the Asserted Patents and Accused Products is provided in the accompanying
`Motion for Summary Judgment and Daubert motion with respect to Touchstream’s technical
`expert, Dr. Kevin Almeroth.
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 10 of 34
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`data or information to accurately calculate damages using either the revenue-based or LTV
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`approaches described in his report. (Ex. 1, Chandler Rep. at 109, 134-35; Ex. 2, Chandler Dep.
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`Tr. at 32:11-22, 33:4-16.)
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`Chandler’s per unit royalty approach began with a
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`
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`. (Ex. 4,
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`devices, but wished to engage Touchstream for
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`.)
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` did not offer, make, or sell any
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`. (Ex. 4,
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`t. at TS-00912238; Ex. 2 Chandler Dep. Tr. at 132:1-
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`5.) The total amount that
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` paid under this agreement was around
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`. (Ex. 2,
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`Chandler Dep. Tr. at 155:17-156:2.) According to Chandler, the
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` agreement has
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` so he
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`did not make any adjustments to account for differences in technology between the
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`
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`agreement and the hypothetical negotiation. (Ex. 1, Chandler Rep. at 68-69; Ex. 2, Chandler Dep.
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`Tr. at 48:18-49:3, 49:14-21.) Rather, Chandler adopted the
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`
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` for all of his device fees. (Ex. 4,
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` Agmt, Schedule 1, at TS-00912270;
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`Ex. 1, Chandler Rep. at 98; Ex. 2, Chandler Dep. Tr. at 45:21-46:8.) Chandler applied a
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` and then multiplied it by the number of months he
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`contends represents the average lifespan of the Accused Products to get a
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`
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`for what he refers to as “pure” Chromecast Enabled Devices (i.e., the original Google Chromecast
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`devices).2 (Ex. 1, Chandler Rep. at 98-99, Ex. 8A; Ex. 2, Chandler Dep. Tr. at 43:13-44:5.)
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 11 of 34
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`For all Google-branded Chromecast Enabled Devices that have additional functionality
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`(i.e., Google Smart Speakers and Google Displays), Chandler applied a
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` on the
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`royalty, resulting in a per unit fee
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` (Ex. 1, Chandler Rep. at 98; Ex. 2, Chandler Dep. Tr.
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`at 74:5-13.) Chandler further opined that a per unit royalty would also be applied to third-party
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`Chromecast Enabled Devices, effectively a fee for Google to sublicense the Asserted Patents to
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`those third parties, and Touchstream and Google would split the
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`
`. (Ex. 1, Chandler Rep. at 98-99; Ex. 2, Chandler Dep. Tr. at
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`85:17-20.) That results in a per unit fee of
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`for those products. (Ex. 1, Chandler Rep. at 98-
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`99; Ex. 2, Chandler Dep. Tr. at 82:17-22.) Chandler applied these per unit fees to the total number
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`of devices activated during the damages period (regardless of whether they were ever used to cast
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`content) and calculated total royalties of
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`. (Ex. 1, Chandler Rep. at 99.)
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`Chandler also opined that the per unit royalty fees should be discounted by
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` for uses outside
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`the U.S., resulting in an additional
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` in damages. (Ex. 1, Chandler Rep. at 99-100.)
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`Although Chandler did not calculate a damages amount under his revenue-based approach in his
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`initial report, he opined that the reasonable royalty rate that should be applied under such an
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` (Ex. 1, Chandler Rep. at 149-153.)
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`On December 19, 2022, Chandler served a supplemental expert report. (Ex. 3, (“Chandler
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`Supp. Rep.”).) That supplemental report discussed four additional files that Google produced after
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`Chandler’s initial report, but ultimately did not change any of the opinions in the Chandler Report.
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`(Ex. 2, Chandler Dep. Tr. at 23:7-25:2.)
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`III. LEGAL STANDARD
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`Experts may not automatically testify before a jury. ProTradeNet, LLC v. Predictive
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`Profiles, Inc., Civ. No. 6:18-CV-00038-ADA, 2019 WL 6499488, at *2 (W.D. Tex. Oct. 11, 2019).
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`Expert testimony is admissible only “if (1) the expert is qualified; (2) the evidence is relevant to
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 12 of 34
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`the litigation; and (3) the evidence is reliable.” Id. The relevancy inquiry requires that the “expert
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`testimony proffered in the case [be] sufficiently tied to the facts of the case that it will aid the jury
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`in resolving a factual dispute.” Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 591
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`(1993). “If the patentee fails to tie [its expert’s] theory to the facts of the case, the testimony must
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`be excluded.” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1315 (Fed. Cir. 2011). “To
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`be reliable, expert testimony must . . . be more than unsupported speculation or subjective belief.”
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`Puga v. RCX Solutions, Inc., 922 F.3d 285, 293 (5th Cir. 2019) (quotation omitted). The expert’s
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`testimony is unreliable and should be excluded where evidence is “connected to existing data only
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`by the ipse dixit of the expert” and the court concludes that “there is simply too great an analytical
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`gap between the data and the opinion proffered.” Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146
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`(1997).
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`Ultimately, the “patentee bears the burden of proving damages.” Uniloc, 632 F.3d at 1315.
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`“[T]he damages inquiry must concentrate on compensation for the economic harm caused by
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`infringement of the claimed invention.” ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed.
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`Cir. 2010). “Thus, the trial court must carefully tie proof of damages to the claimed invention’s
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`footprint in the market place.” Id. In the context of patent damages, the Court’s gatekeeping
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`authority is even more important “given the great financial incentive parties have to exploit the
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`inherent imprecision in patent valuation.” CSIRO v. Cisco Sys., Inc., 809 F.3d 1295, 1301 (Fed.
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`Cir. 2015).
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`An essential requirement for an expert’s damages analysis is that the “ultimate reasonable
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`royalty award must be based on the incremental value that the patented invention adds to the end
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`product.” Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1311 (Fed. Cir. 2018) (quoting
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`Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014)). A patentee “must in
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`every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s
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`damages between the patented features and the unpatented features, and such evidence must be
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`reliable and tangible, and not conjectural or speculative.” LaserDynamics, Inc. v. Quanta Comput.,
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`Inc., 694 F.3d 51, 67 (Fed. Cir. 2012) (quoting Garretson v. Clark, 111 U.S. 120, 121 (1884)); see
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`also MLC Intellectual Prop., LLC v. Micron Tech., Inc., 10 F.4th 1358, 1373 (Fed. Cir. 2021);
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`Omega Pats., LLC v. CalAmp Corp., 13 F.4th 1361, 1376 (Fed. Cir. 2021). “The Federal Circuit
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`has repeatedly emphasized the importance of apportionment as part of a district court’s
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`gatekeeping function.” Bio-Rad Labs., Inc. v. 10X Genomics, Inc., No. 15-152-RGA, 2018 WL
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`4691047, at *8 (D. Del. Sept. 28, 2018) (granting motion to exclude testimony for failure to
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`apportion).
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`IV. ARGUMENT
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`A. Mr. Chandler’s Per Unit Royalty Method Should Be Excluded For Failure
`To Apportion.
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`A reasonable royalty must be properly apportioned. “[T]he governing rule is that the
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`ultimate combination of royalty base and royalty rate must reflect the value attributable to the
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`infringing features of the product, and no more.” Ericsson, 773 F.3d at 1226 (citing VirnetX, Inc.
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`v. Cisco Sys., 767 F.3d 1308, 1326 (Fed. Cir. 2014)). Each step in Chandler’s per unit royalty
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`analysis fails this essential requirement: (1) the royalty rate in the
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` agreement does not
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`have “built-in apportionment” for the patented invention and Chandler fails to account for
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`differences from the hypothetical negotiations; (2) the three “discounts” Chandler applies to his
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`per unit rate are arbitrary and not tied to the footprint of the patented invention; and (3) he fails to
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`apportion his royalty base of all activated devices. These flaws cannot be cured by cross-
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`examination, and each separately warrants exclusion of Chandler’s per unit royalty award.
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`Allowing Chandler to present his unreliable opinions resulting in an award of
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` in
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`Case 6:21-cv-00569-ADA Document 139 Filed 01/05/23 Page 14 of 34
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`“reasonable” royalties will undoubtedly “artificially inflate the jury’s calculation beyond what is
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`‘adequate to compensate for the infringement.’” LaserDynamics, 694 F.3d at 68 (quoting Uniloc,
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`632 F.3d at 1320).
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`1.
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`Chandler Fails To Account For Differences Between The
`Agreement And The Hypothetical Negotiation.
`
`
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`Chandler’s per unit royalty approach is based on a single allegedly comparable
`
`agreement—
`
`
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` Comparable agreements can be used in a reasonable royalty analysis, provided that any
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`distinguishing facts are accounted for when invoking them to value the patented invention.
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`Wordtech Sys., Inc v. Integrated Networks Sols., Inc., 609 F.3d 1308, 1320 (Fed. Cir. 2010)
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`(“comparisons of past patent licenses to the infringement must account for ‘the technological and
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`economic differences’ between them”). Thus, Chandler is required to explain how the parties to
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`the
`
` agreement took into account the value of the patented
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`invention as opposed to other features, and how he accounted for any differences between that
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`agreement and the hypothetical negotiation in his royalty rate. Id.; VirnetX, 767 F.3d at 1330.
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`Chandler admits that he did not make any adjustments to
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` to account for any differences with the hypothetical negotiation, but he fails to provide
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`any explanation as to how or why he reached that conclusion. (Ex. 2, Chandler Dep. Tr. at 49:14-
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`18.) Chandler’s bare assertion that no adjustment was required because it “captured apportionment
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`of value with respect to the patents-in-suit” (Ex. 1, Chandler Rep. at 68-69; Ex. 2, Chandler Dep.
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`Tr. at 48:18-49:3, 49:14-21), is not supported by any reliable facts or data—and in fact is directly
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`contradicted by the agreement itself.
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`One need only look at the title of the
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` agreement to know it was not for the same
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`bare patent license that would result from the hypothetical negotiation in this case, and there are
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`numerous additional differences regarding the scope and territory of the license grant, as well as
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`the bargaining power and relative contributions of the parties involved. Chandler admits that these
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`types of differences should factor into a comparability analysis. (Ex. 2, Chandler Dep. Tr. at 34:3-
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`37:5.) The agreement is entitled
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` a
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`Touchstream, on the other hand
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`. (Ex. 4, (“
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` Agmt.”).)
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` (Ex. 4,
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` Agmt. at TS-00912238.)
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`.” (Ex. 4,
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` Agmt. at TS-00912238.)
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`The license granted by the
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` agreement was
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` (Ex. 4,
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` Agmt. Sec. 9.3, at TS-00912247 (emphasis added).) The
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`agreement defined
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`. (Ex. 4,
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` Agmt. at TS-00912240, TS-00912242; Ex. 2, Chandler Dep. Tr. at 139:3-
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`7, 139:15-24.) And Chandler agrees that the
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`. (Ex. 2, Chandler Dep. Tr. at 142:19-22, 143:12-21.) The only reference to
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`
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` (Ex. 4, Quadria Agmt. at TS-00912240.)
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`A plain reading of the license in
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` Chandler must explain how
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`he accounted for these admittedly different terms—and any other differences such as the relative
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`bargaining position and contributions of Google as compared to
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` He does not make any
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`attempt to do so.3 MLC Intell. Prop., 10 F.4th at 1375 (affirming exclusion because expert
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`conducted no assessment of the licensed technology versus the accused technology to account for
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`any differences with an allegedly comparable license); see also Omega Pats., 13 F.4th at 1381
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`(“What’s utterly lacking is evidence that Omega met its obligation to account for such
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`distinguishing facts in invoking the licenses to value the [asserted] patent.”).
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`Chandler’s sole justification for his adoption of the
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` without adjustment
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`to account for the different terms is “long discussions with Mr. Mitschele” who supposedly
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`informed him that this license was about the patents. (Ex. 2, Chandler Dep. Tr. at 144:15-146:10.)
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`Despite the plain language of
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`, Chandler contends that the
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`
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`“[a]bsolutely” applies to something other than the Licensed Materials—namely, the patents—
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`because Mr. Mitschele told him so. (Ex. 2, Chandler Dep. Tr. at 144:3-14.) Setting aside the
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`problems with relying on nothing by the uncorroborated testimony of an admittedly interested
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`3 What is more, Chandler fails to explain how he can simply convert
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`
`
`
` (See
`Ex. 2, Chandler Dep. Tr. at 62:4-20.) Chandler did not make any attempt to account for that
`difference either, simply concluding “
`.” Id.
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` There is an inherent difference between usage of
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`party4, one thing Chandler apparently never asked him was how the parties came up with the actual
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`licensing fee
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`, what specifically was included in that fee, and whether or how it accounted
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`for patented and unpatented features of the software applications that were the subject of the
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`license. According to Chandler, “the best insight I have is, it was a negotiated number.” (Ex. 2,
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`Chandler Dep. Tr. at 159:18-160:13.) That is not enough to demonstrate apportionment to the
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`value of the patented invention, particularly given the stark differences between the
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`
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`agreement and the hypothetical negotiation. Allowing Chandler’s “cursory analysis [of the
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` agreement] to circumvent the apportionment requirement would effectively gut the
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`doctrine.” Bio-Rad Labs., 2018 WL 4691047, at *8 (excluding expert opinion that “simply state[d]
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`that apportionment ‘would have been considered by the parties to the various agreements
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`referenced throughout this report”). The Court’s reasoning in Bio-Rad Laboratories is instructive:
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`[T]he fact that the parties to each agreement incorporated the
`concept of apportionment into their reasonable royalties does not
`itself show that the same royalty rates apply here. For example, one
`comparable agreement might provide a 15% reasonable royalty
`where the patented technology accounts for 50% of a product. A
`second comparable agreement might provide a 3% reasonable
`royalty where the patented technology accounts for 10% of a
`different product. Both rates are apportioned, but further analysis is
`required to determine whether either rate is apportioned in a
`comparable fashion to the contribution of the patented technology
`to the accused products
`
`
`4 Chandler’s sole reliance on Mr. Mitschele further supports exclusion of his opinions. See,
`e.g. Info-Hold v. Muzak, 2013 WL4482442 (S. D. Ohio Aug. 20, 2013), rev’d in part on other
`grounds, 783 F.3d 1365 (Fed. Cir. 21015) (excluding testimony of expert who relied, without
`verification, on Plaintiff’s employees and Plaintiff’s counsel for information overall to his
`opinions, and simply accepted that all of “Defendants …. revenues were driven by demand for
`accused products”); U.S. Salt Inc. v. Broken Arrow, Inc., 563 F.3d 687 (8th Cir. 2009) (rejecting
`expert testimony that “relied almost exclusively on (the CEO’s) speculative estimates without any
`independent verification”).
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`2018 WL 4691047, at *8. Like the expert in Bio-Rad Labs., Chandler’s opinion should be
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`excluded because he fails to analyze whether the rate in the
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` agreement was apportioned
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`in a comparable fashion to the contribution of the patented technology to the Accused Products.
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`Id.; see also MLC Intell. Prop., 10 F.4th at 1373-1375 (exclusion of expert testimony proper
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`because the expert provided no evidence or explanation for how the royalty rate he derived from
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`the agreement accounts for apportionment of the accused products and conducted no assessment
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`of the licensed technology versus the accused technology to account for any differences.)
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`Chandler uses the
`
` to calculate all three of his “per unit” royalties
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` for
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`Google “pure” Chromecast Devices;
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`for other Google-branded Chromecast Enabled
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`Devices; and
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` for third-party Chromecast Enabled Devices). As such, his failure to explain
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`how he accounted for admitted differences between the
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` software development agreement
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`and the hypothetical negotiation infects his entire reasonable royalty analysis, and warrants its
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`exclusion.
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`2.
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`Chandler’s Three “Discounts” Fail To Apportion To The Value Of
`The Patented Invention.
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`Chandler’s adoption of the
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` royalty rate from the
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` agreement without
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`adjustment is not the only reason that Chandler’s per unit royalty opinion fails the apportionment
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`requirement. Chandler compounds his error by applying three arbitrary “discounts” to that rate,
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`none of which is tied to the footprint of the patented invention.
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`(a)
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`Chandler’s
`Rate Is Arbitrary And Unsupport